On 22 June we gathered a crowd 50+ beneath the railway arches at SAMA Bankside. Attending the event was a diverse array of participants, underscoring the rapid ascent of the software rollup asset class over the past year. Easily the biggest contingent was the rollups themselves, including Threecolts, CentralNIC, Clearcourse, Banyan Software, Volaris, Unaric, Shop Circle, Quadra, Lumo and many others. An equally solid showing from the investor community (Atempo, Aquiline, DH Ventures, P&R Real Value), and of course advisors and vendors.
Here are key takeaways from the event.
Dozens of rollups are being incubated right now
At the event, we overheard at least two new rollup ideas. One idea we can share is to deploy the rollup playbook in emerging markets, focusing on enterprise software in 1-2 large geographies. While WhatsApp and Google Meets are great, there’s nothing like in-person pitching!
Debt is becoming easier to source
There are both more mid-market private lenders, including recent entrants like Atempo Growth, and they are more aware of the burgeoning rollup sector.
We held a fireside chat with Moritz Birke (CFO of Unaric, a Salesforce ISV) and Shane Barry-Lyons (Investor at Atempo Growth) to discuss sourcing debt for a first-time rollup. Without repeating Shane’s excellent article, the key takeaways were:
- Moritz transitioned from investment banking straight into a strategic CFO role, without an interim stint in corporate development or PE
- Unaric had a pipeline of advanced LOIs when they went out seeking debt financing
- While a brand name sponsor isn’t a must, lenders nevertheless prefer teams with committed equity. Debt-to-equity ratios between 2 and 5 have been observed
- Having backed Unaric, Atempo is happy to back more rollups 😉
Rollups offer attractive careers
I bumped into several acquaintances either looking to leave banking or VC, or to scale their single-asset plays. Exactly what we’re here for!
A secondary trend is that of people transitioning from larger strategic software groups to rollups. The work environment is more flexible, less bureaucratic, the deal volume is better – and there is an opportunity for hands-on involvement. And of course, there is more money provided that incentive schemes are carefully calibrated.
