When two serial entrepreneurs meet, sparks can fly. That’s exactly what happened with SparkLoop’s founders.
In less than three years, their success would lead to an acquisition. But the deal would be more an express lane than an exit. And it would be with someone they already knew quite well.
Teaming up to start newsletter growth SaaS Sparkloop
SparkLoop was born of circumstance, as happens with many successful small businesses. At the time, Nicholls was self-employed as a growth consultant, helping other B2B SaaS organizations improve their conversion rates.
This was the latest in a line of endeavors, including co-founding two previous companies: an e-commerce jewelry business and a B2B SaaS business called Gymhopper that was acquired by myClubs.
Eventually, one of his clients, Matt’s Flights, asked for help creating a referral program within their email newsletter.
That’s when Nicholls, who lives in Switzerland, contacted Frigerio, a UK resident. They had met at a SaaS conference in London in 2018.
Frigerio had his own history of entrepreneurship. He’d founded three companies, including ReferralHero, a tool that helped event planners create viral waiting lists. He eventually sold ReferalHero in a 6-figure deal, as featured on our podcast.
Nicholls knew Frigerio would be able to help him help his client, but they soon realized they had more potential than that.
In the summer of 2020, they created SparkLoop: an email marketing software that didn’t require marketing skills or knowledge to use. It allows newsletter operators to incentivize referrals from their readers and get paid to recommend other newsletters, among other features.
Partnering with ConvertKit for growth
From the start, they partnered with ConvertKit, the privately held email service provider that would come to acquire them just three years later. Newsletter operators got access to SparkLoop for free when they paid for a certain tier of ConvertKit.
A year and a half into running the business, the founders raised funds in the low 6 figures from friends and partners in the space. ConvertKit’s audience-broadening influence gave them a boost: SparkLoop was growing well by that point, primarily by word of mouth. They also offered some helpful free products, like a newsletter reaction widget, that sweetened the deal for users and garnered thousands of high-quality leads.
By 2023, SparkLoop had achieved low 7-figure annual revenue with thousands of active users — and they were seeing 25% increases monthly, Nicholls said.
The challenges of co-creating a global enterprise
Many entrepreneurs are well aware of the challenges of working remotely.
But for SparkLoop’s founders, the regular pains of telecommuting were just the start. The U.S. sends more emails than any other country in the world — so Frigerio and Nicholls primarily serve a user base living in very different time zones than their own. (ConvertKit is based in Boise, ID.) That meant, and still means, taking phone calls at hours when most of us are in bed. (I talked with Nicholls at 10:30 p.m., his time.)
Fortunately — and, again, thanks partly to ConvertKit’s influence — SparkLoop soon grew strong enough to ease the burden. At the time of the acquisition, SparkLoop employed six full-time contractors, a team that stayed abroad throughout the transition and has since grown to 10.
But at the beginning of their journey, the founders wore every hat the company had to offer. On top of all that, over the three years that transpired between launch and acquisition, Frigerio had two children and took parental leave for both.
“I don’t even have to worry about a dog,” said Nicholls in a hat-tip to his partner’s resilience.
Why SparkLoop’s acquisition is not an exit
The SparkLoop team had consistent communication with ConvertKit, just like they did with other email partners. Through those conversations, the idea of an acquisition came up several times, and it was a “friendly discussion,” Nicholls said. Eventually, the timing was right.
Given their prior acquisition experience and existing relationship with ConvertKit, Nicholls and Figerio were well-positioned to sell SparkLoop in a way that worked for them. That meant one that would allow them to stay onboard and keep the company growing. (The pair partnered with legal experts to ensure the complicated structure of the deal met their needs.)
“Bootstrapping a marketplace is hard,” said Nicholls. “ConvertKit could provide us with the supply side already.”
For their part, ConvertKit was interested in the opportunity to seamlessly integrate a company with such a similar mission to their own: to help creators get paid, early and often. SparkLoop “integrate[s] with every major email provider,” ConvertKit founder Nathan Barry said on the Creator Science podcast — which unlocked a whole new tier of newsletters for creators to get paid to refer.
“You’re getting paid so early in your creator journey that this is fantastic,” Barry continued. “So when we saw that, we were, like, immediately calling up Louis and Manuel.” The deal took several months to forge and was finalized in March 2023.
I’m excited to announce we just acquired @SparkLoopHQ which is going to allow creators to make a living in a totally new way.
Here’s why this acquisition is a game changer for the creator economy: pic.twitter.com/du5ON2DGRS
— Nathan Barry (@nathanbarry) June 9, 2023
“Not only does this deal change the game for how creators earn a living… it enables publishers on SparkLoop to be recommended by 100k+ newsletter creators,” wrote Nicholls in the acquisition announcement. That unlocks “a scalable, high-quality audience acquisition channel that supports individual creators, rather than Google and Meta.”
Unlike their previous company sales, neither Nicholls nor Figerio see SparkLoop’s acquisition as an exit. Instead, they’re “both really focused on the opportunity that we’ve now been presented with — how we can turn this into, essentially, the best place that newsletter operators and creators across all different email platforms can come together and help each other grow,” Nicholls said.