Is it more or less stressful to have outside investors in your SaaS business?
Doesn’t that extra cash reduce the crazy stress of startups?
Most founders actually find it’s more stressful to have investors, especially big VC investors.
That extra responsibility, the clock ticking, your next bet NEEDS to work.
Some founders like that tightwire act.
But most founders realize the investor game can be pretty unhealthy, even with supportive investors.
Zvi Band is co-founder and former CEO of Contactually, which was CRM software for real estate and other relationship-oriented professionals.
Contactually was founded in 2011 with initial funding and support from 500 Startups in Silicon Valley. In the next five years, they raised a total of $15.5 million from institutional VC investors.
Contactually grew to about $10 million in revenue before growth stalled and it became clear they couldn’t raise additional capital or grow big without funding.
The company was sold in 2019 to Compass, a major real estate technology company and brokerage, to power their internal CRM platform.
In this episode, Zvi candidly shares his personal experience with VC funding, their opportunities and challenges, and the strategic dilemmas they faced along the way.
Zvi now owns and operates a bootstrapped contact management software business called Relatable.
In hindsight, Zvi shares that VC funding was helpful at times, but it wasn’t the right fit for him and his personality.
“I realized I spent seven and a half years of my life in survival mode as a CEO with VC investors. And at no point did I feel that like we were safe and things were fun, because the bank account was always trickling down a little bit.
“We always had big growth goals. And we were always thinking about, How do we get through the next VC funding round? At no point did I realize and celebrate that, hey, we built something really awesome.
“We could have chilled out once in a while or taken the team to Mexico for a week or something like that. But everything was around short-term goals and what we needed to do to get there that month.”
The “Grow Big Fast or Die” approach, when you raise big funding, sometimes works. But mostly it doesn’t work for founders.
And it’s not less stressful to have funding in the bank when you know it’s going to run out, and you probably can’t raise more.
The ultimate superpower for SaaS founders is to be breakeven or profitable.
You can’t do everything you want to do in your business, but you can do the important stuff—and do it well at the right pace.
Profitability = freedom = healthy founder mindset.
Healthy Survival is not the same as Survival Mode.
Check out this helpful interview with Zvi Band on the Practical Founders Podcast.
