Stats
- 150% increase in asset value within 12 months
- 30% reduction in legal and negotiation costs
- 100% retention rate in newly acquired SaaS assets
“We’ve always believed that buying great products with strong retention is key to long-term success. But what truly made a difference in our recent acquisitions was having a partner like WebStreet. Their expertise in due diligence, negotiations, and legal structuring allowed us to focus on what we do best—growing these businesses. This partnership didn’t just streamline our process; it supercharged our results.”
– Andrew Pierno, Co-Founder of XO Capital
Introduction
Founded by Andrew Pierno and Danny Chu, XO Capital has built a reputation for identifying undervalued digital assets and turning them into profitable ventures. However, as XO Capital expanded its portfolio and ambitions, the challenges of scaling their operations became more apparent. This is where WebStreet entered the picture, offering not just financial backing but also a comprehensive suite of support services that would enable XO Capital to elevate its acquisition strategy.
The partnership between XO Capital and WebStreet began at a critical juncture. XO Capital was in the midst of a fundraising round, aiming to secure capital for its next wave of acquisitions. During this time, they were approached by WebStreet, a platform known for connecting accredited investors with high-potential digital assets. The proposal from WebStreet was straightforward yet intriguing: rather than continuing the arduous process of fundraising, XO Capital could partner with WebStreet to secure the needed capital and focus on what they did best—identifying and growing digital businesses.
Initially, Andrew Pierno, co-founder of XO Capital, was skeptical. The offer seemed almost too good to be true, as fundraising for digital asset acquisitions, particularly in the SaaS space, is notoriously challenging. However, after a series of discussions and due diligence, it became clear that WebStreet wasn’t just offering capital—they were offering a strategic partnership that could significantly enhance XO Capital’s capabilities.
Roles and Contributions
From the outset, WebStreet proved invaluable in areas where XO Capital had previously under-invested, particularly in legal and negotiation support.
“In the past, as a bootstrapped company, we just put between the three of us about a million into XO to get it off the ground. One of the areas where we really under-invested was legal, and that’s gotten us into some sticky situations in the past.”
– Pierno
By providing thorough legal guidance and structuring deals to mitigate risks, WebStreet helped XO Capital avoid pitfalls that could have otherwise jeopardized their acquisitions. But WebStreet’s role extended beyond just legal advice.
They also played a crucial part in due diligence, helping XO Capital thoroughly vet potential acquisitions and understand the nuances of each deal. This allowed XO Capital to focus on its core strengths: identifying promising digital assets and driving their growth post-acquisition.
“Throughout that process, though, what we realized is WebStreet’s been a great partner for us, on the backend side, on the diligence side, bookkeeping, setting stuff up. It allows us to really just focus on what we do best, which is the operations, finding deals.”
– Pierno
The partnership was designed to be symbiotic from the start. XO Capital benefited from WebStreet’s extensive experience in managing acquisitions, which included helping with negotiations and structuring deals to ensure favorable terms. On the other hand, WebStreet gained access to XO Capital’s unique approach to identifying and operating digital assets, particularly in the SaaS sector, where retention and scalability are key.
A Recent Acquisition
The collaboration between XO Capital and WebStreet has already led to several successful acquisitions, the most notable being the recent acquisition of a SaaS product known as OnSched.
OnSched is a scheduling tool designed specifically for developers. It offers complex scheduling capabilities that are essential for businesses needing to manage bookings, time zones, and other scheduling intricacies. The product’s appeal lies in its “extremely sticky” nature. As Pierno noted:
“Developers building complex scheduling applications would purchase something like this to be able to not have to write all the complexity around booking and time zones, etc. It’s an extremely sticky product, extremely good retention.”
The decision to acquire OnSched was not made lightly; it was the result of an intensive search and evaluation process that spanned several weeks. During this period, XO Capital, with the support of WebStreet, meticulously vetted the business to ensure it met their criteria for long-term growth potential.
Negotiation and Deal Structuring
One of the key advantages of partnering with WebStreet was the expertise they brought to the negotiation table. In past acquisitions, XO Capital had sometimes under-invested in legal resources, which led to “some sticky situations.” However, with WebStreet’s backing, the negotiation and deal structuring for OnSched were handled with precision.
“When we got a deal that had some funky financials, we leaned on you guys to help us build out those models. That was tremendously helpful.”
– Pierno
WebStreet’s legal team worked closely with XO Capital to ensure that the asset purchase agreement was robust and covered all potential risks. This included modeling out various worst-case scenarios and structuring the contract to protect XO Capital’s interests. This attention to detail allowed XO Capital to focus on the operational aspects of the acquisition, confident that the legal framework was sound.
The Value of Retention
A key factor in XO Capital’s decision to acquire OnSched was its strong retention metrics. Unlike other venture-backed startups that may prioritize rapid growth, XO Capital’s strategy revolves around acquiring products that already have a loyal customer base and can grow steadily over time.
“The name of our game is really about retention. So how do we buy great products that have really, really good retention, such that we can grow at a reasonable rate.”
– Pierno
OnSched fit this model perfectly. With its high retention rates and essential functionality for developers, it was a natural addition to XO Capital’s portfolio. The acquisition not only expanded XO Capital’s footprint in the SaaS space but also demonstrated the effectiveness of their partnership with WebStreet in identifying and securing valuable digital assets.
The Win-Win Outcomes
The partnership between XO Capital and WebStreet has proven to be a resounding success, resulting in a series of favorable outcomes that have benefited both organizations.
1. Success Metrics
One of the most telling indicators of the partnership’s success is the tangible improvement in key business metrics. For instance, the acquisition of OnSched led to a 150% increase in asset value within 12 months, a testament to XO Capital’s ability to identify and nurture high-potential digital assets. Additionally, the partnership allowed XO Capital to achieve a 30% reduction in legal and negotiation costs, thanks to WebStreet’s expert handling of deal structuring and risk mitigation.
Another crucial metric that highlights the partnership’s success is the 100% retention rate in the newly acquired SaaS assets. This aligns with XO Capital’s strategic focus on acquiring products with strong customer loyalty, which Pierno emphasized.
2. Benefits for XO Capital
For XO Capital, the partnership with WebStreet has been transformative. It has allowed the firm to expand its portfolio more rapidly and with greater confidence, knowing that they have the support of a partner who understands the intricacies of online business acquisitions.
Moreover, the partnership has provided XO Capital with access to resources and expertise that would have been difficult to obtain independently. The legal guidance and risk management provided by WebStreet have been particularly valuable, helping XO Capital avoid potential pitfalls that could have otherwise derailed their acquisitions.
“WebStreet did a fantastic job of mitigating both downside risk and some of the worst-case scenarios.”
– Pierno
3. Benefits for WebStreet
WebStreet has also reaped significant benefits from the partnership. By aligning with XO Capital, WebStreet has gained portfolio managers with excellent SaaS operational and growth capabilities. Additionally, the collaboration has reinforced WebStreet’s reputation as a trusted partner in the alternative investment space.
By supporting XO Capital through the acquisition process and contributing to successful outcomes, WebStreet has demonstrated its value proposition to both investors and portfolio managers.
Conclusion
The partnership between XO Capital and WebStreet stands as a compelling example of how strategic collaboration can drive success in the complex world of digital asset acquisitions. By bringing together XO Capital’s deep operational expertise and WebStreet’s comprehensive support in finance, legal, and due diligence, the two organizations have created a powerful synergy that has led to tangible, impressive outcomes.
Looking ahead, the future of the XO Capital-WebStreet partnership is bright. Both organizations have expressed a strong desire to continue working together, recognizing the immense value that this collaboration has brought to their respective operations.
“As long as they’ll let us, we’d like to keep buying businesses with these guys. It’s been a great experience so far,”
– Pierno
Ready to achieve extraordinary results in your digital asset acquisitions? Partner with WebStreet Today