Tech Enabled Services

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Tech enabled services- there is this open question on whether this is a big enough opportunity for venture investors or is this a better fit for private equity investors. We have seen investors try this from both the VC and PE angle. PE has been rolling up services businesses for a long time from HVAC and roofers, to wealth management. The hot new area I have been reading about lately and hearing more and more is rolling up accounting or CPA firms. Infusing these with technology and software to really scale.

You would think CPA firms are ripe for a technology overhaul. The opportunity to train LLMs on tax laws and make accountants more efficient is astronomical. Now can this be done from a VC investment or is it better suited for PE firms to pour money into? Should VC’s focus on investing in the software and LLMs and let the PE firms roll up the CPAs and leverage this tech? Or should it be done all together by a VC with a bigger vision.

One area we have seen investment from VC investors in a services business that is now building software to better optimize their operations is in the pool industry. Acquire a bunch of pool cleaning services businesses, create vertical software, and scale scale scale.

What other industries are ripe for VC’s to run a similar playbook? I think over the next few years we are going to see a lot more VC money pour into similar opportunities. We hear about the great wealth transfer and the big opportunity to acquire SMBs as most of the older generation does not have an exit in place. There are endless small and medium businesses for sale across Acquire.com, BizBuySell, WithKumo and dozens of other sites. There are search funds where PE investors are gobbling these SMBs up, but its just a matter of time until VC’s start to work their own playbooks.

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