$10T in small businesses are selling

Every founder I meet wants to build something from zero. I get it. I run a venture fund built entirely on backing people who want to create something that didn't exist yesterday.

But a few weeks ago I came across a story that made me rethink what "building" even has to mean.

A woman named Coco Sellman built a home health care company, Alumé Home Health, from nothing, grew it through a merger during COVID, and sold it in 2024. Instead of starting something new after that, she went looking for a business to buy. She's now evaluating a 17-year-old digital media company with 20 brands already running. Her reasoning: "It's been around for 17 years. There's really a recipe in place." She already proved she can build. She's choosing not to start over.

Her strategy is similar to Bending Spoons, the Italian company that just went public on Nasdaq this month at an $18.4 billion valuation. Bending Spoons doesn't build products, it buys them: Evernote, WeTransfer, Vimeo, AOL, Meetup, all companies that already had a use case and an audience, then makes them profitable through better technology and leaner operations. The company has already scoped out more than 1,000 additional acquisition targets worth a combined $400 billion in annual revenue. Nobody there is trying to invent the next great productivity app. They're buying the ones that already exist and running them better.

By the way, I talked to the queen of buying small businesses a few months back, and here’s what she had to say:

There is $10 trillion in small businesses for sale right now.

More than half of U.S. small business owners are over 55. One in four are 65 or older, according to a McKinsey report covered by Forbes in February. Six million businesses are expected to change hands by 2035 in what McKinsey calls the "great ownership transfer," with roughly a million of those actually selling in transactions worth a cumulative $5 trillion. The Boomer-owned businesses behind that wave carry an estimated $10 trillion in enterprise value combined.

Only half of those owners have a formal succession plan. One in three is already struggling to find a buyer. This isn't a future opportunity. It's a current one, sitting unclaimed because almost nobody is positioned to claim it.

The people who buy instead of build have shockingly better odds.

Roughly half of new businesses survive five years, and the survival rate keeps thinning out from there, according to Bureau of Labor Statistics data. Founders take those odds because there's no other way to build something that didn't exist before.

But there is another way to become the owner of something that didn't used to be yours. Entrepreneurship through acquisition, buying an existing, already-profitable business instead of founding one, has been taught at Stanford's business school since the 1980s, with Harvard, Yale, and Northwestern all following. 

Stanford GSB's long-running search fund study has tracked search funds formed since 1984, and the aggregate returns on that acquisition path have consistently and dramatically outpaced the returns on funding brand-new startups.

Two weeks ago, I told you that female-founded companies generate 78 cents of revenue per dollar invested versus 31 cents for male-founded ones, and that the market rewards the founders who build lean. This is the same story wearing a different outfit. The path that outperforms is rarely the one everyone's chasing.

The barrier for women is coming down.

For years, the honest answer to "why aren't more women buying businesses" included financing. In 2023, women-owned firms were fully approved for loans just 44% of the time, versus 54% for men-owned firms, per the Federal Reserve's Small Business Credit Survey.

In 2024, that flipped. Women-owned firms hit a 54% full approval rate. Men-owned firms came in at 50%. Women also applied for financing more often, 64% versus 58%. The door that used to be harder to open is now, by the numbers, slightly easier for women to walk through than it is for men.

In that same 2024 data, 28% of women-owned firms that didn't apply for financing cited debt aversion as the primary reason, a larger share than men-owned firms gave. The lending gap closed. The willingness to use debt to buy something, which is exactly how most acquisitions get financed, an SBA loan against a business with a real P&L, hasn't caught up to it yet.

I keep coming back to the version of my own career where I bought instead of built.

I've never done it. Every year of my career has been on the founding side: funding people who are creating something from nothing, and pushing my own portfolio founders to do the same. That bias runs deep in how I think about business, and I don't think it's wrong. I just don't think it's the only right answer anymore.

The businesses sitting in that $10 trillion pile aren't glamorous. Nobody's writing a TechCrunch headline about the HVAC company outside Cleveland with 22 employees and a 66-year-old owner who's ready to golf full time. There's no pitch deck, no hockey stick, no demo day. But that unremarkable quality is the asset. Nobody's competing for it, and it already works. It already has customers, a team, a decade of proof that the model holds up.

If I'm honest, the reason more women haven't stepped into this is close to the reason it took me most of a decade to see it clearly myself. We were handed one definition of ambition: start something, scale it, exit it. Buying a business that already exists doesn't look like ambition under that definition. It looks like inheriting someone else's work instead of doing your own.

But running something well isn't a smaller act than creating it. It's a different act, and right now it comes with better financing, better odds, and almost no competition for the seat.

I'm not walking away from the founder side of my job. I'm just done treating it as the only legitimate front door.

Hit reply and tell me: would you ever buy a business instead of starting one? I read every single response.

Jenny

P.S. If you know someone sitting on a business with no succession plan, or someone with the capital and the nerve to buy instead of build, forward them this.

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