Arik Shtilman bootstrapped his first venture all the way through a $100M acquisition. Now he’s raised hundreds of millions of dollars to build the infrastructure for the future of the financial services space.
On the Dealmakers Show Shtilman talked about bootstrapping versus raising capital, how to sell your company for 5x more, fintech as a service, going global from the start, and taglines in fundraising.
The Ultimate Guide To Pitch Decks
Bootstrapping Your Startup
Arik Shtilman was born in Israel, the Startup Nation. We grew up as the country began transforming, and high tech companies began popping up everywhere.
Growing up in Israel you have to complete three years of mandatory military service before going to university. An experience that he says really helps prepare you for building your own company in the future. One that teaches you what is important, and how to focus.
Even though his father was a professor at a local university Arik ended up dropping out of college after the first semester. I just wasn’t for him. While his parents feared he’d end up just being a bum, living in a cardboard box on a corner, he has certainly proven his path could lead to great success.
Very quickly he went about starting his own company. One which focused on unified management for contact centers and communications equipment. This was back in the day when a few big companies like Cisco dominated the space.
Arik’s company provided new on premise software and better user interfaces. They eventually rolled that into a SaaS model when they saw trends changing.
Then they saw the cloud computing revolution coming, and knew it was time to hit the eject button, before the space crashed. At a conference in Madrid, and after having to be reseated after his designated seat at dinner was taken, serendipity put him next to a contact that would end up leading the acquisition of their company.
Still, it proved to be a near two year process. After first building a tight partnership together, and enabling their future acquirer to sell their software under their umbrella. Once they proved the synergy, it just proved cheaper for that company to acquire them, than to keep paying the royalties.
Although it was a substantial $100M deal, which enabled Shtilman to go out and treat himself to the cars and other toys he had been dreaming of, he says that if they would have brought in outside investors to provide exterior validation that company could have sold for 5x as much.
Still, that first experience equipped him with all the business learnings he needed to excel even more in his latest venture.
He says that included having to engage in all the different roles in the company. Even down to acting as the office cleaner on Fridays. Today, he says that helps him understand every position and be able to relate to the job everyone is doing and their KPIs.
There are pros and cons to bootstrapping a startup. You have more control and freedom. Arik says that it also helps you really focus and be incredibly disciplined with the money you have. You cannot afford to spend money on anything which isn’t profitable, and doesn’t produce immediate revenues. You have to focus on investing in things that will move the needle, without taking on risk. One mistake can put you out of business.
See How I Can Help You With Your Fundraising Efforts
- Fundraising Process : get guidance from A to Z.
- Materials : our team creates epic pitch decks and financial models
- Investor Access : connect with the right investors for your business and close them
Fintech As A Service
After two incredibly miserable years riding out the integration of his old company into their acquirer Shtilman said he had to get moving again.
It is hard to sit there almost idle as someone else makes all the decisions about the company you no longer own. You can begin to rot and stop thinking of new ideas.
However, after a trip with friends Arik says they got frustrated with incredibly high foreign exchange fees.
On returning from that trip they set about trying to put together a company that solved that, and reduced the costs when changing money. However, that also meant having to create all types of new infrastructure, dealing with regulators, and getting licensed.
They realized anyone else that wanted to innovate and work in this space would need to create all of that themselves too. A big barrier to entry. So, they pivoted to building and providing this infrastructure for other companies to their own solutions on. Converting into what they call fintech as a service.
Today, his startup Rapyd has close to 850 employees operating in 106 markets, with offices in 12 countries, annual revenues of over $300M, and are still growing.
Storytelling is everything which is something that JP Errico was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
In spite of his previous success, Arik says that fundraising for his second company was still very challenging at the beginning. They only managed to bring in $3M in their first round.
Investors just didn’t get what they were doing. They were trying to create a variety of services, and wanted to go global out of the gate. Investors found it complicated, and wanted them to focus.
It was only when they were able to boil down what they were doing to the strong taglined of being Amazon’s AWS for financial services that it clicked with investors. Since then they’ve raised almost $800M.
Listen in to the full podcast episode to find out more, including:
- Managing company culture across international offices
- Why you need to invest more in marketing at the beginning
- The future of financial services
- The two responses from investors that mean you won’t get any funding