Regroup Revenue (2023)

has been said I am an entrepreneur who's both taken VC and bootstrapped I've started a few things so I'm just here to talk about that a bit um just want to get a sense of anyone who's maybe either uh let's see are you Founders in the room everyone is a Founder let's say okay uh has anyone raised a BC before uh in the room okay great and people then mostly bootstrapping at the moment okay and maybe looking into VC okay great that's wonderful so um before I go to my you know kind of summary slide that they ask I just want to tell you a bit about what I've started uh so far um kind of in chronological order the first fewer late 2000s the last thing is 2017. my first business uh was a business called College wikis uh started it in 2006 was um out in Silicon Valley was in business school at Stanford did you know kind of Wikipedia like sites for colleges this is the time of I don't know Wikipedia being big Facebook being big that sort of thing still is but it was the moment for it it was a moment for like an advertising driven play and we raised series a for that business and then kind of the world imploded so we'll talk about that with very a lot of parallels to 2023 obviously 2006 I raised series a in 2008 for that business and then 2009 happened um start out's a non-profit so all of these are actually funded in different ways College wikis Series a start out as a non-profit for LGBT entrepreneurs so it's raises money from like Hoffman Foundation that sort of thing uh regroup is what I spend most of my time on now I'll tell you a bit about it it's Mass notifications and emergency messaging cell is like an annual SAS license to Enterprises any company or hospital system or city or school who needs any sort of like text messaging Blaster and way to internally communicate with their constituents of any type bitville capital is a fintech and crypto fund that I started in 2017 so that's actually just based on Revenue essentially um so so let's talk a bit I guess why don't I now do kind of what I'm going to cover but I'm very open to questions we can either take a question or two after or if you have them please please just ask um so uh I think we all know that you know VC is you know once you've found product Market fit you can call it VC you could call it kind of even Angel a precursor VC but it's you know when you found product Locker fit it's a way to really accelerate your growth there's been a lot of talking on the the main stage today if you guys have seen those as well about kind of not essentially like hiring sales people before you have something to sell uh same thing with VC right um but we'll talk about the pluses and the minuses bootstrapping you know um uh you know it's I think as Ben said it's what what Nathan talks a lot about uh but um I will tell you that with regroup it's all I also started in the late 2000s so it's been you know over 15 years as well so there's that plus and minus right you keep a lot of equity but it's also probably going to be a slower growth rate and the risk is all on your shoulders they always say diversification is the first rule investing if your bootstrapping you're not really diversifying and no one else's skin is in the game uh really so no one has to help you it's a at any you know or has that level of uh of involvement um and then I'll talk a bit about uh this presentation about like different gray areas of both funding uh and different ways to kind of I don't know ease things for yourself so how to evaluate yourself in your business and timing timing is I think um under discussed I guess uh just to you know I think it's it's very relevant like that it's 2023 right now and we'll see where the market goes but um even in SAS multiples uh were you know Maybe 2x on a revenue basis what they are today so I've seen multiples up to like 16 time sales on average from some studies another about like six times sales for example so uh everything's timing based uh so we've covered this but I will tell you a bit about regroup so um it's Mass notification meaning text messaging voice messaging I don't know anyway a large company would want to get to their uh their employees or their constituents put them into different groups that's why we're regrouped especially after emergencies but of course uh these days especially with work from home and covid people use it for any reason to get out to their employees we do desktop messaging app based messaging that sort of thing um so uh this has also covered a couple times today but you know we all know that one percent of companies are VC funded I can tell you for college wikis though uh we're here in New York at the time I was living in the Bay Area and I uh for the college Wiki's uh process of getting to series a uh we also raised Angels so we went out to basically every Angel group we went to New York angels we went to I don't even know if these places still exist Boston Harbor Angels ecoast Angels that's just I wasn't even living in this area I was living in the Bay Area so we went to Sand Hill angels we went to everywhere so that's the Venture Capital process I remember Foundation capital I had 11 meetings with them uh and then they told me no we wished from a place called high bar Partners at the end of the day um for college wikis so you should just be aware that it's a long process it's its own process it is a distraction um and but uh it can be worth it in that case you know you you again diversify risk and think college Ricky's did not succeed so that was a good idea in that case the retroactively hindsight being 20 20. um but uh VC I think uh if you let's talk about you know maybe how to know if you're going to be able to take VC um I think since we're at a SAS conference I'm going to assume that most people in the room are running SAS businesses if you're running us as a business maybe let me know is everyone here kind of SAS Tech okay great so we all know that you know getting investment you know what they show on like say Shark Tank where pretty much everyone is selling them a commercial product or service is quite unrealistic very few Venture capitalists actually invest in that and so I don't know you know it's could have made for TV so it sounds like everyone here has a prerequisite of uh having a software product or a SAS product uh and then also of course a prerequisite would be the team having a technical co-founder uh having some traction and that sort of thing so even by the time of going to Angel groups and again I've done the whole Angel circuit um you know they there's high expectations even for I remember talking to David Rose of New York Angels they have you know it's not a one percent rate but it's something like five percent or so of companies that apply to them get get get Angel um I will tell you that my experience with angels that it's much easier to go to individual Angels uh than to uh than to a group I would say um so uh so um let's talk about like VC and this for me also covers the angel market and whether it's an option for you we've talked a bit about you know everyone here is kind of in Tech that helps software helps of course you know that investors want us they do software because they want um you know low cost of goods sold right scalable all of that not telling you anything you don't know um but um in terms of the stage and team uh often uh they will want to see some skin in the game from yourself often you'll see Founders who have you know friends and family invest or repeat entrepreneurs so um I think that's that's you know one thing that you you see is how invested are you as a founder and your traction but for venture capital I think most of the bootstrapped in terms of like where is your business depends on how big your Market is if you're going for a very specific niche market that's when you can own the whole thing bootstrap it get to 10 million ARR sell it for 100 million AR and that's the same exit as building a unicorn uh you know where you're revealing it to Let's whatever that is but the more AR you need to have a good exit the harder your life is essentially so it's uh uh that's just a plus and minus so if you're doing something that's Niche uh you may want to consider bootstrapping if you're doing a huge play where because where you're competing against uh large companies then you're going to want to raise money and go fast um so yeah uh so let's see um so a lot of people I think have this preference for bootstrapping if they can and I think uh I've talked to some Founders here today who have bootstrapped and it's really about a few things but you know either creatively financing uh obviously we're we're here at a at a conference that's sponsored by a company that does you know Revenue based factoring so there are creative ways to do that financing that of course requires Revenue uh but even you know there's early stages of friends and family where you can raise it as convertible debt that's gone out of favor a bit these days since y commentator came out with its uh updated contractors many many years ago that actually kind of already pieces out the company even at the early stages of friends and family but there are ways to get Angel Capital that is actually done as debt that you could in theory pay back if you get to revenue and then there's also I think what I did with regroup is really really really rely on everyone I knew to see if they could become early customers so it is about quite you know as much as you can leveraging your network doing in-person meetings getting uh you know using open source software or software that already exists to build on top of it and iterate on top of it to sell that minimum viable product so that's if you are going to bootstrap then you need to find some revenue or have extremely like costs literally be living as I was in my parents like basement so I mean that's that's what it takes for a while um so um so it just depends on I guess if you think that you can get to some Revenue some low expenses and find a niche and sell to your network if you can't you know if you're not finding sales uh that's the issue that's an issue of course um the problem is and I was talking to a friend of mine about this uh recently uh and you know I think everyone realizes that it's a bit of a catch-22 how do you build a product without financing uh how do you uh raise money or without Revenue so it becomes a catch-22. that is the issue that is what all of you are tasked with figuring out and everyone has to figure out for themselves uh there are some patterns for example when we raised for college wikis we did it on the open source media Wiki platform that Wikipedia used and then we added some things on top of it so you could iterate on things that exist or you can leverage your network as much as you can to create like initial clients a lot of people start with intrapreneurship where they're working at a company and then spin it out so there are some there are some options and ways around this um let's see um we've talked a bit about the different like options for um for for fundraising if uh you know I guess you're getting funding without bootstrapping um uh I think one thing that's been in the news a lot is uh is um is uh when I was thinking about friends and family I was thinking about nepo babies which have been in The Newsroom a lot uh and so that's why I put the first bullet you know with the reference deal on musk unless your dad has an extra Emerald mind lying around friends and family does put a lot of stress on your family and it also uh kind of gives you the Escape of um not try trotting the path of having to actually get to revenue as quick as possible so I've seen a lot of friends and family rounds that haven't worked out um it can be a necessarily necessary evil I was just in a listening to another talk where the founder um had was telling his story about maxing out his credit cards uh that happens to a lot of Founders it happened to me at one point uh but you uh you do what you need to get to revenue but friends and family is you know obviously incredibly stressful it does turn out though that uh we're all in probably if you're an entrepreneur uh one study said about 80 percent of entrepreneurs have in their close Network other entrepreneurs 53 from another study that actually their families you know an entrepreneur so you might have a risk profile where uh you um you know your your network understands um but my advice is always to go out to an angel who's been successful with something comparable those people have a bias towards success for what you're doing uh and um are the easiest to raise from generally individual Angels if you if you need to go at that stage and some terms can give away new Equity at the angel stage if you if you structure it structure it right um so uh yeah and we've covered getting to break even so I'm gonna I'm gonna skip that you know increasing Revenue cutting costs that sort of thing I do want to talk about some gray areas so um I recently I was just in like kind of researching for this I ran across something that I've seen uh number more times before than I see people talking about so there's a great from um from uh there's a great talk with Nathan and two other Founders Chris Savage and Matt facilius uh where Chris talks about something that I've seen before as well where his company raised Equity so a lot of people say oh I don't want it you know the dream is bootstrapping and still getting to a unicorn but uh some you know when times change terms can change as well and it also can change to the Founder's benefit in this case uh he had raised in 2017 uh 1.7 million and then when he had uh you know the ability to when he had Revenue when he had debt uh he then actually or when I had the ability to take debt out he then actually bought out the investors so that he owned the business and he and his team owned the business entirely and proceeded from there and then he proceeded to grow the business with some new product Direction with some new product directions he wanted to take I know several Founders have done something kind of gray area like that and um I guess when I talked to other Founders there's a lot of interesting I think decisions that we all make that we don't realize are iterative so for example even financing can be it or whether you're bootstrapping or a VC backed company who's on your board could be iterative who the founding team is I've seen that you know be iterative as well so people kind of stress out a lot about all of these decisions and um you kind of go with what you have in the moment and especially if we're all going to be running our businesses for a decade or more things change and they can even change if you've taken money I do agree with the saying though that like getting someone on your board is like a marriage you don't want to get into that without really putting a lot of thought into it and you really want to Champion on I've definitely um you know seen and experienced both sides of the coin with that so you do want to make sure that the person has some uh is it maybe just coming in from a strictly Finance background and understands the you know entrepreneurship which some investors don't uh so um so uh just to kind of recapsulate and also happy to take any questions about the series a I did for college wikis the boots trapping I've done for regroup or even building a fund which is you know bootstrap because it's Revenue again if any of you guys do services for your business that's something that's you know maybe uh less of a revenue multiple if you're going to raise money but Services gets you to immediate revenue and I know a lot of Founders who've also added services in as well to get to revenue as quickly as possible um so you know if you do take VC just be aware that it's a process uh the I I you know as I mentioned I've met with one Venture Capital company literally 11 times and every time was like doing a a new deck for them so uh it's a process but it can go well and it can really turbocharge your business you do give up you know a large chunk but it's for a bigger pie the opposite with bootstrapping bootstrapping or also uh strapped in both ways I guess you could say uh so just be aware of that and be ready for it and then it'd be ready for that sort of uh you know really being in love with your business for a while um and um I guess you know I was just talking to a colleague of mine for business school about the decision to uh you know take you know where is the grass greener what side is the grass greener on uh and I think uh both sides of the coin seem to think the grass is greener on the on the other side a lot of blue strappers I think the grass is greater than venture capital and people who take Venture capitals I think the grass is greener on the bootstrapping side so uh they're both good options uh I think um see you know test the market out in both ways and see what you think is like you know in an iterative way again and see what you think like where you think your your path will be um uh but there are some you know uh just you know guidelines you can take about the market that you're in and whether you know you must take VC for your Market or not and that's that's pretty much it uh that's that's my path of bootstrapping twice uh and taking VC and Angel once each so any questions all right thanks a lot Joe yeah any quick questions while we transition to Michael please yeah absolutely and the question was you know is it dangerous to boost shop for too long one thing I have seen that's counterintuitive if I as I have seen um Angels let's say Angels sometimes not VCS so much because I don't think that would be a negative for a venture capitalist actually I think uh they just want to see some traction and so however long it takes you to get to that but I have seen Angels require more um uh like the 11 meetings I had was because we had already launched a product product we already had traction we had to slice and dice our traction so many times for them and I've seen the opposite of that happen when you literally have two a couple like a team and you're ideating and you're going to go to market and you want to hit the market hard because they can't even ask you any questions so they can't say oh you're not you know Facebook so uh so then we don't want to invest they can just say that sounds great or not um so it is counterintuitive sometimes if you could chat for too long but I think for Venture capitalists it's not I think it's it's whatever it takes to get to that that metric I would say all right thanks very we're a little behind so we'll roll into Michael here so give Joe a hand for the two perspectives appreciate it