In this pod, we learn about Laura from Safestack’s journey in building her company, from its inception as a cyber security consultancy to its evolution into a VC backed platform with over 25,000 security learners in 80 countries.

Laura shares her journey as a software engineer and security enthusiast, detailing the origins of her passion and the unique approach Safestack takes in integrating security with software development. The conversation also delves into Safestack’s funding journey, starting with her quitting her job with a new baby and $300 in the bank, bootstrapping through consultancy revenue to securing investments from various VC firms. 

Laura shares insights into the challenges and lessons learned during fundraising, team scaling, and navigating market shifts, particularly the economic downturn in 2023. She emphasizes the importance of adapting to market conditions, making tough decisions, and maintaining a focus on profitability. 

This podcast is entertaining, enlightening, and a must listen for anyone interested in lessons on raising from Venture Capital.

Highlights

The Genesis of SafeStack

• Laura recounts starting SafeStack after having her first child and feeling a lack of tolerance for pointless processes.
• She quit her job with $300 in her bank account and started offering security services for fast-paced companies.
• SafeStack began as a consultancy and evolved into a product company, especially after COVID hit and cut their consultancy revenue. 
• Laura and her co-founder Erica Anderson launched their product in October 2020, after starting development in April 2020. They made their first revenue 7 days after launching their platform. 

Bootstrapping and Early Growth

• The product development was bootstrapped from consultancy revenue and was built using available resources, with a focus on the quality of education content.
• They repurposed household items, including Lego, to create recording studios for high-quality audio and video.
• The initial marketing budget was only $200 New Zealand, used for stickers and business cards.

The Need for Investment

• They started raising capital conversations about a year after inception and seven months after launch, by which point they were substantially revenue-generating.
• They saw a huge opportunity they had but realized they couldn’t manage it with their limited team.
• The first raise was primarily for hiring expertise they lacked, rather than just for go-to-market strategies.

• They raised NZD 1.2 million in the first round after speaking to 88 different investors, and she managed the process like a sales process through hubspot. 
• The process refined what she needed to be as a leader to raise that first round.

Lessons Learned from the First Raise

• Laura is proud of the personal transformation she underwent during the fundraising process, gaining confidence and skills.
• She learned to differentiate between genuine investors and those just seeking information.
• Laura reflects on the challenges of communicating their broad niche to investors, as SafeStack serves software development teams across various industries. Many early investors were not familiar with the software development or security space, requiring significant education.

Decision to Raise Again

• Laura discusses the differences between funding in New Zealand/Australia versus the U.S., noting that their initial raise was small compared to U.S. seed rounds.
• They realized that entering the U.S. market would be more expensive and take longer than anticipated, necessitating more capital.
• The high valuations during the 2021-2022 bubble influenced their perspective on potential growth.
• They raised a second half of the round to better position themselves for market entry, which was a couple of million. 
• The second round involved less shopping around, as they had a great group of supportive investors who re-invested and only took on one additional investor (Blackbird) who had originally said no in their first round. 

Managing a Business with VC Funds

• Laura discussed the post-raise reporting and relationships with VC funds. They provide monthly updates to investors, including metrics, good/bad/ugly sections, and an ask, which one of their investors advised was as much for the company to reflect as for the investors. 
• Blackbird advised that the monthly updates are as much for the company as for the investors.
• They track key SaaS metrics but focus on the ones that are most useful for constructive action.

Economic Challenges and Making Hard Decisions

• Laura describes the economic challenges in late 2023, when many of their SaaS and software company customers faced layoffs or went out of business.
• They realized they wouldn’t meet their growth goals due to unavoidable churn.
• In early 2024, they had a tough conversation with investors and made the decision to to shrink the team size to achieve positive cash flow as they wouldn’t be able to raise.
• Despite the pain, the team and company are now in a healthier position.
• In the last 12 months, they’ve grown their gross margin by 8% and reduced the time to sale significantly.

Advice for Founders

• Laura advises founders to remember that raising institutional money comes with the expectation of a large return in a short period of time.
• She emphasizes that building a long legacy business is as important as a VC-backed one.

🎧 Listen to the Full Episode

👉 Ep5 – The Funding Files on Apple: https://podcasts.apple.com/us/podcast/ep-5-laura-bell-main-safestack-on-bootstrapping-raising/id1807671123?i=1000710349556

👉 Ep5 – The Funding Files on Spotify: https://open.spotify.com/episode/15920Ke4cCydoJVLbA22P5?si=iw-HDho4R4uVkNnP8dYptQ

Read the full transcribe here ↓

Kia ora, and welcome everyone to another episode of the Funding Files, where we explore the highs, the lows, and cash flows of funding a business here in Aotearoa, New Zealand. I’m cohost Anna Gunther, also cofounder and chief bubble blower of PledgeMe. PledgeMe is a New Zealand based crowdfunding platform who supported over 1,700 successful campaigns with over $75,000,000 pledged to the platform. We’re all about helping Kiwis fund the things they care about. My cohost is Matt Stevens, fractional CFO here at PledgeMe, who’s also the cofounder of one of my favorite beers, Parrot Dog.

Today, we’re interviewing Laura from SaveStack. I’m not a 100% sure where I first met Laura, but I can 100% confirm that I’ve always been in awe of her. She’s so well spoken, so smart, and so ethical. She has the skills that could definitely be used for nefarious purposes, but instead, she set out on a mission to make companies more resilient online through her company, Safestack. Welcome, Laura.

Would you like to introduce yourself? Oh, that was a lovely intro. I don’t normally get lovely ones. So a little bit about me, I am part software engineer, part software security nerd. I live in possibly the worst possible place to grow an international company from.

And perhaps most of all, I’m just kind of a a weird sort of optimist for the world of technology, which is odd for a security person. So I genuinely am passionate and believe that we are building some of the crazy technology I read about in sci fi novels when I was growing up. And my job and the job of my team is to help us build those securely so that they can do the good they need to do in the world. How did that, like, how did that passion begin for you? Why did you decide that that is what you wanted to devote this business to?

Oh, how glossy do I need to be with this? Because I the formal answer as well, I made a strategy and a plan. No. I’m just a nerd. I just unapologetic nerd.

I’m excited about technology and have been since I was teeny tiny. I realized though when I I started off, as a traditional software engineer, building all sorts of fun fun things. But I realized really quickly that my path wasn’t to build, like, the digital cathedral. I am not that person. But what I do really well is I am part storyteller, part marriage counsellor, part tech person.

And when you bring all of those things together, what you can do is you can learn systems really, really quickly, and you can see them in unusual ways. And so, I realized that I had this ability to see the bad things that could happen, but also the ability to connect with people so that they didn’t feel overwhelmed by the challenge of fixing it. And so, yeah, I’ve sort of woven this crazy custom pathway of bringing all of that together. Fantastic. I I must admit, I had a I was looking through your LinkedIn profile, and I like just some little ambiguous things about large government organization in your past.

And I just thought, did she work for m I five as a hacker or some kind of for that? But, Well, obviously, if I told you, I’d have to kill you. That’s, like, the cliche traditional answer. Perfect. So you’re then you moved out to New Zealand and, and started a career out here as well?

Yeah. In the traditional Kiwi sense, I’ve been working in a large government organization for a long time. And I hit my Christmas break, and I was pretty burnt out, to be honest. I’ve it was pretty stressful. It was great, but very stressful.

And so I was like, oh, we’ll we’ll just do six weeks in New Zealand. Just, you know, small break. And that was close to sixteen years again. So, yeah, never left. You did mention your location of allowing running a large company, but just wanna flex on where the location is because it’s quiet.

Oh, yeah. I’m just outside Fungare in Northland. Perfect. End of summer. Yeah.

End of summer. You know, teeny, small town, really, comparatively speaking. You know, the height of my social calendar is going to Kmart. You know, that kind of level of cool. Perfect.

And can you talk us through so you came to New Zealand. What was the moment where Safestack began? So I just had my first kid, so I full disclosure, viewers outside, I have two children and a half I have two daughters, 12 year old and a six year old. And the 12 year old, when she was first born, I I was doing, you know, the security thing for a fintech organization. And I don’t know, maybe it was just being a new mom or and return to workforce, but I found my bucket of cares to give was very empty.

I had no tolerance all of a sudden for, you know, pointless process or things that weren’t working. And so I’d come back into this job, like, pretty much ready to beat down walls and just smash things because I was like, oh, I’m not gonna waste my time on bureaucracy. I had no temperament for it at all anymore. And so, small child was less than one years old. I had, like, $300 in my bank account.

Never run a company before, and so I quit my job, as you do, and literally wheeled my office chair from home down Queen Street to the cheapest co working space I could find and started knocking doors going, well, I’m pretty certain I can do security for very fast paced companies without getting in the way of what they do. And that’s pretty much what I’ve been doing in different incarnations ever since. So it started off as a consultancy. Yeah. And then there was a transition point to what started to evolve into what it is today?

Yeah. Absolutely. COVID. COVID. So yeah.

So COVID hit. Everyone went and made sourdough. Me and my cofounder, Erica Anderson, who’s awesome, we were sitting around going, cool. So being a consultancy in a pandemic’s pretty hard work. Not not feeling this very much right now.

So we’re like, well, how hard could it be to turn what we do into a product that lots of teams could do all around the world? So we started building in the April 2020, and we had it in market in October. So, yeah, it was pretty full on, and we’ve been now full product company for four and a bit years. How long did it take to go from we have an idea and it’s out in the market to being sort of revenue generating for you? Was that pretty quick?

Nine days. Nine days. Wow. I’d really I’m really keen to try to tease out exactly what the product is for our listeners because, the yeah. It’s so unique.

Right? So you, yeah, do you wanna explain it to us and and the revenue channels and how how I’ll explain what we are now, with a little bit of a kind of the story of how it got to that. So when we launched, it wasn’t all of the parts because, you know, you don’t launch for the whole thing. You don’t really know what you need to build to start with. So when we first started, we were focused on the education side.

So we, via writing books, doing in person, doing conference talks, have been teaching devs how to build secure software for years and years. So we built a platform that allowed you to train your team to build secure software. But rather than just saying, hey, your baby is our DNA should feel bad, our education is a bit different in that we’re also software engineers. So we consider what we call the ilities when we do security. So the ilities are the characteristics of high quality software.

So it seems like scaling and performance, usability and accessibility, all those things. So when we’re teaching, we’re saying, hey. Here’s this challenge we need to solve. Here’s what we can do, and here’s how it’s gonna impact all of those other bits of your software. So it’s kind of an unusual approach.

We also include everyone in the software team. So we have materials for developers, testers, analysts, architects, UX designers, everyone, and it’s all customized to their roles specifically. Then we expanded that with time. We now have what we call Horizon. So Horizon helps teams to roll out and mature an application security program.

So that’s taking all the steps they need to be doing for security through the software life cycle every day, breaks it down into super opinionated little tasks, gives them all the templates and things they need to do. And so we’ve got now teams in 80 something countries who are building their AnapSec programs, running them themselves without needing a specialist consultant or, you know, a specialist member of the team. So it’s kind of security enablement and productivity plus education, I guess. Amazing. And I don’t know quite when to ask this, but, like, how did you get the funding to get started?

Like, how did you fund that sort of first first maybe it’s for the product. How did you fund the development? So the development of the product was all bootstrapped from the consultancy revenue. And when I say it was bootstrapped, it was also bootstrapped in terms of the effort. Like, we all talk about, like, oh, we’ll just spend our own money on it.

But, actually, our first generation of the product, you know, I still look back with those rose tinty ramaniti glasses of was a feral Frankenstein monster that we built from whatever we had available, and, you know, the big focus was on the quality of the education. So we literally were home brewing recording studios in our houses out of duvets and mattresses and whatever we had around to make sure that we the audio and the video was really great, but underneath it all, it was all, you know, tape and and, you know, hopes and dreams. You you got that cultural appreciation, the number eight wire mentality for Kiwis. Right? You’d take a minute.

A 100%. Yeah. We you know, number eight wire was definitely more than we had at that point. Yeah. I I was surrounded by by my small people, so there was a lot of, like, cool.

What kids’ equipment can I repurpose? So there was a lot of Lego in the early days. But yeah. So we got that got us through to we first started raising, as in so having the conversations, the following April. So it would be about a year on from the initial inception and about seven months ish from the launch.

And by that point, we were substantially revenue generating. Yes. You were revenue generating, up to nine days, as you said. And that was sort of your monthly reoccurrings were growing. And Yeah.

We by the time we came to raise, we were for the first kind of, raise round to, like, labeled wrong now. I just I’ve lost track at, like, rate let’s just call it raise one, because numbers are easier. We were at a quarter of a million New Zealand ARR by the time we started that raising process. So And I’m always wondering what’s the what was the, like, the the goal point in your mind that said we need investment now? Like, what was the opportunity, and what was the sort of expenditure you needed to cover the to exceed the opportunity?

So what I thought I needed and what I now know I needed are not the same thing. So I’m gonna answer that for, like, Laura that was, and Laura that is now has different feelings and opinions. We want that or do we want both, but start with Exactly. I feel like you kinda have to call out both because, like, looking back with the, oh, yes. Absolutely.

It was this. No. It really wasn’t. It was chaos. What we wanted to do was twofold.

We were building the thing. We were building the content. We were selling it. We were we had our marketing was, like, our marketing budget for the first year was, like, $200 New Zealand. We bought stickers and some business cards.

That was it. They are, they’re fantastic. We still get pictures of people with their stickers in strange locations which is kind of adorable. So you know the early search, it’s like, you know, that cliche of you’ve got a tiger by the tail, We had this product and it was selling, but everything we’ve done was really organic. We literally just, you know, contacted people we knew or done the old conference talk, and most of the conference talks we did were because they were willing to give us a free entry pass to the conference because then we could go and talk to people.

So, like, there was no spending money. It was just energy that was going in. And I was quite painfully aware that we had this huge opportunity, and there was no way we were gonna be able to do this with the two and a half people we had at that point. Yeah. And so that first raise was four people.

Yeah. Yeah. I mean, like, if I look back at the pitch desks, it says, you know, go to market blah blah blah, and you know there’s something that that says strategy and a few very dodgy PowerPoint slides. But what it really meant was we needed expertise in the team that we didn’t have. I, you know, I think most founders are pretty good at just going, cool.

I’ve got this problem. I’ll figure out how to solve it then. We’re we’re pretty good like that, but there’s only so much you can do of that time and time and time again before you actually need somebody who’s skinned their knees a few times to say, hey. Stop reading blog posts. Here’s what we need to do.

So and how how big scale was the business after that sort of one year of trading the in the first round, like, three months? So I’m gonna, like, caveat this with there’s a lot of bumps in this story. So, like, there were the, you know, this wouldn’t be an honest conversation with the the three of us if I was like, yeah. It was all amazing. So after the first raise, we hired, I think, two to three extra people initially, primarily in sales roles, and marketing.

But what I would say is one of the things I’ve learned as a founder is that hiring is ridiculously difficult, especially in early stage. So, you know, while we did grow the team, we’ve also, at various times, shrunk the team back. And, you know, the what I thought I needed in those roles has often turned out to not be what I needed at all. So, you know, we hired. We we got a little bit of outsource help with some bits and pieces graphically.

We then bought those things in house. But most of that early spend was trying to build what we thought the first stage team needed to be like. And there was some definite victories in it. You know, revenue grew. That was all very exciting.

But there was also a lot of pain in it because we were learning very quickly how different product companies were to service organizations. Can I ask with that first round, like, what was the quantum of it? Was it, like, a few $100,000? Was it a few million dollars? Oh, gosh.

It was 1 point something million, 1,200,000.0, I think. New Zealand. Cool. And was that a formal process, or you were you introduced to somebody, or how how did that sort of come to fruition? I spoke to 88 different investors.

Wow. Yeah. So invest, raising capital was one of those things I massively underestimate. Even though when people say, it’s gonna take a lot of your time. Hey, founder.

You should focus on this. None of us ever think that that’s the case, and it never applies to us until it does. I ended up tracking it in HubSpot, like, a full on sales pipeline because I was like, there’s just too many conversations to track. We did some through introductions. We did an accelerator program, out of Australia that specialises in cybersecurity start ups, which was, really good for, a, getting contacts that I wouldn’t normally have, and b, refining what I needed to be as a leader at that stage to raise that first round.

And yeah. And then we we ended up raising through, a group of quite formal VC investors. So there were no friends and family. This was a, like, a a formal round, an institutional round. And with that process, like, is there something that you look back on and wish you’ve done differently, or is there something that you’re really proud of in that sort of first raise?

Anything you could share? I think I’ll start with a good on what I’m proud of. What I’m proud of through that and the the the later raise we did, is that I became a different person as a result of it. When I first started the company, I was slightly apologetic for having started a company. Like, I knew I wanted to do this big thing.

I knew it was good, but I didn’t have the language or the understanding of how capital structures worked or how business finance worked to an extent to really go into those conversations in the right place to to make the most of them. And so, you know, an example of how that this is absolutely I can see it in the data is in our first round, Blackburn turned us down flat, didn’t even get past the first chat. They came in and led the second. And it was that transformation of myself and my view and my confidence and my skills. Oh, I mean, I was still failing all the time, but I was at least more confident doing it.

That helped get us then to where we needed to be. But it was a fairly brutal process to to get to that moment of pride. On the negative side, I didn’t learn quick enough the difference between somebody who is just trying to scan information about your business and just wants to, you know, get good numbers on how many calls I’ve had this week versus somebody who is actually genuinely in a position to fund an organization. And I was also really bad at, understanding culturally because we we spoke to investors from around the world. We weren’t New Zealand purely focused in in any of our rounds.

And not understanding that people from different places say no in different ways, and it very rarely involves the word no. Delay. Delay, like the ghosting, the I’m gonna say yes a million times, but my eyes are screaming no. Hi, California. So yeah.

And, you know, all of this was just a learning a new communication scheme for me. Like, you know, learning to read the room, to read the people, to form relationships, to keep those relationships over time because it’s not something I’ve done before, this kind of building up these relationships to such a substantial, relationship. So we’ll try to pick up a segue between your round one and round two because that sounds interesting, that difference in in Blackbird’s interpretation, for example. But would you say round one, you were underselling opportunity to an extent, or did you was it a I don’t know if we were underselling it, but we weren’t communicating it as well. Sure.

So it’s people like to say when you’re raising capital, they’re like, okay. Be really specific in your niche. Like, which industry, which vertical, which 10 people on the planet do you need to sell to? Okay. Cool.

We sell stuff to software development teams. We genuinely don’t care if they are in finance or health or mining or ecommerce or god knows what. And we have a huge broad range of industries. So when people get to, you know, your ideal customer profiles and your terms and SAMs and all of those kind of acronym, soup, It was really hard for us to start with to know, well, how do we communicate that, actually, our niche is b to b software development companies who care or are posturally regulated. Like, there wasn’t a clean language set that, we were good at using.

And, also, a lot of the investors we were speaking to early on were not particularly aware of the software development or security space. So they didn’t really understand the market much either. So there was like a lot of work going on there to communicate that has now been refined a lot better and we’ve also got better at finding partners and organisations to work with who are more experienced in our particular fields. And so then you decided to go out and raise again Mhmm. Your sucker for punishment.

Talk us through that process. So what was the moment that you were like, okay, we’re going out, we’re raising again? There is a probably probably very well known difference between funding that happens in New Zealand and Australia versus funding that happens in The US. So what happens, we we got our first funding round and we were very pleased. It was bigger than we intended and it was great and we had this massive opportunity.

And the markets that we were growing into was placed like The US. And what we realized very, very quickly that the raise that we were very proud of that locally was considered very big was a rounding error to for organizations at stage and being a little bit trite. But, you know, the the size of rounds at this period of time for that seed stage round in The US was 2 to 4,000,000 US dollars, which by comparison, we were looking at, you know, 600 k US dollars funding to this point. I wonder we’re doing great, but it’s very difficult to look at the playbooks and things that are supposed to work for market entrants to somewhere like The US when your budget is not at the level that The US market expects you to be. And so we realized that it was gonna be a lot more expensive go to market than we anticipated and that it was gonna take longer.

And both of those, you know, compound to us needing a little bit more cash. Now in some ways, we were also caught in that horrible bubble that was 2122, where it’s the not quite post COVID, but weird emerging from COVID hiring boom that was happening. The evaluations were super high on companies. And that gave us this really strange perspective on what the potential was and what was going on. And so we we wrote we raised the second what we called at the time the second half of the round, so it felt like we were actually finally finishing a seed round with raise two.

And that put us in a much more even position to then go, okay. Right. Cool. Now we can start really looking at what we need to do to go into these places. So that wasn’t some of it was hiring, and we did hire, across all bits of business.

Like, we we had a lot of customers at this point. We needed a customer success person because, yeah, that was really, really vital to us. We did some experiments with different structures of sales organization, learned a lot. We did a little bit of, expansion of marketing team. Can I just go back to that?

We learned a lot. Can you is there anything you’d like to share about what you’ve learned around, growing a sales team? Yeah. So this is like, if you if a finder ever comes back and recants SSENSE for, like, the end of their journey, Hiring and sales is has gotta be my biggest mistakes over and over again. I’ve tried everything from we had an outsourced sales team overseas doing, like, the SDR style thing.

Actually, I can see how that would work really, really well in certain industries, not in ours. I should have known because I am a software developer that we, as software developers, are mildly allergic to salespeople. So, like, cold calling was never gonna work, but I was so I’m still stuck in that mindset of the playbook. So you should do a thing, so go do a thing. Yeah.

Hired, in team junior roles, in team senior roles, someone to grow out the the team. One of the biggest realizations I had was I was looking for the wrong skill set. I was looking for somebody who had experience in sales in a high growth SaaS organization. But what I wasn’t looking for was the person who’d done the from founder sales to first salesperson transformation. So the people we were bringing in, they were incredible people.

They’re still awesome people now. But when they’d started in their high growth roles, there was already all the playbooks and the tooling and everything was already there. They just operated it. What I needed, which I got wrong, was I needed somebody who could look at the chaotic mess that was how we did sales and go, okay. Deep breath.

Here’s what we need to do and start pulling all of that together. Somebody who wasn’t used to the idea of having a team to be able to delegate to to them because, you know, because of that, we hired team a little quickly. Our sales organization grew and then had to shrink because we realized actually this is a really expensive way to do this when we’re not ready for it. I think this is really important is that sort of move from founder led sales to having a sales team or or any, actually, department within an organization is if you go and hire the person that’s used to big corporate budgets and big teams, like, it’s often a mess. Right?

Like, they just don’t get the, oh, you have to do everything. You have to dig deep. You have to learn. Like, you affect them. You don’t know how to do it.

Right? Yeah. I even went to some there was some workshops held in Auckland by, I don’t know, it was like NZTE plus MOVAC or someone. Like a sales crash course for two days. It was really useful.

It’s fantastic. Took so many notes, but then my realization was when I came back and from the questions I asked, even that early stage sales course, which the room was full of people like me, expected you to have a sales team of two to three people and expected you to have these maturity of process. We were tackling eighteen month procurement pipelines for national level banks with one person and the free addition of HubSpot. Like, we had no brochures, no templates, no contracts. We had everything was like, oh, we need a thing.

Okay. We’ll build a thing then. And we needed, I what I didn’t realize I should have is we needed somebody who could kind of, like, mirror me for a while to transition and start taking that from me to build it up rather than needing it to already be there. And with round we were at round two. Where were you operationally with the business as far as you were you carving out a new frontier?

Like, it sounds like it’s a relatively new product. Right? Subscribing to this kind of information source of security, advisory. And was there a large education piece in there needed for the customer, which you couldn’t really do with sales reps? You kinda needed Yeah.

Focus people talking to tech focus people. Yeah. Yeah. We and we definitely came across that. So for that second round, we were some of the things that had changed between the first and second, we were in a number of countries, and it was organic.

So like, we’re in 80 something countries now. I think back then we were in 40 something. And that was great. It was wonderful, but it was not repeatable because we had no idea where all these people were coming from. Like, they’d turn up and be like, well, hi.

But who are you and where did you come from? And what we were realizing is conference talks that we’d been doing because, well, it was a cheap way to get some publicity and a good dedicated audience, they had really long tails. And people would come to us for a call two years after seeing us talk and say, hey. I remember your talk from blah. And you’re like, oh, okay.

Cool. And we realized that the the number of touch points we needed for our audience was quite high, probably eight or nine. And that they weren’t just looking for a touch point. They weren’t looking for a brochure or a sticker. They were looking for signs that we were authentic, authoritative.

We were in their space, and we knew their world. So it would actually it’s actually become almost like a hybrid of what the service selling model is. You know, when you sell services and you’re having to do that kind of challenge or say our way or, you know, solving their problem dynamically in the in a call or something a little bit and then bringing it into a product sale from there. So we’ve ended up in this kind of strange hybrid, but that’s because our audience needs that. They’re they’re highly unlikely to be doing what they do with us because they saw one advert on Reddit or, you know, they clicked a link on Facebook.

It’s just not realistic. So you did the second raise. Do you wanna talk us a little bit through, like, who came into that raise? Who invested? Yeah.

Absolutely. So, so in the first raise, we had NZGCP, so the New Zealand Growth Fund. Gilex Ventures out of Australia led it. The guy at the time there, Alon, was amazing. Like, if you need, like, a, like, a mentor you never knew you needed, Alon, is amazing.

I think he’s now in a VC firm in the health tech space, but he’s a person who his love language is spreadsheets, and he would send me these spreadsheets of horrific formulas, and I’d be like, oh, what is this? And he’s like, today we’re doing metrics. I’m like, okay. Cool. So, yeah, he was awesome, and Andrea and the team there.

We also have NAB Ventures, so the venture capital of the National Australia Bank who own BNZ. So we have this kind of a pretty cool group for an early round. Oh, and k one w one who, they get my prize for most lovely laid back investors I’ve ever met. Then in the second round, we added in Blackbird. Oh, and I missed Cathona Capital from the first round as well.

So mostly Aussies in the first round and then the New Zealand, of, Blackbird for the second round plus our existing. So we didn’t bring in anyone else new other than Blackbird. And and what was the second race, sort of quantum? Millions of dollars, I’m imagining? Yeah.

A couple of million. Cool. And with that second round, was it a similar process to the first one where you were trying to seek lots of new people, or was it mainly, hey. We’ve got our existing group and we went to the existing group first as you would, and there was agreement that it was a good time to raise, and it was a sensible thing to do. At the same time, strangely, Blackbird had emailed and said, hey.

What are you up to? And I was like, cool. We can have a chat. And they said, hey. Are you raising me?

I was like, well, yes. But you said no to us before. And I’d sort of assumed no meant no forever because, like, yeah. Apparently, that’s deeply in my psyche somewhere. And And they were like, oh, no.

Let’s have another chat. And so we we were very lucky. We didn’t really have to go around. It certainly wasn’t as much shopping as the first round, because we had such a great group of people who were really behind us. And then do you wanna just talk to what what’s it like running a business then when you’ve got this kind of, you know, multiple VC funds invested in you and that sort of how is that post raise reporting and and and relationship with those with those guys?

And and maybe what’s some additional benefits you got out of being Okay. Well, there’s there’s a a little bit I should cover first because well, I’ll cover it in the middle because there’s there’s more of the bumpy journey, and I think that’s important. Yeah. Sure. More more bumps.

Let’s do more bumps. And my VCs are all gonna listen to this and go, Laura, what did you just do? And, oh, well, I love you people. So in terms of communications, we do we try to do a monthly update to our investors. So it includes a whole bunch of metrics that you would expect as a SAS organization.

And then it’s got, you know, the goods, the ads, and the o b’s, and an ask. But we’ve changed the format very at various times. You know, it’s sort of very big and wordy, and now it’s actually quite bullet point and condensed, and efficient. But the regular cadence I think Blackbird gave us the best advice when we we landed that second round. They were like, look, we don’t see we see this as mandatory, you know, this is something we have to do, and we agreed.

They were like, it’s as much for you as it is for us. Because sitting down once a month every month and writing the good, the bad, and the ugly down helps you keep perspective. And particularly the good section, if I’m honest. It’s so easy to forget all of the good stuff that’s happened in a month, and just dwell on the six things that are, like, hurting you right now. So we we do that, you know, monthly.

And then different VC funds have different annual or quarterly or bi yearly reporting requirements, mostly spreadsheets. And it’s it’s all the same kind of numbers you would expect. But what I would say that we’ve learned is that SAS metrics are great, but unless you’re actually using them for something constructive, they can be a bit of a time waste. So, like, we started off with, like, a catalog. I think we had this massive spreadsheet, like, 20 metrics we were tracking.

I think we’ve got, like, five now that are actually useful to us. I’ve got all the data to calculate the rest if I wanted to, but it’s just not you know, keeping it to the key ones that really support the message was really important. So when it comes to the bump, tell us about the bump. So the bump happened end of twenty twenty three when we all across the board when the economy started having headaches. So we’re a SaaS company.

We sell primarily to SaaS companies and software companies. Now if you look at our happiness as a company relative to our customers’ happiness, when our customers are having a bad time, we are having a bad time. About the time the end of twenty twenty three. So when we raise when you raise, just give a bit of clarification. You’re expected to set a timeline of, like, we’re gonna get to this point by this point.

And you set some milestones and an aim, and you’re you’re sort of you know, gently push to be ambitious with it and all of those things. So great. Wonderful. Then the market shifted. And suddenly, all of our customers when we were doing customer success calls, you know, I’d say at least a third of them in that the end of twenty twenty three, beginning of twenty twenty four were laying off their staff or were no longer a business anymore.

So you’re like, So, you know, when you talk about churning your organization’s success company and you’re like, oh, yes. Well, you should produce churn. Well, this is completely not preventable churn. You cannot stop your customers all not being organizations anymore. You can’t tell the company it’s no longer there.

Right? Exactly. In fact, what we did is got really sad on their behalf and just gave their team some free licenses while they were looking for jobs because we were like, well, this sucks. Like, you know, if you if you kind of from our side, it was like doing therapy with our customers every call. We were like, oh god.

We feel bad for you. What can we do to help? And you start to realize very quickly that there’s nothing really we could do but just be kind and be good humans. So that’s still ramping up and you can you see it in in the employment statistics. You see it in the economy and inflation.

You know, all of these things, you can map them against our profit and loss against our revenue. It’s really interesting to look at it as a period of time. So we we had a chat to our investors in early twenty twenty four and said, hey. You know, this we’re not gonna hit those goals. Just can’t.

Like, we’re we’re still growing, but it’s much slower. But we’re seeing contraction and churn that we can’t avoid. And we said, hey, look. We’re not gonna meet the goals, and we’re gonna run out of money. And that was a very brutal conversation to have.

Like, it was very agonizing to even get into that. And quite rightly, it was entirely the right thing for our VCs to do. They said, you’re on your own. The reason for that, and they weren’t so toast with the words, there were many other words with those. But it came down to, look, it’s the fact that things are hard and slow right now isn’t unique to you.

That, you know, you had and have some capital where you had, you know, a year or so’s runway at that point, but we were feeling a little bit cautious because everything was feeling a bit rough. And I’m like, we could give you more capital, but that would need to be because you were gonna hit an even more audacious goal. And that’s not realistic in this market. Right now, it’s in a kind of batten down the hatches and and stay calm and carry on sort of thing. And so we we came to kind of a a mutual agreement and understanding that capital wasn’t the best plan for us.

So, early twenty twenty four, we made some brutal decisions and slimmed down the team a little bit. And then The only option is to sort of right size your way to profitability. Yep. Absolutely. So we because we’re VC backed, you know, we made an operating loss in previously years, and this, new aim was, like, right.

Positive cash flow. And so that’s what we’ve now been on that adventure for, you know, a year and a half. And you were you were making those operational losses intentional to further grow with you. Yeah. Yeah.

Absolutely. So it wasn’t, you know, a malpractice. It was, you know, it was a calculated risk in the same way many sales organizations do that raise capital. That’s what was called be on the accelerator. Right?

Exactly. Exactly. And the same playbook that you see across the board, there is that urgency to grow, grow, grow, sell, sell, sell, build the team. I’m grateful that we we’re security people, and so we’re naturally very anxious, cautious people like it’s in our DNA. And so we saw what was coming a lot earlier than we could have done otherwise.

We made the decisions as soon as we realized. So from knowing that capital raising wasn’t gonna be an issue to making the really difficult decisions to right size and things was about four weeks. Right. We just we just we we, you know, every all the processes were good, and we did the best we absolutely could by anyone impacted. But we we didn’t see any benefit in us going, well, it might turn around to me.

Like, no. We we know where this is gonna go. We know what our runway is right now. We know what we can achieve realistically. And so we we just, yep, took the action, and that hurt.

It hurt really bad. There was a lot of tears. But we’re, you know, a year and a bit on now, and, the team’s in a much better place. The company’s in a really, really healthy place. And so as hard and brutal as all of that is, it is a necessary part of being a VC backed company and being the leader of one is being able to make those decisions when you have to and action them, and then not be destroyed by it in the process.

I was reading someone who worked at Vend, their response to Rowan Simpson’s book, and just commenting that they had to shed maybe a third of their team when they were going through cash flow and capital raising issues. And their reflection on it was it was a horrible time, but actually, the team started producing way better results than they had when they were a bigger team. Like, actually, as horrible as it was, that shift was also needed if it makes sense. Yeah. And I think you see these things in nature, right, to, like, show my left leaning hippie side a little bit.

You know, if you have a flower bed that’s overcrowded or a vegetable garden that hasn’t been pruned back or a forest that hasn’t had a you know, in I’ll show you, for example, that hasn’t had a burn, so the that’s full of, you know, overcrowding it and and things that aren’t as healthy and happy as they once were, the new things can’t flourish. So, you know, it was a necessary thing. It was not enjoyable, and I will look back at that through my whole career, and I’m gonna continue to take lessons from that. But because of it, a smaller team continues to have good jobs, and we’ve been able to focus and grow in a way that we wouldn’t have been able to do before. It was very similar actually in in in a parrot dog business.

I found it as well. We we grew sort of throughout that COVID period at sort of 50% revenue growth across, you know, eighteen, nineteen, twenty, twenty one. And then, yeah, it just slowed considerably. And we we raised again in ’23, but we we and we had growth aspirations, but it was more about talking about this pivot’s profitability. You know, we could no longer sustain just aggressively growing and and breaking even.

Even we had to be growing in a more palatable rate, but delivering EBITDA that we could, you know, go and and fund it continually fund our growth. 100%. Yeah. So ours was less about a a a right sizing, but it’s sort of a slow pivoting ship we talked about, you know, as as Yeah. And yeah.

So we’re sort of we’re finding that as our new directory is sort of that more stable position as well. Yeah. I mean, there’s some things we’ve been able to achieve that, you know, I’m proud of despite all of the pain and heartache. In the last twelve months, we’ve grown our gross margin by 8%, and that’s because we’ve made really good choices and made the business more efficient. The time to sales has dropped from several months to, like I think it’s about forty two days average now.

So, like, I can see the data, and the data comforts me because I can see evidence of what we did and what we went through was worthwhile. Mhmm. But that’s that divide in a founder’s head between the emotional side of, you know, being a human and the logical side of being a CEO. So I wanna just wanna ask about your relationship with your, I guess, cofounder, Erica. And, I see you’re both the co directors at the moment.

Mhmm. You’ve been there from day one, both large shareholders. How’s that been having that person by your sides, you know, dealing with these ups and downs? Erica is amazing. I love Erica’s thesis.

She’s like, the sister I didn’t realize I needed. But, she’s also my absolute opposite. So my team jokes that I live in a different time zone. My brain is naturally six months to a year out, and I’m looking for I’m like I feel like I’ve gone into doctor strange mode, and I’ve gone through, like, different permutations and pathways to go only to this future that only I understand. And the rest of the team are like, what did you just do?

Erica is a very rational process driven pragmatist. And so we’ve we’ve known each other for a very long time, probably the whole time I’ve been in New Zealand. And we finally got the chance to work together just before the product company stage, and I bought her in as a cofounder and gave her equity, to to reflect that status because you need both. You need someone like me who can go, cool. Let’s do something different and new and look at things upside down and in their own time zone.

But then you need someone like her who can turn that into reality. So she’s a good balance. And when things were rough, you know, we we you know, I was getting on planes down to Wellington to go, you know, do some of the stuff in person with her and make sure that we were there supporting each other. We can have the honest conversations we need to have. Whether it’s about what we’ve done wrong independently, you know, giving each other feedback or, actually, this all sucks and it hurts, and it’s okay to be in pain right now.

So, yeah, she’s she’s incredible. Wouldn’t do this without her. Having started because I don’t see one’s fun time as a solo founder, if you can find your cofounder and they’re the good fit, just hold on to them. They’re amazing. Yeah.

Awesome advice. And then the the governance space for the organization, obviously, you two are the both directors. The VC funds brought in this kind of reporting rigor for you to, you know, your lead during month and provide a a effectively a board pack to them right about where you’re at. Have you ever considered bringing in other directors into there or have you got independent advisers? So so they have, so two of our investors, the lead from each round, have the option of a board seat.

They’ve just not chosen to take it. So we treat them as if they are, you know, they could be a director. But at the moment, they’re not in that position. So, yeah, we a big board for us right now wouldn’t really be all that helpful because we’re still very small and operationally focused. But with if we do grow, then we’ll definitely look at that.

And we have something called the faculty that’s forming at the moment, which is an advisory board, and that is a different structure. And that is we try and find the right people at the right time to fill the gaps in the experience we have. So those people change. We swap them in and out as we need. And the next stage for us is very international and partner focused.

And so there’s a lot of nuance that we need to start navigating we’ve not done before. So that’s the type of, advisors we’ll be, talking with. And, yeah, I guess I just sort of thought of that from when you say, like, the when you’re no longer on that growth trajectory, the VCs would like to see sort of who do you turn to to kinda at least, I guess, you had each other and yourself and Erica to kinda bounce ideas off and and and plan the future. Right? Yeah.

And, you know, for the fact that the VCs don’t wanna give us any more money right now, or didn’t in 2023 when we have these conversations, yeah, it isn’t a reflection of whether they’re there still to support us. So, we still can jump on calls with them and regularly do, and we still have all of the the love and support, and we still have them cheering us on. We just, we’re just not actively in their fundraising pipeline at this point. Yeah. Sure.

They they still want a return on their initial investment. Right? Oh, 100%. Yeah. Yeah.

I unless they’re gonna write to me and say otherwise, that would be lovely. But, no, I’ve I’ve assumed they definitely still want that. Yes. So is there one highlight in your funding journey, one story that you’d like to share? You know, I’ve really struggled to find highlights in anything, and it’s not because they’re not there, it’s just because you don’t think about them that much.

In all honesty, I think we after the the second raise, it really felt like an acknowledgment that what we were doing was solid and that we’d come a long way. And to, you know, have a group of investors on the table that were not just good people and good financial backing, but, like, they were super experienced. You know? Going to things like Sunrise with the Blackbird team for the first time and really realizing how much experience was now in my network and how, you know, how the folks around me could, you know, help shape what we were gonna be becoming was was pretty cool. Is there a low light in your funding journey that you’d like to share?

I think the low light’s definitely been, you know, having to right size team, 100%. But I think even if I wasn’t a VC backed organization, even if I was just a manager in a team who in 2021, they discovered four reasons like many organizations have done that they’ve had to restructure, I would have the same feelings. So, you know, there are things I could have changed, you know, decisions I could have made differently, 100%. But there’s also just part of growing up and being a leader and and being at this stage of my my professional journey is going to be having difficult conversations and following difficult processes. And so, you know, it’s just part of being who I’m going to be later in my career.

And do you have one tip for founders that are thinking about raising capital or or funding their businesses? Something that you’d share? Yes. And it’s a different answer than I would have given even two weeks ago. Remember that if you’re raising capital so raising capital can feel like a, you know, an easier way to grow.

Like, oh, I need some money. I’ll I’ll raise some capital, and we’ll, you know, build this thing. And I think the thing that I really needed to be hammered home a million times before I listened was that if you’re raising institutional money, venture capital in any way, the they expect a large return in a short period of time. And to a certain extent, it’s not the natural path of growing a business. It’s actually kind of it’s the equivalent of giving a plant a lot of fertilizer and, like, you know, hoping you get giant pumpkins this year, whatever.

Seems to be stuck in our analogies today. Just roll with it. You need to be prepared as a CEO, as a founder, to put the energy in needed after you take that money to make that growth dream happen. If, however, you just want to build something that does a good thing, solves a problem, makes some money, you know, adds to you either your passive income or becomes one day your full time income, and have a small team that pays people well and treats them well, let’s not forget that that’s actually still a viable business model and has been for a very, very long time. Not all of us need to be unicorns.

Some of us can just be happy who we are. And I think, you know, perhaps this, you know, curve we’ve had from ’21 through till now has been a nice gentle reminder that growing a long legacy business is as important as, a VC backed one. It’s just a different path, and that’s perfectly valid one to take. So, Laurie, you’ve obviously got your business right side as you got a great team, still got a competitive offering, a product. What’s the future that go from here?

We are ekingly close to profitability. Like, the point where the the numbers are being watched with, like, an eagle eye at this point. We’ve just signed a very exciting global partnership, which could put us in front of an organization. So we currently have about 25,000 learners in the platform. Wow.

Our new partner has 1,600,000. Wow. So we signed three new partners in the last week. So, yeah, it’s we we are on the edge of what I’m calling a quite high energy period. So the there is no big, like, VC pool behind us anymore of money.

We’re, you know, operating from our own means, really. And we’re about to do probably the biggest growth section we’ve ever done. So, yeah, watch this space. Send emergency chocolate. It’s either gonna be a wild ride and be exciting and, yay, we succeeded, or, you know, we’ll have another chat one day and I’ll show you, you know, another 20 ways that we fell over.

Yeah. Either way, it’s all good. I think that’s the the thing with entrepreneurship and building a business. Right? Is there’s the highs and the lows, and it’s just like, if you wanna succeed, you just have to keep going through them.

Right? I think what they don’t tell you though is the highs and the lows are often in the same day. I I could do with, like, them just be month by month rather than just, like, that continual right roller coaster. I love it. Awesome.

Hey, Laura. Thank you so much for joining us. You rock. Yeah. It was awesome.

That was great. And Laura, thank you very much.