Sramana Mitra: Do you have about 50 customers right now?
Andrew Plato: That sounds right. We’ve got a mixture of some on our platform. It’s not quite 50. It’s probably in the low 20’s. We’d 12 on the platform as of this year. Plus some existing business.
Sramana Mitra: These 20 odd customers have all come out of your referral network?
Andrew Plato: For the most part, yes. We have some customers who converted over from our previous business. We have some that were managed services customers that we held on to. The majority of them have come out of referrals from some source. That is very common.
Sramana Mitra: In doing all this, have you raised financing?
Andrew Plato: We raised a Series A in 2019. I started working in mid-2018 to do funding. It was obvious that we won’t be able to go to market on the backs of cash flow. Once we got the product out there, we got a few customers on it. We got some revenue under it. I was able to go out and raise a Series A round. We raised $11 million and closed that in early 2019.
Sramana Mitra: That’s very good. $11 million and you’ve already hit $10 million ARR, which means you have a sizable valuation. That’s a very good return on investment. What is the syndicate for the Series A?
Andrew Plato: It’s ForgePoint Capital. We only have one investor. It’s very difficult for the investor community to even comprehend what we were doing. It just didn’t fall in line with the way most of them thought. Most of them were still thinking of, “I’m a product and I’m addressing this product problem.”
We’re coming at it as, “We’re not a product. We’re a whole suite of things.” It didn’t fit with where a lot of their thinking was. I had to go through a lot of venture capital before I even found investors who could comprehend what we were doing.
Sramana Mitra: I would push back on this one. I don’t know which VCs you had access to or spoke with. I think it’s not that complicated to understand what you’re doing.
Andrew Plato: Perhaps now I can explain it better.
Sramana Mitra: That’s fair. That’s one of the things that we see a lot in our programs. Entrepreneurs don’t really know how to position their solutions. We do a lot of work in helping them figure out how to explain and position their product. That is really challenging actually.
Andrew Plato: It is. We have the challenge that a lot of VCs were struggling to figure out where we fit. The other problem was it’s difficult to figure out how to explain this in ways that people could get it.