This article was originally posted on LinkedIn.
Why We Invested in Rowan
There are a lot of glamorous corners of software. Small business succession is not one of them. Yet it’s a massive but unknown problem to most.
McKinsey estimates that by 2035, roughly 6 million small and medium-sized businesses in the U.S. will face ownership transitions as baby boomer owners retire. More than 1 million of those businesses are viable transfer candidates, representing up to $5 trillion in enterprise value.
That is exactly why I’m so interested in it. And why we recently invested in Rowan.
The Economic Impact of Small Business Succession
The macro is pretty staggering. Small businesses make up 99% of U.S. companies, employ more than 60 million workers, and generate a huge share of economic activity. When the transitioning of these businesses fail at scale, the damage is not just personal to owners. It hits jobs, customers, suppliers, and local communities.
And right now, the system is not built to handle what’s coming.
McKinsey also estimates annual small-business exits could rise to roughly 665,000 per year by 2035, about 42% above 2011 levels. More than half of U.S. small-business owners are now over age 55, and one in four is already 65 or older. That wave is here whether the market is ready or not. It is the “silver tsunami” everyone talks about, except this one has actual operating businesses, payrolls, and decades of owner sweat equity tied up in it.
The problem is not that these owners failed to build something valuable. In many cases, they built exactly the kind of business a community depends on. The problem is that a lot of those businesses were built to run, not built to transfer.
That distinction matters.
A huge number of SMBs are under-instrumented financially. Their accounting is inconsistent. Personal expenses run through the company. Debt can be informal, poorly documented, or just plain weird. Critical knowledge sits in the owner’s head, not in systems. Key customer relationships are personal. Processes are undocumented. From the owner’s seat, this can still feel like a great and well operated business. And in many cases, it is with them running the show. From the buyer’s seat, it can look like a single point of failure with foggy numbers and too many unanswered questions. That mismatch kills deals every day.
The stats around readiness are ugly. U.S. Bank’s 2025 small business survey found that while more than half of owners are over 55, only 54% have created a succession plan. 62% said the process feels overwhelming, 56% worry they will not get a reasonable price, and 53% say they lack the resources or guidance to plan properly. Another often-cited data point: only about 30% of listed small businesses successfully sell, leaving the majority without a buyer or viable plan. That is a brutal outcome for people who may have spent 20, 30, or 40 years building something real.
Generational Shifts and the Small Business Reality
I’ve seen this firsthand. I have friends on the owner side who cannot understand why buyers don’t value the business the way they do. Honestly, I get it. They put their lives into these companies. There is sweat equity, reputation, trust, and community goodwill that absolutely do not show up neatly in an EBITDA line. On the other side, I have independent sponsor and private equity friends who come out of diligence wanting to throw a chair through a window because the numbers are inconsistent, the processes are loose, and the owner is so central that the business feels impossible to underwrite. Both sides are telling the truth. That’s why the process is so painful.
Historically, Gen X have been three times more likely than Millennials to take over family businesses and Gen Z appear to be even less likely to succeed their parents. That shift matters a lot. For decades, family succession was the default path for many small businesses. Today, that assumption is breaking down fast. The practical takeaway is pretty simple: family succession demand has fallen materially just as a massive wave of aging owners is moving toward retirement, which is driving a sharp increase in supply. And this problem is not going away anytime soon. As Gen X moves through and eventually out of its core working years, the generational handoff gap is likely to widen even further, putting more pressure on an already strained succession market. Owners can no longer assume the next generation will step in and take the keys.
More Sophisticated, and Skeptical Buyers
At the same time, buyer demand is getting more sophisticated, not less. Axial’s 2025 Independent Sponsor Report says independent sponsors accounted for 27% of closed deals on its platform over the last 12 months, versus 20% for private equity funds. Stanford’s 2024 Search Fund Study reported 681 search funds launched since 1984, including a record 94 in 2023. In other words, there is real and growing buyer interest in smaller businesses. The market is not dying from lack of demand. It is choking on fragmentation, bad preparation, and inefficient process.
That is where Rowan comes in. Rowan, theAI-native platform to help small business owners prepare for and navigate succession.
Rowan Helps Owners Navigate Succession
What I like about Rowan is that they are not treating this as a content problem or a marketplace skin problem. They are treating it like the deeply challenging, multi-party, trust-heavy operational workflow that it is. Rowan combines human guidance with an AI native platform to help owners evaluate where they stand, get organized, improve readiness, structure the business for transition, and move through the succession process with more clarity. That is exactly the right wedge.
And that’s why we backed them at Mercury Fund.We were pumped to participate in the $3.3 million seed round Rowan recently announced. It’s one of the biggest, messiest, most economically important workflow failures hiding in plain sight.
This fits a broader pattern in my investing. I’ve spent a lot of time around companies applying AI to ugly process problems in places most people don’t romanticize: manufacturing, oil and gas, freight, construction labor, industrial workflows. Sight Machine, Ambyint, chain.io, and Buildforce all share a common thread: the best opportunities often live where workflows are fragmented, data is messy, and the pain is very real and incredibly costly. Rowan is another extension of that same idea, except aimed at one of the largest ownership-transfer markets in the world.
Steven Glod and Christopher Weaver are not tourists; there’s extreme founder-market fit in the Rowan co-founders. They have lived close enough to this problem to understand both the emotional side and the transactional side. Succession sits at the uncomfortable intersection of identity, family, operations, legal structure, buyer psychology, and plain old messiness. Founders (like Steve & Chris) who have actually felt that pain usually build very differently from founders who discovered the market in a spreadsheet.
America has trillions of dollars of small-business value tied up in companies that are too important to disappear and too unprepared to transfer cleanly.
So, when I look at Rowan, I don’t just see another AI company. I see a chance to bring structure, transparency, and better outcomes to one of the most broken processes in the world. I see a company helping owners protect the value they created, helping buyers spend less time untangling chaos, and helping more good businesses survive a generational transition that is already underway.
That’s why I invested.
And, in true small-business fashion, none of this will be easy. This is not a market where you wave an API around, post a few slick demos, and call it a day. It’s a hard problem with real people, real stakes, and more than a few weird spreadsheets. Which is probably another reason I like it.
Congratulations to Steve & Chris. I’m looking forward to being on this journey with you and the team.
