Ask HN: Raise VC/angel for tech services in growth vertical?

2 points by hiding-vertical 6 years ago | 2 comments

Hiding behind a throwaway to guard business details.

So here's the story - I work for a small 20 year old business in California with a blend of development consulting services, a cluster of specialized SaaS applications and a fully bootstrapped enterprise SaaS product that is revenue positive with growing MRR even during covid.

We cater to a vertical niche that analysts see being in the "safe" or "growth" category for the post-covid recovery, faster than even the rest of tech sector. I'm seeing even bigger opportunities for what we do in the rebound. We work globally too.

Our owner / CEO got the PPP loan very easily and we've found that banks seem unusually interested in us beyond the PPP loan. We recently found a product-market-fit for our enterprise product and are learning that we can reliably make the services side of the business profitable. And there's now a model to scale it..

Up until I joined the company all of our business was word of mouth referral. Great CTO but no COO, no CFO (the CEO is both). I'm the BD. No CMO or CPO either. So even modest investment in growth (marketing, sales, ops, product, finance) would bring significant ROI. It's just a services business so slower growth. Less hockey stick more like.. banana?

My question is - would it make sense to ride this wave of interest towards raising more capital than we actually need for covid runway? Is that even doable for a business that's 70% consulting services?

Could we raise VC/angel and use it for growth? Is this an opportunity? Should I be putting together fundraise plan and pitch decks?

gshdg 6 years ago |

VCs are looking for “hockey stick” growth and will push you to pursue that even if that’s not in the best interests of the business’ survival or long term health. Proceed with caution.

Angels are more varied in the outcomes they seek. Screen them for alignment.

Alternatively, if you can invest cash in the business now for meaningful ROI, consider traditional small business loans.

hiding-vertical 6 years ago | |

Forgot to mention, I've been in the game quite a while. Yea assuming VC would definitely not interested in a services business with such a slow growth trajectory.

However also become acutely aware that everything in business right now has flipped topsy-turvy upside down and backwards. Nonsensical even by standards of the last recession.. wondering if VC is acting as weird as everyone else, since all the rules are being broken.

Business loans would keep us on the same business as it's been for 20 years bootstrap path. I want a big shake up of the company structure to spark a fire and accelerate growth ahead of the rebound, so we can rise with the market at the top of the pack.