Capital Efficient Entrepreneurship: Bonanza Co-Founder Mark Dorsey (Part 5)

Sramana Mitra: How did revenues scale? How long did it take your to hit $1 million in revenue and how did that ramp?

Mark Dorsey: I would really have to go back to the archives to check. You would think that that would be a major milestone that would be layered into my mind. I would say that as far as revenue goes, I would think that we would have hit $1 million within the first year.

Sramana Mitra: $1 million not in gross merchandise value. I’m talking about revenue.

Mark Dorsey: To be honest, I can’t even say.

Sramana Mitra: What else is strategically interesting in your story and what other inflection point is worth exploring?

Mark Dorsey: Another important part of our story is that when we raised funding. It was very important to us to be very careful that we will never be identified as a big corporation. It was always very important to us to be able to send the message out there that we were after the seller’s best interests and we were doing everything we could. Any missteps along that way could immediately be branded as a corporation that was trying to be just like eBay. That would turn customers away. As we started to scale the business, we found an opportunity to further the growth of our company. That’s when we started looking into raising a round of funding.

Sramana Mitra: What year did you raise your first year of funding?

Mark Dorsey: We raised our first and only round in 2010.

Sramana Mitra: How much did you raise?

Mark Dorsey: We raised $1 million.

Sramana Mitra: What were the metrics of your business when you went out to raise funding?

Mark Dorsey: We had 100,000 users on our site. At that time, we had nearly 150 million page views.

Sramana Mitra: You had significant revenue already?

Mark Dorsey: We did. We were actually being courted by several investors. It’s important to note that at the time we received the round, we were profitable. We didn’t really need to have the funds, but we saw that as a way to be able to scale our business faster. Most important for us was to be able to forge the all-important relationships with people who would be able to give us strategic relationships. We actually received a much higher valuation from other companies in Silicon Valley but we opted to go with the lower valuation and better investors.

Sramana Mitra: Whom did you go with?

Mark Dorsey: We went with some very unique investors – Voyage Capital, Geoff Entress, Ignition Partners, Matrix Partners, and Founders’ Co-op.

Sramana Mitra: For a $1 million round, there were four investors involved?

Mark Dorsey: Yes.

Sramana Mitra: That’s unusual.

Mark Dorsey: It was a very unusual round. It was very strategic. That was in April of 2010.

Sramana Mitra: How did you deploy those funds strategically to accelerate?

Mark Dorsey: One of the things that we had been keen to do was for our company to be a very large business. One of the challenges in that was our name. At the time that we launched the company, the name was Bonanzle. We were on social media. Our grandmother would post on Facebook saying, “I love what you’re doing over at Bananas.” When we first started Bonanzle, we were looking into acquiring the name Bonanza which is this amazing e-commerce name. At that time, it was very expensive for us. Back when we received our round, the option to purchase that site came to us again. We were able to acquire that name in a way that worked for us financially. We were able to acquire the name and rebrand our site. That was one of our focus areas in 2010 after we received the funding.

This segment is part 5 in the series : Capital Efficient Entrepreneurship: Bonanza Co-Founder Mark Dorsey
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