Bootstrap First, Raise Money Later from Oregon: Paresh Patel, CEO of PayRange (Part 4)

Sramana Mitra: The form factor of your product was that you would just clip it on a retail machine?

Paresh Patel: The design was remarkably simple. It almost works like a thumb drive. You just take the device and plug it into the machine. In three seconds, it could take that legacy machine and convert it into a modern mobile machine.

Sramana Mitra: A million and a half worth of orders were from how many customers?‘

Paresh Patel: A few hundred customers.

Sramana Mitra: What did you do next?

Paresh Patel: I took the pre-orders and realized that we had a really great product. The trade show was in April. I spent the month of May finalizing requirements and things we needed to do. Then I started pitching investors.

Sramana Mitra: In Portland?

Paresh Patel: In the Bay Area. I made several trips there. We got some pretty good interest. Right after the trade show, I was able to find an investor.

Sramana Mitra: What was the scale of the investment?

Paresh Patel: The seed was $2.6 million.

Sramana Mitra: Against a $1.5 million order. Fabulous! You got your seed round in and have $1.5 million worth of orders. How long did it take you to fulfill those orders?

Paresh Patel: We now had to convert this MVP into a production product. There was a lot of work to do that summer. We closed our seed round in July 2014. We spent July to September rebuilding the entire system. We had to do a lot of work on the server and web console to make everything production grade. I had to go get a production line going. I flew to Taiwan, found a manufacturer and had them build the production line. We had to do everything.

We launched our beta in October. It was about a few hundred devices. The first day we shipped it, we realized we needed to do a firmware update. Luckily, we have built our device to be updated in the field. Over the next month and a half, we did 13 or 14 updates. By January 2015, we went into full-scale production.

Sramana Mitra: The manufacturing was in US?

Paresh Patel: Taiwan.

Sramana Mitra: How did you find your manufacturing partner?

Paresh Patel: My manufacturing partner saw that I had left my last company and cold-called me. She was new to her job. She was the first employee in the US and trying to find a business for that manufacturer in Taiwan. We formed a relationship. It was pretty much like that.

Sramana Mitra: So now you have a fully-functional product and are fulfilling your backorders. How long did it take to finish that process?

Paresh Patel: We started shipping our devices in January 2015. By now, some of the orders have fallen through because it had taken so long. Our first run was a pretty big. It was 25,000 devices. We started selling them, but we were running out of money. So I had to go do an investment round. As soon as we got live, we went to pitch for a Series A.

Sramana Mitra: How much was that?

Paresh Patel: $12 million.

Sramana Mitra: What is the price point of your device?

Paresh Patel: We had different price points. When we initially launched, it was a $49 device. Over time, we built up not only the hardware but also a software suite. We started adjusting the price. We have it on subscription.

Sramana Mitra: In 2015, it was a $49 device?

Paresh Patel: Right.

Sramana Mitra: $12 million Series A also from the Bay Area?

Paresh Patel: Yes.

This segment is part 4 in the series : Bootstrap First, Raise Money Later from Oregon: Paresh Patel, CEO of PayRange
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