Q: What was your approach to funding Spotlight Reporting?

Richard Francis
CEO & Founder 
Spotlight Reporting

A: “We bootstrapped those first three years as I mentioned. We had a successful consultancy so had little bit of money we could throw at. The little nugget of genius we had was seeing a gap in the Xero ecosystem shortly after we’d launched Spotlight Reporting. We were chatting to Hamish Edwards, the co-founder of Xero, and thought we could build workpapers that are online. So we built the first workpapers set - which is about as exciting as it sounds - but is a very useful tool for an accountant. Rod [Drury] basically said ‘we need that don’t we. Name your price’. It was very early stage so we settled on - public knowledge - $800K, and put that money back into Spotlight. So Julie [Richard’s co-founder, and wife] and I have put everything into it. We had the big mortgage, and all that stuff.

When we were talking to Xero about potentially being acquired, I thought ‘why don’t we raise a similar amount of money and really go to that next stage?’ We ended up getting some great early stage investors, and 3 years in did a seed round of $1.3M. David Wilson, Vend director and major Xero shareholder was one of our backers, as was Craig Winkler, MYOB founder and major shareholder Xero, and so was Graham Shaw, Director of PushPay, Gentrack, Rightway. So we had these cool guys - there is lots of others I can mention - who got in early and that allowed me to hire the next 10 people to seed offices in the UK, San Francisco and Australia more thoroughly.

My accounting background has been useful in understanding the SaaS metrics. I understand the formula that drives our business and I’m very clear on our strategy. But I’ve also got that fiscal management thing going on. The beauty of that is we’ve looked after the money. We do lots of cool things, spend a lot on events and all that. But shareholders money matters. It’s other people’s life savings. Get a CFO in. Get an accountant. Make sure you look after shareholders money. There is a guy at SaaStr who said ‘every dollar of shareholders money matters. And every dollar we spend I want to see ROI’. It might sound extreme, but I think that’s quite important. We’ve all seen founders do a round, and blow the money on shit, or lose it through really poor or loose management. The business either goes under, or needs emergency funding, or a down round. A lot of that is not actually down to the company itself or the product not being that good. But it’s just drinking the kool-aid and getting out there and spending the money on shit.”