The problem is that it's insanely difficult to build a sustainable business in software targeting niche small businesses.
I think Basecamp is not targeting niche small businesses; they're a general purpose project management/team collaboration software, used by many businesses. It happens to be used by some small niche businesses, but in the same way a business checking account is used by many small niche businesses.
To me, niche small business software evokes more "software to automate inventory in a small machine shop", "landscape sprinkler system installation planning software", "antique shop inventory management software", "beekeeper scheduling software", etc.
Plus, I don't see Basecamp or Panic or Bare Bones or whatever paying less to their devs. And less compared to what?
Behemoths are usually in SV or a few constrained places, and have the usual SV culture (including ageism etc).
Small niche business are anywhere, in places with much smaller costs of living, better work-life balance, and more kid-friendly environments. Heck, Procreate (frequently top of the App Store and Award Winning) is in Tazmania.