Raising Funding on AngelList: Contactually CEO Zvi Band (Part 7)

Sramana Mitra: You talked about working with a syndicate on AngelList. Did 500 Startups introduce you to the AngelList syndicates personally, or did you do that cold?

Zvi Band: We did a very good job of building relationships with our customers. One of our customers said, “Hey, I actually know someone who’s a part of syndicate on AngelList. Could I introduce you?” We got connected that way. I always recommend to entrepreneurs to look at your own users and customers first because, oftentimes, there are some well-connected people who already believe in your mission.

Sramana Mitra: In general, you have to be introduced. That’s the experience we have. So in 2015, you raised $8 million, and you now have $2.5 million in ARR. Is that a VC round?

Zvi Band: Yes. That was a VC round. Three larger VC firms came in as well as a number of smaller ones.

Sramana Mitra: Who were these VC firms and what was the process of choosing them or them choosing you?

Zvi Band: Actually, we raised $8.75 million – just shy of $9 million. We raised from Grotech Ventures and Rally Ventures. The common thread is these are people that we have been building relationships with for a long time. I knew a lot of people personally who had taken money from them. We were able to build a really good relationship with them.

We were able to come to an agreement on the terms of the round. In general, we wanted investors who believed in our mission and were willing to be good partners with us. We spent a lot of time in conversations. We met a lot of people who we would want to work with and we met a lot of people who we didn’t want to work with. We ended up coming to terms and working very closely with those two big firms.

Sramana Mitra: Besides fundraising, what are the highlights of 2015? In particular, what strategic moves did you make?

Zvi Band: We really saw that we were on to something. We were able to build out the business. We were able to have something that people were willing to pay for. We saw that we could market and sell it. Throughout 2015, the conversation went from building to scaling. By the end of 2015, we’ve grown from $2.4 million to $4 million. We’re close to doubling our revenue in 2016. What we learned is that having a really great executive team is a critical thing. One of our big moves in 2015 and 2016 has been building out a really good executive team.

Sramana Mitra: What is the process of finding a strong executive team in the Washington DC area? What were the pros and cons?

Zvi Band: First off, I didn’t understand this until later on. One of my advisers said, “Once you hire the best executive, you know you’ve hired the right person when you’re wondering, ‘I don’t know what I’d do without them.” When you bring on the best people who take away so much ownership from you and take away so much responsibility, and you trust them through that, you’d wonder what you’d do without them. We had to, unfortunately, part ways with some people.

Being in DC, it’s definitely a smaller community. It’s nowhere as big as San Francisco or New York, but there is very good talent here. Because we were becoming one of the bigger companies in the area, we’re able to attract a lot of high-quality talent. It’s about letting the community know, which meant me having coffee meeting after coffee meeting. For our Head of Marketing, it took nearly a year. We interviewed 200 people for that role. For our VP of Product, we interviewed 20 and it took four months. It rally varies.

Sramana Mitra: You’re saying that there is good talent in the DC area, but it takes more looking and sourcing.

Zvi Band: Absolutely. Not being in San Francisco or New York, you have to be a little creative for sure. One of the things that is really powerful about it is once you attract talent, they stay there. This is the case throughout the country and not just limited to DC.

Sramana Mitra: San Francisco Bay Area is not the greatest place to hire these days. It’s actually very difficult to hire talent.

Zvi Band: There’s so much competition, right?

Sramana Mitra: Yes. For a company like yours, it would be very difficult to do anything meaningful from a talent point of view. I think you’re better off being where you are.

Zvi Band: There are pros and cons, right. You can get the designer who just worked for Dropbox and Slack but at the same time, you’re competing with Facebook for that person.

Sramana Mitra: Not only that. You probably wouldn’t be able to afford that person. The numbers that are floating around here are just crazy. What are the highlights of 2016? I take it that $8 million was the last round of financing?

Zvi Band: Yes. After raising money every year for the previous four years, it’s nice to take a year off and not have to do it. What I’m really excited about now is the understanding that we’ve built a company that can now scale. I believe that startups are a series of questions. Does anyone like this idea? Does anyone like this company? Will anyone pay for it? Will we be able to scale the company? Will we be able to build a long-lasting company? We have proven so many of those. We’ve gotten past the scaling phase. Now the question is, can we build a long-standing independent company?

Sramana Mitra: Great story. Thank you for your time.

This segment is part 7 in the series : Raising Funding on AngelList: Contactually CEO Zvi Band
1 2 3 4 5 6 7