Rolling Up Bill Management: Flint Lane, CEO of BillTrust (Part 5)

Sramana: Are there other companies who offer outsourced electronic billing?

Flint Lane: There are a handful out there. Kubra is based out of Canada who we probably see the most.

Sramana: How big is the TAM for the service you are providing? Outsourced payroll is obviously a huge market and your offering is a comparable strategy.

Flint Lane: There are two public companies in this space, DST Output and CSG Systems. DST has a couple billion dollar market cap and CSG has 750 million the last time I checked. There are a ton of private companies. It is probably a 10 billion dollar business.

Sramana: How big are you?

Flint Lane: We are going to do 50 million dollar in 2012.

Sramana: Have you seen linear ramp or have there been inflection points?

Flint Lane: We did not have the classic hockey stick pattern. We have seen a relatively consistent 40% to 60% growth each year since we began. When you are doing outsourced transactions you can’t triple your revenue every year. We need infrastructure in place for every client we sign. They can’t just go to a website, sign up, and be good to go. Our growth has been good and steady.

Sramana: What financing strategy did you follow with this company? With your previous company you raised $70M in VC money. This time you validate your business model before raising money.

Flint Lane: I self-funded the business for the first couple of years. We raised a small amount of money in 2003 and 2004 from some angel investors who are friends of mine. We did a small venture round in 2006 from Edison Ventures in New Jersey. That is all the investment we have taken on.

Sramana: How much was raised from each source?

Flint Lane: It was about 500,000 dollars in angel money and 4 million in venture money.

Sramana: You have raised 4.5 million dollars in funding and have a 50 million dollar business. That is very efficient business building. Can you shed some light on what you have done to maintain a capital efficient business strategy?

Flint Lane: First, when you get burned once by raising too much money you learn a lesson. That certainly helps!

Sramana: I always tell young entrepreneurs that it is not a mark of pride to raise a lot of money because it means you have diluted yourself to the hilt and that is not something to be proud of.

Flint Lane: The goal is to not raise money. People think raising 30 million in venture capital is victory. The truth is that money comes with a lot of strings. At PayTrust the bet was that the world would be moving to electronic billing at a certain pace and once it did we would be making a lot of money. However, we were losing money in a lot of different areas in the hopes that things would go quickly. At BillTrust we could be profitable on just the print and mail billing business. We use e-billiing to drive higher margins.

This segment is part 5 in the series : Rolling Up Bill Management: Flint Lane, CEO of BillTrust
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