We recently crossed the 1 year anniversary of our Software4Nonprofits acquisition.
If you’re curious about what this business does, how we found it and what we paid, you can start here.
Today’s issue walks through the big items we’ve tackled in our first 12 months of ownership.
Like always, I’ll keep it quick.
Immediately after closing, we ran a survey using Typeform.
We didn’t give anything away, we just asked customers to provide their honest feedback (in 5 minutes or less).
1,600 people responded.
- Net Promoter Score was 68.
- 60% of customers use the software at least weekly.
- Value for money was rated a 9 out of 10 (with 10 being incredible value).
Those are some strong data points.
The comments only reinforced these themes, and further demonstrated the significant amount of goodwill that had built up over the business’ 15 year history.
At the time of purchase, the company was generating $350K of annual recurring revenue “ARR” from 4,700 paying customers.
That’s $75 per customer per year (or $1.50 per week!).
Keep in mind: this is a mission critical service.
As a nonprofit, you are legally obligated to provide your donors with charitable giving receipts.
The rules around this are strict and vary by country.
It’s not easy.
If you have more than 50 donors, Excel just doesn’t cut it.
And as good as QuickBooks is on the accounting side, bookkeeping is not donor management. The two are different, yet equally essential.
QuickBooks starts at $360/year.
Given the above, we decided to increase pricing to $99/year (+30% YoY).
We also migrated all customers to Stripe—automated billing—and no longer accepted physical checks.
We’ve seen little change in churn.
Here’s what the user interface looks like today:
Here’s what it’s going to look like tomorrow:
We’ve worked hand in hand with the seller and a pair of part-time engineers to completely rebuild the tech stack.
It’s now modern and 100% web-based.
We believed from day 1 that this replatforming was critical to (1) fortify the existing business and (2) prepare for scale.
2023 was about building a great user experience that appeals to the modern consumer.
2024 will be about pouring gasoline on that user experience.
The last big change we’ve made is the composition of the team.
When we bought the business, there were 5 full-time employees: the founder and his 4 friends.
Our sincere intention was to keep these employees long-term.
However, it quickly became clear that the founder was doing 95% of the work.
Fortunately, we had a very good relationship with him and worked delicately to transition his friends.
We supplemented his efforts with two part-time engineers (mentioned above), two full-time customer service agents based in the Philippines and a part-time growth marketing resource that started last month.
My business partner Scott has also maintained ~10 hours per week to help lead the replatforming design and implementation.
It’s been a great year.
I’m super proud of all we’ve accomplished.
Conservatively, I believe the business is worth 5x more than we paid for it.
But more importantly, we did the hard work that sets us up to take ARR from $500K to $1M in the next 3-4 years.
Let me know if you have any questions or ideas!