Selling to Jonas or Taking VC Investment: Understanding the Differences

If you’ve built a successful software company, you’ve probably been approached by venture capital (“VC”) firms.

They’ll talk about accelerating growth, raising another round, expanding into new markets, and increasing enterprise value. For some businesses, that’s exactly the right path.

But for many vertical market software companies, there is another option that’s often overlooked. One built around permanence instead of the next funding round.

What Venture Capital Is Designed to Do

A VC firm focuses on investing money into your business for a minority ownership. They will provide the growth capital, expect aggressive expansion, generate returns for their investors and plan to exit in 5-10 years.

Depending on the stage of your business, this model might be exactly what you are looking for.

What Jonas Software Is Designed to Do

Jonas Software acquires, manages, and builds industry-specific software companies globally. Jonas has acquired 200+ companies and currently has over 6,000 employees.

We pride ourselves on our key philosophies, the Jonas ABC’s.

Autonomy: We have a decentralized structure at Jonas, and do not seek to take over the day-to-day operations of our companies.
Buy & Hold Forever: We have never sold a business. This is our software for life promise – selling to Jonas means you have found a permanent home.
Culture of Sharing Best Practices: Leverage our vertical market software expertise. Jonas has completed 200+ acquisitions and our parent company, Constellation Software, 1,200+.

At Jonas, we are ‘Software for Life’. A permanent home for companies, we never sell, never flip and we invest in the people of the company. We have never sold a company to realize returns for stakeholders.

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Autonomy

We have a decentralized structure and do not seek to take over the day-to-day operations of our companies. a decentralized structure and do not seek to take over the day-to-day operations of our companies.

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Buy & Hold Forever

We have never sold a business. This is our software for life promise – selling to Jonas means you have found a permanent home.

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Culture of Sharing Best Practices

Leverage our vertical market software expertise. Jonas has completed 200+ acquisitions and our parent company, Constellation Software, over 1200+.

Different Goals Lead to Different Decisions

As a business owner – what are your goals with your company as you grow and expand? These are the types of questions that Jonas and VC firms ask when looking at companies.

Venture Capital asks:

How quickly can we grow?
How large can this become?
What’s the next funding round?
When do we exit?

Jonas asks:

How do we serve customers for the next 30 years?
How do we retain great employees?
How do we preserve what already works?
How do we help management succeed?

5 Questions Every Founder Should Ask Themselves

1. Do I Want to Raise Capital or Transition Ownership?

VC gives you money to keep building. Jonas provides a path to ownership transition.

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2. Am I Building Toward an Exit or Looking For One?

Many founders spend years building toward an acquisition, Jonas is the acquisition.

3. What Happens After My Investor Exits?

VCs eventually sell, this is a guarantee. Jonas has never sold a company we acquire.

This is the biggest differentiator between VC and Jonas.

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4. What Happens to My Employees?

Jonas keeps your company running the same way it has always been run, which means the staff stay on too. We don’t restructure; we permanently own the business and the employees. There are countless career advancement opportunities within our large Jonas ecosystem.

5. What Legacy Do I Want to Leave?

Do you want your company to go on after you exit? At Jonas, we have built our reputation around becoming a successor for businesses and keeping your company’s legacy going.

Jonas Construction and Jonas Club for instance are well over 30 years old now.

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What Stage Are You In?

It can be difficult to figure out your best option, some things from VC sound good, and some things from Jonas sound perfect. But the stage of your business will help you determine where you are at.

Closing

There isn’t a universally “better” option for your software business. There’s only the partner whose goals align with yours.

If you’re looking for capital to pursue rapid growth, venture capital may be the right choice.

If you’re looking for a permanent home that values your people, your customers, and the business you’ve spent years building, Jonas may be the right choice.

Either way, choosing between Jonas or VC is a milestone decision. If you want to chat with our M&A team to better understand how our model works and how we compare to VC or even other Private Equity firms, we are always just a phone call away.

– PE or Jonas? What You Need To Know