Introduction
Pascal Levy is the founder and CEO of NOA Labs, a company that acquires small profitable SaaS businesses. Since starting in April 2021, Pascal has made five acquisitions and built an impressive $1.5 million ARR business. In this interview, he shares his SaaS acquisition strategy, the lessons learned from each acquisition, and how he’s building a sustainable holding company without following the traditional VC path.
Founder Success Story QnA
Can you sum up your career journey and what made you launch NOA Labs?
I’ve been in Tech all my life, all my career. I discovered this was what I wanted to do when I was at Stanford in 2002-2003. I’ve been a Founder multiple times, an early executive, and an investor. When I was thinking about what I wanted to do next, I had to find something that leveraged my knowhow but also acknowledged who I really was. When I was in my late 20s or early 30s, I thought I would be like a Mark Zuckerberg type – super amazing founder. But after seeing some of my past experiences and meeting amazing founders as an investor, I realized I lacked something they had, which was an obsession for a specific problem. I realized I’m really good at taking something that is kind of a good idea and bringing it to the next level, and I’m uniquely good at that because I can think like a founder but have this execution mindset that is rare.
How long did it take you to realize you weren’t the “super duper Mark Zuckerberg type”?
A few things happened. When I was at Checker, I discovered what true product-market fit was. When you discover true product-market fit, you learn something about tech. There’s nothing like product-market fit, and when you’re in it, it’s amazing. But when I was talking about Mark or Ian from Notion or even Daniel from Checker, it’s about loving a problem set so much that you want to solve that problem for 10-15-20 years. I know who I am, and that’s not who I am. There are very few areas that I would be that obsessed about. I would have loved to be the founder of Airbnb because I love traveling, but I never found that opportunity or niche myself.
Are you happier now than ever before?
Yes, I mean it’s a journey. The first year was a little bit odd because I was not very serious about what I was doing. The last three have been more serious. We’ve had some tough times, some years that were a little bit flat. But I like the team, I like what we’re building, I’m excited about what we have to do. It’s a very unsettling time because of AI and all the changes, but I love being in the trenches. I like what I’m doing and who I’m doing it with.
Do you think too many people force themselves to do big things because of the prestige and potential wealth?
It’s all about trade-offs. On one hand, with AI and the speed at which some companies are growing, it raises the stakes for everyone. On the other hand, when I look at my path, I decided not to raise money initially and to start with my own money to learn the ropes. I wanted to learn a job that I wanted to do for a long time without the pressure of deploying capital. The trade-off for me was I wanted to learn, and that’s where I am. If this year goes well and we manage to make acquisitions and grow the businesses, then I’ll be happy to raise money to go from $1.5 million to $10 million and $50 million plus ARR. But I needed this time, and I don’t regret having it.
Can you share the timeline of your acquisitions, what type of businesses you bought, and the reasoning behind each?
Initially, my thought was to buy businesses doing around $10K MRR ($120-150K ARR) that were very profitable because they were relying on SEO mostly. The first one we bought was called W messages, a WhatsApp bulk messaging Chrome extension doing between $8-10K monthly in revenue. We paid around 2x revenue for it. That was our first acquisition in July 2021. The second business was Eventable, which we bought in December 2021. It was a way for people organizing events to easily add events to a calendar. It was doing $12-14K monthly. The third business was My red receipts, an addon on the Zendesk marketplace where agents could see whether emails they sent had been read. The fourth was Centric, a countdown timer for email. We made these four acquisitions within the first year. Then in September 2023, we bought our fifth business called Art, a skills assessment business targeting Latin America, which we found through FE International.
What happened to these acquisitions over time?
We’ve had a mixed experience. Our first business, W messages, was doing really well and growing, but we got a cease and desist letter from WhatsApp LLC requiring us to shut it down because it was against their terms of service. We decided to comply rather than fight. Eventable had problems – during due diligence, its MRR fell from $14K to $10K, and it had a complicated code base. We eventually sold it to our largest competitor. My red receipts did well initially but suffered during the SaaS recession when companies downsized and cut unnecessary software. We lost 40% of revenue over four months and eventually sold it. We still operate Centric, which we’re expanding into an email personalization suite, and Art, which we’re revamping.
Knowing what you know now, would you have made those same deals, and what will you do differently in future acquisitions?
For the first deal, W messages, we had a clear plan. Even though we had to shut it down, I learned a lot and would do that acquisition again every day of the week. The second two we bought without really having a plan. We thought we could do better than the previous owners but didn’t have a structured approach. I wouldn’t have made acquisitions number two and three for sure because these were businesses that were too small for which we didn’t have a plan. If you don’t have a plan for a business you’re buying, you’re not going to do well. For Centric, we had a plan and implemented it with good results. For Art, we have a plan and know where we’re going. The main lesson is that we need to do real diligence and have a clear plan before acquiring.
Did you think this acquisition strategy would be easier when you started?
Of course I thought it would be much easier than it turned out to be, and I thought we would be much better than we had been. But when I look at our two businesses now, in the first two months, we generated nice profit from them. The company is profitable and cash flow positive every month. The model works. My idea of buying small SaaS businesses with 60%+ gross margins that we can grow and use the cash to redeploy for more growth or acquisitions has played out. I’m glad to have proven that model right.
What’s your focus for the next 5-10 years – profit or revenue and growth?
My initial plan was to get to $15 million in ARR and 50% EBITDA margin. If we do that, we have a great business with a team from all around the world that has a nice life. The business is big enough to be interesting but not so big that I have to worry all the time. I don’t think my goal has changed much. I’m not looking to build something big for the sake of bigness. My North Star is to build a business that will grow around 40-50% a year, through a combination of organic growth and acquisitions, with 40-50% EBITDA margin. If we can achieve that, I’ve built the business I want to build.
What are the current trade-offs in your business?
One big change we made is that we’re not buying tiny businesses anymore. Some of the first businesses we bought were too small, so we’re trying to buy bigger ones now, $200K ARR or more. As for trade-offs, I haven’t paid myself in four years, or not much. There has been real trade-offs, but these were trade-offs I was willing to make. I’m also glad I didn’t buy a bunch of $2 million ARR businesses in this era of AI disruption where we don’t know where the puck is going. That prudence might be a virtue in this era.
You mentioned serving expensive debt – how expensive is it at this stage?
We bought these businesses with debt of around 18%. The two businesses we still own are the only ones we structured with some kind of seller financing or earnout, which I now do for all my deals. It keeps the founder of the initial business in the loop and improves our cost of capital. On a monthly basis, the debt payments are around 20% of revenue, plus seller financing, so overall it’s maybe 40%. But we’re getting to the end of some of these payments, so this year it will be less.
How many companies have you looked at and offers have you made? And why do founders actually want to sell these businesses with product-market fit?
We’ve looked at hundreds of businesses, maybe a thousand. I dove deeper into maybe 20-25, and we’ve made eight offers overall and won six. As for why founders sell, my job as a buyer is to understand that from a business standpoint. If you’re an indie SaaS builder, you have a suite of skill sets and at some point you hit a ceiling. Our job is to break that ceiling because of the team and resources we have that you as an indie founder weren’t able to hire. For example, with the countdown timer email business we bought, they tried to do outbound sales and manage deals with Enterprise but couldn’t. We know how to deal with Enterprise, their PO process, what type of product they want, etc. We created a product and pricing for that and made money from it.
How have you grown as an investor and buyer compared to when you started in 2021?
I’m doing way more diligence and putting a lot more thought before extending an LOI now. This has kept us from deals because the deals went out before we were able to make an offer, but I’m glad we have this process. We now write detailed memos before making offers. It takes more time, but I think it’s the right approach. It’s important to go through the thinking yourself so that you know in your heart what you want out of a business you’re buying. These interactions with sellers, customers, and competitors matter for what we do because then we have an intuitive understanding of what needs to be done.
Do you think there will be a period where you won’t do a deal for 2-3 years?
It’s possible. If we realize that SaaS is a bad business to buy because everybody builds their own SaaS with AI and nobody’s buying SaaS anymore, then I’m not going to buy them even for a dollar. Maybe we’ll buy HVAC installers like everybody else and use the cash flow of existing businesses to diversify in a true holding fashion. But I don’t buy the fact that we’re like Warren Buffett and there’s only one deal per decade that really matters. I’m not sure that’s true for us.
What needs to change or improve to achieve your goal of $15 million in revenue with 50% EBITDA?
This year we need to grow more to pass certain thresholds. The goal is to have the two businesses we still operate growing well and proving we can grow them consistently. We want to make at least two acquisitions this year to show we can build an acquisition engine through content and outbound. We also want to build media assets around our businesses – communities where we can have access to our B2C customers that we own. I think this is going to be very important for every business, especially with SEO potentially changing. If we do all this and it works, and if AI isn’t making white-collar jobs obsolete, we’ll raise money at the end of this year to go from $1.5 million to $8-10 million ARR in three years. From there, the business would be self-funded.
How has your experience investing in 140 startups helped you become a better SaaS acquirer?
I’ve seen thousands of founders and businesses over the last 13 years as an investor. I’ve followed both the businesses we invested in and some we didn’t, and I’ve learned by observing what happened. My internal database has a ton of data, and that’s valuable. The difference is that in venture investing, you can only lose 1x but your upside is uncapped. In my business at NOA Labs, you can’t think like that. You need to grow these businesses and get them to a point where they can be million-dollar businesses or more. If after a year or two you realize a business has flaws you didn’t see, you need to cut it very quickly and decisively, which is something you can’t do in venture.
What’s your favorite book?
I’m more of a fiction person, so most of my favorite books are French books. But to be useful to your audience, I’d say the book that has had the most impact on me is “Guns, Germs and Steel” because it’s an amazing book about human nature and what it is to be a human being at an intrinsic level. It’s really well written and touches many dimensions. It’s a book I know I will reread every 10 years because I’ll glean something new out of it.
What’s the best investment advice you’ve ever received?
The best investment advice I’ve ever gotten as a venture investor is that when you do a venture investment, remember that you can only lose 1x but your upside is uncapped. The realization that you need to only invest in things that can be huge eventually is the right approach. The worst investments are ones you do because you think you’ll get 5x or 10x returns, because these 5x or 10x outcomes never materialize. There’s no market for companies that drive consistent 5x or 10x outcomes in startups.
Pascal Levy Business Stats
Pascal Levy has built NOA Labs into a profitable SaaS holding company through strategic acquisitions. His business currently generates $1.5 million in annual recurring revenue with strong profit margins. Below are key statistics about his SaaS acquisition strategy and business performance.
- Founded NOA Labs in April 2021
- Made 5 SaaS acquisitions in first 3 years
- Currently operates 2 businesses after shutting down 1 and selling 2
- Achieved $1.5 million ARR through acquisition strategy
- Maintains 60%+ gross margins on acquired businesses
| Metric | Value |
|---|---|
| Annual Revenue (ARR) | $1,500,000 |
| Gross Margin | 60%+ |
| Acquisitions Made | 5 |
| Businesses Currently Operating | 2 |
| Years in Operation | 4 |
Pascal Levy Method
Pascal follows a systematic approach to acquiring and growing SaaS businesses. His method focuses on finding small, profitable businesses with product-market fit and applying operational improvements to unlock growth.
- Target small SaaS businesses with $10-15K MRR and strong profit margins
- Perform extensive due diligence including customer and competitor interviews
- Develop a clear post-acquisition plan before making offers
- Structure deals with seller financing to align incentives
- Apply operational improvements in product design and enterprise sales
- Reinvest profits from successful businesses into new acquisitions
Pascal Levy Tools
Pascal utilizes various tools and platforms to execute his SaaS acquisition strategy efficiently. His tech stack helps with deal sourcing, due diligence, and business operations.
- Acquire.com and FE International for sourcing acquisition opportunities
- Notion for creating detailed acquisition memos and due diligence documentation
- SEO tools for analyzing the organic traffic potential of target businesses
- Internal team of product designers for improving acquired products
- CRM systems for managing enterprise sales processes
Key Notes
Throughout his journey building NOA Labs, Pascal has learned valuable lessons about acquiring and growing SaaS businesses. These insights form the foundation of his successful SaaS acquisition strategy.
- Have a clear post-acquisition plan before buying any business
- Avoid “falling knives” – businesses with declining metrics
- Structure deals with seller financing to align incentives
- Be prepared to quickly exit businesses that aren’t working
- Focus on breaking through growth ceilings that indie founders hit
- Balance acquisition growth with organic growth improvements
Get Started in Just 5 Steps
If you’re inspired by Pascal’s SaaS acquisition strategy and want to build your own holding company, here are five key steps to get started on your acquisition journey.
- Start with self-funded capital to learn the acquisition process without investor pressure
- Focus on small, profitable SaaS businesses with $10-15K MRR initially
- Develop a rigorous due diligence process including customer interviews
- Create detailed post-acquisition plans for each potential purchase
- Reinvest profits from successful acquisitions to fund future purchases
Conclusion
Pascal Levy’s journey with NOA Labs demonstrates the power of a well-executed SaaS acquisition strategy. By focusing on small, profitable businesses with product-market fit and applying operational expertise, he’s built a $1.5 million ARR holding company in just four years. His approach emphasizes careful due diligence, clear post-acquisition planning, and strategic reinvestment of profits. While not every acquisition has been successful, Pascal’s willingness to learn from mistakes and quickly exit underperforming businesses has been key to his overall success. For entrepreneurs looking to build a sustainable business without following the traditional VC path, Pascal’s SaaS acquisition strategy offers a proven alternative that balances growth with profitability.