Here’s a harsh truth: you will never become a millionaire… if you keep watching those videos 👇
They all want to sell you training or a masterclass on how to make more money, while the only way they made true money was by selling you these courses in the first place…
Like my grandma was saying - “If it feels like a Ponzi scheme, and it looks like a Ponzi scheme, it’s probably a Ponzi scheme.”
You see, last year, I made $10M - cash, in my bank account.
Yet, in 2018, I had failed 3 businesses, I was broke, and my girlfriend was paying the rent.
But I decided to take a leap of faith and invest all of the money I had into one idea: a SaaS business.
More precisely: lemlist.
Two years later, I had built 2 successful SaaS businesses growing at double-digit month over month, and I sold one of them in a 7-figure deal.
And in 2021, my business was valued at $150M, and I sold some shares for millions of dollars - becoming a multi-millionaire before 30.
In this article, you’ll get 2 ways to become a millionaire with a SaaS business.
One where you’ll have to sell entirely your business, and the other one without selling your business. 😉
How to become a millionaire by selling your SaaS?
The first way to become a millionaire is to grow your SaaS to at least $28k in monthly recurring revenue (or MRR) and to sell it.
Why $28k in MRR? Because it means you’re generating around $336k in annual recurring revenue (or ARR).
And since there’s a rule of thumb that says that profitable SaaS are sold between 3x to 10x their ARR, it means you’ll be able to sell your SaaS anywhere between $1M and $3M.
In this article, I’ll focus on the process of becoming a multi-millionaire with your SaaS - but if you wanna know how to grow your SaaS, I’ve made a video about it here 👇
Now let’s get to business: how can you sell a SaaS?
Well, you have multiple options: direct sale, marketplace, auction, broker, etc etc.
And today, I wanna talk about selling through a direct sale.
A direct sale means that you either sell your company by yourself by reaching out to a buyer, or they come to you asking to buy your company.
The advantage VS the other options?
- You can reach out to the seller you want.
- You take 100% of the money (after taxes 😅.)
- You learn the most about selling a business and designing creative deals.
Let me give you an example:
Laura Roeder was able to sell her SaaS for 7-figures with this cold email.
After 6 years of growing her company MeetEdgar to millions in ARR, she decided it was time to sell the company so she could work on other projects.
And her process is actually super easy to re-iterate:
She made a list of micro-private equity firms that had previously bought profitable SaaS businesses doing single-digit millions in ARR.
Then, she sent each of them this email:
It works because:
- It’s very sharp, straight to the point, and her message is summed up in one sentence.
- It’s not pushy, and she’s using the push-pull approach (letting them know she’s selling, and basically that she won’t bother them more if they’re not interested in buying.)
- Since she knows she’s targeting the right kind of firms, her message is on point and intriguing.
Thanks to that one simple cold email, she got a lot of answers from the targeted firms.
And if they showed interest, she sent them some topline numbers in order to set up a call to go further into the negotiations.
With that strategy, she ended up selling her company in a seven-figure deal to Sureswift.
If you want to know more about other ways to sell your SaaS, I’ve made a video about how I sold my SaaS through an M&A firm a few years ago - you can find it here 👇
How to become a millionaire without selling your SaaS?
The second way to become a multi-millionaire is to sell some shares of your business.
Let me explain this a bit further:
A few years ago, I went through a public funding round of $20M, and after receiving offers, I publicly declined.
My goal was to show people that you could grow a successful SaaS without funds and to bring awareness to bootstrapped businesses.
But when I was doing the funding round, a lot of investors reached out to me about investing in my business 👇
And one email got my attention: from Oliver, managing partner at Expedition Growth Capital.
Here’s why 👇
He sent me an in-depth presentation about lemlist - studying the competition, the opportunities, and he even did interviews with some of our customers.
The main difference with the other firms? He offered me $30M, where $15M was in cash-out and $15M was in cash-in.
Because I didn’t want to raise, I said no.
But I had no clue what a cash-out was.
Basically, in classic fundraising or cash-in, the money goes directly into the company’s bank account to fuel the growth of the company.
In secondary, the money will go directly into your pockets (after taxes).
In both cases, you’re selling shares of your business, so you get a specific valuation.
In cash-out, the valuation you get is close to the real value of your business because you’re getting cash directly as a founder.
But, in cash-in, the valuation can get totally uncorrelated with the actual value of the business.
That’s because the investors believe that with the money they added to the company’s bank account, you’ll be able to grow your company a lot faster, sell it, and generate a return anywhere between 2 to 100 times their investment.
That’s why fundraising puts a lot of pressure on founders. You’re forced to spend a lot of money to drive growth that is not always sustainable.
Plus, it does not make you a millionaire since it’s not your personal money (even though a lot of people think that…).
Coming back to that cash-out story, I ended up accepting the offer to sell 20% of the business for $30M - becoming a multi-millionaire before 30.
I hope you enjoyed this article!
Peace, love, and profit! 💰