Taking On The Big Guys: Chrome River Co-Founder and COO Dave Terry (Part 5)

Dave Terry: The company had been growing at a really nice growth rate. I think at that point we were in the Inc. 500 list two or three years in a row. We were really funding things out of profits but we had a few investors calling us constantly. We thought that we can keep growing in the self-funded mode, but maybe we should bring in some additional capital. In May of 2012, we decided to take our first round of outside investment. We took $3 million.

Sramana Mitra: What was the revenue at that point?

Dave Terry: We probably shouldn’t say.

Sramana Mitra: If you’re on Inc. 500, that information must have been public.

Dave Terry: Yes. I think we were probably in the order of $5 million to $7 million recurring.

Sramana Mitra: $5 million to $7 million recurring and you only took $3 million in capital, which is minimum valuation at that point, I imagine.

Dave Terry: That’s right. We do have a service component, but we’re largely all recurring revenue.

Sramana Mitra: How did you decide on which investors to take money from?

Dave Terry: There was a group out of New York called Argentum Group. Argentum had followed us for a number of years. We came in contact with them a few years earlier when they had pitched a business to us. We were looking at them and they were looking at our business at the same time. On the way out the door, they leaned back and said, “We’re going to call you guys later.” They got really interested in our business. We got really good ties over there.

As we began talking further, we approached Argentum. They do a lot of their investment and partnership with First Analysis out of Chicago. First Analysis and Argentum were our first investors in that round for $3 million. We put that to work and within the first 18 months, we realized that this worked out really well. We should’ve done this sooner. For us, at least, we are an enterprise software vendor. Using that first $3 million round, we grew our business proportionally. We didn’t just throw it all at sales. We added engineering, QA, support, some more sales and marketing. We realized that everything was going really well. It really paid off. We were pleased with our growth rate.

We started considering taking another round. This is now late 2013. We started looking and we were being approached by numerous investors. We got the attention of Bain Capital Ventures. In this particular round, we were very attracted to Bain because not only will they supply some nice resources in terms of capital, but obviously they could also fuel us with additional knowledge and resources. We partnered with them. This next round was $17 million. It was largely funded by Bain Capital, but First Analysis and Argentum got back in on this round as well.

This segment is part 5 in the series : Taking On The Big Guys: Chrome River Co-Founder and COO Dave Terry
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