In this solo episode of SaaS District, Akeel Jabbar, GP and founder of Horizon Capital, answers a common question from aspiring SaaS investors: how to deploy $50K‑$200K (or more) into SaaS businesses. He outlines four distinct pathways. 1) Straight‑cash acquisition: buying a SaaS company outright, typically at 3.5‑4.5× Seller Discretionary Earnings (SDE), yielding roughly $50K annual cash flow on a $200K purchase. 2) Debt‑financed acquisition: using SBA loans in the U.S. or BDC loans in Canada to leverage the same equity into a larger ($1M‑$2M) deal, increasing cash flow proportionally but introducing personal guarantees (U.S.) or higher down‑payment (Canada). 3) Co‑investing as a limited partner (LP) in micro‑private‑equity funds: allocating $100K‑$200K into larger deals (e.g., a $2M acquisition) for passive ownership and potentially higher cash‑on‑cash returns without day‑to‑day management. 4) Raising external equity: building a small fund by recruiting other investors, using the combined capital to acquire a larger SaaS business, which requires a proven track record and strong credibility. Jabbar also provides a decision framework based on the investor’s experience, time availability, and risk tolerance, suggesting a progression from simple cash deals to building a personal micro‑PE operation. The episode ends with a call to action for viewers to comment on their deal interests and subscribe.
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Hey guys, welcome back to another episode on SaaS District. My name is Akeel Jabbar, GP and founder at Horizon Capital, and today I want to talk about a special topic that I get asked a lot. I get a lot of people reaching out to me and asking, Akeel, I've got $100,000, I've got $50,000, I've got $200,000 saved, I'm working at a job or I'm starting my own company, but I want to invest in my own SaaS businesses? Where should I start? And today I'm going to talk about 4 different ways you guys can put that money to use and make the best returns on your money. So we'll see you on the episode. All right guys, so back to our episode. So today we're going to talk about 4 different ways where you can invest up to $200,000 of your savings into your own SaaS company. Number 1, straight cash deal. That's the one that everybody thinks about. They're looking to take $200,000 and buy their company. That's worth $200,000. Okay, that's the way I first started. I remember back in 2014, I bought my first company while I was working as an engineer. I used to be a petroleum engineer working in Calgary, so I used to work 9 to 5. I understood that grind, and I was looking to invest some of my capital that I had. So I purchased my own business. I think it was about for $60,000 at that time. It wasn't a SaaS company. I didn't know much about SaaS at the time. I was mostly looking at— it was ads an affiliate website and it was making about, I think about $2,000 or $3,000 a month. And that's how I first got started. Now looking back now, that's not something I would have recommended. I didn't use enough leverage and I didn't know enough of what I was doing at the time, to be honest, to make the best decision. But that is an option to start. So if you have say $200,000, what you would be looking to get in return on a SaaS company, typically we are paying anywhere between You're looking at three and a half to say four and a half SDE. Okay, so I'm just going to make a note here. What you want to pay on this is three and a half, okay, to about four and a half SDE. So if you guys don't know what SDE is, that's seller discretionary earnings, and that's the type of earnings that you should expect to get back on a monthly basis. So let's say you're putting about two hundred thousand dollars. What that would look like in terms of your returns? Let's use four. 4x as a number there, you'd be looking at— so divide that in about 4 times, you're looking at about $50,000 a year. Okay, so that's what you should be getting on this deal. So $50,000 a year is what you'd be looking at if you put a straight $200,000. So maybe that's what you're earning right now. Let's say you're making $50,000 a year, you just want to replace that income, you put $200,000 and you should be able to replace that income with your new business. So one thing I want to talk about for that point is The benefit of buying your own business is you have no one to report to. Okay, you're fully responsible. You have the full liability and you have the full ownership of the business. Okay, so what if good thing if it grows, you own 100% of it. You get full upside. Okay, but also if you fail and you ain't or you aren't able to manage it properly, you lose all your money on that deal and you're completely responsible. Okay, just so something to think about there. Number two, number two is using debt financing. And what I mean is using SBA or BDC depending. Depending on where you are. If you are in the US, I suggest going and using an SBA loan. And if you're in Canada, the equivalent of that is a BDC loan. So let's say you have $200,000. Now what you can do is use debt and you can now buy, let's say, probably closer to a million-dollar deal. Okay? So now your $200,000, instead of going and looking for a $200,000 company that's doing $50,000 a year, you can now leverage that debt and let's say you're paying the same multiple. Okay. Now you can buy a company that's 5 times bigger. So instead of $50,000 a year, you're now making $250,000 per year. Okay. So that's not a bad investment. Whereas here you're only making $50K per year. Okay. Now one thing to think about is with SBA, they typically want at least 15% down on an acquisition. The company has to be at least three years old, and there's a couple of other requirements that they do need. Now you are being highly leveraged here. Okay, one thing about SBA is the big thing is there's a personal guarantee on that loan. Okay, so if you aren't able to make those payments, if for some reason the company fails, they're coming after you and your own personal assets. Okay, so you're taking on a hundred thousand dollar loan. They'll come after you. They might take your house, your car. And come after any other assets you have to make sure it gets paid back first. Okay, whereas if you're in Canada, BDC, the interesting thing with them, they do require a little bit higher of a down payment. Typically I've heard about, you know, 25% is what they want for an acquisition. Same thing, they want 3 years of history, they want to make sure you have a track record a little bit, you know what you're doing, you have some management experience, and you'll know how to actually grow the company. But the big benefit there is there's no personal guarantee, okay? If you default on the loan, you're not liable to pay back that extra $750K or $800K, okay? So that's an option I really like. If you have the experience, if you feel comfortable taking on that loan and debt, I would suggest looking at a bigger size deal. Put your $200K to good use, and you can pay back that loan over, you know, 10, 15 years. To get back your money. Okay, so that's number 2, using debt financing to make your acquisition. Number 3, co-invest as an LP in larger deals. So what do I mean here? So there's other— a lot of micro private equity firms out there that actually take outside investors and put it towards larger deals. So they take equity. You can actually get equity instead of putting $200K and getting your returns on one small company. your risk is actually reduced when you're working on a bigger company. So you put that $200K, let's say, in a $2 million deal, and now you own 10% of that. Okay? And you're getting paid distributions based off your 10%. Okay? So for example, at Horizon Capital, that's what we do. We work with LPs all around the world. They're entrepreneurs, high net worth individuals, or other investors, professional investors. And they come to us. Our minimum check size is $100K USD. So they come to us, here's $100,000, they trust our expertise that we know how to manage, we know how to grow the company, we know how to operate it, and we get them 30%, 50%, 100% cash-on-cash returns on their money, and they're completely passive. So if you're looking to just put your cash to use and maybe you don't have the time or expertise on how to manage the company, this is probably the best option. Just put your money to use and you don't need any experience needed, and you should get, you know, probably equivalent or maybe higher returns than if you're just starting from scratch. All right, so that's number 3. Number 4, the final point here, go out and raise outside investor capital for equity. So let's say you have $200,000 of your own money and you want to go buy a $2 million business. Okay, so your $2 million business needs $1.8 million. So obviously you don't have that cash lying around. You don't want to use any debt, or maybe you'll just use a bit of debt, and you need to find the remainder of the money. So what you do now is do the reverse. So this is what we do at Horizon Capital, you go out and find other investors to raise money and invest in your company. Okay, so you're going to say, hey, give me $100,000. You go out and find, say, 18 different investors. You're going to sign an agreement with them, say, I'm going to operate the company. These are the returns I'm going to provide to you. This is my management fee. And at the end of the year, this is what I hope to give back to you for investing and trusting in me. Now, the only thing with this option is you must have a strong track record. Okay, that's the biggest thing why we're successful. Is people want to trust you that you're going to— you know what you're doing, you know how to operate a company, and you're actually going to grow the company and provide the returns that you say you will. So have that track record, prove you can manage the business, and make sure you're trustworthy. Okay, that's number one. Okay, they're trusting you with their money and you don't want to screw them over. So at the end of the day, you'll generate the returns of what you say you will. So my suggestion is if you're looking at these 4 options. If you have no experience, maybe start with 1 or 2, any of these above, and then eventually move. Your goal is to move to this route here, which is building out your own kind of micro private equity firm and building out your board of advisors, build out your expertise, build out partnerships and your team, and then eventually you can go to this route here. But if you just have the cash Maybe look at this option or this, and you have the time. If you don't have the time and you just have the cash, start with this. If you're experienced, you've proven yourself, you've done this several times, then I would go to the last route here. All right guys, so hopefully that was helpful. I hope you guys have a good idea now of what to do with your investment. This works whether you have $50,000, $100,000, or $200,000 or more. The same principles apply here. And if you guys enjoyed this episode, please subscribe to our channel and comment below on what type of deals you guys are looking at right now and what you're— how much you have to invest in your own portfolio. All right guys, thanks again and see you on the next episode.
