POWERS #274 - Paul Yancich - Co-Founder of Arcadea Group - Acquiring VSaas Businesses w/ Permanent Capital
High-Clarity Investing Framework
- Constellation taught Paul to use base rates and Bayesian priors instead of narrative-driven forecasts.
- High-clarity thinking and operational scars are essential to be a great investor.
Family Music Shaped His Work Ethic
- Paul links lifelong classical-music discipline to mastery and relentless practice.
- He credits his dad's orchestral career for instilling dedication and low tolerance for repeated mistakes.
Positioning Between Aggregators And VC
- Arcadia targets faster-growing vertical SaaS companies that sit where Constellation stops.
- They prioritize flexible ownership structures and long-term partnership over quick flips.
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Paul oversees the strategic direction and development of Arcadea across all areas of the firm alongside his partner, Daniel. Paul began his career as a member of the Citigroup Global Analyst program, where he gained exposure to a number of divisions before landing on the high yield and investment grade credit research desk. After Citi, Paul joined Arsenal Growth, a VC & Growth Equity firm in the US with offices in Palo Alto and Orlando. Starting as an Associate and leaving as a Principal, Paul focused on high-growth b2b enterprise software and eCommerce businesses.
Paul then joined Constellation Software (“CSI”), where he had a number of executive roles including leading the global investment team of one of CSI’s six operating groups, acting as CEO of a public sector business, and leading a group of businesses in various verticals.
On this episode, Chris and Paul discuss:
➡️ Lessons learned from working at Constellation Software
➡️ How they underwrite investment opportunities
➡️ Investing with permanent capital and a long-term horizon
➡️ How Arcadea creates value for their portfolio companies
Key Takeaways:
(2:55) - Paul’s career and background
(6:28) - How was Constellation structured? Why was it 6 operating groups?
(8:14) - What’s the benefit of carrying a light corporate office?
(10:37) - Thinking in a high-clarity manner
(13:19) - Is there anything about your family’s history or your love of classical music that played into your ultimate career in acquiring SAAS companies?
(15:15) - How did you end up building Arcadea Group?
(17:58) - Does high growth always mean early stage?
(19:53) - Have most of these businesses you acquire taken on VC?
(24:15) - What is a Vertical SaaS?
(26:35) - What can you do differently operationally in VSaas versus other Software services?
(27:56) - What is Long-termism and why are you pursuing that route?
(32:55) - Do you only offer one injection of cash or do you inject as needed?
(36:38) - Who’s making the decision of whether the business needs more capital?
(40:16) - Do companies mature to a point where they no longer fit the Arcadea model?
(42:11) - What is a quick ‘no’ for you when looking at a company?
(44:54) - What happens in the first year of an acquisition?
(50:03) - What makes an exceptional operator?
(52:32) - How do you make your CEOs think like investors?
(54:51) - What are your investors expecting from you as permanent capital?
(56:27) - What does it do for your business to have such an accomplished advisor on your board?
(59:07) - What happens when a founder or CEO abruptly exits?
(1:01:30) - Are you successful because you’ve been in the seat of the CEO and operator?
(1:03:22) - What are Kanban and Scrum?
Additional Resources
👉 Arcadea Group: https://www.arcadeagroup.com/
👉 Paul on LinkedIn: https://www.linkedin.com/in/pyancich/
➡️ Learn more about Xeal: https://xealenergy.com/
➡️ Fort Capital: www.FortCapitalLP.com
➡️ Follow Fort Capital on LinkedIn: www.linkedin.com/company/fort-capital/
➡️ Follow Chris on Twitter: www.twitter.com/FortWorthChris
➡️ Follow Chris on LinkedIn: www.linkedin.com/in/chrispowersjr/
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