Beyond the Norm: SureSwift is Breaking New Ground with their Unique Business Model

From 2015, SureSwift has been pioneering a unique approach to Software as a Service (SaaS) investment – allowing Investors access to a diverse portfolio of SaaS businesses that we acquire, hold, and grow with our team of exceptional operators.

Since our first round of acquisitions, we’ve zeroed in on the type of businesses we love to buy. Our portfolio is full of B2B SaaS businesses, acquired from bootstrapped Founders who built proven products but felt ready for a change. Each day, our team of Exceptional Operators taps into their expertise and creativity to elevate these businesses to new heights.

In this article, we dive deep into SureSwift’s unique business model. We’ll discuss our strategy for buying and growing profitable businesses as well as what Investors can expect when they invest in a SureSwift fund.

Business Model Blueprint

SureSwift Capital is made up of semi-autonomous business units, spread across three funds. We currently own and operate 13 incredible businesses, each with its own team, leaders, structure, and goals. However, our portfolio businesses share some key similarities.

SaaS: the recurring revenue machine

Most of the SureSwift portfolio businesses follow the SaaS model, and the majority serve the Business to Business (B2B) market. Early on, SureSwift purchased a more diverse range of web-based businesses. Over time, we’ve refined our acquisition thesis, and have come to view SaaS as our sweet spot.

With over 30,000 SaaS companies worldwide, and most self-funded by bootstrapped Founders, there are ample opportunities for future acquisitions. We aim to be the preferred exit strategy for Founders looking to de-risk, fund their next big idea, or just rediscover the meaning of free time. We also know that Founders often have a meaningful connection to their projects – they want continuity for their business, team, and customers, which as an experienced SaaS operator, we provide. 

Our investment thesis

With the abundance of SaaS businesses, we have numerous acquisition prospects. However, this necessitates a clear understanding of our criteria for a SureSwift portfolio product. We look for businesses that are:

Established

At SureSwift, we’re exceptional operators of SaaS businesses – that means taking independently Founded businesses to the next stage of growth, not developing start-ups ourselves. That’s why our acquisition process is so Founder-focused. We rely on bootstrappers and Founders to get their ideas from zero to one, and we want to be their partner when they decide it’s time to move on.

Scalable

It’s key to our model that the businesses we acquire are ready and able to scale. One aspect of this is a remote-first or hybrid team structure. Our goal is to bring on teams whenever we acquire a business, so a team that’s already used to operating remotely is a big green flag for us. 

Profitably Growing

It’s pretty common knowledge that a business that’s growing is going to command a higher valuation, and there’s good reason for that. While some buyers  may be interested in turning struggling businesses around, at SureSwift, we’re more interested in taking already-profitable businesses to the next level by giving teams access to our resources, subject-matter experts, and by applying our Exceptional Operator Framework. 

Why Founders Sell

If you’re not part of the SaaS community, you may be wondering why anyone would ever sell a business that checks all those boxes. We’ve found that SaaS businesses are sold for as many different reasons as there are Founders. Often, technical Founders find themselves at a crossroads when their ventures begin to outgrow their capacities (and preferences). Rather than grappling with the complexities of scaling on their own, many opt to transition towards new projects, seeking fresh challenges and opportunities for growth. This strategic move not only allows them to reduce risk and ensure a stable financial future but often allows them to get back to the part of entrepreneurship they’re truly passionate about by providing the financial freedom and time to pursue their next project.

Selling to SureSwift Capital

When Founders are ready for that transformative step, SureSwift stands as the seamless pathway. With our buy, hold, and grow approach, Founders can also have confidence that their teams and customers will be treated well – we’re not looking to flip businesses or maximize profits at the cost of long-term viability. 

Not a typical Holdco: the SureSwift fund model

SureSwift stands out in contrast to conventional holding companies. Our distinctive approach revolutionizes profit retention and distribution, with a focus on delivering ongoing returns for our Investors. According to SureSwift Founder Don Wharton, every move we make is geared towards ensuring sustained success for those who trust in our vision.

A different two and twenty

A lot of the fund world runs on the concept of “two and twenty” – a compensation structure that includes a 2% management fee, and a 20% performance fee charged on the profits that the fund generates. The traditional two and twenty also generally assumes an expiration date, with an average five to ten-year life cycle. While this works well for many funds and can be highly lucrative for VC and PE funds, it has some potential pitfalls that we want to avoid at SureSwift.

Instead of the traditional two and twenty, we developed a fee structure that supports our mission of raising the rewards for Investors and Founders, and our philosophy of sharing profits from performance equitably. At SureSwift, we take our management fee as 2% of revenue and 20% of EBITDA. This means that we’re incentivized not only to grow revenue but also to grow and maintain profitability. We also never assume an expiration date. At SureSwift, we buy businesses with the expectation that we’ll be operating them in the long run, with continuing returns for Investors.

Added value for Investors

The management fees SureSwift receives also cover a lot more than your typical manager. Because we operate our portfolio businesses with a long-term outlook, we take a more hands-on approach. 

While traditional funds use management fees to cover the cost of finding acquisition targets, selling them, and occasionally engaging in some operational oversight, SureSwift’s management fees cover in-depth operational support for every business in our portfolio.

This gives us the ability to acquire businesses from Founders who are still managing many aspects of their business, a common occurrence in bootstrapped SaaS. Because SureSwift has dedicated finance, HR, and tech/security teams available to all our portfolio businesses, we can transition and improve business operations with ease.

The semi-autonomous model

These corporate functions are an important part of our overall growth strategy for acquired businesses, which we’ve termed our Exceptional Operator Framework. This framework allows for overall scalability at SureSwift, as dedicated teams do the day-to-day heavy lifting on each of our businesses, but centralized corporate functions provide valuable resources. The things SureSwift provides, like our HR and Finance teams, give our portfolio businesses access to professionals and support that would be incredibly expensive to hire in for or contract out.

The Exceptional Operator Framework also gives team members chances to share what they know across the portfolio. Since our portfolio has businesses with similar models, when one team tries a new tool, tests a growth strategy, or finds a helpful resource, everyone in the portfolio can learn from it and benefit.

Our focus on Investor value

Monthly profit distributions and Investor returns

SureSwift Investors benefit from a two-part return on their investment in a specific fund. First, they receive a monthly cash return directly deposited into their bank accounts, so they can spend those funds however they wish. We aim to consistently increase these distributions over time, aligning with the growth and profitability of the businesses within the fund's portfolio.

Second, we aim to enhance the overall value of their investment. While our strategy focuses on holding and nurturing businesses for growth, we remain open to lucrative acquisition offers. In that case, Investors still reap the rewards as the net proceeds from the sale are distributed to them.

SureSwift’s approach to Investor reporting

We also prioritize transparency with our Investors. Alongside their regular monthly cash distributions, we send each Investor a newsletter containing the latest updates on fund performance. Quarterly reports offer more detailed insights into individual businesses, while our annual report provides a comprehensive overview of fund performance, plans, and outlooks. 

All of this means that SureSwift Investors can be as connected or uninvolved as they like – we’re very proud that the vast majority of our Investors read our updates monthly, and our Leadership team members are always sending emails or hopping on calls to answer Investor questions or just chat about the portfolio. However, if an Investor prefers to kick back and just enjoy their monthly distributions, they’re free to do so.

Conclusion

In conclusion, SureSwift's innovative approach to SaaS investment has set it apart since its inception in 2015. By providing Investors with access to a diverse portfolio of B2B SaaS businesses acquired from bootstrapped Founders, SureSwift offers a unique opportunity for long-term growth. Through honing in on specific types of businesses and leveraging the Exceptional Operator Framework, SureSwift ensures that acquired companies not only maintain profitability but also experience sustainable growth. What truly distinguishes SureSwift from traditional holding companies is its commitment to long-term returns for Investors through strategic profit retention and distribution practices. As we move forward, SureSwift remains dedicated to fostering a thriving ecosystem where Investors can confidently participate in the exciting journey of SaaS business acquisition and growth.

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