One way to grow in SaaS: M&A

Today Unity Software goes public. One very interesting graphic in their prospectus is below, which shows their journey to becoming a public company. It’s been a long road for Unity (founded 2004) as it is for most every successful company, but one thing that stands out is the number of acquisitions they’ve made along the way. Unity has made no less than 4 important acquisitions since founding, which not only drives product, but as importantly bolts on revenue.

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ZoomInfo which also recently went public has had a number of important acquisitions itself along the way.

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Bolting on revenue is not the same thing as growing revenue organically. Organic growth is more sustainable and healthier, whereas acquisitions to keep growing means you’ve got to find ever larger companies to acquirer. There is a limit to that. You’ve also got to integrate products and cultures, which is the real challenge. But if you need to get bigger and shorten your time to exit/IPO, M&A is akin to steroids: so long as you keep doing it, you’ll get bigger and more attractive. Organic growth has it’s limits, and there’s no shame in doing M&A to bolt on revenue. Clearly, public markets appreciate it.

Visit us at blossomstreetventures.com and email us directly with Series A or B opportunities at sammy@blossomstreetventures.com. Connect on LI as well. We invest $1mm to $1.5mm in growth rounds, inside rounds, small rounds, cap table restructurings, note clean outs, and other ‘special situations’ all over the US & Canada.

Written by

co-founder at Blossom Street Ventures

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