Demandjump Revenue & Funding (2024)

[00:00] Guys, Chris has been in many industries. He's gotten to investment banking before founding his own software company demandjump in 2015. Grew that to a million bucks in revenue fairly quickly. First eighteen months raised some capital, realized how VC worked inside of the company, and then said, you know what, man? It's time for me to go give back, and ultimately was recruited in a very competitive process to run Elevate, which is one of the most active seed [00:17] funds in the world. They've got caught the most active in Indianapolis in that that Midwest region with over 500 total investments, $5,000,000,000 economic impact, now focused on giving back to entrepreneurs and supporting companies, whether it's software, health tech, fintech, etcetera. Hey, folks. My guest today is Toby Day. He's the CEO of Elevate Ventures, the number one most active seed and early stage investor in the Great Lakes Region and number 24 in The US. He's an innovator, [00:41] entrepreneur, business creator, community builder, job maker, and wealth creator. Through his endeavors over the last thirty years, you guys will respect what he did as cofounder and chief executive officer at demandjump. He focused on that for over seven years. Toph, you're ready to take us to the top? [00:54] >> Yeah. Absolutely, Nate. Nathan, I'm glad to be here. Let's roll. [00:57] Alright. Let's roll. So let's let's talk about your street cred first before we talk about your investing. So street cred, demandjump was on to, I think, 2015. Was that your first software company? [01:08] >> No. My first software company went back to probably in the year February, February when we built some billing software for the utility industry. [01:17] Interesting. And so did did that work well or was it sort of a crash and burn? You learn take the learnings, put in demandjump. [01:23] >> Oh, no. We crushed it. So we have eight I've started eight companies in seven different verticals over the last twenty five plus years. And those have been in your hard tech and software investment banking, commercial real estate, familyentertainment.com, all kinds of different businesses. And did bottled water, that was my one failure. I failed at the bottled water business. [01:44] That's a hard one. That's a hard one. Okay. So what was what was demandjump's sort of texture? You know, was it bootstrap? Were you all in on the equity side and raising as much as you could? How did you build the business? [01:54] >> Yeah. We we initially started demandjump providing largely services. Right? So we were trying to use machine learning and AI to figure out some things. We actually wrote a book, Machine Was Plug. We just we just released this book a couple of [02:06] weeks ago. Pillar based marketing for those of you listening on audio only. [02:09] >> Yeah. On pillar it's called pillar based marketing, a data driven methodology for SEO and content that actually works. We just released that a few weeks ago, but the concept was everybody writes tons of content. Now it's been exasperated by ChatGPT. Right? So people are re writing more content. And there's all different kinds of use cases for content, but the use cases we were trying to solve was how can I write content that people will see, my [02:33] >> target market will see when they're in research decision or buy mode, drive those leads to me to give me a shot at selling my product or service to that to that target customer? [02:43] So were you like, I'm looking at the headline right now, more page one rankings, more customers, more revenue. I mean, you like connecting companies with an army of writers to put up the content or is it more like Ah reps or SEM rush where it's where it's truly SEO software? [02:56] >> Yep. So there's so it's a one two punch. So there's a there's a software. There's a a platform that you enter in any pillar topics. That pillar topic could be coffee mugs or sales forecasting or whatever. It doesn't matter what the industry, what the business is but the B2B use case, you enter whatever you're selling. It could be cybersecurity. It could be SOC two compliance, whatever it is. You enter that that topic, that pillar topic into [03:20] >> the platform. The platform in less than ten minutes out maps out the entire world around that pillar topic in your website against your competitors websites to understand what is the roadmap, what are the words and the questions that are most highly connected to the center pillar topic, and exactly how you should structure your content that maps to how the human brain actually thinks. [03:44] Interesting. Okay. And you got that going in what 2015. Right? [03:47] >> Yeah. It took us probably five years to figure out that use case that we just talked about. We just launched it a couple yeah. [03:52] Oh, wow. So, like, 2015 to 2020, you would call that figuring out mode? Yes. Oh, wow. Okay. [03:58] >> It's a beast. It's about neurosciences, and it's a very complex problem to solve. [04:03] How did you manage the storyline though? Because when I look at your Crunchbase profile, you raised funding during this period. So you must have had some track record to point to inside the company to say, hey. Give us $5,000,000. [04:11] >> Yep. Yeah. We were originally doing I'll call it analytics. It's like marketers spend, you know, 80% of their time trying to figure out what to do. And so the whole purpose of demandjump originally was cross sector in those various marketing channels, helping marketers understand what they should go do. Right? Helping them reduce their time, figuring out what to do, and and just get down a brass tacks on here's the next five things I should do that [04:33] >> are most powerful. [04:34] Interesting. So, Chris, how many years did it take you to hit him at your first million dollar year at that company? [04:41] >> Probably eighteen months, two years. [04:43] Oh, so it's pretty okay. That's pretty rapid. That's not too long. Okay. So 2017, you're doing a million bucks a year. Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside [05:06] of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath [05:30] dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here. Right? So the teal is what a VC would pay. Yellow [05:52] is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna see companies [06:17] that have sold the whole business. Well, here are a bunch that have been acquired the valuation and the multiple. Maybe you're going out right now and you're raising your seed round. We'll go in here and look at all this recent seed deals that went down, what they raised, what valuation they raised at and what percent that they sold. There's never been a larger dataset of SaaS valuations than what you can get now inside of Founderpath. And [06:42] we're thrilled to bring it to you. All We're right, gonna go back to the YouTube video here in a second, but if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and go ahead and sign up to give it a [07:06] whirl. Again, all that valuation data live right inside the platform. I hope to see you there. Alright. Let's jump back into the interview. And then why'd you decide you know, there's obviously two very you know, usually, I hear the VCs thing. It's usually on the coast. You're in Indianapolis actually, but you still chose to go sort of the heavy, you know, raise money route. Why not bootstrap? [07:24] >> Because to figure that out requires data scientists, machine learning engineers, people that make a lot of money. And and we didn't have, you know, that kind of bankroll to to bankroll the whole thing. And so that's why we that's why we raised some money. [07:38] That's fair. This this will pair nicely into Elevate as we build into that part of the story. But, you know, dilution is something that a lot of first time founders, they don't understand how to manage until they're burned once. They go through their first whole startup and then realize, okay. Here's how to that's how dilution actually works. That's how CARTA actually works. That's what a fully diluted share actually means. How did you manage dilution as you [07:56] were growing demandjump? [07:57] >> So I, you know, I don't think about dilution. There's a there's a a a I'll call him a platinum level famous investor. His name is Bob DeVolle. He's out of Boston. He used to be on the cover of magazines back in the.com era. And and I agree with Bob's concept here. I don't think about it as dilution. I think about it as the opportunity. People start companies for all different kinds of reasons. There's no right [08:22] >> or wrong way. And if you're raising venture capital, I don't think about dilution. Think about it's one step or two or three steps closer to achieving the solution that you're trying to actually build. And so would you rather that be successful and get in market or or not? Would I rather have a 100% of $50 or would I rather have, you know, 10 or 15% of a billion dollars? You know, that's that's how I think about [08:50] >> it. [08:51] I mean, that's obviously certainly what we all like to think about. That's what we're dreaming of as founders and entrepreneurs. But just because you raise, it certainly doesn't guarantee that you're gonna go be what you just described, right, which is a billion dollar success story. So when you go raise 6,000,000 in your series a in 2018, you you put together a thesis on what you guys wanna go build. But but, again, most folks in their series [09:09] a are selling 10 to 20 10 to 15% of the company. Right? So if you're, you know, raising there at a $6,070,000,000 valuation, selling 10 to 15%, and then things don't pan out and become that billion dollar story, then what? Do you try and buy them out? Do you it sounds like maybe you leave. I mean, do you manage that? [09:24] >> No. You pivot and you restack the capital stack. You do whatever you have to do, right, to make [09:30] sure mean, restack the capital stack? [09:32] >> So if you have to do a down round, right, you just go through that process. [09:38] >> Whatever it takes to make that company successful, you make those decisions as you go. So I think that investors over the years, it's just like in real estate, things get really hot and new words get invented, the new technology to actually add value come out. And I think investors a lot of times put undue pressure on entrepreneurs. And, you know, so there's concepts out there like the triple triple double double double or there's, you know, 150% [10:04] >> growth rates and 120% net dollar retention. You know, all these best in class statistics. And and there's people on the coast that get funded with large sums of money, right? And a lot of that money ends up getting wasted. And sometimes entrepreneurs are trying to figure out, you know, AI is a difficult thing. Machine learning is a difficult thing. You're going go through a lot of trial and error to try to truly out to truly figure [10:30] >> out something interesting. And, you know, a lot of investors today like, you know, break even running the break even line is is now sexy, right? Or having a burn rate that's, let's say, dollars 100,000 a month or less versus three, four, five hundred thousand dollars. And so the investors that were trying to encourage high growth and maybe product market fit had not been achieved 100%. Now all those companies are going through down rounds, and adjusting the [10:58] >> valuation to raise the next round of capital that's required to still grow. And so, you know, a lot of investors think 50% growth, thirty, forty, 50% growth now with great unit unit economics is an awesome thing. Right? 50% growth is the new sexy as a parent of a 100 or a 150% because in those early those early days when you transfer, it's so hard to transfer from founder led sales to process led sales. That is a [11:23] >> big deal. And often companies try to cross that chasm too early, which ends up in several million dollars of of lost investment. [11:31] Mhmm. So take us now on to elevate it from I'm going off your LinkedIn. It looks like you left demandjump in in what year and why did you leave? [11:38] >> Yeah. So I've been passionate about venture capital for the last fifteen years. I had investment banking firm. What was that in 2007 or 2017? I forget my years already now. 2009 timeframe, 2008, 2009 timeframe. I started an investment banking firm and was sitting on the other side of the table. Right. So I've been an entrepreneur, been an investor and now with the investment banking route. And I just became really passionate about the funding continuum here in [12:08] >> the middle quarter of The United States, and especially in Indiana, you know, living in Indianapolis. And so I see all of these awesome companies that are starting right here in the middle corridor or in Indiana, in Indianapolis, and it's really hard to access capital, to access talent, to access the investment banking services when they go to exit. And so the opportunity came to lead Elevate, I like to call it Elevate 3.0, and the opportunity came around [12:37] >> to lead Elevate and I just, I [12:38] couldn't What does pass that mean, Chris? Did they recruit you at a demandjump, like in some it was already a fund structure in place or something, what does that mean? [12:45] >> They they had a national recruiter. And so that national recruiter reached out and, you know, they were talking to, I think, several 100 people across the country looking for the next leader. And the national recruiter reached out, and we just start talking. [13:00] How do you manage? I mean, you don't want your baby to die either at demandjump. I mean, I don't know how many full time folks you had there, but it sounds like you may have managed through, like, you know, maybe a down round, and then you sort of have to leave. How do you make sure morale doesn't plummet when you leave? [13:11] >> We had an incredible leadership team. The the leadership team at demandjump, I I would just say, is second to none. They're they're incredible. And I I think all of those those folks are more important than I was, right, at that point. Mhmm. So we had a great leadership team. We had a strong culture, and I felt confident that bringing in a new CEO to to keep you know, to take it into the growth phase was the [13:33] >> right thing to do for the company. So Yeah. It all worked out it all worked out great. [13:37] Are you comfortable sharing, like, how many folks were full time when you decide to leave? [13:40] >> When yeah. When when I left, there were what? We were 30 high thirties. [13:46] High thirties. Okay. Yeah. And are you comfortable sharing, like, a revenue range when you left or no? [13:50] >> I probably shouldn't share that. Right? [13:52] Okay. [13:53] >> Leave it up to to the new leave it to the current CEO to talk about those things. [13:56] Yeah. That that's fair. We we like to try and guess at that by taking an average ARR per employee for companies like this, which would put you guys somewhere between, call it, three and five of ARR. But, again, that's just a guess. But point being, you you were recruited you were recruited into Elevate. And then talk to us about Elevate. So so what's the fund structure Elevate? We can see you've done a lot. I mean, on [14:15] Crunchbase, know, it looks like over 200 individual investments. So what's the fund structure? [14:19] >> Yep. So we've done over I think it's 520 investments throughout Elevate's history. So Elevate is the number one most active early and seed stage investor in the Great Lakes Region. Number 24 most active in The United States. We have $215,000,000 in assets under management. [14:35] Is that is that measured by Chris, is that just measured by, like, literally volume volume of deals Number deals. $1,000 in? [14:40] >> Yeah. Yeah. And the lowest we write checks from 20,000 to $2,000,000 in any given round up to $4,000,000 in any given company. We invest in the ideation precede seed and series a portions of the funding continuum. We invest cross sector. So that includes anything from SAS to hard tech to sports tech to healthcare. We even do some med device, food, ag. We truly invest cross sector, and we've invested about $156,000,000 to date, and that's been co [15:09] >> invested with another 2,100,000,000 of other VCs, you know, throughout the whether it's the state or the nation or the globe of other investors that are invested alongside of us. [15:19] And and I cut you off on accident earlier. What was your total AUM? What's the total amount of funding that you guys have raised? [15:24] >> $2,215,000,000. [15:26] Okay. Over over two funds? [15:28] >> Oh, it's an evergreen fund. So we have a total of $215,000,000 in assets under management. [15:33] I see. Okay. And a 156,000,000 deployed today. But the big number, especially right now when the water's going out and we're seeing who's wearing a bathing suit is DPI. Right? So how much have you guys paid back out to investors? [15:43] >> So we it's Evergreen. So we we don't we just keep reinvesting it. So so our our LP, we in essence have one LP, which is the Indian Economic Development Corporation. So we work with the state. And so it's state and federal dollars that we deploy, and we just, right, we just keep recycling that that those investments. [16:02] I would consider that an unfair advantage. That's good for you, but not not standard where most folks have to go raise from a bunch of different LPs and they gotta manage, you know, you know, distributions and all that jazz. The the the government council there doesn't want you to deploy money back to them. They want you to reinvest it and recycle it back into the fund to support local local startups. Right? [16:19] >> That's right. We've had a $5,000,000,000 impact on the state of Indiana over last ten years. [16:23] Do you measure that? What does that mean? How do you get to 5,000,000,000? [16:26] >> So so we look at the co investment that we've driven into the state. We look at the the annual payroll of our portcodes and the employees. Look at the the real the payroll taxes that are paid to the state. We look at sales tax. That's a revenue source to the state. So when you add all those things up, it's about a $5,000,000,000 tax. You probably more than that with various ways you can measure. [16:49] >> Various ways you can measure economic development. But but, yeah, it's it's a massive number. [16:56] How do you I mean, I know we all know how sort of a traditional VC fundraise, but, you know, at the risk of being, like, too sensitive here, mean, how do you make money off? Is it traditional two and twenty? You could take a management fee or you get carry or what? [17:05] >> Nope. Nope. No. We just we have a a a contract to execute the the deployment of those dollars. So it's just a professional service agreement that we have. And [17:15] No variable. It's just a flat fee for management. [17:18] >> There there [17:19] if something goes and sells for a billion dollars, you don't get, you know, some small cut of that. No. Oh, interesting. Do you ever go, man, look at this billion dollar exit we just had. I wish I wish, you know, I had a regular fee c fund so we could get some of that extra upside. [17:31] >> Well, I think there's there's ways that elevate 3.0. I think there's ways that that we can with all of the track record that we've had. I think there's opportunity in the future to other people who may have interest in us managing their funds in a more of a traditional manner. I think those opportunities are are out there and and to also move up the funding continuum in the growth equity phase of it. So so those things, [17:55] >> I think, are definitely on the the future path for You [17:57] think, like, majority minority recaps, you know, main sale style sort of stuff or what? [18:01] >> No. I think I think so. For example, moving upstream into series b, into growth equity, I think it's a real possibility and there'd be more of a traditional fund. There are other institutions, organizations that have large amounts of dollars that they want to deploy in a more traditional format, you know, to get a return on that investment to to but to drive more new company starts, help companies, you know, that help companies that they know grow [18:29] >> faster and more efficiently. I think those opportunities definitely exist out there. [18:33] Writing a book is not easy. I remember how long it took me to write mine and portfolio random house grilled me to the ground in terms of detail and oh, it was so much work. Why take the time to write pillar based marketing and and and it's congratulations on the launch. Looks like it just came out in late March. [18:47] >> Yep. Absolutely. So we started, it took about a year, right? I don't know how long it took to write your book but it took about a year. I wrote it with a gentleman named Ryan Brock. Ryan was the CEO of Metonymy Media. We bought Metonymy Media when when I was leading demandjump. So it was a little over a year ago, December, we acquired Metonymy Media. And the reason we wrote it was there there is there the [19:11] >> world of SEO is just littered with, [19:15] >> I'll just say, [19:17] >> hacks and, you know, just a disaster, honestly. Just SEO is a blank show and and people always promise some magic bullet, etcetera, and there is no magic bullet in in SEO. And I think it really couldn't be solved because we didn't have the database structures and the computational power to actually solve it historically with, you know, with the growth of the Internet. And there's just a lot of myths, I would say. There's a lot of marketing [19:45] >> myths in around SEO, actually marketing in general. And so we wrote the book to kind of once and for all lay out the story from beginning to end like all the pain that that markers have suffered over the last what twenty five years of the of the you know the loss of the Internet and the growth of the Internet and just to walk people step by step through all the things that we all experience so that [20:06] >> we can establish. [20:08] >> You know, validity that we understand what we're talking about and then how we approach the problem differently and then what the results of of that solution are. But even today, I see all over LinkedIn, you know, people like, Oh my gosh, chat GBT is here. Our problems are solved, right? We can put stuff in the chat GBT and we can write content till the cows come home. And that's true. But some people are conflating that with [20:32] >> it'll work on for SEO, and it just simply won't. [20:37] >> The the Internet was built for people to find products and services. It was not built for products and services to find people, the target market. And that's what demandjump solves. Yep. Is the ability through any pillar topic to understand what like, I don't know what you're thinking right now. Right? You can be thinking, I wanna go to Chick fil A, right, and get a sandwich. I'm starving. Right? And so we but we the Internet is a [21:05] >> pure reflection of the human brain at this point, right? We've been talking to the smart devices now for how many years? Ten plus or minus years. And so, the Internet is an absolute reflection of the human brain now. So we applied math, right, and neurosciences to all of that data to understand how all of these words are connected and basically mirror the network of the human brain, which is the internet, and that's how all the search [21:26] >> engines work, right? They want to match a human most closely aligned to what they're looking for in that moment. And and and that's what the map does. [21:36] Mary's Nice. So check it out. Pillar pillar based marketing. Chris, we're out of time or we're out of time for today. Let's wrap up here with the famous five. The first one's always your favorite book. We'll put pillar based marketing in there. Number two, who's the CEO you're following or studying? [21:46] >> Oh, gosh. I I I follow pretty much anybody. [21:51] Name one Indiana that doesn't get enough attention. Get you on [21:53] some exposure. [21:54] >> Eric Christopher Zilo. [21:56] Okay. [21:57] Number three. What's your favorite online tool for building elevate besides demandjump? [22:05] >> My my favorite online tool for for building elevate Yeah. Just something you use every day. LinkedIn. LinkedIn. [22:11] LinkedIn. Yep. Number four. How many hours of sleep do get every night? [22:14] >> About five. [22:15] And situation, married, single, kiddos? [22:18] >> Single and a and a freshman in high school, 15 years old. [22:21] Oh, very cool. How old are you, Tov? [22:23] >> 52. [22:24] >> 52. [22:24] Last question. [22:25] Something you wish you knew when you were 20. [22:29] >> To stay always stay true to what you believe the the the right next step the the right next step step is. Stay convicted. [22:37] Guys, Chris has been in many industries. He's gotten to investment banking before founding his own software company demandjump in 2015. Grew that to a million bucks in revenue fairly quickly, first eighteen months, raised some capital, realized how VC worked inside of the company, then said, you know what, man? It's time for me to go give back. And ultimately was recruited in a very competitive process to run elevate, which is one of the most active seed funds [22:54] in the world. They've got, call it the most active in Indianapolis, that Midwest region with over 500 total investments, dollars 5,000,000,000 economic impact now focused on giving back to entrepreneurs and supporting companies, whether it's software, health tech, FinTech, etcetera. I got a new book out called Pillar Based Marketing. Check it out. Chris, thanks for taking us [23:11] >> to the top. Thank you. [23:14] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. We call it deal or bust. One founder comes on, three hungry buyers, they try and do a deal live and the founder shares back end dashboards, their expenses, their revenue, ARPU, CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM [23:39] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big [24:01] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign [24:23] up for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode. And if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, but I do it so that we can all learn. We have to counter those people. [24:42] We got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you. Hey.