OffDeal: Revolutionizing Small Business Transactions with AI
Small businesses are often regarded as the backbone of the American economy, providing nearly half of the nation’s jobs and contributing approximately 44% of the U.S. GDP. When it comes to selling these businesses, however, owners frequently encounter a lack of viable options. Many entrepreneurs resort to working with small business brokers, pass their companies to family members, or, regrettably, decide to shut down entirely. Meanwhile, large corporations utilize investment banks like Goldman Sachs to secure the best acquisition prices, leaving small enterprises in a lurch—especially since Wall Street firms typically ignore deals under $25 million.
Finding a solution to this gap in service is OffDeal, a forward-thinking startup innovatively founded by former investment banker Ori Eldarov and ex-Meta engineer Alston Lin. OffDeal aims to automate traditional mergers and acquisitions (M&A) services, enabling millions of small business owners to navigate the selling process more efficiently.
How OffDeal Works
OffDeal utilizes advanced AI agents to automate aspects of the acquisition process, simplifying the matching of small businesses with potential institutional buyers. The company is currently participating in Y Combinator’s Winter 2024 batch, marking a significant step in its development.
Catering to the unique needs of small businesses, OffDeal’s AI algorithms gather crucial information—such as website content, revenue data, and employee counts—to produce a roster of viable buyers. In one demonstration, Eldarov illustrated how simply by entering a business’s details, OffDeal’s technology could identify 150 potential buyers while also extracting data on previous acquisitions and compiling a profile that could facilitate immediate outreach.
Moreover, for buyers looking to expand their portfolios, OffDeal has developed a comprehensive database containing information on around 2 million American small businesses potentially seeking to exit in the coming years, making it easier than ever to scout for acquisition opportunities.
Growing Demand and Services
As it stands, OffDeal is already under contract with nine institutional buyers and has over 250 more on a waitlist eager to utilize its services. The company’s offering echoes some of the functionalities provided by traditional investment banks but aims to do so more efficiently by utilizing AI. Eldarov is resolute that the human touch is irreplaceable in these critical transactions, emphasizing the need for skilled advisors alongside technology.
OffDeal’s not just a tech platform; it is a full-fledged advisory firm that leverages its software to fight against traditional brokers. By keeping advisors in the loop, the platform aims to mitigate the risks associated with AI, particularly the problematic phenomenon of "hallucination," where AI generates inaccurate or misleading information. The team believes that by integrating human oversight with AI capabilities—utilizing OpenAI’s GPT-4 models—they can optimize the advisory process while maintaining quality control.
Fair Pricing and Future Plans
OffDeal’s pricing model ranges between 5% to 10% of the transaction value, aligning closely with traditional investment banking rates. However, the founders are confident that their AI-driven approach will enable them to close more deals than traditional brokers can achieve.
This business model isn’t exclusive to OffDeal; leveraging AI for repetitive tasks has been a burgeoning trend across various industries, from legal services like Harvey AI to compliance solutions such as Sedric. Investors remain keen, as evident from OffDeal’s recent funding success—a $4.7 million seed round led by Radical Ventures, an AI-focused venture firm. The startup is poised to use the new capital to expand its team of advisors and bolster marketing initiatives.
Conclusion
With AI reshaping the landscape of small business acquisitions, OffDeal stands on the cusp of revolutionizing the way entrepreneurs transition out of their ventures. By blending technology with a human-centric approach, OffDeal not only helps small businesses find suitable buyers but also paves the way for more efficient and successful transactions. As the demand for innovative solutions in this area grows, OffDeal is carving out its niche in an evolving market, demonstrating that even the smallest enterprises can leverage modern technology to find new horizons.
