When you grow a software business to $10 million ARR in three years without VC funding you keep your optionality as a founder and focus 100% of your energy on your customers.
This is Customer Funding with sales and revenues. Not VC funding with endless pitches, legal bills, and monthly board meetings.
You have to be very lean and hurry up and start generating revenue efficiently. And your startup may grow fast too.
This week on the Practical Founders Podcast, co-founder Miles Schwartz shares the exciting story of bootstrapped success at Zūm Rails, an open banking payments platform based in Canada.
They went from three savvy co-founders with a niche idea to being a fast-growing fintech superstar with over $10M in ARR and 40 employees in just over three years.
They tried to raise funding and hire engineers when they started, but nobody took them seriously. Now, they can hire great talent, but they have decided not to take any outside investment yet.
Every month they are closing big deals with big partners and picking up speed. Their partners keep adding new customers every week. They are expanding from Canada to the US and it’s working.
Zum Rails will be a much larger company next year, but it’s still hard for Miles to manage the growing revenue engine that funds their payroll and growth investments—every month.
It hasn’t gotten easier yet. It doesn’t look like the pace will slow until they are over a $100 million revenue company, which could happen in a few years or sooner.
Rocket-ride growth has its challenges, as Miles describes his role as the head of sales:
“When we first started, we had a runway of seven weeks. Every big deal we closed moved the needle and we celebrated it. But as we scale past $10M ARR, we still have the same pressure, but with larger numbers. If Sales doesn’t hit these targets by this day, we’re out of money.
“I think the exhaustion of being year four into that same pressure week after week, month after month. I can’t take a vacation because if I take three weeks off, that may mean we don’t hit our runway. I don’t ever overwork myself, but I never disconnect.
“It takes a toll. People glamorize it. Especially being bootstrapped, it’s a slog. It’s grinding teeth. I don’t recommend it for most people. We’re very successful at it, fortunately, and knock on wood, we continue to be, but even despite the success, it’s grueling. It’s tough.”
Fast growth, larger partner opportunities, and traction with a US expansion are causing Miles and his cofounders to think differently about the future of the company. They might raise growth capital from the right VC investment partner. Or not.
They know funding won’t make everything easier, but they can consciously choose which hard things they take on and what risks they want to manage.
Pick your poison. Embrace the suck, as they say.
Listen to this interview with the co-founder of an amazing bootstrapped success story Practical Founders Podcast.
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