The Startup Funding Journey
Eric Shanks recently wrote a fascinating article analyzing startup funding using Rubrik as an example. If you haven’t already, go read it now – I’ll wait here until you come back.
I’ve always loved figuring out how things work, whether it’s exploring SimCity, learning Netware out of college, understanding channel reseller business models, and now IT startups. However, as Eric Shanks explored, fascination with technology often expands into understanding all the factors surrounding its creation. As we all know, the best technology doesn’t always win. Let’s have a moment of silence for OS/2, Betamax, Novell Netware + eDirectory, and many more.
For startups, one major factor is funding, which I’d like to share a few thoughts on. Please note this is my own personal perspective built over the last 15+ years.
All About the People
Before Round A, it’s more about the people than the product. There’s typically not much of a product at this point, so the main thing to gauge is the team.
Looking at Rubrik, all four co-founders, as well as the founding engineers, could literally work almost anywhere they wanted in Silicon Valley. In the past, they’d held positions at Oracle, Facebook, VMware, Google, and more.
And who would be a better fit to navigate venture capital funding than someone who worked in venture capital for years? That’s what Rubrik CEO Bipul Sinha did. Before Rubrik, he was at Lightspeed Venture Partners, where he was a founding investor in Nutanix, Hootsuite, Numerify, and Peel. This 2013 interview with Outlook Business reflects a remarkable consistency in his thinking then, Rubrik today, and his vision for Rubrik in the future. He’s always held a strong emphasis on simplicity while offering more functionality.
Very quickly, though, it does become about the product, its core capabilities, and how those expand into other areas. Kenny To, founding engineer, recently gave a great example of this feature expansion on the Software Engineering Daily podcast.
One of the initial impressive features for Rubrik was Live Mount – the ability to bring one or many VMs online within seconds by letting the VMware hypervisor mount VMs directly from Rubrik. What if you leveraged this opportunity to mount a virtual disk internal to Rubrik? At that point, you could index the VM contents and provide fast, single-file search and restore.
“Scrambling for the Continent”
In the words of Bipul Sinha, later funding rounds are focused on “scrambling for the continent.” Additional venture capital provides the ability to take a solid product that fits the addressable market well and expand its visibility and sales as quickly as possible. If the market is ripe for disruption, you double down.
I joined Rubrik 8 months ago as employee 200 or so to build a Technical Marketing team. That means I’ve been here longer than 200 other people – absolutely crazy and wonderful all at the same time. When you have solid technology that is disruptive across all sectors in a given space (simplifying backup and recovery) while offering capabilities in areas customers are moving towards (all things cloud), it only makes sense to grow as fast as possible.
Past Round D
Growing up with a father who was an investment analyst, I was keenly aware that stock performance is partly related to the company’s actual performance, but also heavily affected by secular market conditions.
The last thing a startup wants is an unfavorable secular market dictating its funding or IPO terms. Per Sinha on BloombergTV, this is part of the reason behind Rubrik’s Round D, despite still having Round C money in the bank. Having sufficient funding allows Rubrik to continue growing and wait for an IPO when overall market conditions are favorable.
Looking beyond an IPO, the real goal is to build a strong, long-lasting company. As Sinha said, “We want to go public by 2019. But the IPO is not our goal. We want to be the next 20-to-30-year company.”
That is why we’re here – to transform the industry for our customers. Doing so requires deep knowledge and skill in leveraging the requisite financial tools.
Want to learn more about Rubrik?
[WEBINAR] Rubrik Product Demo, Live or On-demand
[BLOG] Rubrik Raises $180 Million at $1.3 Billion – Why it Matters