newy66•This week
The case for micro PE [x-post from r/micro_pe]
Any SMB owners considering a sale? What have your challenges been so far?
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The high-flying venture capital party is quieting down. The pullback in the public tech valuations and high-profile failures have made venture capitalists more cautious, doing fewer deals, no doubt stemming from antsy LPs.
But at the same time, real tech has been built that improves business efficiency. AI to cut costs, target customers, improve products. SaaS products to automate everything from billing to marketing. New platforms that open up new modes of customer acquisition.
Some of the hyped venture-backed companies from the past decade, while not quite achieving world domination, demonstrated models that provided real value to customers. The on-demand universe - rides, rooms, meals, home services, pets, leisure, showed that customers value convenience and experience.
On another front, there's a silver tsunami on the horizon as aging business owners start to cash out. Nearly 60% of private companies are run by the 55+ crowd. Trillions in assets will change hands in the next 15 years as they retire. The tech layoffs have flooded the labor market with brainpower. No shortage of sharp operators looking for their next act.
Put it together and you have the ingredients for a new investment approach: micro private equity. Modest valuations, reasonable return expectations, solid companies with positive cash flow or a clear path to profitability. Maybe with debt financing or an acquisition of an existing business at the outset. More targeted, grounded bets are emerging as an alternative to the high-risk venture model.
r/micro_pe
![The case for micro PE [x-post from r/micro_pe]](https://jfbmhhfxbbrxcmwilqxt.supabase.co/storage/v1/object/public/resource-images/smallbusiness_AI_for_SMB_20250328_184737_processed_image.jpg)