I sold 2 micro startups in 2023—here's what I
learned
I used to believe a $300 MRR startup was worth nothing. I was so wrong….
- In March 2023, I sold my first startup GameWidget: $80 MRR for $4,300.
- 3 weeks ago, I sold my second startup Habits Garden: $450 MRR for $10,000.
Your weekend project can change your life. Let’s talk about what it’s worth and how to sell it.
Valuation 🤑
Startup valuation can be very complicated. I’m going to assume we’re alike:
- You’re a solopreneur or have a co-founder
- Building software, AI tools, or mobile apps (no info products)
- Shooting for 5/6/7 figures valuation (no unicorn)
- Low operating cost (hosting, OpenAI credits, etc.)
Here’s the over-simplified formula to calculate your project worth:
Valuation = Annualised Revenue x 3
Let’s take a few examples:
- A habits tracker with $300 MRR could be sold for $10,800 (300x12x3)
- A logo maker with AI launched 3 months ago and made $4,000 so far could be sold for $12,000 (4,000x3)
Note that Monthly Recurring Revenue (MRR) can be extrapolated to a year for the habit tracker but the one-time payments for the logo maker with AI can’t.
You can dive deeper into startup valuation. I don’t. It gets overwhelming and gaining 5% here or there isn’t worth the hustle. I’d rather build more apps.
Imagine you grow a weekend project to $1,000 MRR… You have a 2-year pass to quit your job, move to Bali, and build apps full-time. Congrats!
Is it time to sell? ⏰
It’s a tough question. For me, it comes down to 3 criteria:
- Can I 10x the revenue in a year?
- Do I care about the market?
- Do I need money right now?
It’s tempting to enjoy a juicy $500 recurring revenue. But keep in mind that every abandoned business goes to 0 quickly.
When you sell a startup, you get temporary financial freedom (and less stress) along with more time to focus on a new project.
The acquisition process 🤝
You made up your mind, listed your startup, and got interested buyers. What’s going to happen if someone decides to buy?
1. Paperwork
First, you’ll do boring paperwork like signing a Letter Of Intent (LOI) and an Asset Purchase Agreement (APA). The latter is a summary of what’s going to be bought, like your Intellectual Property (IP), marketing assets (like a Facebook page), etc. You might also sign a non-compete agreement. Just make sure it’s not too broad and allows you to build apps you care about.
Platforms like Acquire will do the paperwork for you. You don’t have to read 20 pages of boredness, ask ChatGPT to explain like I’m 5 to make sure you know what you’re signing. If you don’t use Acquire, ChatGPT is also really good at making the paperwork for you.
2. Payment
Second, the buyer will secure a payment through a third party like Escrow. Once the money is secured, you have to send the assets to the buyer.
3. Transfer
Lastly, transfer the domain name, database, credentials, etc (more on that below). The buyer will inspect everything and tell Escrow to move forward with payment. Congrats, you got acquired!
How to transfer the assets 🔀
Some platforms don’t allow you to transfer assets. For instance, you can’t transfer an AWS S3 bucket, a Mailgun email-sending domain, or a Google Cloud Console project.
Should you give your credentials and move on? I wouldn’t.Chances are you use these platforms for other projects and sending your credentials isn’t an option. In that case, explain it to the buyer and ask him/her to create his own account/API keys.
Tips to sell faster ⚡️
- Ditch buyers asking a million questions. If they’re highly skeptical, they won’t buy and you’re losing your time
- It all comes down to trust so build your startups in public: you don’t know it yet but potential buyers are following you and can wire the money to your bank account without asking much (that was the case when I sold Habits Garden). You also save the platforms’ listing fee (4% on Acquire, for instance)
- Don’t be afraid to follow up and tell buyers you need an answer within 3 days.
- If you’re selling on Acquire, ensure your listing is 100% ready before publishing. All buyers on the platform will be notified within 24 hours when most opportunities land.
- If you’re selling on Acquire and no one is interested after a month, lower your price a bit. Acquire tends to lift your listing up when significant edits are made.
Selling your side project can give you the mental clarity to work harder on your solopreneurship journey.
Happy indie hacking!
The idea of achieving temporary financial freedom by selling a startup is intriguing. Your criteria for deciding when to sell make a lot of sense. It's a delicate balance between growth potential, market interest, and immediate financial needs. I am wondering whether you have registered any IP before selling, e.g., trademarks?
Congratulations to you~
I wonder what the ratio of buyers to sellers is on Acquire.
Also very interested in tracking the future MRR of the projects you sold after 6, 12, and 18 months.
Your tips on the acquisition process and asset transfer are invaluable, especially for those new to the process. It’s a smart move to recommend platforms like Acquire for paperwork and to caution against sharing sensitive credentials — security is paramount. Also, your advice to build startups in public aligns with the modern ethos of transparency and community engagement, which can indeed expedite the selling process.
It feels like you're using ChatGPT for your comments...
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Thanks for the tips!
Something not mentioned by anyone that I'll definitely be applying if I get to the point of selling a project: Strongly recommend listening to Patrick McKenzie's 2015 Microconf talk, "Leveling Up." In it, he tells the story of selling Bingo Card creator. In particular, he discusses how much using a broker helped him. They even lined up a backup buyer in case the first buyer fell through (and to discourage them from demanding last-minute discounts or other tricks).
The broker he used is called FE International, and I believe multiple other MicroConf speakers have used them as well. (I have no affiliation and have never been in a position to use them.)
Great article! How did you handle the legal aspects and how much work was the asset transfer? I am also currently selling a small side project SaaS of mine for a similar amount of money, and could use some input
Hey Marc,
Great piece. What's to prevent someone from hijacking assets, once you've given them control of infrastructure if they haven't released the money from escrow? Is it the threat of a lawsuit?
I am a big fan of selling NO to wrong prospects. Don't sell to customers but with them I would like to add.
Hey Marc
Some great advice in there and most definitely some solid ground work before building something bigger solo!
Hey Marc,
Thanks for this amazing article!
How long do you spend on validating an idea? And what would be your approach if you don't have an audience?
Build & Validation can go hand in hand. You could start a social challenge for example. Reach out to your target audience and use this challenge as feedback. At least this is what I am currently doing.
Thanks Stephan!
How's it going for you?
I was thinking of building a prototype with one core feature and let the target audience decide whether it's the solution they want or I need to pivot or maybe move on to the next idea.
I build and launch it if it passes my criteria
Thanks Marc! That's quite simple and straightforward. I liked it.
I was also thinking about doing the same thing. Build a prototype with one core feature asap and let the targeted users decide whether it works or not. I believe it's a good form of validation.
This is cool to see.
I've spent the last 8 months building my app in the martech saas space.
No recurring revenue yet as we haven't even started beta testing.
thanks for sharing .
Great advice man!
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Congrats, and thanks for the advice. The tips section at the bottom is awesome!
Excellent sharing, thank you!
Does the $0 revenue from a product mean it has no sale value? If it does have value, how should its price be estimated?
It doesn't mean it has zero sales value, but the offers you might receive will likely be highly subjective, based on the buyer's perceived value. Do they think they can get revenue out of your product, is it a free tool they will use as a lead magnet for another product, could it be a bolt-on? Sometimes you might just get an offer because of the amount of users you have and the access to their details.
Congrats and thanks for sharing!
@marclou Marc, congrats on your success and thanks for sharing these valuable insights with us.
I need to know how did you find buyers for your micro SaaS business?
One from Twitter by building in public
The other is from Acquire.com :)
Thanks for sharing!
"Ditch buyers asking a million questions. If they’re highly skeptical, they won’t buy and you’re losing your time"
I would agree on this one. Sometimes you need to be patient. I was buying a boat, I was sending 2 emails per day for a almost a month. The seller was patient enough, and send me everything I asked for. I bought the boat in the end.
It's not always the case, and sometimes we need to cut it off before we start wasting too much time, but sometimes it's worth answering all those questions.
If the prospect is part of your ICP defo worth answering questions. But when a prospect only fires objections they might be bad.
This is a great information, Thanks for sharing.
Thanks for sharing, super useful information!
Great Article!
100/100 Marcs for This!
Thanks for the article. I think it’s also important to spread the idea. That you can buy a micro business instead of building one from scratch. And just scale it further with your resources. Somehow, the idea of building instead of building is still barely considered among entrepreneurs.
This is really interesting! I recently started dabbling in building some side projects as a hobby, and didn't know about Acquire or that marketplaces like that exist. Thank you for sharing your story!
Nice sharing!
Good article
Damn this is super helpful, always wondered how those platforms worked (in terms of what paperwork needs to be done to sell or buy a SaaS tool) but never researched about the topic. Now i know what i need to googleto learn more, thank you!
Good to hear! I share all my learning in my newsletter: https://marclou.beehiiv.com/
Hey Marc, thanks for writing this! I have two iOS apps that make around <$1k a month and I thought nothing of it. Super inspiring and gives me more hope when working on more than one at a time :,)
You've got a nice car with this :)
@marclou Everyone is rich on paper 🤪
That's a valuable article.
Good information, congratulations