Our Thesis
For individuals interested in either investing or selling their company to us, we've published these materials to make it easier to determine if we're a good fit.
What kind of companies do we buy and operate?
Fork's interests and core competencies are summarized in the graphic below.
Product
We've built and maintained ecommerce stores (acq Dec 2018) and niche content sites. Our biggest wins have been B2B SaaS (software as a service). We are not interested in consumer brands, social networks, or mobile applications.
Company Cycle
A founder-led company is likely operating closer to its original vision than a business that's already been passed along. A "startup" implies the total addressable market (TAM) is growing vs shrinking. And a [successful] bootstrapped company usually makes better financial and product management decisions in order to survive (fewer "tries" than investor-backed ventures).
5 Forces
We've adopted Porter's Five Forces methodology to analyze how our expertise makes a given acquisition more or less formidable. Primarily we target companies that are "first to market" in their space vs "me-too" competitors.
Growth Potential
A SaaS company generating $10-15k MRR presents a challenge for solo founders. They can a) hire others at the risk of their margin, or b) remain where they're at, putting a target on their backs to be out-innovated. Hence the essence of our fund: for founders at a fork in the road.
Acquisition timeline
Once we've identified an opportunity that fits our thesis, we move quickly.
There is a saying in finance that "time wounds all deals." For this reason, every acquisition offer Fork has extended to a founder was made within 30 days of initial interest.
Our confirmatory diligence is a qualitative and quantitative procedure:
- Source code walk-through by founder or selling team's developer
- Review of bank statements or similar verifiable revenue records
- Probing questions regarding support, maintenance, and market threats
In just one diligence session we found a revenue discrepancy, which we believed to be an honest mistake by the seller. Rather than abandon the deal we adjusted the purchase price, and closed on-time without delay.
Immediately following asset transfer, Fork develops a 3-part strategy to facelift the project, increase its pricing, and go back to market with a renewed energy and brand. This process is described in-depth in our Relaunch and Scale educational materials.
Operational strategy
Unlike funds whose managers have never operated or started a business, Fork's team is composed entirely of practitioners. Instead of a 2% management fee, Fork partners are paid alongside investors.
Investing with Fork is not for everyone, and we prefer it that way. The ideal Fork LP (limited partner) is one with operational expertise, previous investment experience in private ventures, and alignment with our thesis described previously.
Ultimately, investments are partnerships.
To ensure our partners have visibility into daily operations, without day to day involvement, we send monthly stakeholder updates and cash dividends.