How I hit $5m ARR, kept control using 3 different debt providers

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Top Founders 31 min 3 speakers 6 chapters transcribed

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What insights were shared from the Founder 500 event?

Nathan Latka 0:00

Hey folks, hope your Q3 and Q4 is off to a good start. We just wrapped up Founder 500 in Austin, Texas. Hundreds of bootstrap founders showed up. It was an amazing time. I loved meeting so many of you. This interview today is a recording from that session, which you're gonna love because now we have visuals, we have the founder teaching, and I made every single speaker include their revenue graphs and real artifacts in their presentations. Without further ado, let's jump in. 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. We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool.

Nathan Latka 0:51

It's like a big Excel sheet for all these podcast interviews. Check it out right now at getlatka.com. You were actually a massive inspiration of pushing me to get into FounderPass. So why don't you start there and I'll go to your slides. Give him a round of applause.

Steve Benson 1:10

Yeah, thanks for having me. This is exciting stuff. So yeah, I guess I'll tell the early FounderPath story from my perspective, which is basically, I started Badger Maps like 10 years ago, a little more. And I started doing debt deals in like 2015, I think, maybe 16. And And debt back in those days, as some of you may recall, was not as good of a deal as it is today, right? Lenders have a difficult time wrapping their arms around the concept of ARR and MRR. They're like, that's not an asset. That's not collateral. And then lighter capital came in the scene first. And they were heavily... They raised a ton of money and I forget how much, $60 million, big team. And so to make the economics work on that, where you're going to pay off your investors at 12% or whatever they take, to pay for that big team, they needed a pretty big spread on the actual deal, right?

Steve Benson 2:21

So the debt was super expensive. Next, then other players sort of jumping in. And there's also like the, there's different types of debt players in SaaS, right? There's like the Golubs of the world. That's actually their name. It's a huge, I don't know why. Golube, Golub, I don't know. But it's, that's, that's, that was their branding. And so they come in like later, if you're like, you know, $10 million and above and I think I think you have to have institutional investment to get their money. Right. So that's kind of the scene is like if you're an early stage startup, there was just nothing at those times. And when lighter came on, we could like at least we could get expensive debt, which is better than no debt.

Steve Benson 3:02

Right. And because it turns out that's one of the major ways companies lever up. And. So over a five-year period, I had different experiences with different SaaS debt providers, all these early players. And I was a very active shopper of debt.

Nathan Latka 3:20

By active, you mean you've got a spreadsheet of how you can find that spreadsheet in your computer?

Steve Benson 3:28

everyone that could potentially loan a SaaS company money, I had like talked to and knew about because turns out I really needed money. Cause it's like way easier to get debt than revenue.

Steve Benson 3:48

But so over time I kind of gather experiences, gather data about this industry and, And I forget exactly when this happened but Nate was in town in San Francisco where I used to live and we were shooting the shit about the debt industry and he was really interested in it and poking around at it and he figured out that I had made basically a hobby of learning about debt for years. He was trying to pick my brain. And I gave him all my stuff and he went after this market and has really changed it a lot.

Nathan Latka 4:21

I mean it's a... What did you say in terms of the product that needed to exist that didn't exist?

Steve Benson 4:26

What didn't exist, well, I mean, the products that exist were more expensive for starters, but they weren't willing to loan very much, right? So I think Lighter would do like three, and I'll get into this in my slides.