Competing with Blackline: FloQast CEO Mike Whitmire (Part 6)

Sramana Mitra: What about your financing strategy? After that $1.3 million you raised in 2014, what other financing have you raised?

Mike Whitmire: In 2014, we got to a good recurring revenue clip, and then I went back out to do our Series A. We closed $6.5 million in Series A funding, which was led by Polaris Partners. They’re headquartered in Boston but they have their software investment arm in San Francisco. Toba continued to participate. That was around when we needed the money to keep going and grow the business. That was incredibly challenging for me. I probably got a hundred no’s again.

Sramana Mitra: Why the no’s this time? You had validation.

Mike Whitmire: The no’s were for being “too early”. Too early is really code for something else.

Sramana Mitra: Actually no. Let me refute that point. You were going to the wrong investors. I don’t know if you are familiar with the podcast series where we have a lot of investors coming and discussing their investment thesis. The segmentation of the early stage venture funding business has really intensified.

We have pre-seed, seed, post-seed, pre-Series A, small Series A, large Series A. Firms are segmenting on where they want to play. If you go to the wrong set of investors, you will hear, “It’s too early.” For another set of investors, you’re okay, but you have to find that right set of investors.

Mike Whitmire: Definitely agree with that. I’m certainly very targeted in the investors I’m speaking with. We were looking at Series A type of funds. I know for a fact that they invest in companies that have less revenue than us. I’m very confident that was code for something else.

My hunch here is, they don’t know that the market opportunity is big enough. This was before Blackline filed for their IPO. No one really had any idea of who Blackline was and how big of a company they really were. They just looked at us and said, “We don’t know how big the accounting market is.” The second point is VCs are not generally used to accountants being co-founders. They’re used to engineers and business development-focused people. There’s a lot of head scratching.

Believe it or not, because I was starting a SaaS company, I was viewed as too young and inexperienced to be doing this because I hadn’t done it before. That was just a sneaking suspicion I had. Nobody ever said it to me. At the very end of the journey, I already got a term sheet with Polaris and I was sitting down with one investor and going through the deck.

She goes, “Mike, this is awesome. Clearly, your background is a good fit for the project. I’m going to keep it real. If you were 45 years old and had done this before, I can take this to my partners right now and get a term sheet.”

This segment is part 6 in the series : Competing with Blackline: FloQast CEO Mike Whitmire
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