For more than eight years, Clu Connors built Radius as a side gig.

In its first year, the sales enablement and customer relationship management (CRM) platform made $708.

“I played the long game — tortoise vs. hare type of approach,” Connors said.

In 2022, around 13 years after launching, he got a LinkedIn connection request from a private equity firm that had just acquired Radius’ direct competitor. Just a few months later, discussions of a strategic acquisition began to unfold.

Growing this software company as a side gig

Radius is software that helps insurance agencies market to leads while also managing their existing clients with sales automation, marketing automation and integrated VoIP.

The CRM industry is massive, with lots of products to choose from, but customers are often better served by tools that are built for their specific industry, rather than a one-size-fits-all approach. Connors, with his background in insurance, realized how much time agents spent customizing CRM solutions to meet their needs. That’s why he built Radius: to cater to insurance agents and agencies.

Connors launched the first version of Radius in 2009. Initially, Radius operated on a “freemium” pricing model, providing users a free basic version with the option to upgrade for additional features and functionality. But this approach wasn’t paying the bills, Connors told Cheddar, so he moved to a tiered pricing model. At the time, monthly plans ranged from $34 for a single agent to $732 for up to 10 users.

Radius primarily grew organically through word of mouth. Connors also participated in a large online insurance agent forum to gain awareness, he told us. Over the years, organic SEO also proved effective.

Connors kept Radius bootstrapped, “reinvesting revenue back into the product to help it organically grow,” he said.

He wasn’t interested in chasing growth at all costs. Instead, Connors focused on three critical levers for sustainable growth: top-line revenue, churn and profit margin.

“Our annual growth became very consistent, very predictable and as our revenue grew, we were able to stay at roughly the same expense structure, so each new account wasn’t a burden on costs but more margin,” he said.

One of the biggest challenges along the way was “staying true to the product,” Connors said. Instead of trying to build every requested feature or pursue every idea the team had, he chose to stay focused on the core offering.

In 2018, Connors left his customer marketing role at Quest Diagnostics to focus on Radius full time.

“My career at Quest Diagnostics was advancing in a very positive direction, but Radius was growing rapidly at the same time,” he said. “My journey came to a fork in the road and I needed to make a choice.”

Connors kept his team lean. He initially brought on one developer to build, maintain and upgrade Radius. Later, he added a customer support representative and eventually another developer. At sale, the team consisted of Connors plus these three contractors.

In 2022, after working on Radius for more than 12 years (including full time for more than four), the platform had 8,000 paid users.

Selling Radius: “There was still so much more growth in it”

Connors told They Got Acquired that selling had crossed his mind, but he was never all that serious about it.

Then in 2022, he had a brief introductory call with Resurgens Technology Partners after becoming connected on LinkedIn. The private equity firm had recently acquired AgencyBloc, which Connors considered a direct competitor to Radius.

A few months later, another investment firm also inquired about acquiring Radius, and Connors became more interested in selling.

“It had been more than 10 years, and I had taken the business as far as I wanted to, but there was so much more growth in it,” he said.

That’s when Connors circled back to Resurgens Technology Partner and learned AgencyBloc was interested in a strategic acquisition to expand its sales and enablement capabilities.

Adding Radius to its portfolio would also complement another recent acquisition AgencyBloc made. In July 2022, it had acquired FormFire, which offered quoting and enrollment for small-group benefits and medical health questionnaire data collection for carrier underwriting.

Connors held dual conversations with AgencyBloc and the other investment firm, and ultimately pursued the sale to AgencyBloc.

“Both firms were strategic buyers but had different approaches to post acquisition,” he said.

He opted not to work with an M&A advisor to sell the business, even though it was his first time going through the sale process.

Within a few months, in November 2022, Radius was acquired for a sale multiple of 6x revenue.

Most small businesses sell for a multiple of EBITDA, but SaaS companies with more than $1 million in revenue are the exception, as they tend to be valued based on revenue multiples. Our sale multiples guide reveals typical multiples for different types of businesses.

After the acquisition, Connors stayed on for a year and a half to help with product and team mergers. His contractors also joined the team as full-time employees or remained contractors.

Once he left the company, he went on to build Scour, a compliance tool that screens prospect lists against the Do Not Call Registry, and Clue, which uses AI to help translate legal jargon on contracts.

“Always be open to any conversation,” he said. “Even if it isn’t the right one, you’ll still learn something from it.”