Serial Entrepreneur Zack Rinat on Model N (Part 10)

SM: How much money did you raise?

ZR: We raised about $42M from Accel and Accel KKR in June of 2000. We also had a couple of private Silicon Valley luminaries who invested in the Company. Eric Schmidt, the CEO of Google is an investor. Mark Andreesen, who co-founded Netscape, is also an investor. The second round was in December 2003. Every cent of that money we raised has stayed in the bank and this is after we have completed a cash acquisition.

SM: Why did you raise the money?

ZR: You know how it is with companies. You need to choose your battles. A company such as us needs to take risk with our product and go to market strategy, yet maintain a conservative financial strategy. It is particularly important for the types of customers we deal with; if you think of the J&J’s, Pfizers, Texas Instruments, the IDTs and the Boston Scientifics of the world, they want someone who is going to be as conservative as they are. That is part of our strategy. The company is also GAAP profitable and has been for two consecutive quarters.

SM: Do you have an idea of the timeline of when you would like to go public.

ZR: So far it is just a milestone and a step.

SM: It is going to change your life. You are going to have a lot of gray hair.

ZR: I have enough already, thanks! For us it is not an outcome or an exit, just something we need to build for the long run. Related to the IPO, I need to make sure the infrastructure is in place. We have invested heavily in the last 18 months in the infrastructure which we will use to take the company public. We have the financial control, the information technology and the management team. We are making those investments in the company. We will make that IPO jump when we feel the market conditions are appropriate. The company is cash flow positive, so we don’t need the cash. It is more important for our customers; it is more of a strategic need than an operational need.

SM: What is your next vertical after life science and high tech?

ZR: Those two are very attractive industries. Combined they have about $1B of software licenses in the next several years so we are very focused. It is also an industry where we are a leader but we have not penetrated the entire industry. We have room to grow. We feel that we will be able to create a very nice medium-sized software company just focusing on these two industries.

The next vertical is going to be dependent on the progress made within these two verticals. The question there is “make versus buy”. We have more than a single vertical.

SM: What is the organizing principle of the vertical markets you choose to go after?

ZR: The issue with revenue management is one that cuts across different industries. Going to different industries is about some simple things; I listen for need and urgency.

This segment is part 10 in the series : Serial Entrepreneur Zack Rinat on Model N
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