Building a High-Growth Startup From Brazil: Revelo CEO Lachlan de Crespigny (Part 4)

Sramana Mitra: Did you raise Series A?

Lachlan de Crespigny: We did. We raised Series A in late 2017 and Series B in 2019.

Sramana Mitra: When you went to raise Series A, what were your metrics vis-a-vis revenues, customers, and growth rate? Was the business model still the same?

Lachlan de Crespigny: The business model was still the same. I think we were making about $20,000 to $30,000 a month when we were raising Series A. We felt that Series A would be all about the metrics. It’s not. It’s about determining if we have a plan to be a very big company in the future. I remember we focused so much on our metrics that we were unconvincing to a lot of investors.

Sramana Mitra: We do a lot of work with a very large swath of entrepreneurs who are, most often, first-time entrepreneurs. They often bring me a pitch where they will go from where we are currently, which is zero revenue, to $10 million in five years. My response to that is that is not going to get you funding.

To raise money to be compelling to investors, you have to show a vision and a trajectory to go from zero to $100 million in five to seven years. If you don’t show that trajectory, investors will not look at you as a fundable business.

Lachlan de Crespigny: It’s exactly that. We were playing a game that we didn’t even know the rules of.

Sramana Mitra: That’s exactly why I started One Million by One Million. There are a large number of people playing this game without knowing some of the very basic rules of the game. We can teach them with very little friction.

Lachlan de Crespigny: Absolutely. This is so natural for people who grew up in the Silicon Valley environment that it seems crazy when you teach it to people in other parts of the world. If you know those rules, it makes sense.

Sramana Mitra: Then you’re not going around beating on 40 doors who are all going to say no. Hearing no from a hundred people is really debilitating.

Lachlan de Crespigny: It’s tough.

Sramana Mitra: But you were successful in raising Series A.

Lachlan de Crespigny: Yes. We got very lucky with the two funds that invested in our Series A. One was betting mostly on the team. They knew us from past experience and said, “We think something will come out of this team.” They also knew the industry. The other fund was very experienced and was looking for people who had a business like our model to invest in. We almost succeeded in spite of ourselves.

Sramana Mitra: Who were these two funds?

Lachlan de Crespigny: One was Valor Capital Group. The other one was SEEK which is an Australian company that invests in HR tech solutions all around the world.

Sramana Mitra: How much did you raise?

Lachlan de Crespigny: $4.5 million.

Sramana Mitra: What happens next?

Lachlan de Crespigny: We were more aggressive this time around. We invested in building a professional sales force. We professionalize a lot of the product and tech. We were able to use that traction to raise our Series B in October of 2019 with the same business model. We were growing nicely. It was about 100% year-on-year growth. Then 2020 happened. It was catastrophic for our business. There was an 800% drop in sales.

This segment is part 4 in the series : Building a High-Growth Startup From Brazil: Revelo CEO Lachlan de Crespigny
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