493.5% ROI - Exiting Sheet.Best
We Sold Sheet.Best
Since deciding to focus on a smaller quantity of bigger companies we have listed most of our portfolio for sale. The first to close was sheet.best which was our second ever acquisition.
This one is personally meaningful because it has been such a joy to own and operate. It was purchased by a group in Brazil in Jan of 2021 and immediately was a treat to deal with, build on and grow.
This was one of the first products that gave us confidence we could buy, grow and cashflow these micro saas companies. I'm not sure XO would be what we are today without this great single purpose product.
Deal Card
to protect the buyers privacy we are redacting some info.
- Acquired January 2021
- Purchase Price $undisclosed
- MRR At Purchase: $835
- Current MRR: $4000 (4x Growth)
- Sale: $undisclosed (Feb 2024)
- Annual Profit: $38,860
- ROI: 493.5%
- MOIC: 5.93
- IRR: 135.5%
Growth and Performance Metrics
- Initial and Current Monthly Recurring Revenue (MRR): At acquisition, Sheet.Best's MRR stood at $835. We grew the MRR 4.8x, reaching above $4,000. This was mostly from 2 channels. Organic videos (some influencer created a banger of a video that got a metric ton of views), and google ads. This growth trajectory was relatively slow and steady. 2% ish MoM growth, which I think is exactly our sweet spot in terms of consistent, relatively low effort growth. When we have this consistency, we can hold an asset for 2+ years and at least double revenue.
- Annual Profit: Throughout the period of ownership, Sheet.Best consistently held high margins (90%) and nice profits. The annual profit reached $38,860 last year, with very few engineering asks and minimal customer support tickets. It was and is super cheap to run, and the customer base is also a joy to work with. Horizontal products can be fun because of how varied the use cases are. There's always something new!
- ROI, MOIC, and IRR: We crushed this one and got a 493.5% Return on Investment (ROI) and a Multiple on Invested Capital (MOIC) of 5.93. The Internal Rate of Return (IRR) came out roughly at 135.5%. IRR might actually be a little higher since I only used last year and 2022 profit (I didn't have 2021 handy).
The Exit
The sale price remains undisclosed to protect the buyer's privacy. The divestment aligned with our decision to focus on making room for our fresh round of capital ( $2M) and focusing on Flip Fund 1 (Journey.io).
We had some off market interest and sold it in a little over 30 days.
The journey with Sheet.Best highlights the potential of XO's business model. Although these numbers are small, there's some decent money here. At this stage in our journey we need to replicate these results with another zero attached to it (i.e. go from $8k MRR to $40k MRR) and realize an exit at that size.
The Future
The new owners have a joyful ride ahead with an awesome product that just keeps running. We've battle tested it over the years and can't wait to see what the new owners do with it! If there's interest I may ask them to do an AMA in our discord on the sale if people have any question!
And of course support the new owners by checking out sheet.best!
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