Bootstrapping a High Growth Cyber Security Venture with a Paycheck: Christian Geyer, CEO of ACTFORE (Part 6)

Sramana Mitra: So, what you’re describing is a very interesting scenario where you were able to incubate the company to a very large degree – $18.3 million revenue level within your parent company, and the board let you do that. It’s amazing that you were able to do this at this scale.

Now, how many people went with the spinoff – you and your co-founder and who else?

Christian Geyer: Oh, my co-founder and I are the only ones that were originally employed by the parent company. We’re the only two that went with ACTFORE.

Sramana Mitra: The two of you owned the full valuation of this $18.3 million revenue with a minor minority stake for the parent company. That’s the cap table.

Christian Geyer: Yes. We do have other employees that we hired as ACTFORE. We are roughly about 40 employees, delivering this service.

Sramana Mitra: But in 2024, when you did the spin out, were there other employees?

Christian Geyer: Yes, that’s where we were. We hired them under the subsidiary of ACTFORE. That was under the parent, and they all went with it. They’ve never even really known Active NAV or the parent company.

Sramana Mitra: Got it.

Christian Geyer: When I started this and I was bootstrapping it, I didn’t want to bring in people to the parent company.

Sramana Mitra: You already Had your eye on, on the spin out and building this business as a separate company. So you were working towards that structure. So they all had equity in the new entity once it was spun out.

Christian Geyer: Correct. They’ve never known the parent company.

Sramana Mitra: What does it mean? What does minority shareholder mean? What is minority shareholder? What kind of numbers are we talking?

Christian Geyer: Less than 50%. The employees and I carry the majority stake. We were able to negotiate and stick firm from an organization that rightly owned 100% of the subsidiary in its infancy because we negotiated ahead of time that it was our idea and our sweat that was building this.

Sramana Mitra: But they had very substantial equity, even if it’s 49%.

Christian Geyer: I don’t want to go into the actual figures, but it’s less; it makes them a very small minority. It was a big pill for them to swallow.

When you’ve got an idea and you’re working for somebody else and if you’re not getting generally the support financially from them, and you’re building it and you’re bootstrapping it yourself, don’t let them take the vast majority of your idea.

Sramana Mitra: Still, I mean, even if it’s 40% of the company, even if it’s 30% of the company, that is a very significant amount of ownership, given the fact that they didn’t really put in capital into this.

Christian Geyer: I would say they didn’t put in capital, but they did put in the core software code.

Sramana Mitra: Okay.

Christian Geyer: I pulled it apart and I dismantled it and rebuilt it, and I also bolted on new additions to it to then service our industry.

Sramana Mitra: It’s a good deal. Overall, it strikes me as a great compromise. It’s a huge win-win for everybody. You, your co-founder, the original company, everybody created something of good value that was fairly owned at the end of the day. At the time of spinoff, it was fairly owned.

So, what happens after that? In 2024, you spin it off. What happens next?

Christian Geyer: Now, we’ve started our own branding. We’re out there in market, we hired a marketing team, a PR team.

So we’re trying to get the word out as much as possible that what we’re doing in the industry is disruptive. It truly is disruptive in that we’ve already, I think in our nine months as our own separate entity, we’ve already won nine highly acclaimed awards. We’re being featured in magazines, journal articles, talking about how disruptive we are.

Basically what the next step is we’re on a journey to be acquired. There’s more to it, in that we built this companynot to be a multi-billion dollar organization. We, at least I, know the actual limitations of myself being able to grow this to a certain level.

I’m trying to get our software solution and our workflow process into the hands of every single incident response. How do I get it into every incident response? It is by selling it off to a much larger organization, somebody who actually can influence and pour significant amounts of capital into it to then say, “This needs to be everywhere, all around the world, in every cyber breach.” I think that’s up for people with much larger pockets and Rolodexes.

This segment is part 6 in the series : Bootstrapping a High Growth Cyber Security Venture with a Paycheck: Christian Geyer, CEO of ACTFORE
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