Sramana Mitra: What is your funding strategy? We talked about the $2.2 million round. What else have you done since then?
Rich Waldron: We’ve raised a total of $109 million now. We raised a $5 million bridge to a Series A. In 2016, we raised our Series A which was $14 million in March of 2018. Then last year, we did our Series B and Series C just under four months of each other.
There have been a number of things that helped us. Our company culture and the thing that we’re most guided by is that we are humble, gritty, and we have a huge vision. Most important for us with investors is that we find people that we could spend time with for a very long time that would bring skills to our Board that we didn’t have and more importantly, who are very good people that we could call with good or bad news.
That means not necessarily taking the highest valuation but by going with the people that you think are going to support you all the way through. Our strategy over the past few years is, we manage capital carefully and efficiently. We are a venture-backed company. We think there’s a big opportunity here.
From a strategic perspective, a number of things have really gone in Tray’s favor. During the development phases, backend architecture changed fundamentally. Over the last five years, what you’re now able to achieve with cloud architecture is significantly different. There was a shift to people outside of engineering understanding what an API is and why it’s important.
We saw this explosion of SaaS along the way. From the early days of struggling to raise to the latter years where it’s driven by a company’s performance and market opportunity, it just changed the dynamic of how we’re able to raise money and the partners that we are able to get.
Sramana Mitra: Which funds did you go with after True Ventures?
Rich Waldron: A fund in the UK called Mosaic led the round between seed and Series A. Our Series A was led by GGV Capital. Glenn Solomon joined the Board. Spark Capital led our Series B, and Meritech Capital led our Series C in October of last year.
Sramana Mitra: Given the amount of money you’ve raised, you have hit the billion-dollar valuation?
Rich Waldron: We’re just north of $600 million in our last round. We’re certainly on track for something like that. Given how we got here, valuations are important for a number of reasons but they don’t mean a great deal.
Sramana Mitra: I’m very happy to hear you say that. A very common and bad practice in the industry has become flapping a bunch of liquidation preferences and getting to a billion-dollar valuation which is a bad idea.
I’m reading between the lines. Given the valuation numbers you are quoting, I’m assessing that you don’t have crazy amounts of liquidation preferences on a lower valuation, which is a much healthier way of raising money.
Rich Waldron: I’ve always been careful of getting in over our skis. We want to build a company where everybody wins. Most importantly, it matters to us that we have an iconic brand that’s going to be long-lasting. It’s not a badge of honor for us. Seeing people use Tray and talk about it, that brings far more pride.
Sramana Mitra: You would build a much more sustainable company in the long run if you make sure that everybody involved is well-positioned to make proper amounts of money in the event of an exit including getting through difficult times like what we are facing right now. The liquidation preference-heavy term sheets get into massive trouble in situations like this.
Rich Waldron: We are a company that was founded by three friends. We all stayed friends all the way through. That is the heartbeat of our culture. When you hit a pandemic or something you didn’t expect, it doesn’t have an impact on us. We’ve been through tough times. This is what our company was built for.
We’ve seen the company thrive because of the need to do more with less. The need for automation has brought more and more opportunities. We’re just well-positioned to continue to grow throughout the challenges ahead.
Sramana Mitra: Great. Thank you for your time.