E267: Why Buying a Business Beats Starting One – Buy Your Way to Success! - Watch Here

About the Guest:

Sanket Bhasin is an experienced entrepreneur and the managing partner of Spring Street Capital, a New York-based software-focused search fund. He has successfully built and exited two tech businesses and is now focused on acquiring and scaling vertical software companies in the energy and healthcare sectors. His expertise in scaling businesses, combined with his strong belief in long-term ownership and AI-driven efficiencies, makes him a compelling voice in the world of software acquisitions.

Summary:

In this insightful episode, host Ronald Skelton sits down with Sanket Bhasin, the founder and managing partner of Spring Street Capital, a search fund specializing in software acquisitions. Bhasin shares his entrepreneurial journey—from growing up in Australia watching his father search for businesses to buy, to founding and successfully exiting two software startups, and ultimately choosing the search fund model to acquire and scale businesses in the vertical software space. His passion for scaling companies rather than starting them from scratch provides a fresh perspective on the search fund model, the importance of strategic investors, and how AI is shaping the future of software businesses.

For anyone interested in the mechanics of search funds, the distinction between horizontal and vertical software businesses, or the future of AI’s role in software development, this episode offers a wealth of knowledge from an entrepreneur who’s been on both sides—founding and acquiring.

Key Takeaways:

1. Entrepreneurial Roots & Early Exposure – Bhasin grew up in Australia, spending Sundays with his father searching for businesses to buy, which sparked his lifelong interest in entrepreneurship.

2. Successful Startup Experience – He founded and exited two software companies, Smart Therapist and Communicate This, gaining firsthand experience in solving niche industry problems with technology.

3. Why Search Funds? – Bhasin chose the search fund model because it offered a structured pathway to acquire and scale a business while benefiting from investor mentorship and long-term strategic partnerships.

4. Search Fund vs. Traditional Acquisition – Unlike solo acquirers using SBA loans, search funds allow for investor-backed mentoring, longer search times, and a built-in support system for new CEOs.

5. The Appeal of Vertical Software – Bhasin focuses on acquiring mission-critical software companies in the energy and healthcare sectors, as these specialized businesses have strong customer relationships and high retention rates.

6. Long-Term Hold Strategy – Spring Street Capital isn’t built for quick flips; Bhasin emphasizes holding acquired businesses for the long haul, ensuring sustainable growth and strategic improvements.

7. AI’s Impact on Software Businesses – While AI is making coding more efficient, Bhasin believes that human ingenuity and decision-making remain irreplaceable, especially when it comes to designing software and setting strategy.

8. Excitement for the Future – Bhasin sees the ongoing digital transformation as a massive opportunity, where businesses leveraging AI and software-driven efficiencies will thrive.

Article:

Why Buying, Not Building, Might Be the Best Move in Software

For years, the startup world has glorified the grind of launching a new venture, raising capital, and chasing elusive product-market fit. But what if there was another way? A way to skip the painful early stages and jump straight to scaling a profitable company? That’s exactly the path Sanket Bhasin has taken, and in this episode, he lays out why acquiring a business through a search fund is a smarter bet than starting from scratch.

From the Trenches: An Entrepreneur Turned Acquirer

Bhasin’s journey began not in Silicon Valley, but in Melbourne, Australia, where as a kid he rode shotgun with his father every weekend in search of businesses to buy. That early exposure led him to build two software startups—one in health tech and another in business process outsourcing—both of which he successfully exited. But instead of launching another venture, he took a different route: buying a company rather than starting one.

Why? The answer is simple—scalability.

"The actual work of scaling a company is what truly fascinates me more than actually building from scratch," Bhasin explains.

While most entrepreneurs are obsessed with the zero-to-one phase, he sees the real magic in taking a business from one to ten. The search fund model allows him to acquire a proven company with existing revenue, customers, and operations, then apply his expertise in software and growth strategies to scale it further.

The Search Fund Advantage: Why It’s More Than Just Money

Many aspiring business buyers think about acquiring a company using traditional financing—say, an SBA loan or seller financing. While these methods work, they often leave buyers without the guidance or strategic backing needed to truly optimize and grow their acquisition. This is where search funds shine.

Bhasin describes search funds as a two-step process: first, raising capital to fund the search itself, and second, securing additional investment to acquire the business. The key differentiator? The mentorship from experienced investors.

Unlike traditional acquirers who are on their own, search fund entrepreneurs have a built-in advisory board of seasoned investors, often former operators themselves. This means they aren’t just buying a company—they’re stepping into a network of knowledge, best practices, and industry expertise that can be leveraged to scale the business.

The Hidden Goldmine: Vertical Software Companies

Not all software companies are created equal. Bhasin is laser-focused on acquiring vertical software companies—those serving specific industries like energy and healthcare—rather than horizontal software that serves multiple industries.

Why? Because vertical software companies often have deeply embedded relationships, high switching costs, and long-term recurring revenue.

Take, for example, a data analytics software used exclusively by offshore oil rigs to transmit real-time production data. Unlike a generic accounting platform that could serve any industry, this kind of niche software is mission-critical—meaning customers are highly unlikely to switch providers. That stickiness is what makes vertical SaaS businesses so valuable.

The AI Factor: A Game-Changer, But Not a Replacement

Inevitably, the conversation turns to AI—how it’s changing software businesses and what the future holds. Bhasin is bullish but cautious. He sees AI as a tool to enhance productivity, particularly in coding, testing, and debugging. However, he’s skeptical of claims that AI will fully replace human engineers.

"The human brain is just an incredible thing that sometimes gets discounted," he says.

Rather than viewing AI as a replacement for human decision-making, he sees it as an accelerator—one that can synthesize vast amounts of business data and empower CEOs to make more informed, strategic moves.

Final Thoughts: What This Means for Business Buyers

For those looking to acquire a business, Bhasin’s journey offers a powerful lesson: Scaling a great business is often more lucrative than starting one from scratch.

With a long-term mindset and a focus on acquiring mission-critical software businesses, he’s playing the long game—one where strategic acquisitions, not endless startup pivots, drive real success.

If you’re considering a business acquisition, take a page from Bhasin’s playbook. Instead of getting lost in the startup grind, find a business that’s already working and make it better. That’s where the real magic happens.

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