Diving In: Announcing Our Investment In Splash

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As many in our network know, we at Asymmetric have regularly invested in rollup platforms - efforts to build large businesses via the acquisition of many small businesses - since the inception of our firm in 2021. Our logic for this niche (but we believe compelling) approach to investment is summarized in greater detail in this post; suffice it to say under appropriate conditions we believe the risk-adjusted return profile available in this space is competitive with many alternative uses of our precious fund capital. In that vein, today we are thrilled to announce we have led the Pre-Seed raise for Splash, founded and led by serial entrepreneur Jeremy Yamaguchi. Splash is an acquisition platform for residential pool services businesses, with so much more beneath the surface.

To start, we found that residential pool services displayed many of the foundational criteria we search for in evaluating this style of consolidation platform:

• Industry Characteristics: residential pool services in the U.S. represents $5B+ of annual spend across a fragmented base of 85K+ companies, with spend growing at GDP+ rates and resilient through economic cycles. While there is no scaled national - or in many cases, regional - brand of note, we do not believe the industrial logic of the industry precludes that outcome.
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• Rollup Logic & Economics: Efficiencies across labor utilization and goods procurement create a genuine rationale for building local scale through consolidation. In addition, healthy acquisitions broadly available at 3x - 5x LTM Actual EBITDA (and under buyer-friendly structures) create an opportunity to efficiently build a parent company with strong logic to be valued at 12x+ EBITDA at scale - with significant, capital-efficient equity value creation along the way.
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• De Novo Technology Opportunity: Little in the way of high-quality vertical software exists for residential pool services, which we find unsurprising given the SMB-dominated nature of the industry and the difficulty of efficiently selling into that customer segment. However, that dynamic does not itself imply that software cannot create meaningful business benefits across customer experience and margin structure; we believe in these circumstances a consolidation platform must acquire SMBs and infuse them with proprietary vertical software to unlock these benefits. Splash intends to do exactly that.

While we at Asymmetric care deeply about each of the factors and dynamics listed above (amongst others), the pairing of (i) SMB acquisition and (ii) proprietary vertical software built by the parent company is both the most underappreciated and in some sense first among equals. Ownership enables the parent company to capture in full the value created, simultaneously (i) enhancing the acquired P&L, (ii) producing more future non-dilutive acquisition currency in the form of augmented free cash flow and (iii) positioning the parent company as an advantaged acquirer relative to less tech-forward competitors. In that way, Splash is representative of our broader tech-enabled approach to investing in acquisition platforms. We at Asymmetric believe this general approach can be translated to other industries with similar dynamics, and have been hard at work identifying those opportunities; we look forward to sharing more as we continue to invest behind this theme.

Of course, the factors and dynamics described above speak only to opportunity; for any nascent, ambitious early-stage platform, a founder or founding team is required to translate that abstract potential into a valuable, successful business at scale. To that end, we are genuinely thrilled to partner with Jeremy. As a third-time founder in home services, the depth of his category expertise and informed nature of his vision for Splash were apparent from the start. Over time, we came to appreciate his broader, polymath nature and ability across core technology, go-to-market, and M&A disciplines in addition to his more general strength as a business leader. In Splash, we believe we have invested in a platform with a genuine opportunity to grow into a national champion over time, and have partnered with a deeply talented founder on the journey to do so. We look forward to sharing more updates as the story begins to unfold.

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Splash is currently hiring for a Head of M&A and is actively sourcing acquisitions of residential pool services businesses. If either may be relevant to you, please reach out to sam@acp.vc.