When e-commerce company Boxed went bankrupt, its SaaS division, Spresso, was spun out. The deal was facilitated not by equity investors, but by debt holder BlackRock, who saw value in the technology and team, converting their position into a new structure for the spin-out.
Reflecting on his journey with VC-fueled Boxed, the founder argues the startup ecosystem has shifted. He believes the 'growth at all costs' era is over, replaced by a 'peak bootstrap era' that prioritizes capital efficiency, doing more with less, and leveraging AI.
Describing Boxed's Chapter 11 filing, co-founder Jared Yaman validated the saying that bankruptcy happens 'slowly, then all at once.' The process was a gradual series of breached covenants and forbearance requests that created a turbulent environment before a sudden, rapid collapse into bankruptcy.
The transition from an internal tool to a commercial SaaS product is not just a business model change. For Spresso, it required 18 months of focused engineering to make the platform leaner and cut customer deployment time from four months to less than four weeks.
When asked about a hypothetical $50M (10x ARR) acquisition offer, the founder of enterprise SaaS company Spresso called it 'a bit frothy.' He provides a grounded perspective on current valuations, suggesting a multiple in the 6-7x ARR range is more realistic for his type of business.
Spresso, a $5M ARR SaaS company, maintains a conservative debt strategy. Leverage is kept below 10% of ARR (e.g., <$500k debt on $5M revenue) at a ~10% interest rate. The lender also received warrants for an equity position under 10%, providing a clear model for early-stage debt.
Despite raising $380M and hitting $187M in revenue, Boxed's co-founder owned a low single-digit percentage at IPO and did not achieve significant personal liquidity. This is a cautionary tale against the 'growth at all costs' mindset, which can heavily dilute founders in low-margin businesses.