Bootstrapping an investment bank to $100M+ deal volume
TL;DR: Einar Vollset's path to founding Discretion Capital exemplifies how businesses can emerge from natural network effects rather than top-down planning. After selling his second business in 2015-16, he was pulled into technical due diligence work for PE firms. When a dinner conversation revealed that buy-side brokers get paid for deal flow, he started making introductions. The real opportunity emerged when PE firms began moving down-market in B2B SaaS, buying businesses as small as $1M ARR instead of their previous $10M+ threshold. This created demand for advisors who understood smaller SaaS businesses. Founders started coming to Einar for advice on acquisition offers, and eventually one asked him to help find a better deal. He thought 'Yeah, I probably could' and Discretion Capital was born. Rather than hiring MBAs or paying for expensive databases like PitchBook, Einar built scrapers to track all PE firms and their portfolios worldwide. This technical approach gave Discretion a cost and capability advantage over traditional banks, whose junior staff were often non-technical and resentful of 'small' deals. Client growth came entirely through word of mouth. When you add 300% to someone's initial PE offer, word gets out. The firm now handles well above $100M in transaction volume yearly, serving mostly technical founders (95% of clients) in the $2-20M ARR range.
Key Insights
- PE firms moving down-market to sub-$10M ARR SaaS acquisitions created a new advisory opportunity
- Word of mouth from exceptional outcomes (300% improvement on offers) drove all client acquisition
- Building proprietary data systems (scrapers for PE portfolios) provided cost and capability advantage over traditional banks
- Technical expertise is a competitive advantage against traditional bankers who are often non-technical
- Businesses can emerge from network effects and genuine expertise rather than top-down planning
Actionable Takeaways
- Monitor industry shifts (like PE moving down-market) that create underserved segments
- Build proprietary data infrastructure instead of paying for expensive third-party databases
- Start by giving free advice in your area of expertise to build reputation and surface opportunities
- Focus on exceptional outcomes that generate word-of-mouth referrals
- Use technical skills as differentiation in service businesses dominated by non-technical incumbents