How I Raised It with Enrico Palmerino of Botkeeper
Nathan Beckord: Welcome to another episode of How I Raised It, produced by Foundersuite.com. Today with me is Enrico Palmerino of Botkeeper, coming to us from Boston. How are you doing today, Enrico? You just finished giving a talk to a class at Babson, is that correct?
Enrico Palmerino: Yes, I was brought in to do an hour-long conversation on how do you identify opportunities in a market and what kinds of metrics and data points do you track, and how that changes as the company scales.
Nathan Beckord: Very interesting. So let's talk on that. How did you find an opportunity? Where did the idea for Botkeeper come from? Actually, start off with what Botkeeper is, and then how did you come up with the idea?
Enrico Palmerino: Sure. So Botkeeper is automated bookkeeping and accounting for startups and small- to mid-size businesses. The idea is that we can (rather than using a team of bookkeepers or accountants and hiring them in-house or using an outsourcing firm) leverage software to do the majority of the work, and software does a great job at automating the process. It's very efficient and that means that the companies that use Botkeeper get more accurate data and financials. It's real-time at their fingertips, and it's half the cost of using a person or an outsourced firm.
Nathan Beckord: Interesting. So how did you come up with this? Were you a bookkeeper or doing accounting work, or studying accounting?
Enrico Palmerino: No. So the inside joke is that I hate bookkeeping and accounting, which is ironic, but how I came up with the concept had a lot to do with my first startup. I started a lighting company that automated how you analyze design and manufacturer LEDs. So we built software that ran a bunch of data points and variables through decision trees. And at the bottom it would say that this is the ideal light for this scenario and here are the specs. Then we convert that into CAD and then manufacture it. And we do that business very quickly. So I started that in my dorm room. By the time we graduated we were doing about $8.5 million in recurring revenue. We had 60 employees, and we're 46 on the INC 500 list, so, you know, Facebook, Twitter, 44 other companies and then us.
Enrico Palmerino: And then we ran out of cash, even with all that revenue, because our books were always behind. We had a 60, sometimes 75 day close. We had very complicated accounting, deferred revenue recognition, depreciation schedules on assets, foreign currency conversion, inventory, manufacturing, you name it. And we just didn't know what our cash position was, so we over-leveraged ourselves. And it really frustrated me that we had built this incredible business, and that bookkeeping, or the lack of speed or the ability to keep up, almost sank it. And so that kind of prompted this idea of, “I bet I could take those same decision trees that I use for lighting and apply to it accounting.” In fact, it can even more easily be applied to accounting because accounting is a bunch of policies and processes that have guidelines. And they need to be followed.
Nathan Beckord: Whereas lighting has a lot more variables, complexities, and nuances. Very interesting. So when did you start the company?
Enrico Palmerino: Botkeeper started in 2015. We began development, and prior to Botkeeper, I also invested in another outsourced accounting firm. I grew that one, applied some automation to it, but having that accounting background or knowing math, and then also knowing the databasing and decision tree side of the equation, meant that our dev for Botkeeper went pretty quickly. We weren't relying on me to try and translate the accounting language and speak to someone who knew tech and having them do their interpretation. I actually understood accounting well enough to be able to say, “Okay, in this process, this is how inventory is being dealt with. Here's a way that we could automate it.”
Enrico Palmerino: And then really architecting that out and then handing it to a dev team to build out the software was the next step. It took us about a year to build out the beta. The MVP of Botkeeper and the beta went really well, and we knew it went well when we had someone who needed around three years worth of cleanup come to us, and we are able to do it in about two weeks. And it was accurate. It was cool that we flew through it, but then the fact that they got acquired within a month after we gave them those numbers and the auditors didn't tear it apart said to us, “Okay, cool. We built something that will take off here.” Normally, three years cleanup like that would take months, maybe even a year. So we launched a generally available product and in, January 2016, a much more simplified version (certainly not what Botkeeper is today), our first version. While we got 50, 60 clients in our first year, which was great, we grew to like 200 clients by our second year and going into our third year, we've grown that to like 350 or 400 clients in just a couple of months. So, that's been a really exciting.
Nathan Beckord: Did you raise money before the general availability launch in 2016?
Enrico Palmerino: No. So, I had a previous success with the lighting business called Think Light, and having also had a successful accounting business or being one of the owners of it, I had some money where I was able to fund the early stages of the business as well as the founding team. I reached out to friends and people who had seen the success of my first business and were like, “Yeah, let me join. I want to do that with you.” So they came on, and through blood, sweat, and tears helped me build this next company. My sister joined the founding team. I have a buddy that I knew for a while who was there and joined as the head of our sales. There was Louis, and then Andy came on to the accounting and operations. We knew each other through working on a firm early on.
Nathan Beckord: Great. If you're willing to share, what do you think you put into the business before you were able to get it to general availability? You can even give a range if that's more comfortable.
Enrico Palmerino: To get the real MVP or the Beta for Botkeeper was probably maybe about a half a million dollars. I'm in for somewhere between a quarter and a half to a million. So a decent amount of money. Probably the seed stage for most companies. I funded it the following year as well, and then we raised four and a half million dollars that we closed and that we announced in January of 2018.
Nathan Beckord: Awesome! Congrats on that. That's exciting. Did you do 500 startups? Did I see that on the list?
Enrico Palmerino: Yeah. So our funding story is a little interesting. I was anti-funding. I didn't want to raise, I wanted to bootstrap it as long as I could, maybe even potentially never raise, because my last two businesses we used debt, factoring, and other things to build. And when we sold them, I had owned a majority of the business which worked out really well. The thing that changed was when we saw the business and the marketing and the other efforts that we were doing, and the only thing that was holding us back was resources. If we had just doubled down on marketing dollars, we'd quadruple clients, and if we could do some internal improvements, we could on-board them even faster than we were then.
Enrico Palmerino: And that was a resource issue. That's when we decided to raise. But I had told a lot of VCs — we had a decent amount of interest come out early on because there's some newspaper articles and stuff written up about what we're doing — but we had just told everyone, “Look, we're not interested in raising. We’ll let you know what our strategy is.” We’re like, “Not now, we'll let you know. We're fine, and probably not another year or two.” But we still entertained that idea and had meetings at least, but we were always the ones telling them no versus them telling us no, which I think worked out well. And then when it came time to raise at the beginning of September 2017, I met with a lot of people and just asked them, “What's your recommendation? How do we do this?”
Enrico Palmerino: And this is what I learned. Pretty much everything has to be planned. For instance, don't just start trying to raise money, don't go and start talking to VCs casually. It has to be one of those things that you go from zero to 100 overnight. So we made up lists of VCs that we wanted to contact. I asked our board of advisors and everyone in my network who do they know. I asked, “Can you come up with a list of those people that you know?” The cool thing was getting to it that week, or asking, “Could you introduce me this week?” So I reached out to maybe 40 people, and then our advisors introduced us. They all made those intros the same week, and some of them actually even knew the same VCs.
Enrico Palmerino: We were like, if the same VC gets introduced to me by three other people that they know and they trust, that's a company you're gonna at least want to take a peek at. Let's go ahead and ask somebody. Yeah, we had that happening a lot. And what that meant was that all of our VC meetings happened in a very condensed period of time. So, we went from initially trying to raise to the first four million in our bank in less than two months. It was just super fast. A lot of it had to do with outreach. That spawned people to be like, “Hey, keep introducing this company.”
Enrico Palmerino: So then all the VCs are talking amongst each other and everyone's talking about Botkeeper. That spread coast to coast just because of VC circles and connections. And then that also meant that when it came time to having those intro meetings, they all happened at once. I'd have like three or four meetings a day for about two months. It was just non-stop, back-to-back. Nothing else that I was doing. And prior to those first meetings, we courted 406 Ventures, Rob and Graham, and…
Nathan Beckord: Say the name again.
Enrico Palmerino: 406 Ventures. And what we did was, which I think was probably the greatest thing we could have done, we got vulnerable. I went to them and I said, “I've never raised before. I don't know what you want to see from me, I have no idea what metrics you care about. I don't know what numbers are good or bad. What's the layout or the format of the presentation? What do you want to know, what do you like?” And they just opened up and helped us out because I was just open and honest, and I didn't pretend to know what I didn't know. And I think they appreciated that.
Nathan Beckord: Were you pitching them or were you just going in for advice on how you should be pitching? Were you actually courting them or not so much?
Enrico Palmerino: So, we were courting them in the sense that I knew I had to. I knew I had to be vulnerable with one VC at least, and open the Kimono so to speak and not pretend to know more. And that could be good or bad. It could also mean a much longer courting process. It would potentially lose their interest. We also didn't know a hundred percent if we wanted to raise right then. So this is the month prior to August. They had an interest in us. Rob said, “Hey, can you put together a deck? We'd love to have you come in and do this.” And I had to pump the brakes. I was like, “Yeah, I'd be happy to do that, but I need your help.” I don't think he was used to hearing that, but he was happy to help. What ended up happening was that over the course of a month, or maybe a month and a half, they worked with me to refine our presentation and the order that they cared about. And then even after a bunch of intros they said, “Let me talk to your clients, and then let me introduce you to some of our portfolio companies to see what they think.” And then their portfolio companies signed on and they were like, “This is great.” Then that meant that we got more clients, more revenue, and the business was growing. And so the joke was that maybe we should never stop raising because it leads to sales.
Enrico Palmerino: But a lot of the seed VCs want to syndicate rounds. So that meant they put us in touch with a bunch of other firms. And at the end of every presentation, I always would ask like a question, “What would you have wished you saw? Or what would make this a no-brainer to invest in? And off the back of a napkin, what do you think the valuation could be?” And if you do that across 10 people, you can kind of start to hone in on what everyone thinks your valuation is, and when you go and you tell people that that's what you think your valuation is, that’s more believable because you're calling off of a bigger data set. And you can tell them, “I've heard from these other people that these are the ranges of the valuation.”
Enrico Palmerino: So take that, and now because we had dragged the process out with them (406 Ventures), we totally botched it. There was a point in time where I remember Rob being like, “Hey, there's a lot of interest here. If you can come in and pitch to the team, I think we’d like to move forward.” And I knowing that we didn't want to basically marry the first VC we talked to, said, “I'm going to go on vacation for two weeks and I'll get back to you.” So some of the other partners had other deals that they wanted to do. We basically had two or three of the partners that wanted to do our deal, but the other two had at that point found other companies that they were interested in.
Nathan Beckord: By slowing down the process with them, and going on vacation and whatnot, it lost a little momentum would you say?
Enrico Palmerino: For sure. What I didn't realize, and what I know now, is that every partner wants to do their deal because they get some preferred investment terms on deals that they source and bring to the table. And it's also their deal. Maybe they don't get all of their preferences, but it's their deal. And so if it goes well, they're the one that gets the credit and that sort of thing. And even if there's a better company in the firm, partners would prefer to kind of go with their thing over the other. And if you catch them at a time where they don't have that other, then it becomes easier for them to get on board with someone else's thing. And that was the timing. Early on, we dragged it out and then they found other stuff that they were interested in and they weren't so interested in Rob and Graham’s deal.
Enrico Palmerino: So to answer your question: we did that. We got vulnerable. Now we have this master deck, we just knew that this is the format and the numbers, and we’d always ask every VC what they wanted to see and then tweak it, and the next one we’d do would be better.
Enrico Palmerino: We had all those meetings going simultaneously. I'd go to one where I'd walk into a VC meeting maybe a few minutes late and that the excuse was that I was coming from another meeting with a VC. When that meeting ended, it had to end on time because I had another meeting with a VC after.
Nathan Beckord: You would tell them that? “Sorry I’m late, I just came from another VC meeting.” Would you name the other VC?
Enrico Palmerino: I’d name them because I didn't want them to think I was bullshitting. “Oh, I just came from a meeting with Mass Ventures or with whoever. I'm sorry I'm running late.” And then the thing was that we'd scheduled an hour and a half, and they would expect that as an entrepreneur you would stay as long as you needed. And I'd be like, “I gotta go, I have a call with another VC.” And they're like, “Which one?” They always want to know and you tell them, and you're kind of creating competition in that way. What you do now is you take this idea of “Well, let me look at this and go through our analysis and think about it on our timeline,” to “Wow. There's a lot of others looking at this right now and I have to speed up my decision process.” What the best thing about that too is that you take the variables off the table. For instance, who knows if the market crashes in two months and now my business does badly, but if I was able to get the round closed prior, that's a make-or-break for a lot of companies.
Enrico Palmerino: So we did a lot of really good stuff with timing and other things like metrics. We're an accounting company so anytime someone asks us for data, we gave it to them immediately. When someone asked, “Oh, tell me that number,” I knew it off the top of my head, down to the penny. I think that instills confidence in numbers and the understanding of the business. I made sure that whenever a VC requested something from me, that I would turn it around that same day or night. Even if it was at 10:00 PM and they sent me something. Or if they put it in at 2:00 AM. That was just the mantra I was living by.
Nathan Beckord: Could you share any of your key metrics that you were holding out on that key metric slide? What did they look like at the time you're raising Series A?
Enrico Palmerino: They want to know churn rates, they want to know how many clients have churned. Also how much revenue you're churning and what is the percentage of your total revenue churn. They wanted to know LTV (life time value) and why we thought that that was the LTV. So back it up with some data that says that you've only been in business for a year, why do you think it's a four year LTV? They wanted to know LTV to CAC (customer acquisition costs). And when you're starting off, you don't have data points because we didn't spend a whole lot on ads and marketing, but what I could tell them about was my total sales and marketing costs combined for the year generated this much in monthly recurring revenue for the year. And if I let that play out, I could boil it down to like a smaller number and it’s like, “Okay, I’m getting a little more LTV to CAC,” which is a really good number in a raise.
Enrico Palmerino: And then other stuff like how many clients are we bringing in month over month? What's the average size of our clients? How many clients per accountant does it take to support this? What are the margins in the first three months of the on-boarding versus over the course of a year over? So knowing your numbers in and out, I think is key. What’s the timeline? How long does it take us to close a deal from start to finish? And I literally had the numbers, and then I was not only able to tell them in the meeting but I would pull them up. We were tracking everything. So it was like, “Here you go.” I didn't just come up with that out of thin air. Like, “you can see it was eight yesterday. It's ten today. We're averaging 8.7.”
Nathan Beckord: Great. Was it a pretty healthy growth story? I mean, at that point when you were getting feedback on your metrics, and they were like, “Hey, wow we're impressed with you, you're at 300 clients, whatever the number was, growing at x percent,” was that a big part of the pitch at that point?
Enrico Palmerino: Growth was part of the pitch. I saw revenue retention, so we had a negative churn, we actually retained 130 percent of our revenue because of upgrades, and as companies grow and offset churn. So that's also nice. And we also have a network effect where, because every client that brings us in we pay all their bills, all their vendors then interact with Botkeeper and learn about us. Also, simultaneously, our competitors started reaching out to see if they could white label us, which kind of says that you're doing something cool. One of our biggest competitors that was on our slide reached out and we included that email in a slide. But then even with the growth, I think a lot of it is that growth without the entrepreneur knowing why or how, or having to be in the plan, is something the VCs were more skeptical about.
Enrico Palmerino: We did something where I would make predictions and say like “we're going to grow by this much, over this period of time, and margins will increase by this,” but what they really were were predictions for the VCs. Every time it sounded like I was forecasting or predicting what I think, but I was doing it based on the fact that I had enough data and I knew that we had client upgrades that were going to be going out soon that hadn't hit yet. So I knew we had all these other clients that we're on-boarding, but it hadn’t hit our books yet. We were rolling out a reworking of our processing software that was going to lead to more margins. And so, what you kind of do is show some of those cards, but not all of them. It's kind of like when you flip over a hand. It's four kings, and you pray and you predict that you are going to win. You go all in. People will think that that's a lot of skill. But if you've been holding four kings all the time, it's not so much, you know what I mean?
Nathan Beckord: Yes. That's awesome.
Enrico Palmerino: So I would say these numbers and then atthe next meeting, because we'd lined them all up and so quickly, it was the beginning of the month and I told them at the end of month that numbers are going to be like this or that. In two months, it was going to be like this. And the next meeting we had, the numbers matched perfectly and that meant I'm matching an upward trajectory perfectly. And then it's going to continue matching, and you kind of instill that confidence.
Nathan Beckord: I want to get back to the actual process. You had about 40 or so investors on your target list. You got very vulnerable with 406, but then you started having three or four meetings a day, and 406 didn't end up leading the round. So take us through what happened after that.
Enrico Palmerino: So 406 made a bunch of intros and those intros to other VCs would then test us on their portfolio to see if it works. That meant more clients and more revenue and more growth. That also meant that more VCs and new companies were using us. And along the way, one of those intros was to Correlation Ventures. They are a machine-learning VC fund. They use an algorithm with a bunch of data points that you provide them and then a week later they make a decision. And that's it. No other meeting. It’s like, ”One meeting. Give me 10 data points. The decision is in seven days.”
Enrico Palmerino: And they really loved our business. They’re like, “this makes total sense.” They said, “We love it, but we don't lead. We follow. Let me introduce to you to guys at Ignition. I know this guy Kellan over there who's really great.” Now Ignition is in Seattle so we’re leapfrogging to the west coast without doing any outreach over there. Simultaneously, we had other firms reaching out to us on the west coast too, it’s that network kind of effect. We just showed them at Ignition what we were doing, and they just thought it was brilliant, they loved the business model and how scrappy we were, and that we had been able to build a business off of low upfront costs. They've put millions into companies that hadn't gotten as far as we did, or seen other companies that had raised millions that didn’t work. I think John Connors (a Managing Partner at Ignition) was there that could kind of relate to me just by being a hard-working, young, scrappy guy. Scrappy describes our whole team.
Enrico Palmerino: We just hustle, and then it helped that he was the former CFO of Microsoft, so when he looked at our business and what we were doing in finance and accounting, it made total sense. He's like, “I get it. I can see what you're doing and I can see the result and it lines up.” Then the other thing is that they had there too is like, Nick was on the board of Bill.com a big accounting platform and knew people in the space. So he got our space and essentially what it came down to is that we moved through all those meetings so quickly.
Enrico Palmerino: So it was like, “Okay, let's jump into the next meeting. Let's have your whole investor team do the final presentation. Have my team come in and meet with you.” So very quickly we had term sheets, and we had verbal offers. We had actual terms from other firms, and now we were able to go and say, “Hey, we've got these terms and we're looking to close.“ So when they talked to me, I was like, “I don't want the biggest valuation.” We've got bigger valuations than what you guys are offering but I don't want to have to take a down round as that could kill us, and I don't need to be greedy.
Enrico Palmerino: I would show them numbers that were numbers, like these are real actual numbers and projections. I'm not showing you a chart that says we're going to go 10x this year, so that you guys think that there's a market. I would show them numbers, I would show them small gross margins. I would add more stuff to my COGS than I needed to. But because I actually understood that there's variances there and I want them to track it that way. So when they looked at everything we did, they looked at it as a business that you would fund it and put your own money into it, and you already have; it is a perfectly great business so we're just going to boost the marketing and growth versus me trying to sell a dream.
Enrico Palmerino: So, ultimately after a few meetings we went with Ignition. Just out of the gate, Kellan (a partner at Ignition) flew from Seattle to Boston and met with us. It was our second meeting and I was just like, “Holy crap, the VCs are coming to us. That's really cool.” We wanted more than money. I felt like we could get money from banks or you can get money from other people. And so just Ignition brought a lot more. They brought industry insight, SaaS experience. We've got Doug Slater now, who is on our board. He's a Hall-of-Famer in the accounting space, like “the guy” in accounting, and that was a connection that they brought us.
Nathan Beckord: But Ignition wasn’t on your initial list. How did you miss them on your initial target list building?
Enrico Palmerino: They're in Seattle. So our target list building was predominantly based on firms and people that we knew here in Boston. It's easiest to reach out to people in circles or firms that I knew other friends of mine had raised money from and that they liked. A lot of the firms that we reached out to, we didn't reach out to anyone based on how they presented themselves on paper, like from Pitchbook or whatever. I asked all the entrepreneurs I knew who had raised money, “Who have you worked with? Who did you raise money from? Who do you like, who don't you like?” And it's crazy, the stories you get. I can't name any names, but there were certain VC firms where I was like, I'll never work with them because four or five entrepreneurs told me four or five different stories of them coming in and putting in money, forcing the company to use all their vendors, forcing people and consultants into the equation, and then ousting the founders and I was like, that's not the kind of investor I want to work with.
Enrico Palmerino: We talked to a lot of the portfolio companies that are or were in Ignition’s portfolio. I didn't talk to a single person, whether it was an old portfolio company or a new one, that didn't rave about them and say that they treated it as a partnership and that they care more about the entrepreneur. And they told me, “You take our money and you don't raise another round in 10 years. We're fine. We think this is a good investment, and we think you'll be worth more in three, five, 10 years then you are today. And we're not going to push you guys to hit growth.” I don't have that pressure. I think a lot of people have that pressure. I set my own pressure.
Nathan Beckord: Yeah, well a lot of VCs put on the pressure to quickly groom you for the next round, and the next round. But you are in a space with companies like Xero. They've raised $65,000,000 in their last round. I mean you are in a space that is fairly well funded. Do you not feel your own pressure to raise a lot, or how do you think about that?
Enrico Palmerino: I look at like Quickbooks and Xero, and I think that they may be in a different category, right? Like you're either trying to compete as THE accounting platform or a general ledger tool. And so you need a lot of money to distribute a $30 a month tool. In order to make a lot of money on a $30 a month tool, you gotta get it in a lot of hands. And there's a lot of product now that needs to be developed. I think that if you're actually looking at our space, the outsourced accounting firms are the closest to us because that's the business process that we replace. That doesn't get funded as well but it’s starting to a little bit more.
I think what helped us was like UI Path that does big enterprise robotic process automation just raised a $120,000,000 on a billion dollar valuation. Or Receipt Bank which automates the scanning of receipts and data extraction, raised $50,000,000 roughly around the same time. But then there were firms like Indenero, that had raised a lot of money, and 10 years later they're still doing great, but they're not billion dollar valuations. So I felt pressure on our round and valuation and raise actually from both ends. Are the VCs going to look at that and say, “This isn't a space that you put money into,” or “Money has been put in there and it hasn't become an Uber.”
Enrico Palmerino: Then there’s no acquisitions in the outsourced accounting space. You can look at Indinero as kind of leading the path with Bench, and neither of them have had exits. So it's kind of TDB on how that plays out.
Nathan Beckord: Do you try and tailor that story? Like when you're talking to any VCs, you're kind of lumping yourself in more with a Receipt Bank versus a Bench. Are you controlling that story at all?
Enrico Palmerino: So we grabbed a bunch of data from Pitchbook and we were able to then get valuations and rounds, and be able to say, “Hey, company X raised this much money. They had this many clients, and here they are today. It took them this many years to get this many clients and they're now at this valuation. We did that in two years and it took them eight.” So we use that sort of thing. But we were able to very quickly look at the market and say, “Hey, here's who compares to us. Here's how much they raised, here's where their clients are right now, here's the revenue’s LTV to CAC, and the other stuff you want.” Surprisingly, there's a lot of public data out there that people don't realize. We use that as benchmarks, and then show how we compare and that was how we did it. And then I'd be like, “Look, other companies in our space have raised a lot of money, but like a Receipt Bank, that's one piece of the equation and that's not us- they raised $50,000,000 but I don't know how that data point holds.”
Nathan Beckord: I won't keep you too much longer. This is really great stuff. Just to finish up, you had a couple of term sheets, you're really getting a good vibe with Ignition, talking to a bunch of portfolio company founders, and then to just conclude it… did you try and build a syndicate with a couple of VCs, or did you just go with Ignition and thank the other guys for their help along the way?
Enrico Palmerino: We want to go with this strategic money, and Ignition felt very strong about it. They wanted to do the whole thing, but I felt there were other people who would want to invest in smaller capacities or in larger capacities and I had said, “Yes, I'll save some room for you.” So I'm a man of my word. I say I'm going to do something, I do it. And I think that was what all the VCs saw. When it came time for the round, I'm like, “Look, I want to add another half million to the round.” That's why we did four and a half, it’s a weird number. And you know what? I gave up some in equity, but I feel it's only right because I had promised Trevor from Correlation (he ended up just investing in by himself). I promised Matt from 500 Startups that he could get in. I promised another dozen people that they could get in and we basically took $500k and cut it a bunch of ways, and then they came in and took it smaller chunks.
Nathan Beckord: That's cool. Good stuff.
Enrico Palmerino: It works for us too. This is how we also sold it to Ignition and we were like, “Well, if we let another ten VCs get another round, that’s 10 VCs with 10 portfolios that we can use and sell to as well.”
Nathan Beckord: I like that little-known sales hack: just be pitching VCs and use them to pitch their portfolio companies. That's good. I love it. Any final thoughts or anything you would do differently? Would you give yourself any advice if you were starting this all over again or just giving advice to founders who are thinking about raising now? Any other nuggets to share?
Enrico Palmerino: The way I did it was really stressful. The way I did it was a hit or miss. You're lining everything up so quickly, so fast. You're gaining momentum and traction, and either you get it and you walk away with a term sheet and get it all signed, or you don't and you have to start over again. It’s going to be tough maybe because I literally put everything in the background. I still have like 1,200 emails that from that period of time and just no one got responded to.
Nathan Beckord: Wow, that's amazing.
Enrico Palmerino: So you're going for gold. I think you increase the probability of closing a round if you do it like that, but when you do that, you're sacrificing other things in the business in a big way. You're not sacrificing slightly or working double – truly everything hinges. And then if you're hitting growth and you've used real numbers, numbers that you're not predicting, but you know, you can't do that forever. So I knew I had two or three months where I knew what was gonna happen, and I could show it. After that, I didn't, and that could turn out to be revenue declining, or we lose a big client. I would say plan as much as you can. Get in front of as many VCs in a short period of time as you can, and do it in a predictive, planned way on your revenue. If you know you’ve got some big clients coming down the sales pipe, that's when you want to go out to raise, because the more variables you can take off the table, the more likely you will be able to close because they want to invest in something that seems tried and true with no risk.
Nathan Beckord: But they're all startups. So it's like you sort of have to manufacture that “tried and true.”
Enrico Palmerino: We kind of had to do that, but it's not like we had to lie about anything. It's more like we knew things were lining up and that was when I said, “Now's the time to raise.”
Nathan Beckord: This is great. I’ve got two pages of notes here, full of awesome tidbits and nuggets. Well Enrico, thank you so much for your time. This has been fantastic and I wish continued success to Botkeeper. I love it. I love the story.
Enrico Palmerino: Thank you so much for having me. I really appreciate it. It’s great being on Foundersuite.
Nathan Beckord: Awesome. Thank you. Adios!
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