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The “small” in SMB doesn’t mean small opportunity or small ambition. It does mean fragmented buyers, low initial ACVs, and ruthless GTM execution. Despite concerns around SMB churn, extraordinary stickiness and ACV growth is possible in Vertical SaaS / AI. Today’s episode shares one of those stories, wrestling with big questions at the heart of vertical company-building:
How big is big enough for TAM?
How SMB can you go and still build a big, high-NRR business?
Does AI expand the market size for “small TAMs”?
Our guest, Brian Litvack of LeagueApps, has spent a decade-plus serving the youth sports market through software, payments, and now AI. You’ll hear how he parlayed a payments wedge into an OS for clubs and tournaments, how to identify your sales funnel’s true choke points, and how AI can be “employees three, four, and five” for hyper‑SMB orgs.
Watch through for concrete tactics: the $100–$500 “launch package,” timing the BDR→AE split, and the retention habits that helped Brian sustain 95%+ GRR.
I) Vertical Market Pulse
AI in life sciences & compliance as a wedge.
We cover Ketryx’s $39M Series B. Regulation is a moat if you turn it into product: Ketryx is leaning into “trust & compliance” as the wedge, echoing how Veeva carved life sciences by tailoring horizontal workflows to a regulated domain. The open question on air: will the incumbent spin up a competing module (a la Abridge vs. Epic), or does a net‑new workflow create a durable control point for a specialist?
Is supply chain back?
Two flavors in the same week: Augment’s aggressive raises ($85M recent Series A, taking in $110M in five months total) speaks to platform‑owning ambition across shippers, carriers, brokers, and 3PLs; Happy Robot (fresh off a $44M Series B), by contrast, starts with a discrete pain—communication/data sharing—then expands. The takeaway for founders: supply chain remains a rich set of sub‑verticals; “agentic platforms” win by starting narrow, then spanning adjacent roles/workflows, not by boiling the ocean on Day 1.
Is Seed Broken? Venture Broken?
We discuss market perspectives from via Beezer Clarkson @ Sapphire at Tomasz Tunguz @ Theory Ventures. They opine on VC concentration and what it means. Mega‑funds are leading ~30% of seeds, half of dollars are flowing into a single‑digit number of companies, and ~50% of LP dollars YTD have gone into just 12 venture funds. Seeds are getting larger while sub‑$5M seeds shrink; Tunguz’s data also shows today’s companies often hit Series A smaller than 2020 cohorts. Founder implications: do the fund‑math of your lead, align ownership/dilution with your actual ramp, and pick partners by stage‑fit—not AUM.
II) Vertical Titan: Brian Litvack
Co‑Founder / CEO @ LeagueApps
The Backstory
2007 began as Sportsvite—“Evite for sports”—to help people find games. The B2C model didn’t pencil, but the super‑users did: organizers who needed registration, payments, scheduling, and messaging. Pivot: build the operator OS, move from adult to youth, and let software, data, and payments “make sports happen” at scale.
Wedge: collect payments → become the OS
The early proof was simple and painful: registration nights with checks, cash, and lost envelopes. Online registration + payments became the wedge; scheduling, team formation, comms, reporting, websites, and mobile wrapped around it. One key GTM invention: a $100–$500 “launch package” that secured commitment and funded white‑glove onboarding.
Capital efficiency
First 6 years: ~$3M raised (friends & family). First 10 years: ~$20M total to ~$12M ARR going into 2020—then an April shock (payments volume off ~96%). The rebound was real; by 2022–23 the company was profitable and ultimately closed a growth round led by Accel‑KKR (with Arctos participating) to support the next phase.
Vertical of choice matters
Youth sports is big, messy, and professionalizing: ~150k orgs across team sports, increasingly for‑profit, typically a few FTEs plus large 1099 staffs. Focus shifted to the top ~20k orgs as ACVs rose (now >$10k on payments alone). Retention is exceptional (95%+ gross) because the product is both the system of record and payments.
Why not just sell “features”?
Because the unlock is time and trust, not feature checklists. LeagueApps leaned into embedded analytics (e.g., Sigma) for pricing, churn, LTV, cart abandonment, and field allocation—then reframed AI as staff augmentation: “employees three, four, and five” who write parent comms, optimize schedules, and surface decisions from data.
The hardest part
An operating company: show up in the community’s real workflows (rainouts, permits, volunteers) and make the day run.
A GTM machine: you can’t buy lists—scrape, segment, and call (~10k calls/month), because the funnel’s choke point is getting to a demo.
A vertical AI startup: ship “do it for me” copilots that remove admin, defuse parent interactions, and increase throughput on fields/courts.
Memorable lines from Brian
“The wedge was collecting payment.”
“We thought we were building a company to help make sports happen in communities… and what we’ve built is a vertical SaaS payments‑enabled platform—turns out that’s a good way to scale.”
“I want us to be employees three, four, and five for a youth sports organization.”
III) Vertical Playbook: Hyper‑SMB Strategy
Why it works
Payments create lock‑in. Being the money rails is sticky even in hyper-SMB verticals: Brian saw 95%+ GRR and some LTV cohorts >10 years.
Seasonality favors usage‑based pricing. “Pay as you go” aligns cost to cash‑in months; it also removes procurement blockers.
Fragmentation = data moat. Consolidating schedules, rosters, payments, and comms across thousands of operators compounds BI value.
Trust beats flash. Hyper‑SMB buyers reward reliability over novelty—service and outcomes drive ACV expansion.
How to run it (LeagueApps‑inspired blueprint)
Pick a workflow wedge that monetizes (e.g., online registration + payments).
Add a commitment catalyst: sell a small “launch package” to flip intent into real onboarding and address concerns for non-technical buyers.
Split funnel roles: BDR/SDR for intent creation, AE for domain‑deep demos and closing.
Your north‑star sales conversion metric is likely around the demo. For Brian, it was the demo set rate (for others, it might be acceptance, attendance, or completion).
In LeagueApps’ hyper-SMB journey, a functional system of record (in his case payments) was necessary—scheduling, teams, comms, and reporting later compounded around it.
Embed BI early (churn/LTV, pricing, cart abandonment) and package the insights as “do this next.”
Frame AI as staff augmentation (“employees 3–5”), not a feature: draft comms, allocate fields, optimize brackets.
During shocks (e.g., COVID), lead with service (webinars, “return to play” guidance) to bank future brand equity.
Re‑segment as the market professionalizes; move up‑market to denser, multi‑program operators as ACVs rise.
Keep product, GTM, CS, and finance growing in lockstep—over-hiring early (and especially hiring poorly) slows you down.
Founder litmus tests
Do you have a wedge that prints ROI on Day 1 (money in, time out)?
Can you reliably source contacts in a market where lists don’t exist—and sustain 10k+ monthly touches?
Will a BDR→AE model work at your ACV, or do you need to change packaging/price?
Can you become the payments + data OS, not a bolt‑on tool?
Do you have the discipline to avoid raising more than you can productively deploy at this stage?
Where will AI genuinely be an extra employee, not an extra button?
What we debated on‑air
Capital concentration: mega‑funds leading seeds, larger rounds, and the dilution math founders must do.
Timing and size of rounds: is a big early raise a tailwind—or a curse that masks bottlenecks?
Agentic platforms: every “industry” splits into 10–50 sub‑industries; platforms will be verticalized.
Regulation as a moat: in life sciences and beyond, compliance can be the category wedge.
Next Week on VERTICALS
Jack Greco, Co‑founder at ACV Auctions, joins us to talk Vertical AI Marketplaces.
Parafin!
A quick shout-out to Parafin, the partner who makes VERTICALS possible. They provide ready-to-launch financial products that help vertical SaaS companies deepen retention, expand TAM, and boost revenue. Founders: if you want your merchants to grow with you, you need to know Parafin.
If you’re building in Vertical AI (or considering it) and want a sounding board, the Euclid Ventures team would love to hear from you. DM us here on Substack or ping us on LinkedIn.
