This special episode of Private Market Insights offers an insider’s perspective on the newly launched Private Market Labs platform straight from the founders. CEO Josh Levine and Chief Product Officer Titus Capilnean unveil their innovative solution designed to democratize the small business acquisition landscape. With diverse professional backgrounds— Josh in public policy and finance, and Titus in marketing and tech—they dive deep into how their vision and market knowledge evolved to bring the platform to life.
Below, you’ll find key takeaways from the conversation, but for a more personal introduction to the founders, we highly recommend tuning in to the entire episode:
Exploring Key Features of the Platform
The episode explores a variety of topics and insights, but we begin this summary by exploring what might be considered the highlight of the discussion: an in-depth presentation of the Private Market Labs platform. The conversation featured a live demonstration of its core functionalities, such as:
- The ability for users to tailor a search based on specific criteria like business type, location, and financial scope.
- A dynamic matching engine that identifies the most relevant deals according to user-defined search parameters.
- Features that enable users to save and meticulously track deals and brokers.
- Users have the option to leave feedback on deals and brokers. This input contributes to the ongoing refinement of the platform’s matching algorithm.
View a detailed walkthrough in the demo video of the Private Market Labs platform here:
Challenges that Sparked Innovation
Titus Capilnean encountered numerous obstacles while trying to purchase a business, despite the potential assistance from the SBA 7(a) loan program. His exploration of public marketplaces for viable business opportunities was hampered by challenges such as outdated deals and unresponsive brokers, making it difficult for potential buyers to establish meaningful connections. Additionally, he confronted the complexity of having to assertively qualify oneself to brokers, who often approached interactions with skepticism due to a flood of inquiries from unqualified tire kickers.
This experience underscored a fundamental issue: a prevalent disconnect between buyers and brokers. Private Market Labs was conceived with the aim to bridge this gap, enabling a more efficient, trust-driven initial dialogue and ensuring both parties are adequately qualified.
Navigating the Acquisition Catch-22
The dialogue dove into a complex, cyclical issue in acquisitions, described as “a catch-22 atop another catch-22”. In order to be taken seriously by sell-side representatives, buyers often need to display evidence of available or committed capital. However, some capital providers won’t (or can’t) commit to funding a deal without seeing the company being acquired. This scenario is further complicated by the need for separate underwriting for both the deal and the buyer, adding multiple layers to the already complex small business acquisition requirements. While we’ve observed improvements in this area, with investors and SBA lenders providing letters of support in advance of a deal being identified, this process can still serve as a barrier to entry for buyers without connections. As with other sources of information in our industry, we encourage buyers to engage numerous capital providers and sell-side brokers early in the process.
The numerous challenges in the acquisition process inspired Josh and Titus to pursue innovation for the industry. Thus, Private Market Labs was conceived as a multifaceted marketplace designed to foster a more streamlined and efficient navigation through the intricate acquisition journey for both buyers and brokers.
The Need for Data-Driven Navigation in the Acquisition Landscape
The journey through small business acquisitions is marked by fragmented and inconsistently formatted data. The myriad of data points scattered across broker websites and aggregators can make it difficult for buyers to confidently and precisely identify opportunities that align with their distinct investment theses. Executing a focused search—whether based on price range, business traits, or location—often becomes a tedious and complex filtering task due to prevalent inconsistencies in data access and presentation.
At its core, Private Market Labs is a data company structured as a marketplace. We engage with raw data, process it, and subsequently present it to customers. We belive that the future winners in this market will be companies and individuals that can manage and navigate through this data in a manner that is simultaneously comprehensive and user-friendly.
In this context, Private Market Labs aspires to weave through the data intricacy, guiding stakeholders towards informed, data-driven decisions within the acquisition labyrinth. We endeavor to not only connect disparate entities but to consolidate, organize, and intuitively present data to the users, thereby facilitating informed decision-making.
Efficient Data Management with Machine Learning
Navigating through the multifaceted realm of acquisition data, Private Market Labs identified the intricate challenges associated with making vast and varied data usable and accessible to stakeholders. With a background in AI, Titus outlined the challenges encountered in previous years concerning data structuring, infrastructure, and machine learning operations. He remarked that the situation changed dramatically between 2021 and 2022, with the advent of large language models that can deliver high value for very specific use cases. The integration of these machine-learning models into the platform provided a logical and innovative path to refine the handling and presentation of data. This technological leap not only improved the platform’s capabilities but also led the company to focus more on understanding what users are specifically searching for and providing that information in a structured manner.
Aligning Expertise with Business Searches
In addition to the discussion about the platform’s capabilities, Titus and Josh talked about building effective searches and how buyers can stand out among their peers. They advise buyers to build investment theses that take advantage of their unique areas of expertise. For example, while Titus started his search looking for a home services company, if he were starting over today, he would lean more heavily into areas where his extensive expertise in marketing and digital services can be fully utilized. Aligning acquisition goals with personal experience allows buyers rto operate with ease and expand the business’s existing trajectory.
This underscores the principle that the search process, bolstered by a platform like Private Market Labs, becomes more efficient when it’s combined with familiarity and genuine interest in a particular industry.
In aiming to connect aspiring owners with businesses that resonate with their experience and vision, the platform facilitates a heightened specificity in searches. This not only ensures an efficient search process but also enhances buyers’ appeal to sellers and brokers, amplifying the probability of finalizing deals.
Paving a New Path for a Broader Demographic
Reflecting on shifts in the industry, the founders have noticed a transformation in business acquisition, previously perceived as a closed circle for the wealthy elite. The gradual opening of this market is making room for mid-career professionals to seek business ownership, particularly with more businesses entering the market due to the retiring older generation.
This diversification is being actively supported by the emergence of various models of business acquisition and tweaks in SBA programs, making the acquisition journey more accessible to a wider spectrum of aspiring business owners.
When asked about valuable lessons from his entrepreneurship journey, Titus emphasized the importance of testing one’s business thesis. He advised early-stage entrepreneurs and seekers to collect data points and honestly evaluate the viability of their business ideas, enabling either course correction or the decision to move on.
Josh echoed this sentiment, urging entrepreneurs to separate their ego from their startup. Testing an idea rigorously, even attempting to disprove its viability, provides the surest path to understanding if the business concept has “stickiness.”
Both founders reiterated their commitment to making Private Market Labs a tool for democratizing the small business acquisition market. By emphasizing not only the mechanics of buying and selling businesses but also the importance of a resilient, data-driven approach, the team is steering Private Market Labs toward becoming an invaluable asset in the complex ecosystem of small business acquisitions.