There is a strange new category of company appearing everywhere right now.
It has a real product… the software works… the founder spent one or two years building it. There may be custom infrastructure, proprietary workflows, patent activity, domain expertise and a genuinely useful solution underneath it.
What it lacks is revenue.
Sometimes it lacks distribution. Sometimes timing. Sometimes the founder discovered that building the product was far more enjoyable than selling it. Sometimes funding disappeared halfway through the journey. Sometimes a technically strong team built something valuable in a category where the eventual winner needs an enterprise sales force, an installed customer base, or a much larger product ecosystem.
Historically, these companies entered a kind of commercial purgatory.
They’re too early for an investment bank, too sophisticated for a code marketplace, too valuable for the founder to shut down and forget, and too commercially immature for buyers trained to value software through ARR multiples.
Revenue is only one form of evidence
Conventional software M&A begins with financial evidence.
How much recurring revenue exists? How quickly is it growing? What is gross retention? What is the customer concentration? What multiple did comparable companies receive?
Those questions make sense when somebody is buying an operating business.
But a strategic buyer can acquire something else entirely. It can acquire:
12-18-24 months of product development
A working answer to a roadmap question its internal team has yet to solve
A founder’s accumulated insight into a highly specific technical problem
A product that becomes significantly more valuable when placed inside the buyer’s distribution, data, brand or installed customer base
The value, in other words, may exist in the combination rather than in the standalone company.
That requires a different acquisition thesis.
The real question is rarely “How much revenue does it have?”
For early-stage assets, the more useful questions are:
What would this allow the buyer to launch faster?
Which internal roadmap does it accelerate?
What would recreating the product require?
Does the founder possess knowledge that would transfer with the asset?
Does the buyer already own the distribution the product lacks?
Could this become a feature, product line, assessment engine, workflow or infrastructure component inside a larger platform?
What new revenue, retention or strategic control could the combination create?
That is where pre-revenue software acquisitions become legible.
A product can have weak standalone economics and strong strategic economics at the same time.
This distinction seems obvious once stated. Yet most early-stage founders still approach potential buyers with a deck written for investors.
They explain the market size, forecast revenue, describe the product’s features, and try to present an optimistic five-year model.
A strategic buyer needs a different story. The buyer needs to see where the product belongs inside its company.
Mocking up the acquisition before pitching it
This has become one of the more unusual parts of my process.
Before approaching a buyer, I study its product direction, recent announcements, executive language, acquisition history and apparent roadmap gaps.
Then I build the acquisition case around that specific company.
In several recent situations, I have created visual mockups showing what the seller’s technology could look like inside the buyer’s existing platform.
For one workflow automation company, I showed how an assessment engine could become an “opportunity intelligence” capability that identifies which processes deserve automation before a customer starts building.
For a developer platform, I showed how an external product could provide continuity as software projects move across AI agents, coding tools and human developers.
For other buyers, I have created private acquisition pages, short video walkthroughs and tailored integration concepts.
The purpose is to remove the imaginative burden.
A corporate executive receives hundreds of vague partnership emails, founder introductions and product pitches. Very few arrive with a credible answer to:
Why this asset, inside this company, right now?
The best acquisition outreach should almost feel like a product strategy memo that happens to include an available asset.
AI has changed the supply side of M&A
AI has reduced the cost of producing credible software.
Small teams can now build products that once required meaningful venture funding and a much larger engineering organization. That creates more experimentation, more niche products and more technically capable companies.
It also creates more stranded assets.
Building has accelerated faster than distribution.
A founder can use AI coding tools to create a sophisticated product in months. The founder still faces the old realities of enterprise procurement, customer trust, implementation, integrations, security reviews, category education and sales cycles.
The result is a widening gap between product capability and commercial maturity.
That gap creates acquisition opportunities.
Large software companies face the inverse problem. They have customers, distribution, capital and established platforms. Yet internal roadmaps remain crowded. Strong engineers remain expensive. Every new product initiative competes for attention.
A small acquisition can offer something valuable: a working product, a committed creator and a meaningful head start.
The classic build-versus-buy calculation therefore deserves an update.
The question is broader than whether acquiring the code costs less than recreating it.
The buyer is also evaluating:
Time saved
Product risk already absorbed
Founder knowledge acquired
Internal prioritization avoided
Competitive advantage accelerated
Narrative value created
Customer demand served earlier
For the right buyer, speed alone can justify the transaction.
The awkward middle has been underserved
Traditional M&A infrastructure serves companies with financial traction.
Startup marketplaces serve smaller businesses with established profit or recurring revenue.
Patent brokers serve discrete intellectual property.
Acqui-hire processes serve talent.
Yet a working pre-revenue software product often sits between all four.
It may include source code, product design, operating knowledge, early integrations, proprietary methods, trademarks, patent applications and founder transition support.
It may deserve a strategic price far beyond its current revenue, while still falling below the transaction size that attracts a conventional technology bank.
So, for pre-revenue or very early-stage assets whose value is harder to gauge, the process looks a bit different than traditional M&A work; it requires elements of M&A, for sure, but also product marketing, corporate development, enterprise positioning and founder translation.
You must understand what was built. You must identify who gains disproportionate value from owning it. You must convert technical capability into a buyer-specific strategic thesis. Then you must reach the executive(s) who can recognize and sponsor that thesis internally.
This is a highly manual process. I increasingly believe that is an advantage.
My bet
I believe pre-revenue software and AI asset acquisitions will become a more visible part of the technology market over the next several years.
More founders will build credible products with smaller teams.
More of those products will reach technical maturity before reaching commercial maturity.
Large platforms will continue facing pressure to ship AI capabilities quickly.
And more value will migrate from standalone financial performance toward strategic fit, time advantage and product integration.
This will still be a selective market. Buyers have endless access to code and talent. Generic AI wrappers will attract little interest. Ambitious asking prices will die quickly when the underlying asset creates no unique advantage.
But the best stranded products deserve a more intelligent outcome than abandonment.
Somewhere, a larger company may already possess the customers, distribution and infrastructure required to complete the story.
The work is finding that company, showing it the future clearly and creating a transaction both sides can defend.
If you are a founder exploring the sale of a pre-revenue software product, AI asset or related IP, I am always open to reviewing a concise overview of what has been built, who owns it and which strategic buyers you believe could benefit.
And if you lead product, strategy or corporate development at an established software company, I am currently representing a small portfolio of acquisition opportunities across AI, automation, developer tools, collaboration and sports technology.
The market for these assets is early and that may be exactly why it is worth paying attention to.