Salesforce stock dropped 43% in 12 months. Meanwhile, Toast—the restaurant software company—posted its first year of GAAP profitability in 2024, with 80% of revenue now coming from embedded payments and lending. Mews, which makes hotel management software, processed $10 billion in payments last year and reached $2.5 billion in valuation.

If you’re building vertical SaaS, these data points should matter to you, because they represent a fundamental shift in how software creates value. For the last 15 years, the venture capital playbook has been clear: horizontal beats vertical, the biggest TAM wins.

That playbook is breaking down, and the vertical SaaS founders I work with at Hexa Scale are starting to see it in their own businesses.

I think we’re at an inflection point, and most vertical SaaS founders don’t realize how strong their position actually is. You’ve been told your market is too small, your niche is too specific, your business isn’t venture-scale. Meanwhile, Salesforce has launched twelve “Industry Clouds” trying to become a vertical solution for healthcare, education, manufacturing, and every other sector. They’re spending billions trying to build what you already have: deep domain expertise and workflows designed for a specific customer.

The numbers are showing up in retention rates, in revenue per customer, in the economics of customer acquisition. Vertical SaaS companies consistently show higher retention than horizontal platforms, and the best ones are now layering in embedded financial services that can significantly increase revenue per customer. AI is strengthening their moat while simultaneously eroding horizontal SaaS’s.

Indeed, the underdogs are winning.

Horizontal SaaS is running out of steam

Horizontal SaaS has been the obvious startup bet for some time. CRM for everyone. Marketing automation for everyone. Project management for everyone. Build one product, sell it to every industry, achieve infinite scale - the pitch was elegant.

The model has started showing its limitations. HubSpot grew revenue by 18% in 2025, which sounds good until you realize that revenue per customer only grew by 3%. They’re adding customers, but those customers aren’t getting more valuable. The growth is coming from volume, not depth, and volume is an expensive game when your customer acquisition costs keep climbing.

The Salesforce story is even more revealing. They’ve now launched twelve “Industry Clouds”—for healthcare, education, financial services, nonprofits, manufacturing, government, retail, and on. Each one is essentially an admission that horizontal software doesn’t actually work horizontally. What they’re building now are vertical solutions bolted onto a horizontal platform, except the platform was never designed for this. It’s become a kind of digital Frankenstein, extended by armies of consultants who use it as a blank canvas because the out-of-the-box version doesn’t do what anyone actually needs.

For every dollar Salesforce makes, their partners make $6.19—the consulting ecosystem is five times larger than the product itself. Ninety percent of implementations require custom development, users only utilize half the available features, and 42% still store critical data in spreadsheets. Forrester reports that 70% of implementations fail to meet their stated objectives.

This is what happens when you try to make one tool serve every possible use case. You end up with something so general that it’s useful to almost no one without significant customization, and customization at enterprise scale costs a fortune.

Of course, horizontal SaaS isn’t going to collapse overnight. Enterprise software moves slowly, switching costs are brutal, and most large companies haven’t even finished moving off on-premise systems yet.

But new market entrants aren’t choosing these platforms the way they used to. Small and mid-sized businesses are adopting faster, and they’re increasingly choosing tools that were built specifically for them rather than tools that were built for everyone and no one.

Domain expertise = the real moat

While horizontal SaaS companies were raising massive rounds and chasing infinite TAMs, vertical SaaS founders were building something different. Software for labs. Higher ed administration systems. Tools for small construction firms, hotels, dental practices. The markets looked small—$50 million to $500 million addressable, not the $10 billion-plus that VCs wanted to see. The industries felt unsexy. The founders were often industry insiders, not product people from Google or Facebook, which meant the early versions had dated UX and clunky interfaces that looked “old school” compared to the polished horizontal tools.

VCs passed. Growth investors passed. The conventional wisdom was that these businesses would never scale, and the founders would never get the outcomes they deserved.

Meanwhile, these companies were building something that horizontal platforms couldn’t replicate. They understood the workflow at a level that no general-purpose tool could match. A dental practice management system built by someone who’s run a dental practice knows things that Salesforce will never know—how insurance verification actually works, how to handle operatory scheduling conflicts, how to manage the specific compliance requirements for patient records.

The retention numbers reflect this. Vertical SaaS companies see 35-60% higher retention than horizontal platforms because the software actually solves the problem it was designed to solve, without requiring an army of consultants to make it work. The CAC is lower because word spreads through industry networks—trade shows, professional associations, peer recommendations.

Many of these companies were bootstrapped or grew with minimal outside capital, which meant the founders kept control and built sustainable unit economics from day one. There were no insane burn rates, no growth-at-all-costs mandates from a board that needed a 10x return in five years.

3 forces accelerating the shift to Vertical

The landscape has recently shifted in three ways that particularly benefit vertical SaaS, and understanding these shifts is critical if you want to capitalize on this moment.

1. AI can’t replace knowing what to build

AI is very good at solving general problems. This is bad news for horizontal SaaS, because horizontal SaaS solves general problems. If your value proposition is “we’re a CRM for everyone,” and AI can help a company build a lightweight custom CRM in a few weeks, your moat disappears quickly.

Vertical SaaS has a natural defense against this: deep domain expertise. AI can help someone build a generic task management system, it can tell you what high-level workflows a hospital lab needs for specimen tracking, but not at the level of field experience, that gives you all the small details and edge cases that make a good product good. That knowledge still has to come from somewhere, and “somewhere” is either years of industry experience or a product that was built by people who have that experience.

Software creation costs are decreasing, which means the value is shifting to knowing what to build. Product design informed by deep domain knowledge becomes the differentiator, not the ability to write code. If you’re a vertical SaaS founder, this is working in your favor.

2. Fintech can 3-5x Vertical’s Revenue Per Customer

Traditional SaaS charges subscription fees: $50, $100, $500 per user per month. But that model is getting commoditized, and AI is accelerating the compression. It’s getting harder to charge meaningful subscription fees for software alone.

Meanwhile, fintech has become embeddable. Payments, lending, insurance, bank accounts—all of it can now be built directly into your product. And if you’re vertical SaaS, you’re already sitting in the middle of the financial workflow. Restaurant software sees every transaction, hotel software processes every booking, legal practice software handles every client payment.

Toast already makes 80% of its revenue from financial services, not software subscriptions. They lend $1,000 to $300,000 to restaurants through Toast Capital, underwritten on the transaction data flowing through their system. That lending business helped them reach GAAP profitability in 2024 after years of losses.

Mews processed $19.7 billion in payments in 2025 —double the prior year— and their valuation jumped from $1.2 billion to $2.5 billion. Clio, the legal practice management platform, is now over $300 million in ARR with billions processed annually through Clio Payments.

Stripe reports that 60% of all small businesses in America use a vertical SaaS platform, and over 15,000 vertical SaaS companies have embedded Stripe payments. The reason is simple: adding fintech can increase revenue per customer by 2-5x, and the unit economics are often better than subscriptions. You’re taking a small percentage of large transaction volumes instead of charging a fixed monthly fee.

If you’re a vertical SaaS founder and you haven’t thought seriously about embedded fintech, this should be a top strategic priority. It’s a completely different business model that compounds the advantages you already have.

3. Your customers will buy, not build

Your customers are not going to build their own software, even as AI makes it easier to do so.

Restaurants, schools, museums, labs, and dental practices are businesses at the end of the digitalization curve. We’re still talking about software adoption, about replacing pen-and-paper processes or on-premises legacy tools with digital workflows. These customers don’t have internal tech teams. It’s not their job to code, and even with AI lowering the barrier to software creation, they’re not going to start.

This is different from the enterprise customers that horizontal SaaS serves. Large companies have engineering teams that can evaluate build-versus-buy decisions. When AI makes it easier to build custom internal tools, those companies will increasingly choose to build. But your customers—the restaurant owner, the dental practice manager, the hotel operator—they just want a tool that works. They will buy, not build.

This is a structural advantage that’s easy to underestimate. The threat that AI poses to horizontal SaaS—that customers will build their own solutions—doesn’t apply to you in the same way. Your market is more defensible than it looks.

Result: the markets that were ‘too small’ are now worth billions

Horizontal SaaS had its moment. The winners were built in an era when being general-purpose was an advantage, when the path to scale was clear, and when venture capital rewarded growth above all else. That era is ending because the conditions that made it dominant are shifting.

The next wave of valuable software companies will be vertical SaaS businesses that combine deep domain expertise, embedded financial services, and AI-enhanced product development. These companies will have better unit economics, higher retention, and more defensible moats than the horizontal platforms that preceded them. Many of them already exist—they’ve been the underdogs for years, quietly building sustainable businesses in markets that VCs didn’t think were big enough.

If you’re one of those founders, the question isn’t whether the landscape has shifted in your favor. It has. The question is whether you’re positioned to capitalize on it. Are you thinking about fintech as a core part of your business model, or just as a nice-to-have feature? Are you using AI to accelerate your product development in ways that your competitors can’t match? Are you articulating the value of your domain expertise in a way that makes it clear why you’re not just another SaaS company, but the definitive solution for your industry?

The markets that nobody wanted 10—even 3—years ago are now worth billions.

And most importantly, vertical SaaS is the best place to build AI agents solving real-life-problems for the whole SMB economy. I’ll cover that in a second article.

Now is the hour of the underdogs. Make sure you don’t let it pass you by.

Why is this in your inbox? Part of Hexa Media, Underdogs is a podcast and newsletter by Augustin Celier for bootstrapped founders who want to turn years of hard work into the outcome they deserve. Drawing on his experience as both entrepreneur and investor, Augustin explores the choices that can transform a solid company into an exceptional one. Unsubscribe from future notifications here.

There’s a pattern I see in almost every bootstrapped company past €2M ARR.

The founder does everything: product decisions, sales calls, hiring, ops, customer escalations: everything flows through them. They’re surrounded by a team of junior people, because that’s what the budget allowed. And for years, it worked.

It worked because in the early days, being everywhere creates value. You learn every inch of your market, build intuition, and make fast decisions because all the context lives in your head.

But at some point, that same behaviour starts destroying value.

You become the bottleneck of every decision. You centralise knowledge that should be distributed. You de-responsibilise your team without realising it. You slow the whole company down.

The shift from founder-led to executive-led is one of the hardest jobs in scaling. Most founders either attempt it too early (and hire people they can’t afford), or too late (and burn out trying to do it all). Many try and fail, then convince themselves that delegation is impossible and only they can do the job.

That’s wrong, but I get why it feels true.

This is how we built an executive committee at Veevart - five C-levels in nine months - and what I learned helping Antonio, the founder, make that transition.

Step 0: Realise you have a problem

When I met Antonio, Veevart was doing well. Great product, loyal customers, real traction in a niche market. But Antonio was running everything himself, supported by a team of mostly junior people he managed directly.

He didn’t see it as a problem. As a bootstrapped founder, this felt like the only option. Senior hires were expensive. Delegation meant more work, not less: you delegate a task, then spend hours reviewing it, fixing it, explaining it again.

Antonio couldn’t envision a world where leaders would bring him solutions, not problems. Where entire chunks of the business would get out of his head and stay out.

My first job as his Partner was to keep insisting that this world exists. You can build a team you trust to solve whole parts of the company. To solve problems, not just execute tasks.

He started believing it when he met the first candidates I brought to him. People who had done it before, who didn’t need to be managed, but unleashed.

That mindset shift is the first unlock. Without it, nothing else works.

Step 1: Know when you’re ready for it

There were two signs that Veevart was ready for an executive committee.

Veevart was post-product-market-fit, and Antonio’s involvement in everything was having diminishing returns. At the beginning, doing things yourself enriches your vision. But past a certain point, you’re just slowing things down. If every decision waits for you, you’re the problem.

Second: they had the budget to hire A-players. This matters more than people think. If you don’t, you’ll fall into the classic trap: hire someone who can only do part of the job, feel relieved to finally delegate, watch it not work, fire them, and conclude that delegation is impossible.

It’s not impossible, you just hired the wrong person because you couldn’t afford the right one.

Step 2: Find your A-players (and be patient)

At Veevart, we assembled a full executive committee in nine months - five C-levels. It was extremely fast, but it felt painfully long.

You’re looking for profiles that almost don’t exist. Your checklist is too long and too specific. The best people don’t necessarily want to join your company - by definition, if they’d raise your talent bar, they have options.

So it’s a sales exercise. You need to sell your vision, your trajectory, and the team you’re building around them. The best hires join because they see potential, not because you’re already there.

Two lessons I learned:

1. Be patient and keep searching. The moment you meet the right person, you’ll know. Don’t settle before that moment.

2. Be ready to sell, and do it well. You’re not interviewing them. You’re convincing them to bet on you.

For the COO search, Antonio and I had different bars. He kept pushing for candidates who could do part of the job, profiles that would help in the short term but wouldn’t get us over the bridge we needed to cross. I kept saying no, because I knew that hiring the wrong person here would set us back a year.

After six months and dozens of candidates, we finally met the right one. There was no shadow of a doubt, and Antonio felt it too.

Step 3: Get them to work together

So you’ve got your A-players. They’ve taken whole chunks of the business off your plate, and that’s great. But the real magic happens when they start operating as a team rather than siloed superstars.

I don’t believe in team-building centred around entertainment. Escape games and cocktail nights create a fake image of bonding. At best, you learn how to have fun together, but you don’t learn how to work together.

Real team-building happens in the work, on hard problems, together.

With an executive committee, there are two levels of cooperation:

Strategic cooperation. Get your leaders in a room and make them work on company direction at a short offsite - not a retreat, a working session. Vision and priorities get challenged. Everyone has a say. You want them to fight over goals and budget allocations. You want them to own where the company is heading, with you.

Operational cooperation. This one is tricky. Getting all your C-levels in a single room is the most expensive time allocation in your company. Most of these meetings will feel painfully useless - especially for you, the founder, who already knows everything being discussed.

But I’ve learned that these meetings aren’t for you. They’re for your C-levels to learn what the others are doing. That information exchange is necessary.

More importantly, you need to turn these meetings into a space for hard discussions. Surface the conflicts of interest between departments. Arbitrate them as a team. That’s where each C-level rises above managing their silo into managing the company.

At Veevart, we’re still building this out, so no war stories to share yet. But the early signs are there. The team is starting to challenge each other. Decisions are getting made without Antonio in the room, that he approves. That’s the goal.

The real unlock

Building an executive committee is less about delegation, and more about fundamentally changing what kind of founder you are.

You go from being the person who solves every problem, to the person who builds the team that solves every problem. It’s uncomfortable, you might feel a bit useless for a while. You’ll wonder if you’re still needed. You are, just differently.

Your job becomes holding the vision, staying obsessively close to your market, and knowing where to go next. And every single day, enabling your C-levels to succeed - removing blockers, providing context, setting them up to win.

And when it works, when you watch your team make a decision you would have made, without you - that’s when you know the company can scale beyond you.

This is the second article of Underdogs, my newsletter about the bootstrapped founders who build quietly and aim for something big.

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Apprenticeships are going down -20% this year. Every school in France is impacted. Many of them, especially among the small ones, will probably struggle, get acquired or close in the years to come.

The market itself is not very large - we found a few thousands higher education schools with an apprenticeship program in France.

But we decided to invest €6M in Filiz, a software company dedicated to apprenticeship financing in France, amid this turmoil.

Are we nuts?

Long-term: higher education is not going anywhere (nor are apprenticeships)

A mega-trend is ongoing for the last few decades: young adults in Europe study more, and study for longer. This is easily explained by the arrival of the knowledge economy. We need to learn more for longer, and we need to learn more new things and more often. Even if demography is decreasing, the share of adults getting higher education is still increasing, with a net positive effect in coming years as education will remain a key part of our western societies.

It triggers a second trend, which is the privatization of higher education in Europe. In many countries, the public state is not agile enough to adapt to the changes of the work environment and therefore to the changes required in teaching our young adults. Non-profit associations and for-profit enterprises fill the void.

AI will certainly quicken our acquisition of knowledge. However, we are firm believers that getting together in a classroom, be it virtual or face-to-face, will remain a key part of preparing young people to the work environment. The learning experience in a group will stay and probably be more focused on experience: peer communication, teamwork, soft skills.

Apprenticeship itself is an amazing tool to professionalize our students and reduce young adult unemployment. It has been subsidized by the government, and as always, this has triggered some excesses in the system. Now is the time of a market correction which was necessary — but apprenticeship will remain at a high level as it is so important for the state, the students, and the companies hiring them.

Short-term: reforms increase the need to adopt modern software Filiz

This market correction is coming in the form of administrative reforms. In 2025, it has become even more complex to get public financing for every apprentice in your school. The mounting bureaucracy is a necessity to fight against the excesses — but fortunately, solutions exist.

Filiz has developed a mind-blowing software that allows any school with an apprenticeship program to connect immediately to the OPCOs (financing bodies), to automate entirely the financial and administrative cycle from the contract to every invoice, and therefore to remove errors and get paid faster, all of which with a much lower administrative burden.

There is a reason why the company has grown 300% this year, with only just word-of-mouth.

Higher education software in Europe is such a beautiful niche

The software space for higher education in Europe is relatively immature. It is fragmented between continuous education (vocational training), apprenticeship and higher ed schools.

It is also fragmented between: CRM, ERP, Student information system, Job boards, Learning management systems… Most of the main actors are legacy, local and relatively small.

But schools have extremely specific requirements. A student is not a customer nor an employee. A school is not a non-profit association nor a company. And running it implies many workflows that easily benefit from the adoption of modern software.

Why has nobody taken up the market yet? I believe we can sum it up in three reasons:

1. The American and, to a lesser extent, British mature software solutions have a hard time penetrating the market because of the huge differences in how we deliver higher education in continental Europe.

2. The privatization trend is recent, and so is competition between schools (at all levels, not just the top 10 business schools) and therefore the will to modernize.

3. The European market is fragmented, and selling an all-in-one solution to a school is no easy feat.

Filiz has built incredible potential

Maxime and Aurelia, the founders of Filiz, have built an amazing product muscle. Not only did they manage to build a tool that many had tried before to nail: automating the public financing of apprenticeship — but they did so by being so close to their customers that now every time they work on a new module or feature, they easily gain immediate adoption.

It is hard to have customers praising a tool that’s just an administrative shortcut. And it’s even harder to get immediate adoption of your product extensions that wander out of your initial scope. It is the combination of being subject matter experts, of being super close to the customers and of excellent engineering that Filiz has created.

This is why they are in the best position to build the modern all-in-one software for higher education in Europe that the market finally deserves.

And we can help unleash it

What was preventing Filiz from deploying that vision alone?

With Hexa Scale, we not only provide some capital to invest into that vision, but we’ll work hand-in-hand to build the other parts of the business, such as the go-to-market and international expansion of the company. Word of mouth is amazing, but what took you here is not what will get you there.

As we’ve been doing with Veevart for the last several months, we’ll help recruit the key talents required to execute this plan, we’ll help define the priorities of the product roadmap, we’ll act as a co-founder to Maxime and Aurelia in achieving this ambition.

Long live Filiz!

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For the first podcast episode of Underdogs, I wanted to start with someone whose story I’ve seen up close — Antonio Velasco, founder and CEO of Veevart, and the first founder we’ve partnered with at Hexa Scale.

Antonio bootstrapped his software company for museums for seven years, growing it into a profitable business serving cultural institutions across the US. But even with $2M in ARR and more than 100 clients, he’d hit a ceiling.

Growth was strong, but the company itself still operated like a scrappy early-stage startup. The systems, the team, the processes — none of it reflected the scale Veevart had actually reached.

It’s not that he didn’t want investors; he knew they could help.

He just wanted investors that would really help and not just promise they would.

And also, at first, he didn’t want us.

Probably because the first meeting wasn’t exactly an instant click, to say the least. But we salvaged that nascent relationship, kept each other updated. It took a year to really earn his trust.

And I can’t blame him. After years of building something valuable on your own, you want to be absolutely sure you’re letting in the right people.

But eventually, Antonio decided to take the leap. And over the past few months, we’ve been working side by side to rebuild Veevart — setting it up so that, in a few years, his years of hard work translate into the outcome and valuation he truly deserves.

We go through his story together in this first episode of Underdogs.

Listen to the episode on your favorite podcast platform.

And if you like it, don’t forget to subscribe below to get future episodes straight to your inbox.

Cheers,

Augustin

In this episode:

00:00 Bootstrapping Beginnings
04:00 Shift to Museums
08:36 Hitting Growth Limits
12:41 First Investor Meeting
17:24 Seeking Help
23:04 Crossing the Line
30:00 New Ambitions
37:15 Team Transformation
40:21 Final Thoughts

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August 2021. I’m on top of the highest skyscraper in Helsinki, sitting across from the CEO of a €30bn industrial group — the incumbent of my startup Uptime’s market. He looks me in the eyes and says: “We can do an operation of €100m.” Well, be my guest.

The night before, at dinner, he had broken the ice with: “Could you please stop breaking our balls on the public markets?” Hum, it depends.

We had started Uptime with my brother Amaury 5 years ago, with one goal in mind: develop an elevator’s predictive maintenance technology powerful enough to disrupt the entire industry. It had cost >10m€ of investments and 4 years to get there, but here we were, with a tech that had more proven results than the different 200m€+ R&D programs of the giant incumbents.

There was a catch: we couldn’t establish a sound business model selling our tech to the long-tail of small elevator companies around the world. We had to get to the four major multinationals of the sector if we wanted to do something big.

To get their attention, I had published a series of blog posts exposing how these four incumbents were disguising declining market shares and the total absence of positive impact of their — supposedly — amazing predictive maintenance products. It had worked well beyond our expectations: within weeks, Morgan Stanley had released a 20-page research note based on our work. JP Morgan followed. Pension funds started calling. Soon, billion-dollar CEOs were being asked tough questions about predictive maintenance and about Uptime live on their quarterly earnings calls.

Now, hearing a 100m€ commitment, it felt like it was all about to happen. It didn’t.

Just fourteen months later, in October 2022, Uptime was sold through a judicial process for €3m — less than our liabilities. We walked out naked.

We failed to transform this interest in either contracts, or more adequate for us and our investors, an exit.

Exits are the ultimate purpose of most startups — but if you don’t know what you’re doing, the process will not only be brutal and messy, it can also be fatal. I learned that the hard way.

That failure is what pushed me to create Hexa Scale — to be the investor I wish I’d had — and now to start this newsletter, Underdogs. For my first post, I want to walk you through what happened to us, because if you’ve been building the hard way for years, you’re probably eying towards an exit too — and man, it’s easier to fail one than to ace it.

Here is what killed us.

We were nice and polite instead of brutal

Towering headquarters of multinational corporations, marble lobbies, elevators that opened onto boardrooms larger than our entire office. Herds of corporate suits and polished shoes. Direct access to key decision makers, people that can unlock hundreds of millions of investments without necessarily further approval.

We were flattered, awed, and frankly intimidated. We smiled, nodded, agreed to almost every request (but no, we can’t give you the codebase for an audit). We thought playing the “good son-in-law” would make them trust us and get us faster to a deal.

What it actually did was make us look like something they already owned.

Don’t act like the teacher’s pet — smiling, nodding, saying yes to everything. Acquirers don’t buy what they already feel they own. They’re driven by FOMO, not politeness. Be brutal instead. Say no, make them come to you, laugh at the first offer. If they’re serious, they’ll chase harder.

We waited on one suitor for nine months

For Uptime, a great exit was a very narrow path: only four large corporations could really afford the price to pay for the huge synergies our technology would unlock. One of them was much more advanced on this point, and so we decided to pour all our energy on that lead.

So month after month, we jumped through every hoop. New Letter of Intent. New data rooms. Updated models. Forecasts redone for the fifth time. New meetings with each key exec in the world. New roll-out plans for our tech. Updated synergies calculations. Each week brought another set of questions. Each time, we thought we were close.

Nine months of this.

And then, one morning, when key documentation was finally agreed upon, it ended with a single phone call. The context for them had radically changed: the Chinese market, where most of the synergies were expected, was falling down (Chinese real-estate bubble explosion) and the company’s stock was in free-fall in public markets. The CEO announced cost-cutting measures, and stepped down a year later.

We scrambled to bring other suitors to the table, but then our company was already in serious financial trouble, and it was too late.

Keep the competition alive, refuse exclusivity until the very last moment, and let word spread.

We chose the wrong bankers

We had two options. On one side were bankers who knew us well — they’d worked with our VC, they were close to Uptime. But they had never once closed a cross-border deal of this size with a €30bn industrial giant.

On the other side, one of the world’s top three banks called us directly: “We know your acquirer’s board. We can help get this over the line. But our minimum fee is €Xm.”

The fee felt outrageous.

We thought it mattered that our bankers knew Uptime well. In reality, that counted for nothing. What mattered is their ability to navigate a professional billion-dollar M&A buyer.

Only take an M&A banker that has really done it before (and selling a tech startup to an old conservative industrial conglomerate cross-border is rare and hard). Either go without a banker, or pay for the best — the cost of the wrong one is far higher.

We ran out of runway

With our huge R&D program, we had bet everything on building the best technology possible for our market. It had paid off: we had it, and we had an industry leader ready to pour €100m on it. But we lacked a scalable business model. So by the fifth year, we were already running on fumes.

We were patching cash flow with duct tape — one more bridge, one more loan, suppliers so angry at our payment delays that they threatened to cut us.

And of course, the acquirers understood it, and soon enough, they knew. Once they saw how fragile our runway was, they didn’t need to negotiate. All they had to do was wait.

Fake it if you must — line up a conditional bridge, venture debt, or a noisy investor commitment. We were in discussions with competitors: killing us instead of buying us can always look like a nice plan B.

We listened to the wrong advice

Our board and VC had never actually closed such a deal. They knew nothing. But they carried authority, and we deferred to them. One of our closest friends was the only one around us who really understood what was happening — and of course, he was the one we listened to the less.

Your investors are supposed to know, or at least not act like they know if they are clueless. I can still remember these meetings and confident assertions:

• “Be nice to the acquirer, keep their trust.”

• “Don’t go to the competition now, it’s way too risky. Imagine if they hear about it?”

• “Let’s take this banker, we know them well, they’re serious.”

• “We still have some cash left, and we’ll close the deal with them, it’s fine.”

Every single one of those calls was wrong.

Don’t take guidance from people who’ve never actually done it — even if it’s their job to ‘know’. Check your VC’s successful exits track record. If it’s thin (and unless you’re with a Tier-1 US or UK fund, it often is), don’t rely on them. Bring in advisors who’ve done a similar transaction for real.

October 2022. We’re in a court in Paris, and Uptime is sold through a judicial process for €3m to another market incumbent. From the “we’re out” phone call from our first suitor to this, less than four months had passed.

But by then, we knew who to listen to, and we knew that this outcome was the best for everyone — including our business angel investors, our banks, our customers and our team. Well, maybe not for our VC’s reporting, but that clearly wasn’t our priority anymore.

Pretty brutal — but put me back at the start with Amaury, and I’d do it all again in a heartbeat. Never learned so much in such a short time-frame, and never had more fun in my professional life.

Since then, through creating Hexa Scale, I’ve met hundreds of companies - I’ve seen exits unravel in many different ways, and I’ve learned an enormous amount, not only from my own experience but from working alongside other founders.

And that’s why I’m starting this newsletter.

Underdogs is where I’ll share the tips and strategies that can help founders that built the hard way for years to scale their company well, until it has enough strategic and financial value to be eligible to a great exit.

And I promise, it’ll be the right blend of success stories and horror ones ;)

—Augustin