Dan Cane has scored one of the best first exits ever and is now onto his second startup, which has raised hundreds of millions of dollars to serve the healthcare space.
Ever since he was five years old, Dan Cane was an entrepreneur. He hustled from his front yard in South Florida and has gone on to build transformative companies in education and healthcare technology.
In our recent interview on the Dealmakers Podcast, Dan shared his journey, his unique take on building a company, staying humble, the process of raising funds, and many more topics.
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Ever since he can remember, Dan was fascinated by problem solving and commerce. He actually calls his lemonade stand his first startup. He even got as creative as to simply sell the packets of Crystal Light, instead of going through all the pain of adding water and ice. It was a sweet business, considering his parents were supplying the inventory for free.
According to Dan, entrepreneurs are those who have an eye for inefficiencies around them. Then they also have the drive to actually change things.
Dan’s mom was a teacher and his father a physician. They met at Cornell. So, Dan was given the choice of attending any college he wanted to — as long as it was Cornell, too.
He studied applied economics and found the program there very practical and easy to apply, instead of just learning theory.
While attending Cornell, Dan saw that the internet wasn’t yet being used in classrooms. He recognized that this was a huge inefficiency in education and decided to change it. So he teamed up with his housemates, who were the only people he could find to work for free.
They were inspired by the fact that if their plan worked, they could upgrade their kegs of terrible discount beer to something slightly better.
The team launched CourseInfo and it took off like wildfire. They began building websites for different courses and scaling to hundreds of programs. They changed education in a way that hadn’t been done in a long time.
Dan says that while he may have been a good innovator and technologist, he recognized his lack of business experience. That turned into a merger with a team that was a spin-off from KPMG, who had the brand awareness, industry know-how, and mature reputation.
The company was then renamed to Blackboard, and they went out to raise capital. A billion-dollar company was created in the process and a solution that is used by 17,000 schools and organization today.
One of the most pressing questions founders have to answer is whether they’d rather have a small percentage of a much bigger company or a big percentage of a smaller company?
Dan Cane says it’s a tradeoff. In hindsight, he recognizes how dilutive their fundraising spree for Blackboard was. They marched from a Series A, all the way through Series F. Yet, in contrast to many unicorn startups today, they were careful to ratchet up the spend and the revenue and get to a new plateau of sustainability with each round.
He says if you need to move fast, then not having the capital is a risk, and money can help you overcome a lot of obstacles.
If you have the luxury of time and crave more control, then you may be slower to raise funds and dilute your position.
Blackboard went public in 2004 and was then bought by the private equity firm Providence Equity. Storytelling is critical for a transaction of this nature to happen and having a solid acquisition memorandum that captures the essence of the business is key. For a winning acquisition memorandum template take a look at the one I recently covered (see it here).
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