Sramana Mitra: Do your merchants have $100,000 in revenue or are they $2 million in revenue? Is there any kind of cut-off there?
Mitch Harper: Our customers’ revenue typically ranges from $1 million to $30 million of revenue per year.
Sramana Mitra: Your customer base is more in the $1 million to $30 million range. Then, the customer base with revenue of $30 million and above goes to Magento and below $1 million is with Shopify and GoDaddy.
Mitch Harper: You’re right about Shopify, but I wouldn’t say Magento handles above $30 million. I’d say that’s Demandware. They do a much better job on the high end because of the problems Magento’s having and Magento is discontinuing a lot of their products. I don’t think they’re fit for merchants above $30 million. They’re more in the $1 million to $20 million range except for their enterprise offering.
Sramana Mitra: That gives us a reasonable idea about the competitive landscape. You got to 9,800 customers by the end of the year. You said you raised Series A. Did you raise Series A in Australia or in the US?
Mitch Harper: All our funding has been raised in the US. We raised our Series A in July of 2011. Eighteen months before that, we had venture capitalists contacting us non-stop. We spoke to 150 of them and boiled it down to the top five that we really liked.
We weren’t looking for just the money. We were profitable. We had money in the bank. What we wanted was an operational partner who could join our Board. We wanted someone who could help us be better leaders and navigate some of the challenges we knew we’d come across as we grow the business from 10 people to 450, the stage we are at now. General Catalyst was our first investor and Larry, who’s on our Board, really stood out. He’d taken a few companies public. He’d been CEO multiple times. The money was just as important as the experience. That’s why we chose General Catalyst.
Sramana Mitra: But you said you raised the money in 2011.
Mitch Harper: Yes.
Sramana Mitra: But you started in 2008, is that right?
Mitch Harper: We launched Bigcommerce in September 2009. So it’s almost five years ago.
Sramana Mitra: That means that the first 9,800 customers came in 2010. Then you raised money in 2011.
Mitch Harper: That’s right.
Sramana Mitra: You raised $15 million, right?
Mitch Harper: Yes.
Sramana Mitra: General Catalyst was the only investor. Was there anybody else?
Mitch Harper: No, they were the only investor.
Sramana Mitra: Here’s a question. You can answer it in whatever way is comfortable for you. We have a philosophy in our program where we believe that entrepreneurs should bootstrap first, and then raise money later for a variety of reasons. When you have a validated business, it’s easier to raise money. Like your experience, you had 150 VCs calling you. That’s a much better situation to be in than you going with the begging bowl to 150 VCs, and having everybody turning you down because you don’t have a validated business. That’s number one.
Two, you get better valuation, much slower dilution and much better terms. I don’t know if you’re comfortable discussing this, but what kind of valuation were you able to raise your Series A at?
Mitch Harper: All I can say is, it was a really good valuation for the revenue we were doing at that time. It was definitely based on General Catalyst seeing that we could be a leader in the space and grow the company significantly in the following few years, which we’ve done.