Sramana Mitra: I’ll tell you exactly what happened in your case. You did a Bootstrap First, Raise Money Later strategy. You were going out to raise Series A with $2 million in revenue. You went out to raise Series B with close to $10 million in revenue. These are funding situations where a company that is not in the location of the investors is not a problem at all.
If you were trying to raise money with $100,000 worth of revenue, it would have been a very different experience for you. Even if you’re in Silicon Valley, people are looking for more and more validation to raise funding. This is a story that comes over and over again. If you can do Bootstrap First, Raise Money Later with serious proof points, funding is a much easier game.
John Stewart: It absolutely is. It was so much easier to raise the Series B than the Series A.
Sramana Mitra: Are you profitable now?
John Stewart: No, we’re still in the mode where we’re growing 100% year over year. We burn a lot of cash doing that.
Sramana Mitra: Do you need to raise money?
John Stewart: Another thing that I’ve learned at this stage is, you raise money when you can get a good valuation and the market conditions favor it as opposed to when you need it. If you’re raising money when you need it, then you’ve got a problem.
Sramana Mitra: I think philosophies differ vastly on that. I would encourage you to read the case study of Veeva. Peter built the entire company, which is close to $10 billion in valuation today, with less than $7 million in funding. In fact, he built it with $3 million. He raised another $4 million, but he never really used it. This overfunding of companies is not something that is a requirement to build good companies.
John Stewart: I’m very well-versed in the Salesforce ecosystem. There was a time when we had exclusive rights for any healthcare and life science deals being run through Veeva. That helps.
Sramana Mitra: That’s one of the differentiators. The domain where Veeva was built is also a specialized domain with not as easily available domain expertise. Once you create a defensible positioning with solid value proposition, it’s not easy for people to get in there. It’s not crawling with competitors.
John Stewart: Salesforce doesn’t do that anymore.
Sramana Mitra: I understand. It still has it’s own moat just because of the dynamics of that space because it is highly specialized with a lot of domain-specific dynamics.
John Stewart: My counterpoint is more companies are built in the model of raising the appropriate level of money at each stage versus not. You can certainly find those scenarios at the scale that we’re at now. You can certainly find the one-off examples but that’s pretty rare at this point.
Sramana Mitra: We have a company in our portfolio right now that is going to do $5 million this year that hasn’t raised any financing yet. They followed your strategy of bootstrapping with services and got the product built. They’re phasing out their services. This year, it’s mostly product revenue.
Thank you for your time.