The entrepreneurial landscape is currently undergoing a significant shift as numerous small business owners approach retirement, creating unprecedented opportunities in business ownership transfer. This transition, combined with the increasing interest from a new generation of entrepreneurs influenced by the post-COVID work culture, has emphasized the necessity for efficient business sale solutions. Baton, a tech-enabled platform, is at the forefront of revolutionizing the SMB acquisitions marketplace by achieving a remarkable 70% close rate – a staggering ten times higher than traditional solutions – while delivering 50% cost savings. This platform simplifies the entire sales process from valuation to closing, making business ownership transfer more accessible and efficient for all parties involved. Baton provides free initial valuations and digital data rooms for sellers, along with paid tiers ($500-1000/month) and a 6% commission on successful sales, with monthly payments credited toward the final fee.
StartupMagz.com had the opportunity to catch up with Baton’s CEO and Co-founder, Chat Joglekar, to delve deeper into the business, the company’s strategic plans, their latest round of funding, which has brought their total funding raised to an impressive $12.8M, and much more…
Investors and Funding:
Baton recently secured a $10M Series A funding round led by Obvious Ventures, with participation from Burst Capital, FJ Labs, Fluent Ventures, and Spencer Rascoff (cofounder and former CEO of Zillow) via 75 & Sunny, Divergent Capital, Bloomberg Beta, Zeno Ventures, and Giant Ventures.
Product and Services:
Baton stands out as the leading marketplace for SMB acquisitions, boasting a 10X higher success rate than previous top solutions and an exceptional 70% close rate. It serves as the optimal platform for sellers looking to navigate the sale of their small business and for buyers embarking on their entrepreneurial journey.
Inspiration Behind Baton:
The founding of Baton was inspired by the recognition of significant inefficiencies in the SMB acquisition market, akin to what Joglekar had previously observed and helped solve in the real estate market through Zillow. Drawing from his experience in market transformations at companies like Google, Spotify, and Zillow, Joglekar identified key issues in the SMB space, including a lack of transparent business valuations, difficulty in accessing improvement strategies, and challenges in finding trustworthy brokers. Collaborating with his co-founder, Dylan Gans, Baton was created to address these issues by providing free valuations and fostering transparency in the SMB acquisition market with the goal of ensuring small business owners receive fair compensation for their hard work.
What Sets Baton Apart?
Baton differentiates itself through:
Fast data-driven valuations in just one day compared to traditional weeks-long manual processes, with automatic data pulling from websites and QuickBooks integration.
Free valuations and private listings with a free model, unlike competitors who charge upfront fees or necessitate lengthy broker interactions.
Comprehensive digital data rooms that offer full business transparency to buyers immediately, as opposed to traditional platforms requiring back-and-forth emails for basic information.
Guidance throughout the owner through buyer interest, negotiations, and closing in half the time of a traditional sale process.
Target Market and Business Model:
Baton targets the SMB acquisitions market, specifically focusing on small and medium-sized business sales with a valuation of over $100K. The market size is estimated at $10 trillion in small business assets expected to change hands over the next decade, largely driven by retiring baby boomers (“Silver Tsunami”). The business model entails free initial valuations, followed by two paid tiers: a “lite” plan ($500/month) and a “pro” plan ($1000/month) with enhanced services. Baton takes a 6% commission on successful sales, with monthly payments credited toward this fee.
Preparation for Economic Slowdown:
Baton has observed that its business is relatively resilient to economic fluctuations, as small business transactions occur for various reasons such as relocation, retirement, or health. As the economy shifts, Baton anticipates slight changes in deal structure and slightly more favorable deals for buyers during slow economic times.
Funding Process and Investor Interest:
Baton’s funding process was notably streamlined, progressing from the kickoff to a signed term sheet in under a month. The company’s primary challenge lay in managing the overwhelming interest from investors, as the market recognized the readiness for a transformational solution in the small business space, which Baton embodies.
Factors Influencing Investor Confidence:
Investors were compelled to invest in Baton due to the company’s superior performance metrics – a 10x higher success rate than current market solutions with a 70% close rate, 50% cost savings compared to traditional solutions, and their position as a leading marketplace in a significant market opportunity surrounding business ownership transfer.
Upcoming Milestones:
In the next six months, Baton aims to double its workforce from 15 to 30 employees by the end of 2025 and enhance its product offerings to further support small businesses with their next phase and finding an honorable successor.
Advice for Companies without Fresh Capital:
Baton emphasizes the importance of providing value to customers every day, as this ultimately attracts investors and capital. New York, being a hub of great investors, offers numerous opportunities for startups solving worthwhile problems.
Future Outlook:
Baton is enthusiastic about supporting more small businesses with their evolution and finding suitable successors, with a laser focus on this mission driving all their endeavors.
Winter Destination Favorites:
While the Rockefeller Tree and Ice Skating are classic choices, Joglekar has a soft spot for The Nutcracker at Lincoln Center every holiday season.
Conclusion:
Baton’s innovative approach to streamlining the SMB acquisitions marketplace through tech-enabled solutions, coupled with their remarkable success metrics and strategic funding, positions them as a frontrunner in revolutionizing business ownership transfer. With a clear vision for expansion and continuous enhancement of their offerings, Baton is poised to make a lasting impact in the startup ecosystem.
Frequently Asked Questions:
1. What inspired the creation of Baton?
The recognition of inefficiencies in the SMB acquisition market and the aim to provide transparent valuations and foster market transformation influenced the creation of Baton.
2. How does Baton differentiate itself from competitors?
Baton stands out through its fast data-driven valuations, free valuations and private listings, comprehensive digital data rooms, and expedited sale process guidance.
3. Who led the recent $10M Series A funding for Baton?
The recent Series A funding for Baton was led by Obvious Ventures, with participation from other prominent investors.
4. What milestones does Baton plan to achieve in the next six months?
Baton aims to double its workforce and enhance its product offerings within the next six months.
5. How does Baton prepare for potential economic slowdowns?
Baton has observed that its business is relatively resistant to economic swings, with slight adjustments in deal structures during slow economic times.
6. What factors led investors to invest in Baton?
Investors were influenced by Baton’s exceptional performance metrics, cost savings, and leading position in the SMB acquisitions market.
7. What market does Baton target?
Baton focuses on the SMB acquisitions market, specifically small and medium-sized business sales with valuations over $100K.
8. What is Baton’s business model?
Baton offers free initial valuations, two paid tiers, and takes a 6% commission on successful sales.
9. How does Baton support small business owners and future entrepreneurs?
Baton focuses on providing value to customers every day to attract investors and capital, ultimately aiding small business owners and future entrepreneurs.
10. What are Baton’s key differentiators in the SMB acquisitions market?
Baton distinguishes itself through its fast data-driven valuations, free valuations and private listings, comprehensive digital data rooms, and expedited sale process guidance.
