How Lemon Squeezy Went from Idea to Acquisition in Under 4 Years

🍿 Quick Snack

Imagine being on the verge of signing a deal that would make your company worth $50 million.

Would you walk away?

That is precisely what JR Farr did.

• 🍋 Having started and sold multiple companies before, JR’s journey with Lemon Squeezy was intentionally aimed at building a profitable and self-sufficient company.

• 🚀 As Lemon Squeezy experienced rapid growth, inbound interest from major VC firms and potential acquirers became hard to ignore.

• 🚫 Despite having term sheets in hand, JR and his team decided against taking any offers. The company was not in immediate need for money.

• 🤝 Fast forward to 2024, the company found its perfect match in Stripe.

🍔 The Full Meal

From Launch to $1M ARR in 9 Months

In 2009, JR co-founded MOJO Marketplace a digital goods marketplace for themes, plugins, apps and other digital products. The company was then acquired by Endurance International Group (Endurance.com) in December of 2012.

Fast forward to 2020, after a decade of selling digital products, JR had a vision to make selling digital products as simple as opening a lemonade stand. The goal was to build a platform that could take the pain out of selling things globally.

What you probably didn’t know is that most SaaS companies are breaking international tax laws without even knowing it.

When building a product, a startup or individual is mostly focused on getting it to customers. Rarely are they thinking about tax regulations countries on the other side of the world.

However, you need to comply with the relevant laws in the countries you’re selling a product. And if you’re selling a digital product, you will probably have customers in a lot of countries.

This is exactly what JR wanted to build with Lemon Squeezy — a comprehensive solution that could help you:

• Register, file, and pay taxes in any country

• Collect tax and VAT

• Handle refunds and chargebacks

• Prevent fraud

• Manage PCI (Payment Card Industry) compliance

The product was an instant hit.

Within 9 months of launching in 2021, the company reached $1M ARR. 🤯

This milestone set the stage for their future success.

Walking Away from a $50 Million Deal

In 2023, as Lemon Squeezy continued to experience rapid growth, VCs like a16z, Sequoia, and Accel were reaching out, which brought the team a sense of validation and excitement.

There was an appeal to explore the VC route. Entrepreneurs know that an injection of capital expands your ability to grow faster.

So, despite JR’s bias towards bootstrapping, he was open to consider VC money as long as it involved the right partner. This implied someone who understood their space, had relevant connections to the industry, and shared their vision.

The team quickly started booking meetings, flying out to San Francisco and doing pitch presentations. Throughout the process JR also reached out to a few friends to get some advice about his raise.

Without hesitation, they told him to NOT take the money.

So, after weeks of back and forth with investors, despite having term sheets in hand, Lemon Squeezy decided against taking Series A funding.

The decision came down to a few factors:

• The company had the power of choice: Lemon Squeezy was not in a desperate financial situation and could continue operating without VC money.

• Being bootstrapped was a competitive advantage: Remaining self-sufficient, in JR’s view, forced them to stay close to their customers and stay profitable.

• Investor interest was not going to fade away: If the team eventually decided they did need capital in the future, the door was already open to all those VCs if necessary.

The Acquisition by Stripe

Lemon Squeezy quickly became known as an alternative to Stripe for many.

It would be ignorant to think that Stripe did not notice the level of traction Lemon Squeezy had achieved.

As a leader in online payments infrastructure, Stripe has its finger on the pulse of the industry. Over the years, the company has expanded its suite of products, organically and inorganically, to include services like Radar (fraud prevention), Terminal (in-person payments), and Tax (Sales tax & VAT automation).

Some of its most recent acquisitions include:

As discussions between Stripe and Lemon Squeezy began, it quickly became evident that their visions were aligned.

For one, Stripe’s customers were already demanding for a Merchant of Record (MoR) service, which Lemon Squeezy specializes in. Therefore, rather than building this service from scratch, it made more sense for Stripe to acquire it.

For Lemon Squeezy, this meant joining forces with a market leader known for its world-class developer experience and API standards in payments. This, combined with Stripe's robust ecosystem of solutions and dedication to craftsmanship, made Stripe the ideal partner.

While the terms of the deal remain undisclosed, this is an exciting turn to the Lemon Squeezy story. The saying continues to hold true: “never say never.”

Congratulations to the entire team!