Sramana: What did you do with the money that you raised in your initial round?
Ricardo Villadiego: After I closed our first round in April 2010 with Progressive Capital based in Medellin, Columbia, we focused on growth in Latin America. By the end of 2010, Gartner approached us because we had picked up so many large clients throughout South America. They validated our approach and included us in their magic quadrant for web fraud prevention. That has led to us getting a lot of recognition and traction in the US.
Sramana: How many customers did you have in Latin America by the time Gartner approached you?
Ricardo Villadiego: We had around 40 clients. Almost all of them were in the financial services industry and the rest were telecoms.
Sramana: What revenue levels were you able to achieve?
Ricardo Villadiego: By the end of 2010, we were doing about $1.2 million in revenue.
Sramana: From there, you decided to raise money in the US to build the US customer base, is that where we are now?
Ricardo Villadiego: Yes. In 2011, we kept growing in Latin America and achieved 80 customers. In 2012, I convinced my other partners that we needed to take on an additional round of financing to create a global business. During 2012, we built our plan to go global.
The first step was to get a second round of financing. I needed to identify the key pieces of my management team that would allow me to get better traction raising the second round of financing. I believe the management team is a huge part of taking a company global.
Sramana: Why did you decide to recruit before going after financing? Often times entrepreneurs find it easier to recruit after they have the backing of a major US venture capitalist.
Ricardo Villadiego: I decided to do it as a measure of validation. It would validate that our message, technology and platform was appealing to people outside of the US market. I went and met with some of my colleagues at ISS and pitched the company. Those people joined our company.
Sramana: Were these executive from Latin America?
Ricardo Villadiego: No, they were based in Atlanta and were raised in the US. These type of guys could have a job in any company that they wanted to in the cyber security space.
Sramana: It is excellent to have key executives recruited before heading you’re your second round. That does wonders for valuation. How much revenue did you earn in 2012?
Ricardo Villadiego: We did about $3 million in revenue.
Sramana: That is a great situation to raise money in the US. Where did you go to raise money?
Ricardo Villadiego: I knocked on the same doors as I did in 2009. I visited my friends in Atlanta and San Francisco. We were very close to signing a deal with a Silicon Valley firm when a good friend of mine put in contact with Manny Medina who had just sold his company to Verizon. He was starting his own equity firm. We went to him in October 2012 without too many expectations. It turned out to be a great fit. He had lived the pain that I had already gone through and understood what it was like to take the company global. I decided to close my round with Medina Capital. We closed at $11 million.