The Second Acquisition: Notehouse

I'm excited to announce that over July and August, we closed the second acquisition in Waterglass's history.

Notehouse (getNotehouse.com), which originated as note-taking software that eventually transformed into a lightweight, HIPAA-compliant CRM for nonprofit leaders, social workers and counselors, is a $100k ARR business that has been growing steadily over the past six years and has carved out its own niche in the market, based in Massachusetts, USA.

The founder of Notehouse, a US immigration counselor, started it with a simple idea: let's keep note-taking simple and easy, especially for non-tech-savvy users. And that idea has paid off.

With 100+ reviews on Capterra, a solid 4.7-star rating, and awards received for “Best Ease of Use” and “Best Value” in 2023, we realized it struck a strong chord with its customers.

That's no coincidence. Our first acquisition – Pxl – had similar positive ratings which serve as a strong indicator of customer satisfaction.

Three weeks to get to an initial conversation

After more than six years of building Notehouse as a non-technical founder, she made the strategic decision to find the right partners who could take the product to the next level.

We initially came across Notehouse on a marketplace. However, the initial price of $375k was above what we were looking for at the time.

Nonetheless, Notehouse ticked a lot of boxes on our list:

• Founder-led B2B SaaS niche business
• Serving 250+ customers
• In a niche that – at least we think – we will be able to fully comprehend

However, getting the founder's attention took three weeks of persistence, because on the surface, we didn't look like the perfect fit at first.

What eventually got things going was an intro video about myself and Waterglass that I recorded and sent over. I've always supported female-led initiatives and she wanted her creation in the right hands.

But due diligence revealed a big risk

The due diligence process took another three weeks and revealed a risk we hadn’t accounted for: the codebase was in really bad shape.

Throughout the process, we learned that the web application – owing to the fact that several IT agencies had worked on it over many years – had become a wild mosaic of workarounds and fixes.

And not only that: back in December, a week-long outage shook the very foundations of Notehouse, ultimately marking the starting point for the founder’s decision to sell it.

It was clear that, if we were to make the deal, we would need to rebuild the application from scratch.

Turning a threat into an opportunity

So why did we move forward? At Waterglass, we focus on acquiring software businesses that have a solid customer base and distribution as well as product figured out.

However, what excited us about Notehouse is that despite the many challenges the product has on the technical side, customer love it. Not only that, churn is and always has been low, which is another sign of strong product-market fit.

Our hypothesis is that if we carefully rebuild Notehouse with our in-house engineering talent, we will not only be able to bring a delightful user experience to customers, but also build the very foundation to improve on top of it, especially in the context of AI-enablement.

Products don't survive six years (almost) on autopilot unless they truly solve a problem and have people who truly care. The founder created something so valuable, it thrived by itself. Now, it’s our turn to give Notehouse the technical and distribution attention it deserves.

More about this in the upcoming issue.