Paperplane is a micro-SaaS that targets developers who need to create PDF assets from a webpage. As it uses Chrome to create the PDFs, it has full support for all HTML and JS. PDFs are stored on your own S3 bucket, meaning that you own the files and we have no access to them.
The purchase was from the founder and developer of the project who launched the product in December 2018 and grew it to $11,400 ARR with a very low churn rate.
The product has found a small but sticky customer base, and has grown MRR by 36% in the last year with very limited resource commitment from the previous founder and owner.
Metrics (At Acquisition)
- ARR: $11,400 ($10,500 claimed)
- TTM Revenue: $11,271 ($10,393 claimed)
- TTM Profit: $7,387 ($8,627 claimed)
- Asking Price: $40,000
- Revenue Multiple (actual): 3.51x
- Profit Multiple (actual): 5.41x
- Purchase Price: $36,000
- Revenue Multiple (actual): 3.18x
- Profit Multiple (actual): 4.87x
User Metrics (July 2021)
- ARPU: $30
- Customer Churn: 0% (3.23% June)
- LTV: ~ (no churn) ($929 June)
Being the first Dee Bee Vee newsletter, no vision or plan has been shared. But the short version is that there is a kitty of USD 80,000 to deploy to acquire one or two micro-SaaS businesses. The acquisition of these businesses is a case study (or proof of concept) for a larger play in the same space.
The type of micro-SaaS businesses we are looking at for this round are:
- B2B only.
- A product that is sticky (e.g. once set-up is hard to switch) or has a clear use case that is income generating/saving (e.g. a generator of sales, productivity or similar).
- Has clear “wins” to grow the product.
- ARR greater than $10k (as a base to work from and pay down the acquisition price).
- Purchase multiple ideally 2.5x ARR.
How does Paperplane fit into this criteria?
- As it is PDF generation and is solely a paid product; you likely wouldn’t purchase unless you are operating a business and need to create PDFs.
- Very sticky as once integrated with our APIs, it is a hassle and potentially costly (development time) to switch away.
- As the founder did not commit much time due to work commitments, there are many wins to grow the product (both on product, business and marketing angles).
- ARR of $11.4k is above the $10k threshold.
- Final purchase price was 3.18x revenue, but as it is a smaller product the cost does go up slightly as well as having good metrics in low churn and high ARPU.
The Buy Process
Being the first acquisition for the folio, we wanted to make it an “easier” one with low risk. This deal allowed for two aspects to reduce risk: low purchase price (allowing a purchase of a secondary product to de-risk product risk) and legal risk (by purchasing from a local seller in Australia, meaning if any issues arise, it would be possible to take action in a local court).
The actual process was quick and simple as the seller was genuine, being very open and transparent at all times and in the same time zone.
The deal moved very quickly, with three days from initial call to first LOI, a further two days to have a signed LOI, 7 days for the business sale agreement to be sent and acquisition completed three days later.
- 2021-06-28 - Requested Access on MicroAcquire
- 2021-07-02 - Granted Access on MicroAcquire
- 2021-07–07 - Initial Zoom Call, Follow Up Questions, Extra Data Shared
- 2021-07-09 - Review Conducted, Additional Questions via Email, ChartMogul Access Granted
- 2021-07-10 - Letter of Intent Offered
- 2021-07-11 - Counter from Seller
- 2021-07-12 - Revised Letter of Intent Offered, Countersigned Letter of Intent Received
- 2021-07-14 - Due Diligence Call Completed
- 2021-07-15 - Escrow Deal Created, Deal Accepted by Seller and Deal Funded
- 2021-07-19 - Business Sale Agreement Sent
- 2021-07-22 - Business Sale Agreement Signed
- 2021-07-22 - Asset Transfer Completed
The process moved extremely quick, with us having the business in just over two weeks after the first call.
I’ll likely touch on the due diligence and similar items that we looked at in a future newsletter.
The Short Term Plan
The product and business has some key areas that we can tackle for quick improvements over the short term to grow trial sign-ups and to convert these sign-ups to paying customers.
There has been very little (or zero) marketing done for some time. At the beginning, the founder did some basic marketing activities that resulted in getting the product off the ground. This included a Product Hunt launch, some Indie Hacker posts, some app marketplace listings and two blog posts on the Paperplane blog (and Medium). The website leaves a bit to be desired as well, in terms of call to actions, content, use cases and social proof.
The website is currently built using a static site generator and deployed to Netlify. Not great for ease of publishing and maintenance by marketers. So we are re-building as is in Webflow and will slowly update from that base.
The initial marketing activities are going to be content and SEO based. The two current blog posts attract a good bit of traffic, so expanding on this should be a clear win. And then expanding out the content of the main site.
As it stands, the only way to use the product is with an S3 bucket. If you do not use AWS, you are out of luck and unable to use Paperplane. As not everyone uses S3 this limits our market. It also makes it more complex to use out of the box (you must configure the bucket to test out our rendering and configuration).
The first point of call for our development roadmap is to make the product “work” out of the box with in-built Paperplane based storage. This will allow for other markets (such as no-code tools, Zapier integrations or similar) to more easily use our product.
The next step will be to open up to all of the big cloud players (Azure and Google) object storage, as well as all the S3 compatible object storage vendors (such as Backblaze, Digital Ocean, Vultr, etc.).
After this, there will be a look into two additional product areas:
- Plans/Pricing: currently we have a 14 day free trial with no credit card required, with the cheapest plan being $25 per month. Current thoughts:
- Potentially try credit card up-front (may need to tackle pt.2 below).
- Potentially a very low tier plan to get people in for free and using, and beginning to pay when usage grows (similar to SendGrid’s free plan).
- Potentially a micro plan below the $25 tier at the moment, but have to ensure we don’t cannibalise too much revenue from current low volume subscribers.
- On-boarding experience: how we can push customers to get their first API request send and really locked into the app.
Thanks for subscribing to the newsletter. As this is my first time sending, it’d be great to get feedback.
- Thoughts on this issue? Would love to hear if this was interesting or a bit of a bore.
- Anything else you’d like to hear from in the future? Deal analysis? Product analysis?
- Any suggestions on how to grow Paperplane? 🚀
- Or know someone that could use it? 💌
- Know of any investors looking at this space? Or have capital to deploy yourself? Let’s chat.