Metrics that Measure Up

Micro Private Equity - New Path to B2B SaaS Liquidity + Growth -Akeel Jabber, Horizen Capital

July 27, 2021 Ray Rike
Metrics that Measure Up
Micro Private Equity - New Path to B2B SaaS Liquidity + Growth -Akeel Jabber, Horizen Capital
Show Notes

B2B SaaS founders continue to find new financing options to both grow their business and/or be rewarded for their sweat equity investment.

Akeel Jabber's journey from petroleum engineer, to gym founder, to real estate investor and now "micro private equity" investor has one common thread - entrepreneurship focused on how to generate cash flow

Akeel's first area of focus to generate returns +  cash flow was investing in the stock market.  He quickly identified that the large institutional investors on Wall Street had an unfair advantage as measured by technology, access, and sophistication.  As he searched for alternative avenues to build cash flow, he identified technology assets with recurring revenue streams as an attractive investment area - especially for the less than $5M ARR B2B SaaS companies that were not growing  50%+ per year.

Akeel's first experience at $99 Social highlighted that with the right focus on go-to-market programs, processes, and operational excellence, smaller B2B SaaS companies could accelerate growth, and thus cash flow + enterprise value for founders and investors alike.

 This experience led to the founding of Horizen Capital.  Horizen Capital is focused on investing in <$5M ARR B2B SaaS companies with 10% - 30% growth rates, and then applying their operational and go-to-market expertise to unlock 50%+ growth rates, resulting in increased returns for founder and investor alike.

Akeel defines the early stage B2B SaaS market that they invest in three segments:

Pre Seed Stage (pre-revenue)
     - Raised friends and family investments
    - prove they are the best team to tackle this problem/opportunity

Seed Stage ($120K - $1M ARR)
     -  Product built
     - Market and user feedback received
     - Money charged to and received from customers

Series A ($1M - $10M)

  • Built good product
  • Established Product Market Fit (PMF)
  • Built out initial marketing channels

The metrics that Akeel and Horizen Capital focuses primarily on when making micro private equity investments include:

  • Historic Growth Rates (10% - 30%)
    • Greater than 30% - 50% founders should evaluate VC investors
  • Churn
    • < 5% month over month
      •  SMB market
    • < 2% per month
      • Commercial/Mid-Market
  • CLTV
    • $1,500 - $2,000 at least
    • Size of company is used to conduct cohort-based CLTV analysis
      • 5 Users (higher churn)
      • > 5 Users have different CLTV (lower churn)
      • Blended hides reality

When asked how does a founder know if it's time to sell or just fund their company, Akeel suggested to ask these two questions:

      #1: Am I still enjoying running my company?

     #2: What am I trying to achieve by taking micro PE money?
                       - Exit and go do something new
                      - Accelerate my company growth rate 

Akeel shared the top sites and companies that a B2B SaaS founder looking for a potential exit/acquisition should know about:

1. M&A Advisory Firms
2. Empire Flippers
3, MicroAcquire
4. Flippa

If you are an entrepreneur, especially one in the B2B SaaS business looking for strategic investment and growth support, this Metrics that Measure Up episode with Akeel Jabber is a great is the SaaS District Podcast that Akeel hosts!