SaaS Interviews with CEOs, Startups, Founders
Founder Raises $750k From Founderpath and Increases Equity. CEO Shares how Founderpath Worked for Him.
03 Oct 2024
Chapter 1: What is the main topic discussed in this episode?
You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
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They're running a company called VoxPopMe, and we first started speaking in terms of FounderPath and VoxPopMe. Guys, this is crazy. It was all the way back in February, actually. February 7th was my first email in my email inbox. But why don't you introduce yourselves really quick? Lottie, what's your role at VoxPopMe? Andy, what's your role?
Yeah. I'm chairman of the board. I've been on the board now, I think around four years, five years. So yeah. So that's my role is to do what Andy tells me to do.
Something like that. Yeah. My role is now CEO. I was founder and originally a CTO at Vox Pop and I moved into the CEO role about seven months ago. So yeah, it started off in
uh yeah end of 2011 is when we kind of originally founded the company so been with her ever since and take us through a bit of the sort of company story after you give a a teaser on what the product does because you're in a very exciting space andy how would you describe the product
Yeah, so we work with large businesses, Fortune 500, helping them really understand their consumers a lot better through video. So companies doing research, either one-to-one interviews, focus groups, similar kind of setting to what we're in now.
or launching video surveys and connecting with their consumers to understand their thoughts towards trends, spending habits, maybe new product ideation, right throughout the kind of research flow and really helping them to analyze that at scale and understand their research centrally as well across the company and drive kind of customer empathy and change within the business.
So it's been a super exciting journey from the start and initially kicked off
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Chapter 2: What is VoxPopMe and what do they do?
When did you guys write the first line of code for the company? And Andy, how did you decide to split equity with your co-founders?
So yeah, I mean, it was an interesting start to the company. So I was actually working with a guy who founded the company with Dave Carruthers. And I was working as a technical director at his company to begin with. And then we started... Sorry, this was 2012. So yeah, about 2011, 2012, joined him.
And that company was helping to bring in seed investment for, you know, we'd have people coming with ideas. They wouldn't have the technical background. They'd be looking to... fund. And so we were kind of incubating product startups from that point. We'd had some that ended up being pretty successful at the back of it, others that were very, it was very hit and miss.
And so when we came up for the idea around video and thinking about how we can connect with brands through that, we decided to kind of split off our own way and kind of took some of the learnings that we'd had from how the companies had been formed through that process. And that's how things worked out there. So
Equity split was actually quite interesting because we kicked off with... So first lines of code, I was writing in the kind of... When would it have been? The November 2012, I think it was. And so because we had these angel investors that were already familiar with everything that we were doing, we kind of went straight into that route and actually did some fundraising pretty early.
And yeah, that's kind of... And took... Yeah, equity split based on that and a few of the roles that we kind of kicked off the company with at the time.
Are you comfortable sharing, Andy, sort of like percentages there? You know, Dave was about X percent, you were about Y percent, investors were about Z percent.
Uh, yeah, I mean, it was, so at the time it was interesting because it was, we'd actually formed it with a, with a number, like a number of people that we decided to kind of kick off from who were originally in the, the, the, the, you know, the previous company. And so at the, at the time, like as a percentage, mine was pretty, pretty low.
I think it was around like two, 3%, um, which was, um, yeah, uh, So there was a few of us that took that amount and actually a lot of people dropped off within, you know, probably within the first year.
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Chapter 3: How did VoxPopMe raise $750k from FounderPath?
And so I think there was just a delay. I don't believe it was ever, we don't want to give more. It's just, now that we're on the playing field, you've got the equity, let's see how you play. I think that was pretty much the deal during that time.
And I think it's always tough as well, because you're going through those stages of trying to race. And at the time, I think we were concentrating so much on what we wanted to do with that within the business. We weren't necessarily thinking about it from our perspective at that early stage when we were going out to do that raise.
And that's something that chatting to a lot of the other founders and things, having that intention to go in. So you've had those expectations set up front. And so I think we're often coming out the back of those conversations and then trying to negotiate for things.
And it becomes more difficult to do at that stage because you've gone through all the excitement of everything, come out the other side. So things just kind of nudged on and nudged on at that time. And it wasn't through anyone trying to... do anything untoward or bad towards us. It was just the makeup of how we went into that.
I think that's something that I've definitely learned through that time. And I've heard from other founders who have gone through the same kind of struggles and had to be more purposeful in that at later stages.
And Nathan, I think to the question too, later on, I'd say in the last three years, I remember one of the meetings I had specifically with one of our investors and, you know, the tone was now changing into what do we need? Who do you need? Who do we need to make sure, you know, is still flying the plane?
Um, so we had those conversations, obviously Andy was at the top of that list and we had a couple of other people. Um, and so we, you know, there was an openness to it and with both of our lead investors, actually, they were saying, okay, we've done a lot of work, you know, and we've made some progress clearly on the profitability side.
We've made some significant process, but now how do we take this to the next level? And so you came in, you know, sometime after that. So I think the appetite was open even more, and we were talking about percentages and You know, what could we do for Andy? And you came in and blew that out of the water in a positive way for us, I think.
Yeah. We look, so picking up at that part of the story from founder paths perspective, you know, when we got the original data room from you guys, there was a couple of things. Number one, we loved the business. We know the space pretty well. We know some other, I have an activity in the space and I also know the other products in the space really well.
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Chapter 4: What is the significance of the new ESOP pool for management?
And you're going to see the growth and you're seeing that now. But one of the things, the biggest risk we saw back in February when we were diligencing the Vox Pop me deal, despite love and the product was, and I'm going to generalize here because I don't remember the exact numbers, but the, when we, when I asked Andy and Lonnie, you, Hey, what is the go forward management team?
who's going to take this thing to the next level? And you guys listed, you know, your key names, right?
Chapter 5: How did early co-founder dynamics affect equity distribution?
And there were several of them. And I then went back to my team and I looked at the cap table and I sort of looked at how much equity those names had.
And again, I don't know what the exact number was, but it was something, I want to say it was like maybe something between like eight and maybe 15% of sort of like, this was the group that you guys said was going to change the company and drive off future growth. And they were already diluted down to like eight to 15-ish percent.
And it was something on the order of like four to nine people, right? I'm like, guys, I want to make sure I'm not misspeaking. It was something like that, right?
I think that's right. Yeah, I think that's right.
Yeah, it was right in that range. And so I saw this as an opportunity. I said, ah, the board doesn't necessarily, maybe the board wants to put in money, maybe they don't, or the investors.
I said, but FounderPath can align with management here and use our capital coming as a forcing function to get a board resolution done, to reestablish a new ESOP pool, and then reissue those shares however the board wants to the go forward management to increase their equity. When we proposed that, Lonnie, Andy, what was the internal communication like at the board level and the management level?
What were you guys thinking?
Well, what I was thinking, and Andy, I'll let you talk to this too, but what I was thinking was refreshing. How refreshing is that? You're talking to an investor that actually wants to put more equity back in the hands of those that are going to take this to the next level, and how do we do it? And I knew at that time, we have a very, I would say, communicative and cohesive board.
They're here to support. We may not get everything, or the company at that time might not get everything they want, but they're open to it. And so we had created a really nice... culture with the board. Prior to that, I think we had a little more of a hostile culture with the board and maybe a typical type old school board. But this one has been very supportive. So I thought it was refreshing.
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