Capital Efficient Strategy for Generative AI Startups: RavenPack CEO Armando Gonzales (Part 5)

Sramana Mitra: At this point, you had a customer. You understand your TAM. You are starting to execute. It’s an easier funding situation.

Armando Gonzales: Exactly.

Sramana Mitra: How much did you raise?

Armando Gonzales: $3 million.

Sramana Mitra: 2008?

Armando Gonzales: Yes.

Sramana Mitra: How many customers did you get through the Dow Jones partnership? How long did that partnership last before you brought in your own sales force?

Armando Gonzales: We probably got a couple of dozen customers in the first few years. Even today, we have a good partnership with Dow Jones that there’s a referral component there. They’re always working with us.

Sramana Mitra: We are now in 2010?

Armando Gonzales: Between 2008 and 2013. We demonstrated that there is a market. Now it’s known as alternative data. We were arguably the first alternative data product out there. It was just called big data. It was non-fundamental, non-trading data used for investment decision-making. There were millions, if not billions, of dollars that were being traded where our data was a signal. That became the foundation.

We made our content available to academics as well. The key question that we would get all the time is, “How do I know that your data is valuable?” That was the next wave in order to get more customers. We had to demonstrate that we could add value to their investment process. The way we thought of doing it is to get professors and PhD’s to do research on the data.

That became a great success in terms of universities all over the world licensing the data and using it for teaching purposes. That’s another five years of our history of educating the market.

Sramana Mitra: Also getting validation that your data produces good results. That takes time.

Armando Gonzales: Exactly. Timing is so important. I was talking about this 20 years ago and there was a lot of skepticism. 10 years ago, we were still struggling to get people to adopt this way of understanding market sentiment. It’s been a long road of educating customers. As a result, we’ve built a very loyal customer base. It’s been a long journey.

Sramana Mitra: Aside from the $3 million you raised in 2008, what other financing have you brought in?

Armando Gonzales: We’ve done two rounds so far. We took our Series A from Molten Ventures. It’s a publicly-traded investment firm in London. More recently, we did a Series B with a technology investor called GP Bullhound which is based out of London. That’s it. We’ve only done two rounds so far.

Sramana Mitra: What the total funding?

Armando Gonzales: About $20 million.

Sramana Mitra: Your deal sizes are pretty large so your revenue should be in a very comfortable position so you don’t need a lot of outside investment to do what you’re doing.

Armando Gonzales: We’ve been profitable from the start because we were trying to be as capital-efficient as possible and not dilute ourselves. Also being in Spain was a big component. We were just trying to do things in a very cost-effective way. We had to learn to adapt to what we had. It was only recently where we decided to get a little bit of cash from these investors and we managed to grow the team three to four times because of that capital.

Sramana Mitra: You built a team in Spain?

Armando Gonzales: Yes, and in the US. Because of remote working, we have a number of employees that are spread across Europe and the US.

Sramana Mitra: How big is the team?

Armando Gonzales: 200 people.

This segment is part 5 in the series : Capital Efficient Strategy for Generative AI Startups: RavenPack CEO Armando Gonzales
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