The two acquisitions that we completed in 2024 (Convox and Buildfire) were both examples of businesses that fell out of favor, but were businesses we felt had exceptional potential if operated in a different way. In both cases, we took businesses that were unprofitable and made them profitable. In both cases, we took businesses where growth was declining and stabilized them. In both cases, we recommitted to developing the product and creating a brand that customers love. Most importantly, we provided a great exit for the founders, while doubling down on their vision and their team.
This is not easy work, but it’s work that we love to do.
It’s also work that others in our space are generally too scared to take on or don’t have the experience for. At Curious, this is our key differentiator, now and in the future. As we look out onto the horizon, we do so with the foundation that was hard earned in 2024 to allow us to transact, add wonderful companies to our roster, and develop the flywheel that allows us to build Curious, and the companies within it, for decades to come.
The market of sub-scale software acquisitions, which we consider as those with under $5M in ARR, has become increasingly competitive. A decade ago, even several years ago, this was a space that not many folks were looking at. Today, countless individuals have entered the space (legitimate buyers or not), along with dozens of holding companies like Curious. This has taken an inefficient market and made it trade like upmarket private and public companies, albeit with less sophistication.
The result of that is that businesses with a history of growth and earnings demand a premium that prices them out of what we feel is reasonable for companies at this stage. During the past year, we regularly encountered companies with price expectations in the 5 times to 10 times revenue range, with limited earnings and very modest growth. Although we believe revenue in the range of $1M-$5M represents some level of product market fit, there’s inherently more risk and less foundation for companies of this scale.
The inefficient market in this space exists where others are unwilling to look. Companies with a period of downward growth. Companies with debt or messy cap tables. Companies with unprofitable operating history. Companies that are in need of a reset. Companies that are venture backed but no longer fit the venture model. Companies that are more horizontal in nature.
This is where we believe that the exceptional opportunities exist and we are uniquely positioned to capture. Our first two acquisitions are a case study of our ability to buy excellent businesses for a fraction of their intrinsic value in these areas, while unlocking their true potential.
Of course, we love businesses that are growing and profitable out of the box, and are actively pursuing these opportunities and willing to pair fair prices for them, but this is not where the inefficient market lies. In these cases, the unsophisticated buyer tends to price us out of what we're willing to pay. There's a different type of risk when overpaying for businesses at this scale. Our belief is that non-traditional targets in the search context can become great companies. We want to buy exceptional businesses at a fair price, and we'll continue to be diligent in that pursuit.
At the end of the day, the business we’re in is very simple. Founders want to find a home for their business that commits to keeping their product and vision alive. They want to find a home that commits to carrying forward their team. They want to find a home that conducts themselves ethically and transparently, while paying a price that’s fair for the business that they’ve built. This is our north star and how we'll win in a crowded space.
2024 was an exercise in patience for us. There were times over the course of the year where the work didn't translate into new acquisitions. Several opportunities went painfully far into diligence before we had to walk away. We are an incredibly ambitious group, one that wants to transact often, so it can be painful to be patient. But we believe there’s nothing more critical in this business than patience. We believe very much in the fat pitch philosophy, which means that we have to let more pitches go by than feels comfortable. Every pitch we’ve taken in 2024 has given us better vision on what our ideal Curious company looks like. From a very high-level, a Curious company looks like this: A business that is horizontal or hyper-vertical in nature. One with recurring revenue in the $1M - $5M range. Strong NRR and GRR metrics. A path to profitability. We are laser-focused on these opportunities.
From a macro perspective, we saw that 2023 and 2024 were the years of the bridge round for VC-backed companies. Historically, most of these companies have been priced out due to valuation requirements and a misalignment of incentives with early investors, but we believe that will change in 2025. There’s simply too many of these companies that have entered a slow growth period and no longer fit the venture model. This is an example of our fat pitch company and a place where we can be great long-term partners. If we are successful in positioning Curious, we will be the first call in these situations.
2025 is also the year where the age of AI and agents will come into view. This is particularly interesting in the context of software applications.
There may be truly remarkable disruption in B2B SaaS as AI comes into the workplace and expands capabilities in such a way that offers point solutions to very specific use cases. We still very much believe in the future of software, but it’s ignorant to think that nothing will change. There's plenty of smart folks that have shared what they believe this transition will look like. We tend to agree more with the worldview that all SaaS will need to become intelligent by integrating AI-driven learning to make simple actions easier for the customer, rather than the worldview that SaaS will be replaced by UI-less individualized agents, at least in the short-term.
From our perspective, this new age will put additional emphasis on the peripheral — things like quality of acquisition channels, criticality of the service to day to day operations, brand quality and awareness. Every acquisition needs to be viewed through the lens of what this business will look like in the age of AI. It’s not entirely clear what this future will look like, but it’s a future we are aware will have a dramatic impact on the space and are approaching with genuine curiosity to ensure we’re acutely aware of how we must adapt.
I want to end with a heart felt thank you to our small but mighty team. This is not easy work. The first ones to get on the bus deserve the most praise and that’s certainly true of the team we have.
They took a chance on us and poured their passion into our mission. I can’t thank them enough. I also can’t thank you enough, our shareholders, for your support from day one. It’s uncommon to have partners that have a true long-term orientation that allows us to work in the best interest of founders and their companies. We feel very fortunate.
Curious is a long-term holding company that buys and grows software companies with empathy.
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