OffDeal Uses AI to Help Small Businesses Find Buyers and Big Exits

Small businesses are a cornerstone of the American economy, accounting for nearly half of the workforce and 44% of the nation’s GDP. However, when small business owners look to sell their companies, they often have limited options. Some owners turn to small business brokers, pass the business on to family, or close the business entirely. While large corporations turn to investment banks for mergers and acquisitions (M&A), firms like Goldman Sachs don’t typically handle deals below $25 million.

OffDeal’s AI-Powered Solution for Small Business Exits

OffDeal, a startup founded by former investment banker Ori Eldarov and former Meta engineer Alston Lin, aims to fill this gap. As part of Y Combinator’s Winter 2024 batch, OffDeal leverages AI agents to automate M&A services for small businesses, providing them with tools typically reserved for larger corporations. The platform helps small businesses find buyers, matches them with institutional investors, and generates pitch decks—all while keeping interactions with human advisors.

“The most important transactions in our lives all involve a human,” said Eldarov in an interview with TechCrunch. He believes the mistake others have made is relying solely on code to manage complex transactions, which require a human touch.

How OffDeal’s AI Agents Work

OffDeal’s AI agents work behind the scenes to streamline the buying and selling process. To find buyers for a small business, OffDeal’s software scrapes a company’s website for details about its products, services, and markets. It then analyzes the data to identify 150 potential buyers, complete with information about their acquisition history and other factors that would make a good match, and then provides a way to quickly contact them. This allows for more targeted outreach to buyers with a high likelihood of interest.

On the flip side, institutional buyers can also use OffDeal to search a database of 2 million U.S. small businesses, matching them with those that may be looking for an exit to sell in the coming years.

AI as a Copilot, Not a Replacement

While AI handles much of the heavy lifting, OffDeal recognizes the limitations of AI models, particularly the risk of hallucinations, where the AI might generate inaccurate or misleading information. OffDeal CTO Alston Lin acknowledges this challenge but notes that advances in AI, such as OpenAI’s GPT-4 models, have reduced these errors. That’s why OffDeal, like many other AI-powered startups, uses AI as a “copilot” rather than a full replacement for human oversight.

OffDeal’s Business Model and Growth

OffDeal charges between 5% and 10% of the transaction value for its services, similar to traditional investment bank rates. The company believes its AI-powered advisers can close deals more efficiently than other small business brokers. As of now, OffDeal has nine institutional buyers under contract, with over 250 on a waitlist.

Future Growth Plans and Funding

OffDeal recently raised $4.7 million in seed funding, led by AI-focused venture firm Radical Ventures. The startup plans to use this funding to expand its team of advisors and ramp up marketing efforts.