How Nth Round CEO Graham Mcconnell grew Nth Round to $5M revenue and 25 customers in 2024.

hello everyone my guest today is graeme mcconnell as co-founder and ceo of nthround graham runs all aspects of the company's operations from product development sales and marketing to customer support before starting the company graham started in product design and development at relay network after which he joined the quantitative investment firm ajo partners all right graham you're ready to take us to the top yeah absolutely so you describe you describe nthround as an equity management platform what does that mean well it's uh it actually can mean a lot of different things for different companies whether they're just starting off and doing fundraising whether they're issuing equity to employees or communicating with shareholders you know distributing documents um it really is a very flexible powerful platform depending on where the company is how should people think about you in terms of carter well uh carter i think really is centered on foreign evaluations and capital management and we try to take that to the next level um really creating a more engaging experience and facilitating communication between founders and their shareholders which i think uh in the vc backspace where carter really lives is just not as strong so is this more sort of like visible vc where it's more like you can have manager cap table give log and access to it everything like that yeah absolutely really interesting so you're sort of i mean don't don't let me put words in your mouth you're sort of a blend between carta and invisible is that accurate i think that's right yeah i mean like i said we really try to focus on shareholder engagement and um i mean if you're a cfo at a big company i think we can look a lot like a toolbox for you um but for smaller companies and and founders um you know having that strong relationship and being able to go back to your investors and ask for support is is really important and on their end uh they they don't they don't want to just hear from you when you're raising money they want to hear from you you know or when hits the fan right exactly yeah yeah they want to know ahead of time when did you launch the company in mid-2018 and i actually i started it with my dad who's been um kind of a serial entrepreneur so he's got a lot of experience in the space who has more equity you are your dad uh i do oh wow like 60 40 sort of a deal uh yeah i mean actually uh to be honest he was he gave his side of the equity to all of my siblings um they're all involved in some way um but yeah i mean he's he's been at the at the helm before and and thought that this was a good opportunity to let me kind of take the reins super interesting have you bootstrapped the company or did you raise we did raise money uh so our our vc is nea new enterprise associates and then we also brought in about a dozen individual investors from the philly area and about how much did you raise we raised 4.3 million for our uh seed round when when was that that was 2018. do you regret that or no no i i mean we've uh i think it's a very different dynamic i was actually reading your last uh newsletter from yesterday about you were talking about bootstrap companies and it is a different culture um you know when you're when you take money from a vc you're definitely reporting to them and it's a different model they're very much focused on fast growth um whereas i think with boost truck companies you're more accountable to yourself and to um you know i i actually tend to bucket bootstrapped and family and friends uh raises kind of in the same category and i think you're just a little bit more accountable to yourself in that way i don't disagree with you that's for sure um okay so 4.3 raise 2018 uh you continue to scale talk me you know talk me through those early days right so i assume you had some connections at ago you were able to use how did you get your first 10 customers so uh actually i mean it was all our our personal network honestly we we really when you're talking about capital management you need to kind of uh get trust in some way and being able to go to our local network and work with people that we've worked with in the past in the past and kind of established that trust early on was was really helpful um and then we expanded from there to uh you know one degree away from from those close friends um and we've kind of continued to try and grow mostly through word of mouth so that's first 10 sort of back in 2018 how many customers you have today we have uh 25 now uh and honestly the first six months was a lot of regulatory work we started out on the trading platform uh which i didn't really mention but um that was our core for i'd say the first 12 months and um we didn't go to market until last year and then this year has actually been a great year for us um you know i think part of that is the the fact that uh founders can't really get together with their investors in person and having a tool for for them to do that remotely is is really helpful and so i want to go back to why your initial thesis was the trading platform and when you knew that it was appropriate and that you needed to kind of pivot so we'll get back to that in a second but help me understand sort of the nature of the 25 customers today are we talking sort of smaller rp accounts are these like big enterprise deals you're trying to close we do actually nowadays we're mostly targeting bigger enterprises because they have they really feel the need and um they have much better ability to pay um i mean in terms of of how the thesis started i actually at relay network i got stock options and um you know i was really excited to be a part owner in that company but didn't realize until i left the company that those options weren't really worth anything and ended up giving them up um and well there was something you just got to pay for them and curl the taxes then hope the company keeps growing exactly yeah and then and then uh if there's no liquidity event you know what what do you do with them um so that definitely was kind of the genesis of the trading platform um but yeah the our current customers are more enterprise i would say um they have more shareholders they have k-1s that that they need to distribute um and they have kind of an office of the cfo that we can provide a lot of value to so graham what are these folks paying on average per month so on average i'd say 12 000 we do have a um sorry per month uh a thousand yep um we do have a lower tier now that's eight thousand dollars a year um it kind of just depends which which levers you want to pull okay so that would put you at somewhere around 25 000 a month today in revenue yeah that's right where were you you bet about a year ago we were uh almost nowhere i mean we had less than 10 customers a year ago uh maybe even less than five honestly so that i i wouldn't really call it a pivot i although it's a pivot in terms of our focus um the trading platform was our our main selling point before and it turns out that there's a lot of uh reporting requirements around having a trading platform so um we built all these tools for making sure that all of your shareholders are on the same level playing field in terms of information and that's actually what turned out to be what people really wanted today and so that's how we ended up being in that business martial yeah graham just because when you're talking trading platform people shouldn't be thinking about the images they see from like the nasdaq stock market for when you talk about trading platform what you're talking about is essentially like a nasdaq private market there's only the angels that will watch linkedin when an employee leaves a company and they will go buy up just like you really they'll go get a small stake in the companies by buying up unexercised options you essentially brought liquidity to that market with your trading platform yeah absolutely it's it's actually technically a listing service we can't exchange that's that's an sec defined term and uh it's a very private environment it's not it's nowhere near like what you would see in public markets where there's trading happening every second of every day yeah so so this is a world that i'm just not behind the scenes on a lot because your point you have to have trust with tons of people right and for them to actually show you and share with you like their 409 a's and you know the strike prices and all this sort of stuff what are you for someone listening right now who is an employee that's going to be leaving a fast growth sas company where can they get liquidity for those for those options right now and there's not many places i mean there are certain platforms out there ours is one of them that allow you to almost that kind of will broker a deal for you that will be very careful about releasing that information which you referred to and finding a buyer um but it really comes down to the company whether they want to allow this new shareholder this new investor to come in and buy you out so it's it's a very controlled environment um and those other platforms not ours but those other ones will typically charge uh between five and ten percent of the value of that equity so it's a pretty big chunk well that was my real question right is that that employee that's listening right now at a fast growth tax company that wants to leave and maybe do their own thing but doesn't want to exercise...