1Mby1M Virtual Accelerator Investor Forum: With Rami Elkhatib of Acero Capital (Part 2)

Rami Elkhatib: We had been interested in the area of security, specifically application security. We found a fantastic technical team. We found the deep IP and the fantastic product. When we closed that Series A, we had a full product and a full technical team. I hope that illustrates where we tend to be a little bit different.

A typical Series A is typically looking for that initial revenue or that initial customer. We’ve done that as well. From our perspective, we try to take a different approach.

Sramana Mitra: I’m very happy to hear the example that you just provided because among the various tools that we have pulled together in our methodology is an extensive and very creative set of tools for bootstrapping. If you have to make one million companies successful to some degree, you do need a lot of bootstrapping tools because they’re not all going to get funded. 

One of the things we do in that process is bootstrapping using services. You just described a scenario where the product was developed by a consulting firm and they had visibility into a product opportunity and they went and built the software. Then you came in to invest in a product that was already built but with input from their consulting scenarios.

Rami Elkhatib: This is a great way to go about it from the founder’s and entrepreneur’s perspective. In this particular situation, the product itself was complete, but once we spun it out to its own company, we were willing to write an $8 million check before there were any customers because of all the factors that you mentioned.

Sramana Mitra: That’s very good. We actually believe that Bootstrapping Using Services is a tried and true method of building, especially fat, startups where you have to invest quite a bit of time and resources to come up with a product where several years of product development time has to go in before a product can be sold. In those scenarios, Bootstrapping Using Services is a very good model.

Rami Elkhatib: I completely agree. It’s also a model that requires patience. This particular team that I mentioned, their journey was probably in the order of 10 or so years.

Sramana Mitra: Which is also the case with these kinds of Bootstrapping Using Services companies. They have bootstrapped for a long time and eventually arrived at a product idea. We’ve seen this case study over and over again. I think they make for very interesting companies in the long run.

Rami Elkhatib: as an entrepreneur, you will know when the time is right. The best way to go through some of these journeys is, these are not folks that started from day one saying they’re going to start a company. They started out based on their very deep expertise building this product. Then when the time was right, they jumped on the opportunity. That’s another aspect of it. I love it when it happens organically. One day, it hits you that, “Of course, we should start a company.”

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Rami Elkhatib of Acero Capital
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