Sramana Mitra: One question, when you raised the $12 million, what were the metrics? How many customers did you have?
Chaitanya Chandrasekhar: Starting the year 2014, we had zero revenue. Because of Home Advisor, we exited the year doing $2 million in contracted recurring revenue.
Sramana Mitra: $2 million in recurring revenue from how many customers?
Chaitanya Chandrasekhar: About 10 or 20 customers.
Sramana Mitra: That’s very good. 10 to 20 customers with solid business models means you’ve pretty much shown that the market has appetite for your product. That makes sense.
Chaitanya Chandrasekhar: In the middle of 2014 when the Home Advisor deal happened, we started to figure out we had market fit. We didn’t have product-market fit for everybody, but we understood who we had it for. We understood the value proposition that they were looking at. We were able to use that information to go get more customers. We went from MVP, to refining the MVP, to figuring out what the market fit looked like for a certain set of customers.
Sramana Mitra: When did you close the $12 million?
Chaitanya Chandrasekhar: April to May 2015.
Sramana Mitra: Oh. What happens next?
Chaitanya Chandrasekhar: Maybe I’ll take a second to string together the time frame. We had no revenues in 2014. We had a proof of concept with Home Advisor. We figured out that it was a success. We went from MVP to having product-market fit for a certain segment, figured out what the value propositions were. We were able to capitalize that. We had substantial contracted revenue by the end of the year.
We were then introduced by the CEO of Home Advisor to Safeguard. I went to Philadelphia in the beginning of 2015. We got the term sheet in March. I had to have the conversation with the co-founders. I remember I finished due diligence on March 31st and my son was born on April 2nd. We closed the round over the summer. We used the fund to build a bigger team. We also started investing in sales.
Sramana Mitra: Is your sales all direct? Do you do inside sales?
Chaitanya Chandrasekhar: Our average ACV is about $200,000. That means we have a direct field sales model. I would say more field sales than inside sales. We have sales reps who would go call named accounts. If they express interest, we’ll talk to them. Typical deals take anywhere from six to nine months. It’s a long sales process because of how important and strategic the solution is. It contributes directly to the revenue.
Sramana Mitra: Mission critical.
Chaitanya Chandrasekhar: Yes. In 2015 once we raised the Series A round, it was a matter of figuring out how to refine our sales process, how our go-to market strategy will change. We also went from a founder-led sales to figuring out how to build a repeatable sales process. We moved to a nice office space in Redwood city. That was 2015. We started growing the company. I was looking for funding.
As I started growing the business, I started meeting other VC’s. Every now and then, I’d get coffee with one of them. Ashu at Foundation Capital was one of them. He was extremely supportive. At a coffee meeting one day, I was telling him about how the company was growing. He was super excited and impressed at the metrics that we were generating. We had less than 12 months payback period and pretty high ACV’s with good customer retention.
We hit those milestones that we were trying to hit with the Series A. We set up a separate office in Argentina to help grow some of the sales efforts that we were doing. The company was humming along. We were about 40 to 50 people. We raised our Series B funding. We started talking to a bunch of people.
At the end of 2016, I was talking to Ashu. Early 2017, I said, “Why don’t I talk to a few other people?” I ended up presenting to the partnership at Foundation. I really liked them. Instead of doing a fully competitive process, we decided to take the capital from Foundation Capital. They led our $20 million Series B.