Despite a tumultuous start to the year on the political front, the venture and startup ecosystems remained healthy in 2017. It was a positive year for Foundersuite as well, but not without a few startup twists and turns to the adventure.
Here's what happened -- and what we can look forward to in 2018.
Q1 - Q2: Right(sizing) The Ship
We started the year in an “interesting” position: we had largely burned through the capital raised in our seed round, and thus we needed to raise more money.
After 20 or so pitch meetings, it quickly became apparent our timing was off. Our revenue was still low (around $5k per month) but more importantly, the goal posts had moved significantly since we last raised. Expectations had risen to $25k+ MRR to do a seed extension, and more like $100k for a proper A round.
The moment you realize a new round is not going to come together given your current metrics, you need to move fast and decisively. Rather than waste more cycles chasing investors, we retrenched and focused on reducing our burn rate + growing sales.
I’m a fanaticial sailor — I’ve logged over 10k nautical miles and sailed across the Pacific — and the metaphor I came up with (probably after too much sun) is:
“Your first and primary job is to keep the boat afloat; your second job is to keep it moving forward. If you do 1 and 2 you’ll eventually reach your destination.”
I had to let several people go including some very talented engineers and one content marketer, but I got our burn lower than our MRR.
The other apt metaphor is:
“Startups are like sausages: it’s better not to see them being made.”
…meaning that despite the glossy facade we all put up on social media, behind the scenes it’s a messy, messy process. In our case, we pretty much had zero engineering team for the better part of six months, while the marketing team kept hustling and selling.
Yes, a startup without an engineering team. Please don’t peek behind the curtain. :)
Q3 - Q4: Sail On
Summer was the low point. We got as far as we could without major product updates, but the day of reckoning finally came: July was our first flat month without any revenue growth. However, we were generating a healthy $18k MRR so it was finally time to start building again.
August was spent sourcing and interviewing new engineers and a new product manager, and by September we had a lean and mean development team back online.
It felt incredibly good to push new code out after such a hiatus. We released several new features such as a new To-Do Dashboard View, the ability to add VC Funds to the funnel, and much more. I'm happy to report the engineering team is now in a good groove and gearing up for a really productive 2018.
2017 By The Numbers
The metric I monitor most closely is MRR, which I find cuts through all the clutter…ultimately it’s the one metric that matters. We’ll close out the year around $24k MRR, which is not off the charts but we’ve done it with a bare-bones team and almost zero marketing budget— as the Australians would say, on the “smell of an oily rag.” I’m proud of this.
We haven’t yet jumped on the NPS bandwagon, but we did recently get on Capterra and I’m also proud of our 4.6 stars (out of 5) rating. Users genuinely like our product (it wasn’t always this way :)
What really matters most, however, is the success of our customers. If you get this equation right, and you’re producing meaningful wins for your users, the business model will fall into place.
On this metric I am extremely pleased:
"Foundersuite customers have cumulatively raised over $450 million in angel and venture
capital, with $300 million of that having come in 2017."
Boom! Look Ma, it really works! :)
We’re entering 2018 in a stronger position with the development team running full steam ahead. The main themes we will be focusing on this year include:
1. A Larger Investor Database: To grow with our customers as they grow, we are building the list of VC firms quite extensively. This project should be done in early Q1 and it will add 10,000 new investors to the database, as well as several thousand “long-tail” investors such as family offices, HNW, fund of funds, etc.
2. More Automation: Digging through our Capterra reviews, the most common request is for more automation in the process. Save me a few keystrokes, our users say. Pull in information automatically, they plead. We are listening, and will be rolling out some new features, including an iOS App (currently In design phase) and a Chrome plugin. Stay tuned :)
3. Better Investor Relations: By now you’ve probably heard me beating the drum about how beneficial sending regular investor updates can be — both to your existing investors (to activate them and put them to work), and to prospective investors (to grease the wheels for your next round). We’ll be working on making investor updates more automated and more interactive.
We will also be formalizing our “fundraising concierge service” where we selectively make intros to relevant investors for startups with funding momentum. We experimented with this successfully on a few customer such as Pyron in 2017 and hope to expand the program.
Thanks for reading and Happy New Year!
As always, reach out any time if you have questions, suggestions, or ideas on how we can do a better job of helping you.
Nathan Beckord, CFA