Sramana: How many VC funds were operating in Amsterdam? Did you know them well?
Derek Roos: There are very little options in the Netherlands. There are a lot of angel investors but we were looking for an institutional investor and there are a handful of institutional investors there. There are maybe 10 at most. It is a small market and quite limited because of the size of the market.
Sramana: What happened after you raised money in early 2007?
Derek Roos: We raised 750,000 dollars. At that time we had a million dollars of revenue. With the money we raised we were able to expand the product team. Initially we were very focused on bringing the product to market and building the first versions of that product. We learned a lot in that early phase that, with all of our lessons learned, we realized that we would have made different design decisions.
We used the money we raised to expand the design team and build a second version of the product that would be a much better fit for scale. We always knew that when we started the company. At the same time we kept selling the product so we could continue to grow. We added some sales guys and we added a marketing team. We really had a corporate team in its entire makeup at that point. We were so successful selling that we were profitable. We have been cash flow positive from the first day that we founded the company. We were able to expand into the UK and Johannesburg, South Africa on our own cash flow.
Sramana: What prompted the decision to choose those two geographies for expansion?
Derek Roos: The UK was a strategic move because of the size of the market in Europe. It was also very close and English speaking. We felt we had to be there early on as the market emerged. We did not plan Johannesburg, but we happened to onboard a couple of big customers there who brought us down. It turned out to be a very good market for us as well.
Sramana: How did your growth strategy progress into the US?
Derek Roos: We always knew that was a market that we wanted to reach but we wanted to wait until we had another round of venture capital to get there. We knew we had to do it right. Once we saw the market opening up we knew that if we wanted to be a market leader that we had to seize the opportunity. That is what initiated our second round of VC money and our move to the US.
We took money from the VC in Amsterdam with intent of moving to the US. It was led by Prime Ventures and our seed partner was a part of it. It was a 13 million dollar round. At that time we had a couple of hundred customers, primarily in Europe.
Sramana: How do you charge? What is your business model?
Derek Roos: Right around 2010 we changed our licensing structure from perpetual software licenses to an annual subscription model. Obviously selling licenses up front is good for cash flow. Going forward we felt that our strategy should be to operate a SaaS company that is all about subscriptions.