Category: Capital Raising

Q: What was your approach to funding Spotlight Reporting?

2/20/2018

Richard Francis
CEO & Founder
Spotlight Reporting

A: “We bootstrapped those first three years as I mentioned. We had a successful consultancy so had little bit of money we could throw at. The little nugget of genius we had was seeing a gap in the Xero ecosystem shortly after we’d launched Spotlight Reporting. We were chatting to Hamish Edwards, the co-founder of Xero, and thought we could build workpapers that are online. So we built the first workpapers set - which is about as exciting as it sounds - but is a very useful tool for an accountant. Rod [Drury] basically said ‘we need that don’t we. Name your price’. It was very early stage so we settled on - public knowledge - $800K, and put that money back into Spotlight. So Julie [Richard’s co-founder, and wife] and I have put everything into it. We had the big mortgage, and all that stuff.

When we were talking to Xero about potentially being acquired, I thought ‘why don’t we raise a similar amount of money and really go to that next stage?’ We ended up getting some great early stage investors, and 3 years in did a seed round of $1.3M. David Wilson, Vend director and major Xero shareholder was one of our backers, as was Craig Winkler, MYOB founder and major shareholder Xero, and so was Graham Shaw, Director of PushPay, Gentrack, Rightway. So we had these cool guys - there is lots of others I can mention - who got in early and that allowed me to hire the next 10 people to seed offices in the UK, San Francisco and Australia more thoroughly.

My accounting background has been useful in understanding the SaaS metrics. I understand the formula that drives our business and I’m very clear on our strategy. But I’ve also got that fiscal management thing going on. The beauty of that is we’ve looked after the money. We do lots of cool things, spend a lot on events and all that. But shareholders money matters. It’s other people’s life savings. Get a CFO in. Get an accountant. Make sure you look after shareholders money. There is a guy at SaaStr who said ‘every dollar of shareholders money matters. And every dollar we spend I want to see ROI’. It might sound extreme, but I think that’s quite important. We’ve all seen founders do a round, and blow the money on shit, or lose it through really poor or loose management. The business either goes under, or needs emergency funding, or a down round. A lot of that is not actually down to the company itself or the product not being that good. But it’s just drinking the kool-aid and getting out there and spending the money on shit.”

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Q: What has your approach been to raising money? And how is it different being a first time founder?

12/14/2016

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Rich Chetwynd
CEO & Founder
ThisData

A: For me I had never raised money before. I’d built and sold a company and that was great, but I’d never raised money before. It was the classic case of ‘ask for advice and you’ll get money, ask for money and you’ll get advice.’ There wasn’t any funny business going on there, I just really wanted the help. So I found the single person I knew who had a lot of experience raising money, and I went and asked that person if they’d be interested helping me put it together. Then ultimately they ended up putting in money as well. That person was really key; I didn’t need their money but I really needed their help. And they helped me work out what that initial valuation might be, how much we should raise, who we should raise from, as well as opening a few doors and making a few connections. That’s is how I started off on that raising journey.

There are so many questions when you go out to raise money. You’re all obsessed about what you want to do and how you’re going to change the world; and you need x dollars to do so. But then there is are sorts of other things that come into play. How do we value this opportunity? What sort of investors do we want? What are the timelines we’re looking at? How do we put together good terms?

One of the things that also came up for me was to stop thinking about the first round. To start thinking about what the subsequent rounds actually looked like. You can get hung up thinking it’s all about that first round of money, but once you’re on the capital raising buzz it’s hard to get off it. You have to spend the money, but then if you haven’t hit the targets you’re still spending the money. So you’ve eventually got to trim your costs, raise more money, or more likely both.

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Q: What was your approach to funding Spotlight Reporting?

Q: What has your approach been to raising money? And how is it different being a first time founder?

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