SaaS Group

Tim Schumacher had already tasted success twice. After successful exits from Cedar.com and IO (the company behind ad blockers like Adblock Plus), he had accumulated significant capital and realized something crucial about himself: "I'm not the best person from zero to one. Starting a business, MVP, all of that—they're much better people than me, but I'm pretty good from one to 10. Scaling a business." In 2018, this insight became the genesis of SaaS Group. Rather than chasing another startup or fund model, Tim decided to create an evergreen holding company that would acquire existing SaaS businesses and scale them indefinitely.

The first deal came in 2018 when SaaS Group acquired deploybot.com. Unlike most acquisition-focused companies, Tim had the capital ready before the deal closed—"100% of my own cash." He continued this pattern for the second acquisition, maintaining complete control and avoiding the complexity of needing external financing approvals. But as the company grew and deal velocity increased, Tim smartly structured a hybrid financing approach. By 2020, SaaS Group had access to three funding sources: (1) debt lines of credit from providers who gave them a "card blanche" to deploy capital as long as deals met certain SaaS metrics, (2) operating cash flow from their growing portfolio of profitable companies, and (3) external equity when needed.

For SaaS Group, "customers" are founders selling their businesses. The acquisition model hinges on identifying businesses with strong fundamentals but operational inefficiencies. A perfect example is Dash This, a marketing tool for agencies. When Tim acquired it, the company was spending $50,000 per month on Google Ads to acquire customers at a $440 CAC for customers paying $135/month—a brutal five-month payback period. The team had 2,600 customers but struggled with 36% gross annual logo churn. Most PE firms would walk away, but Tim saw opportunity. Within months of acquisition, his team of specialized operators "slashed the Google paid accounts budget in half but doubled the output," effectively 4xing lead generation efficiency and cutting the CAC payback period to 2.5 months.

The SaaS Group playbook proved that churn and profitability at acquisition weren't deal-killers if the underlying business had strong product-market fit. They've built a portfolio of 20 companies generating $60M ARR across 300 people, with standout performers like Rewardful (fastest growing in the portfolio, going from single digits to 10x growth) and Scraper API. Tim also proved willing to enter unconventional situations—acquiring Zen Loop out of German bankruptcy and CrossTalon out of French bankruptcy when VC-backed founders had overspent and lost access to capital. By acquiring at bankruptcy pricing and bringing operational discipline, both companies became profitable and re-accelerated growth.

Their deal structure evolved too. Rather than cookie-cutter all-cash offers, Tim tailored each deal to founder motivations. Some founders wanted clean breaks (deals closing in four weeks), while others wanted ongoing involvement and earnout structures that aligned incentives. Tim noted: "Every deal is unique." Valuations typically ranged from 2–4x ARR, a stark contrast to some PE firms paying 8–9x and betting on leverage and exit timing to make money.

By the time of this interview, SaaS Group had closed its first outside equity round—$25M from a syndicate of successful SaaS entrepreneurs, taking "single digit percentage" dilution. The company ran with 20–30% profit margins across its portfolio, with the parent company retaining disciplined capital allocation. Tim emphasized the philosophical difference from traditional PE: "We're not a fund. We don't flip our companies. If someone sells a business to SaaS Group, we intend to run this business indefinitely. We want to preserve the legacy of the founder." With no fund lifetime constraints forcing exits, and access to patient capital, SaaS Group could focus on compound growth—buying quality businesses, improving their operations, and letting profitability fund the next acquisition. Tim's next challenge was deploying capital efficiently; at the time of the interview, he was doing deals "100% debt" because the balance sheet had accumulated so much cash.