How “Getting Vulnerable” Helped Enrico Palmerino Land $4.5 Million for Botkeeper in Two Months
Botkeeper was born out of one of founder Enrico Palmero’s frustrations with his first company. That venture, ThinkLite, offered an innovative process of analyzing, designing and manufacturing LED lights. But even with $8.5 million in recurring revenue, Enrico sometimes had trouble keeping the lights on.
“We had 60 employees, and we were 46 on the Inc. 5000 list. And we ran out of cash, even with all that revenue, because our books were always behind,” says Enrico. “It really frustrated me that we had built this incredible business, but the lack of speed in our bookkeeping almost sank it.”
So Enrico redesigned his software to automate the accounting process. Using the same decision trees he built for analyzing lighting, Enrico helped illuminate best financial practices for around 60 clients within his first year.
Initially, Enrico was anti-fundraising.
“I wanted to bootstrap it as long as I could and potentially never raise,” Enrico says. “It changed my life when we saw that the only thing holding us back was marketing investment,” he continued. “We realized that if we just doubled our marketing dollars, we could quadruple our clients. And if we could do some internal improvements, we could onboard them even faster.”
To prepare for fundraising, Enrico and his team decided to focus on building a unique relationship with .406 Ventures before sitting down for any formal pitches.
“We did probably the greatest thing we could have, which was we got vulnerable,” Enrico says. “I went to them and said, ‘I’ve never raised before. I don’t know what you want to see from me.’”
.406 Ventures gave Enrico advice on everything from the format of his presentation to which metrics he should include. Through that relationship with .406, Enrico met other companies in the firm’s portfolio, and many of them became Botkeeper clients.
“They said, ‘let me talk to your clients and introduce you to some of our portfolio companies to see what they think.’ Then their portfolio signed, which meant that we got more clients,” Enrico says. “So the joke was, maybe we should never stop raising.”
When he did start fundraising, Enrico decided it should be as immediate as a flip of a switch. He and his team created extensive lists of VCs to approach and asked the board to brainstorm warm introductions.
“We said, ‘don’t make any intros until this day,’” Enrico says, before allowing Botkeeper to burst onto the fundraising scene. “Then we had the first $4 million in the bank in less than two months, which is super fast.”
All work, no play (at least for two months)
Enrico met 40 investors, often multiple times, in two months. He tried to schedule three to four meetings every day. This tightly packed schedule surprised investors who expected him to run on their time, which gave Botkeeper a reputation of desirability and stoked competition among investors.
“I’d walk into a VC meeting maybe a few minutes late, and the excuse was that I was coming from another meeting,” says Enrico. “Then that meeting had to end on time, because I had another one right after.”
This didn’t come without sacrifices, but Enrico says he doesn’t regret it: “I literally put everything on the back burner. I still have like probably 1,200 emails that from that period of time that just went unanswered.”
He did make sure to respond to any follow-up inquiries from investors as quickly as possible.
“Never did a VC request something from me that I didn’t turn around that same day,” Enrico says. “Even if they sent me something at 10 p.m., they got it at 2 a.m.”
He constantly kept numbers on things like rates of churn, revenue, customer acquisition cost, competitors, loan-to-value ratio, and client size and number at the ready. This attention to detail and focus on numbers allowed Enrico to make predictions about growth that impressed investors.
“We lined these meetings up so quickly, I could tell them, ‘at the end of the month, the numbers are going to be like this. In two months, they will be like that.’ By the next meeting, they matched my predictions perfectly,” Enrico says.
Relationships > cash
At the end of the day, it wasn’t just about the money, so Enrico and his team were careful to collect firsthand accounts of working with different investors.
His lightning round of meetings brought Enrico in touch with Ignition Partners, who eventually signed on as Botkeeper’s lead investor.
“We could get money from banks,” says Enrico. “But Ignition brought a lot more industry insight. I talked to a lot of their portfolio companies, and I never talked to a single person who didn’t rave about them. Everyone said that Ignition treats investing like a partnership, and they care about entrepreneurs.
“Plan as much as you can, get in front of as many VCs as quickly you can, and do it in a predictive way on your revenue,” Enrico says. The more variables you can take off the table, the more likely you’ll be able to close a round.”
Nathan Beckord is the CEO of Foundersuite.com, a software platform that has helped users raise over $1 billion in seed and venture capital since 2016. This Q&A is based on episode of Foundersuite’s How I Raised It podcast, a behind-the-scenes look at how startup founders have raised capital.