Burned out. Should we sell our SaaS business or find second round investment?

Hey my name is Chris and my wife and I started a web application in Brazil over 3 years ago.

As most of the individuals in this community understand the difficulties of starting a business(These problems are even more complicated here in Brazil), the whole thing is starting to wear on us mentally. We released a 3.0 version of the application producing the desired conversion rate, weekly sign ups, and per customer revenue we need. All in all the stress levels are beyond tolerable in order to reach profitability.
The ups and downs, 15 hour days, no money / personal time have gotten the best of us.

Our first round of investment is set to run out as Sept 1 2011 and the original investors want us to logically sell part of our majority. Should we sell our SaaS business or find second round investment? Selling seems complicated cause the company has yet to break even and we will get little for all the efforts. Just wondering if anyone who has been in this position before has some good advice. The whole concept of letting others have the headaches is really appealing.

Based on the limited information that you have provided:

I recommend that you sell part of your majority to an owner/operator who will have new energy to fully realize the value that you and your wife have started. I imagine that you would move into a board/consultative role.

There are lots of question on here for how to value that sale, and where to look for prospective people to invest/purchase. My bet is that the original investors will have a lot of thoughts on both subjects.

You have a majority-owned business which is barely making a profit and is requiring you to put in 70 hours per week of work. This is clearly unsustainable. It sounds to me like there is something wrong with your business if you have to work crazy hours just to break even. Either your market is poorly defined or much smaller than you think, your product does not serve the market well, or you are not running the company properly. Either way, I wouldn't invest in that kind of a business.

Your investors are probably right in asking you to sell your majority stake. They probably see some obvious problems in the way you are running the company, or in your products or in your markets. They still see potential in the business, or they wouldn't be asking you to sell.

I think that you would do well to sell. You will get something for your herculean efforts, and they might be able to turn your minority share into something bigger than what you could do with a majority share. With control of the company, maybe the investors or their proxies (new executive team) will be able to correct the product-market fit, and/or operate the company more effectively. Either way, you will be able to preserve equity. However, you might get fired after you sell your stake, and if the company languishes, subsequent rounds of financing could dilute your shareholding. However, it is better than the current situation.

I hope I have helped you to see the question from a different perspective.