A few weeks ago we wrote about Fintech Pilot Raising a $ 100 million series C. This doubled the company’s valuation to $ 1.2 billion.
Bezos Expeditions – Amazon founder Jeff Bezos’ personal investment fund – and Whale Rock Capital joined the round, adding $ 40 million to Sequoia’s $ 60 million increase cited about a month earlier.
That increase came after that a Series B valued at $ 40 million Jointly managed in April 2019 by Stripe and Index Ventures, who valued the company at $ 355 million.
Both increases were remarkable and warranted coverage. But sometimes it’s fun to take a look at the stories behind the raises and delve deeper into the numbers.
Here we go.
First of all, the San Francisco-based pilot, who has the task of providing back-office services such as accounting for startups and SMEs at low cost, did not have term sheets, which in his series B made “2x the 40 million USD”, did not have to raise so much capital.
I also heard that the same investor who ultimately led the $ 60 million donation from a now defunct competitor first invested $ 60 million in Pilot as a result of this Series B before making the other investment. Although I don’t know for sure, I can only guess that it is ScaleFactor $ 60 million for the Series C. in August 2019 it was run by Coatue Management. (Scaling factor crashed and burned last year.)
According to CFO Paul Jun, “There have been many periods when Pilot turned away new customers and growth capital rather than absolutely maximizing short-term growth … Pilot prioritized building the basic investments necessary for scalability, reliability and high speed. When it was given the opportunity for additional funding for further growth in 2019, it declined. “
Co-Founder and CEO Waseem Hence explains and points out that the first company to lead Pilot’s founding team, Ksplice, was booted before it was acquired by Oracle in 2011. (It’s also worth noting that the founding team are all MIT computer scientists.)
The story goes on
“Ultimately, the reason you raise money is because you believe you can put the capital in, make the company grow, or basically make the company grow at the rate you want to grow. And there is no point in raising money if you don’t need it or if you don’t have a good plan of what to do with it, ”therefore told TechCrunch. “Too much capital can be bad because it leads you into bad habits … when you have the money, you spend the money.”
Despite what he calls “huge institutional interest” in 2019, Pilot chose to raise just $ 40 million instead of $ 80-100 million as the company was confident it could be used successfully.
Also, Jun shared some numbers beyond the recent raise amount and valuation.
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The company has tripled sales every year since its inception, with the exception of 2020 when it doubled sales.
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Pilot claims to have had a cash burn of $ 800,000 per month in 2020 with a starting balance of $ 40 million.
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The startup advertises a gross margin of 60% under GAAP. Therefore notes: “We feel really good when we have a long-term unit economy that works for this company without resorting to offshoring or outsourcing to compromise quality and relationships.”
The bottom line is that companies don’t have to accept all of the capital that is offered to them. And maybe in some cases they shouldn’t.
