#055: The Business Of Death, 2024 Predictions, Is Industry Expertise A Requirement For vSaaS Founders?

One vSaaS breakdown. One biz story. One 'how to'. In your inbox once a week. Written by @LukeSophinos

Jan 15, 2024

The Business Of Death: Tribute Technology & Rolling Up Funeral Home Software

DEATH is the ultimate "boring business".

This guy bootstrapped a software platform for funeral homes for over 15 years before selling it for ONE BILLION DOLLARS.

This is the wild story of Tribute Technology:

Tribute Technology, fka Frazer Consultants, was founded in 2003 by Matt Frazer. Matt started by building websites for funeral homes as the internet began to take off. As he continued to build websites, he realized there was an opportunity to become an end-to-end funeral SaaS.

His vision was to offer a comprehensive suite of solutions, including management software, online payment options, e-commerce, and personalized products for families. He also wanted to leverage the power of data and analytics to help funeral professionals grow their businesses.

Funeral homes is a sneaky large space. Everyone dies so it makes sense. It's an estimated $28 BILLION dollar market with ~20% of funeral homes in the U.S. being family owned small businesses. Another interesting fact -- the average funeral costs a bit over $7K.

So Matt expanded beyond websites and started supporting in other areas:

SEO and Marketing
Physical Materials ie Memorial Pamphlets
Social Media
Payments

Brick by Brick Matt built up his vertical SaaS business. From what I can tell, he bootstrapped it for 15+ years. In 2020, he partnered with Providence Equity, a PE firm with track record of building successful industry-specific platforms in other sectors, such as churches. Providence Equity acquired Matt's Consulting firm for an undisclosed amount. But they were just getting started. The goal? To own the entire U.S. funeral home software space.

With Providence, Tribute Technology acquired several companies...

FuneralTech
Osiris Software
FrontRunner
AdPerfect

All of these solutions had similar offerings - software specific to funeral homes -- payments, marketing, inventory tracking, and more.

Matt had this to say:

That drove some serious scale. The combined companies served over 9K+ funeral homes. That's roughly 40% of the US market...

Vertical-specific companies can acquire A LOT more market share than horizontal providers, as they build tailor-made solutions. And only after a few years Providence acquired the business, they sold it again to Carlyle & Vista for ONE BILLION.

Given that Carlyle bought business near the peak of the software market, I'm sure the multiple correction has been challenging. In June of 2023, they brought in a new CEO, Charlie Cole. Charlie's a seasoned executive with prior VP & C-Level stints at TUMI, Samsonite, and FTD.

What's next for Tribute? Working with two of the biggest PE firms out there to scale their offering internationally. The U.S. market seems pretty penetrated at this point, so that's the obvious next step.

Tribute's Founder, Matt Frazer's story is a great one...

Bootstrapping a business over a 15 year period, bringing in a leading PE partner, and then selling it again to another PE group for $1 BILLION. He's likely also cashed out at every stage along the way.

Kudos to all involved in Tribute Technologies. It's a beautiful case study on building a market leading vertical SaaS company via M&A.

What are other examples are out there of highly successful roll up strategies? Ministry Brands comes to mind...

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True or False?

One ‘How To’:

2024 Predictions

What are your predictions for 2024? What crazy sh*t happens next?

Here are my 2024 predictions:

1. Private Equity goes on a buying spree in the lower and middle markets. I expect this to be 10% higher than 2023. As interest rates fall PE can borrow more $$ and cheaper. They will rush to buy companies before SaaS multiples really begin to rebound.

2. More venture-backed software companies go out of business than in 2023. A bunch of companies were able to hang on with bridge rounds, but back to back bridge rounds are near impossible and many companies will face a sad fate as a result.

3. Series A Bar stays really high for everything that's not AI. 3X YoY growth, $2M ARR at the absolute minimum. 4. More software IPO's than in 2023 but the window doesn't fully re-open until 2025.

5. Things get really dark before, during, and after the election. I have no idea what's going to happen here but whatever it is I don't think it's going to be pretty. Will report back in 12 months how these did... What do you agree with? What do you disagree with?

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