Starting your own OSS Company? Is there an Alternative to the Startup Path?

Most entrepreneurs are wired to build from scratch. The idea of founding something original, of bringing a vision to life from the ground up, is deeply embedded in startup culture. But what if this isn’t the smartest way to scratch your entrepreneurial OSS-builder itch?

The obsession with starting anew often overlooks a powerful alternative: acquiring an existing business that has already survived the grind phase. When founding PAOSS, I never even remotely considered the possibility of building on the foundations of an existing business. I didn’t even think it was a viable option. I’ve now seen the light.

In this article, we’ll explore the reasons why I should’ve considered it back then (if I’d even known it was an option), and why growth by acquisition is now firmly on our radar.

Let’s start with the obvious.

The Grind Phase vs. the Growth Phase

Starting a business is a battle of endurance. Large numbers of businesses fail within their first couple of years. In the early stages, founders must navigate:

• Identifying the right customers
• Establishing reliable revenue streams
• Building systems and processes
• Testing and refining product-market fit
• Managing cash flow and raising capital

Most businesses don’t make it past this grind phase. Even for those that do, the process is slow, expensive, and full of existential risks.

The most common approach I’ve seen to starting a company is founders who finish employment and then start their new business. This is a revenue / momentum curve that looks like the following:

In this chart “t” often takes years in the grind phase as you try to build a business from nothing.

The other common approach, the one we took at PAOSS is when you start building the company whilst still being employed. In our case, we started the company and blog back in 2012, but it was a number of years where we were still working a 50-60 hour week and trying to find enough additional time to build up PAOSS at the same time. This curve looks like the following. In our case, “t” was around 4 years of overlap before PAOSS was self-sufficient:

On the other hand, businesses that have already built a foundation—those with recurring revenue, existing customers, proven products, and operational systems—have already done the hard part. They’re primed for scale, efficiency improvements, and strategic pivots. Depending on the situation, this example might look something like the following curve, where you leave a salary behind and walk straight into the existing revenue / cashflow of the company you’ve bought:

You might be wondering what and how you might buy an existing company. You might be surprised that there’s actually a huge market of small and mid-sized companies available for sale. There are more OSS/BSS-related companies or adjacent fields that are currently on the market than you might realise.

Acquiring a business doesn’t mean losing the entrepreneurial spirit or constraining your big corporate ideas, it simply shifts the focus from creation to transformation. Entrepreneurs who embrace M&A can take all that’s good about the current company and:

• Inject new energy, ideas, connections and leadership into established businesses
• Modernise legacy operations with technology and automation
• Expand product lines or enter adjacent markets
• Build roll-up strategies, acquiring multiple businesses in a space to create a market leader
• Inherit existing customers. Telcos are notoriously slow to adopt new vendors, usually due to multi-year sales cycles. Acquiring a business with live deployments means you get instant credibility and revenue
• Access financing more easily. It’s far easier to raise debt or equity financing for an existing business with recurring revenue than for a new startup with no proven traction

The Problem of Fragmentation in the OSS Market

The OSS industry is highly fragmented, as seen in the 600+ listings in our OSS/BSS Vendor Directory. Dozens of vendors—ranging from niche specialists to full-stack giants—fight for market share, each offering slightly different versions of inventory management, service assurance, fulfilment, orchestration, analytics, etc, etc.

For entrepreneurs looking to enter the space, the instinct is often to build something new. The vision is compelling: create a better OSS, disrupt incumbents, build a better architecture and capture market share. But the reality is harsh. The grind is harsh. Developing a new OSS product from scratch requires:

• Years of R&D (how long does “t” equal when you’re building a product to go head-to-head against mature products?)
• Deep industry relationships and
• The ability to displace entrenched systems that telcos are often reluctant to change

Most founders start with the tech (and end with the tech too for that matter). There are so many brilliant tech solutions competing for market share. In our experience though, many of these existing companies are far less adept at sales & marketing and scaling project delivery. This represents an opportunity if you’re willing to look past the tech only.

The sheer number of small-to-mid-sized OSS vendors means:

• Limited differentiation – Many vendors solve the same core problems in slightly different ways.
• High customer switching costs – Even if you build a superior OSS, telcos resist change due to integration complexity and the cost of migration.
• Competing on price instead of value – When multiple vendors offer similar capabilities, it often leads to price wars rather than innovation.
• Challenges scaling beyond niche markets – Many smaller OSS vendors have strong regional or operator-specific footholds but struggle to scale globally.

And this is for the companies that have already been through the grind phase. These challenges are even harder for new startups:

1. Customer Entrenchment Beats Customer Acquisition: One of the hardest parts of launching a new OSS is convincing telcos to take a risk on an unproven product. Acquiring an existing vendor with live deployments means inheriting its customer base, relationships, and revenue streams. Instead of spending years chasing deals, you start with built-in traction.

2. Proven Technology vs. Starting From Scratch: Developing a full OSS stack is expensive and time-consuming. By acquiring a vendor, you start with working technology that can be enhanced rather than built from zero. This also avoids the common mistake of focusing too much on the product while underestimating go-to-market and delivery challenges.

3. Industry Credibility: In OSS, trust and industry reputation matter. Having helped many carriers buy the best-fit solutions for their needs, I can guarantee that reputation and track-record matter to these clients in a huge way! Many small vendors struggle, not because they lack good products, but because telcos prefer to work with known players. Acquiring an established vendor provides credibility that a startup simply can’t match.

4. Operational Efficiencies: Many OSS vendors are highly technical but lack strong business execution. Acquisitions allow for starting from a base and introducing efficiency gains in:

• Streamlining product portfolios
• Eliminating redundant overhead costs
• Centralising support and maintenance
• Expanding sales and partnerships

For buyers and aggregators, this fragmentation presents an opportunity. Instead of trying to compete with hundreds of small players, there is a distinct opportunity to consolidate them.

The Quiet Consolidation that’s Already Underway

What we’ve increasingly come to realise over the last few years is that the OSS/BSS market is undergoing a quiet transformation. While new startups continue to emerge, a more strategic play is unfolding too – consolidation. Companies like Lumine Group (part of the Volaris Group) have been aggressively acquiring OSS and BSS vendors, recognising the combined value of established businesses.

Where are the Acquisition Opportunities?

Many OSS/BSS companies are prime acquisition targets because:

• Founders are looking to exit – Some vendors are run by long-time industry veterans who want to retire but lack a clear succession plan. A trend that we’ve observed in recent times appears to be gathering momentum. Many OSS and BSS companies were founded in the golden years of OSS/BSS in the early 2000s. Those companies have done more than survived the grind phase – they’ve built a presence over the last 20-25 years. Often those founders are now reaching their mid-60s and are looking for a pathway to retirement. Their companies are often too valuable to just shut down, not to mention having the obligation of having many workers / colleagues / friends whose livelihoods depend on the company continuing to thrive
• Smaller vendors struggle with scale – Many niche players have great technology but lack the resources to grow beyond a certain threshold or beyond their core regions of operation / presence. Whilst there’s no doubt that there’s still massive room for innovation and disruption, the biggest challenge in OSS/BSS isn’t technology, it’s adoption. There are many companies / products fighting for a relatively small number of potential customers
• Larger vendors are divesting non-core assets – Bigger players like Ericsson, and Nokia often offload underperforming or non-core business units
• Legacy OSS/BSS vendors that have a foot-hold in the market and existing customers but are in need of technology and business modernisation
• Open-source challengers providing lower-cost and (sometimes) lighter-weight functionality alternatives

If you’re interested in discussing starting up your own company, or buying in via M&A, we’d be delighted to have a chat with you and answer any questions you might have about our experiences.