Small and medium-sized businesses often don’t have many options when owners want to retire. Now they can turn to Baton, which offers a marketplace to help SMBs find buyers and just raised $10 million in a Series A round led by Obvious Ventures.
In all, Baton has raised $15 million in funding. The current $10 million included participation from Burst Capital, FJ Labs, Fluent Ventures and Zillow co-founder Spencer Rascoff. Prior investors Divergent Capital, Bloomberg Beta, and Zeno Ventures also took part.
Baton plans to use the new funding to hire more engineers and to boost marketing. The New York startup currently employs 15 people and is looking to double that number by the end of 2025, said Chat Joglekar, Baton’s CEO and co-founder. “We are excited at the opportunity to really reach so many more owners and buyers and support them in their journey,” Joglekar said.
Founded in December 2021, Baton aims to solve one of the biggest problems facing SMB owners: figuring out how to step away. When owners of small companies want to retire or step away, they often have no one to take over their businesses, especially if their children aren’t interested. Private equity may buy the SMB if the company is big enough. Other times, when there are no options, or just bad options, these companies sometimes cease operations.
“You see it a lot,” said Joglekar, who is a former Zillow executive.
Baton is also poised to gain from the “Silver Tsunami” which refers to the millions of small businesses that are expected to exit in the next five to 10 years as baby boomers retire, Joglekar said. “There will be a huge wave of SMB’s going to transact,” he told Fortune.
Baton’s major competitor in the space is the much bigger and older BizBuySell. Launched in 1996, BizBuySell is considered a leading aggregator of business listings. About 65,000 companies advertise annually on BizBuySell, which is a unit of CoStar Group, according to Bob House, BizBuySell’s president.
Unlike Baton, BizBuySell does not advise the companies listing on its site, House said. Instead, BizBuySell helps brokers source new business listings, value them, market them, and qualify the buyers, he said. “We welcome competition, and we love innovation in the business brokerage space for sure,” House said of Baton.
Croissants, baguettes and cookies
About 564 companies, from all over the U.S., are currently featured on Baton. Many of the businesses are in the services sector, like plumbing and HVAC, Joglekar said. To list on Baton, companies typically need to have a valuation of at least $100,000, he said.
Owners can receive a free valuation of their business from Baton that analyzes their financials, market trends and industry benchmarks. Baton then offers two plans that aren’t free. With the “lite” option, companies pay $500 a month to list on Baton. In return, customers receive reconciled financials, a data room and Baton advisors will also provide support once a company gets an offer, a spokeswoman said. There’s also a “pro” package, which costs $1000 a month, and includes all services in the lite package. Baton will also advise customers on creating their listings, their launch strategy, initial buyer interest and qualifications, and providing strategic buyer outreach to potential acquirers, a Baton spokeswoman said. If a business is sold, Baton takes a 6% cut from the sale, Joglekar said. (Monthly payments are credited toward the 6% fee if there is a sale, the spokeswoman said.)
SMBs have found success with Baton. Consider Gus “Emmanuel” Reckel, who spent nine years building up his business, L'imprimerie, a French bakery in Brooklyn, New York that sold croissants, breads and baguettes. Reckel realized in November 2023 that the business would thrive better with new ownership and decided to sell. “My mental health was becoming unbearable,” Reckel said. A former investment banker, Reckel would often have to wake up at around 1 a.m. on weekdays and 2 a.m. on weekends to run L'imprimerie, which in 2020 made Food & Wine’s list of 100 best bakeries in America. (In 2016, L'imprimerie’s chocolate chip cookie was voted the second best in NYC.)
In 2023, Reckel reached out to real estate agents, small broker dealers and listed the company on Baton. The real estate agents told him to shut down the bakery and sell the property, which he didn’t want to do, while the brokers produced offers that were "all similar in terms of ratios based on profits,” said Reckel, who ended up rejecting both options.
Baton produced several leads that were close to Reckel’s asking price and eventually resulted in L'imprimerie selling in late 2024. L'imprimerie is now owned by two brothers who don’t want to change the bakery but plan to further develop the business. Reckel, who is now retired, said Baton’s 6% fee was “money well spent…I couldn’t have done it on my own.”
