Sramana: Tell me more about financing, what was the financing strategy that you followed in the company?
Brian Requarth: We decided to bootstrap for a long time.
Sramana: How long did you bootstrap?
Brian Requarth: We started in 2007. We didn’t have cash flow to support the expansion to Brazil in 2009. In 2010, my family invested a little bit of money. My first professional investor was Simon Baker who was the CEO of REA Group in Australia. Today, it’s a $6 billion market cap company.
Sramana: How did you find him? How did you know about him?
Brian Requarth: In 2007, I watched a conference online where he talked about how international markets are more attractive because they have more fragmentation. This was what inspired me to go to Brazil and launch more of a marketplace business. I also started reading his blogs and a lot about him. Right when he left REA Group, I sent him an email and told him that I’d like to meet with him in San Francisco the next time he’s there.
We met in this little café in San Francisco around 2007 when there was a real estate crisis. I pitched to him that Latin America is a huge opportunity. I gave him all these numbers on GDP and stuff. He took notes the whole time. At the end, he asked me what the terms were. When I told him I was looking to raise $1 million, he abruptly marched out of the meeting. It was just completely out of touch with the reality because we were in a real estate crisis.
From 2007 until 2010, I would send him monthly updates on everything we were doing. It took me 24 to 30 months, but I finally got him to invest. I asked him to give us some feedback on the business and I paid him to come consult with us. We didn’t have a lot of money and I hated paying for it. So five days before he got here, I told our small team that we’re going to organize an event where Simon Baker was going to be the keynote speaker. We had a hundred people to pay and show up for the event. We paid for his trip with that money.
We had invited all these potential customers and charged them to come and hear him speak about real estate marketing technologies. We signed up a bunch of customers from the event. He saw the entrepreneurial initiative and ambition that we had and how smart we were and scrappy we were and invested right after that.
Sramana: When was this happening?
Brian Requarth: He invested twice. Around 2010, he invested in a seed round along with my family and friends. We raised a little over $500,000 at that time. He invested $100,000. In 2011, the Angel round was led by Greg Waldorf, one of the first investors and a board member in Trulia. He was the CEO of e-Harmony for several years.
Sramana: When you were raising the first friends and family round in which Simon invested, what were your metrics at that time?
Brian Requarth: I don’t remember what the revenue was, it was very small.
Sramana: So, it was so small that you can’t remember? He invested pretty early in that case.
Brian Requarth: Yes, he invested very early. It was probably $10,000 a month.
Sramana: For a seed round, $10,000 is a perfectly fine revenue run-rate. At the time of the second or the real Angel round with Waldorf and Simon, what were the metrics of the business at that point?
Brian Requarth: I don’t remember how much revenue we had but it was probably a couple of times of that.
Sramana: So, it was not that long after that first round?
Brian Requarth: No, it was pretty quick. Simon invested again on that. In 2011, we closed our Angel round. The money that we raised from Simon and a few other people got us going for a while, but it wasn’t a lot of money. Just opening the business itself took six months in Brazil.
Sramana: Is this because of paperwork? Is this a bureaucratic issue?
Brian Requarth: Yes, paperwork and everything. We raised the Angel round in July 2011. Our funds depleted and at that time, my dad, my best friend and college roommate James Gray, and myself were just keeping the business afloat on the cash we had. Each month, we had to put in $3,000 each just to keep it going because our expenses were higher than our revenue. It was painful to write a $5,000 check every month. We did that for several months. In the Angel round, James was a huge Angel investor for us. He sold the business in England.