At the 2017 Bend Venture Conference (BVC) just a few weeks ago, LeadMethod, a lead management software platform, received almost $500,000 in investment. We talked with LeadMethod CEO, Justin Johnson, to find out how the funds will be used to continue to grow the company (hint: more staff, bigger office, fast growth) and also got some great advice for other startups looking for funding.
Tell us about LeadMethod.
Well, first of all, LeadMethod is an awesome group of hard working, friendly, and wicked smart people that are relentless about building a culture that people want to be a part of. As a result of all this hard work and dedication, we have built the world’s first channel revenue optimization software company. LeadMethod helps large businesses that sell through channel partners and distributors better understand channel sales operations, improve engagement, and ultimately increase revenue.
During the Bend Venture Conference, LeadMethod was awarded close to $500,000. How will you use these funds to grow the company?
At the time of BVC, we had 12 employees, all of who were crammed into a 1,200 square foot office. We recently moved into a 4,500 square foot office and are in the process of hiring six more people in development, sales, and client success.
The funds will primarily go to hiring employees in order to drive our ‘channel referral’ sales strategy. Our new team members will be proactively working with the 13,000 current users of LeadMethod to generate referrals to future clients.
Four different funds, including Cascade Angels, invested in LeadMethod through the conference. In addition to the capital, what other resources do these funds provide?
The Bend Venture Conference investments were part of a larger $1M raise for LeadMethod. We have always valued our investors for more than just the money, but also for adding a unique value to our organization. It’s a team effort here, and we always want to have involved investors that can help us get further, faster. The team at Cascade Angels has always been there for us, to help in any way. (Julie and Robert even helped us build furniture for our new office.) We are also bringing a Cascade Angels investor on as a board observer.
Other investors in this round are helping with strategic partners, clients, and relationship with future acquirers.
Where do you see LeadMethod in 3-5 years?
Growth is our core strategy for the next 3-5 years. We have to grow fast and own as much of this market as possible. But, that growth has to maintain the quality that we have always sustained and which has resulted in 100% client renewal. We are also watching our culture and employee well-being to make sure that even in times of rapid growth we are maintaining a strong, healthy culture and strong client service.
Any advice for companies looking for funding?
Yes, lots of advice!
- Don’t think about raising outside funding unless you are very serious about building a fast growing company with the goal of an exit in the next 5-7 years. It’s great to have product that people are buying, and you can turn that into a great job and income. But, too many people get caught up on raising money when they should just stay as a small business.
- Don’t waste your time (or anyone else’s) trying to raise money for a product that you haven’t validated yet. You need to build the product (or at least a strong prototype), test it in the market, and even start to generate recurring revenue before you go out and ask for money. If you can’t do those things bootstrapping it, then you likely won’t get much traction with angels or VCs.
- If you do decide to take on money and you have something that angels or VCs want to invest in, then take your time to pick the investors that best fit with your goals and values as an organization.
Book recommendations for startup entrepreneurs?
I wish I had time to read a full book, but it’s just not in the cards right now. I spend my time reading blogs and articles on scaling startups and funding strategies. The ones that I like best are:
- onstartups.com – a blog by Darmesh Shaw, the founder of HubSpot
- Saaster.com – great and actionable advice on how to get from 1M ARR to 10M ARR
- Masters of Scale – a Podcast by Reid Hoffman (LinkedIn founder) that covers a lot of interesting topics on scaling a company