Matt Danna went from product manager to co-founder, and raised more than $100M for his software startup.
During his appearance on the Dealmakers Show, Danna shared how going into product management prepared him for entrepreneurship, the pros and cons of bootstrapping your startup, his thoughts on picking the right investors, building a vertical software business, and surviving and thriving through economic crises.
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Before moving to LA, where his startup is based today, Matt Danna was born in Central Massachusetts.
Since high school he says that he has balanced both being technical and creative. He was inspired by the ability to write some code, build a website, and create something immediately available to others.
When it came to college he ultimately chose software engineering, with a focus on human computer interaction, over graphic design. He says that put him on the path to working in product.
He likens company building to product building. It requires bringing many different functions together. You have to bring a team together, figure out the process of building and what you will build. You have to set objectives, and make decisions. Eventually you begin to build up a portfolio of products.
All of which is very similar to building your own company.
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The Pros & Cons Of Bootstrapping Your Startup
Matt Danna ended up shifting into consulting, which enabled him to pay the bills as he began working on his startup as a side hustle.
He provided consulting services three days a week. Then spent the other four days and nights working on his startup.
He and his co-founder liquidated their 401ks and went all in on their startup. Ultimately ending up bootstrapping it for the first two or three years.
They wanted to prove product market fit and monetize it, before considering outside investment. Today, Boulevard’s business model runs on both subscription licenses and payments and merchant processing, with the latter making up about 60% of their revenues.
Matt says that bootstrapping was very helpful in giving them a sense of urgency to find that product market fit, and gain adoption. It forces you to make money and strive to be profitable. Especially when it comes to making payroll. It pushes you to go fast.
They found that fit for their product. Yet, also found the one drawback of bootstrapping was that investors really didn’t take them seriously. At least until they were able to put the logos of other VCs on their site.
Matt says that VCs are generally extremely skeptical and sometimes very critical. Which meant that they had a lot of work to do when it came time to scale the company and go out fundraising.
They had to convince investors of their market, that it was a mature industry, but one with fast growing submarkets that could be capitalized on. They had to prove that they could sell, and people would pay real money for their software solution. Then not only that they could create a viable business, but one which could win in a highly fragmented market, with lots of competition. Some of whom had been in business long before the founders were even born.
Fortunately, their fantastic customer retention really stood out to investors, and they’ve now raised over $100M.
Storytelling is everything which is something that Matt Danna 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.
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Picking The Right Investors For Your Startup
While there are many things you have to prove to investors at each round, Matt Danna says that you really need to go into a round understanding what kind of partner you are looking for.
At your Series B he says that investors are looking at your unit economics. By your Series C it is about proving that you can unlock operational leverage, know your margins, CAC, LTV, and can scale.
Still, Danna says that he was adamant that he wanted hands-on investor partners that could advise and guide him. That would be available for calls to help talk through hiring candidates and working through strategy.
Keeping in mind that you might be working with this person for the next 10 years or longer, he says that you need to trust them, and like them.
You also need investors that will help you attract future capital. Other investors will be looking at your cap table to see if your current and past investors have a strong track record of success.
Surviving & Thriving Through Economic Crises
Boulevard had just closed on their Series B round the week Los Angeles County forced all businesses to close and forced lockdowns due to COVID.
That meant that all of their customers were shut down. No payments were happening.
When things did begin opening up again, revenues were still revving up at 30% of what they were prior to the lockdowns. While their competitors were busy slashing support teams and making layoffs, Matt says that he convinced the board to increase their spending instead. They chose to grow their engineering teams and move even faster. Which turned out to be the best move.
Listen in to the full podcast episode to find out more, including:
- The roadmap for building a vertical software business
- How big Boulevard is today
- How to get in touch with Matt Danna
- Piece of advice before launching a business