Mastering Tech Investing: 4 Lessons from Constellation Software (213)

The Tech Strategy Podcast

This week’s podcast is about Constellation Software. And their approach to software investing.
You can listen to this podcast here, which has the slides and graphics mentioned. Also available at iTunes and Google Podcasts.
Here is the link to the TechMoat Consulting.
Here is the link to the Tech Tour.
On the Constellation webpage, they actually list their criteria for both “exceptional” and “good” companies. Here’s what they say.

• Exceptional businesses
  • Mid-to-large vertical market software businesses. With greater than $1M EBITDA.
  • Consistent earnings and growth. Constellation has a good equation for this:
    • EBITDA/Revenue + Revenue Growth = 20%
  • Experienced and committed management.
• Good businesses
  • #1 or 2 in a niche vertical market
  • Revenue over $5M
  • Hundreds or thousands of customers
  • “Unimposing” competitors

Constellation is an interesting company to follow if you invest in tech companies. Just follow their transactions. They do lots of them and you can learn a lot.
Cheers, Jeff
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I write, speak and consult about how to win (and not lose) in digital strategy and transformation.
I am the founder of TechMoat Consulting, a boutique consulting firm that helps retailers, brands, and technology companies exploit digital change to grow faster, innovate better and build digital moats. Get in touch here.
My book series Moats and Marathons is one-of-a-kind framework for building and measuring competitive advantages in digital businesses.
This content (articles, podcasts, website info) is not investment, legal or tax advice. The information and opinions from me and any guests may be incorrect. The numbers and information may be wrong. The views expressed may no longer be relevant or accurate. This is not investment advice. Investing is risky. Do your own research.

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