How Founders are Funding Their SaaS Startups from Their Other Businesses

What’s more common than big VCs investing millions in pre-revenue startups? Founders funding substantial software development, design, and sales cycles from the profits and staff of their other businesses.

It is often a related services business that productizes part of its solution over time. Or a previous software company that spits out profits.

These serial entrepreneurs parlay one business into another better one, as one frugal founder I know described it.

They grew that business to fund this one. Like big software businesses that have a portfolio of products.

These big bets require lots of savvy and some serious guts.

Hamed Mazrouei has been creating businesses to test ideas and generate profits. He grew his first software company, Vivant Corporation, out of his security services company.

Vivant is now a profitable $5M revenue software company with 45 employees. But he had other business ideas too.

Hamed now has a second software company, Milagro Corporation, that solves bigger problems for many of his smaller customers.

Milagro is a marketing automation, data analytics, and complete “restaurant operating system” for small restaurant chains.

It took four years to build so far, so it’s not a small and crappy MVP.

And it wasn’t easy, as he describes on the Practical Founders Podcast this week:

“After four years, we rolled out the new Milago product to a few customers. We thought we had it all covered—and it just flopped. Oh my God, I can’t believe this. So we iterated, rebuilt, updated, and went back. Flopped. Went back again. Flopped.

“I think we lost like four or five customers. And every time it was catastrophic to come back home and say, ‘Did I just waste four years of my time and all these resources that I could have grown Vivant? What happened?’

“And then we got the first customer in September of 2021 and they’re still a customer. After that, things changed. We got more customers and we see a light at the end of the tunnel.

“I wake up every day, get punched, and then wake up again and go do it. I know that failures will happen. If you fail and you just pack up and go home, that’s a true failure. But if you fail multiple times, learn from it, improve and really truly believe.”

His persistence may have come from investing his own money and reputation for a few years.

Or from his loyal 95 employees who depend on this new venture to work and become a much bigger company.

Or is it because Hamed is slightly crazy and enthusiastic about his big ideas?

Hamed is funding this new big-swing startup himself out of his existing businesses and has no intention of raising outside funding. VCs would never make that pre-revenue bet.

Listen to this awesome interview on the Practical Founders Podcast.

Congrats on your progress with Milagro, Hamed!


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