The Sale of PublicRelay: Structuring Our Capital Raise So We Had Multiple Offers to Choose From
The Sale of PublicRelay
A great position to be in when raising money as a founder is to have several offers to select from.
Working with an investment bank put us in a position where we could select among multiple qualified investors based on what we deemed was the best fit.
My co-founder Chris Bolster and I started PublicRelay in 2008.
At the time, we saw many tools on the market trying to solve the challenges of media analytics that simply weren’t solving them.
Together Chris and I had a unique mix of experience in media, consulting, analytics, and software development, so creating our own media analytics solution was the natural convergence of those skills.
After selling more than just a couple deals, we felt we were onto something, so in 2012 we ran an angel round. That shot in the arm gave us what we needed and off we went.
The business grew and we periodically considered taking on additional investment, but we wanted to first get past the venture stage.
We wanted to work with a growth equity investor as opposed to venture capital in light of the differences between the two models. While the goal of a venture capital fund is to create hyper fast growth while betting on two or three winners out of ten in their portfolio, growth equity investors want every company in their portfolio to grow.
As a founder, I only had one company, not a portfolio of companies, so I wanted a partner whose goals were aligned with mine and who could help us grow without introducing unnecessary risk.
At this point we’d proven what we could do, so I had a lot of growth equity firms reaching out. I probably talked with at least 100 firms over the 5 years leading up to our capital raise.
As I talked with firms, I noticed a few different personalities, including many firms that were adamant about the "Acme Inc." or playbook approach. For us, we wanted a partner who could bring their wisdom and help us think through things smarter, but at the same time not come in with the attitude of tearing everything apart like a bull in a china shop.
To help us find the right partner, despite already having many relationships with investors, we decided to hire an investment bank.
Our decision to hire a bank was driven by a desire to have an expert represent us. While I’m not clueless about running a transaction, I’m also not an expert. I don’t fund companies for a living, I run companies.
We wanted professionals who sell businesses for a living who could orchestrate a defined, rigorous, methodical process. In our minds, if an experienced banker could bring everything to a head simultaneously in the transaction, we felt we could get the best outcome.
When I started interacting with investment banks, I knew the bankers at Vista Point were the right people for several reasons.
For one, I was impressed by how well the bankers at Vista Point knew investors in the growth equity space.
Early on, one of the bankers from Vista Point met with me to discuss investors. As I brought up specific firms, he knew from memory the names of partners at the firms, the firms’ portfolio emphases, their portfolio companies, etc.
That experience told me that the bankers at Vista Point knew the investor ecosystem—the players, the personalities, and who were the talkers vs. the doers in the space. It was a seminal moment that led us to pick Vista Point.
Another point in favor of Vista Point was that their size and model matched our company.
Based on past experiences working with advisors in other areas of our business, we learned the importance of right-sizing. When your advisor is right-sized, you’ll have a healthy relationship because they’ll value you and give you the right amount of attention. If you’re tiny compared to the advisor you work with, you’ll get the B team, which isn’t what we wanted.
Vista Point was a good choice because we fit well into their sweet spot: representing minimally funded, founder-led software businesses north of $10M in revenue. As a boutique bank focused specifically on our space, we knew we’d get the best.
We officially engaged with Vista Point and the process began.
Early in the process, Vista Point knew all the right questions to ask to understand our business. These questions helped them build out a story that we could take to market.
One of the benefits of having Vista Point represent us was their reputation. Vista Point has a history of bringing quality businesses to market, so almost by default, having them hang their logo on our investor deck added a level of credibility for the group of investors who looked at our company.
The process couldn’t have been as smooth or successful in any way, shape, or form without Vista Point Advisors.
Having Vista Point manage the process allowed me and my leadership team to focus on the business and keep the numbers coming in.
There was a lot going on during the process and Vista Point was great at communicating openly with me about how everything was looking. At points where I would get nervous, they would help me understand what to expect next.
When I asked, "What are you thinking?" they would share what they thought was good about the process and other areas that they didn’t like to see and how to address those areas. The process was pretty even keel all the way through, and even when a couple things came up that we didn’t like, Vista Point got everything back on track within a couple weeks.
When it came down to it, we had six different players submit formal offers to invest in our company.
Other than two lowball offers, the dollar difference from one offer to the next was small enough to be irrelevant, which made it so we could focus on choosing a partner that was the right fit.
Choosing a good fit was especially important because we weren’t selling our company, we were raising an investment with a partner who we’d be married to for years to come.
Among the offers was the firm we eventually chose to partner with, Tritium Partners. I couldn’t be happier with the choice we made.
From the perspective of a founder, hiring an investment bank to advise you when selling your business or raising capital is one of the best moves you can make. If you look at the fee a banker charges, it’s the easiest investment decision you’ll ever make, since just a few points of improvement in price will pay the banker’s fee and that alone takes so much stress off your table as a founder.
On top of that, if you try to do this yourself, the problem is that you will take your eye off the ball. Trying to get multiple bids, building out a marketing package, handling all the calls and screening of your company data, all while trying to execute current business growth plans, is impossible.
The worst thing you can do is build up interest, go to market, and have to tell investors that performance dropped because you were so focused on closing a deal.
Don’t get me wrong, you’ll still have to dedicate significant time to running a transaction with an investment bank, but it’s a fraction of what you would if you took this on by yourself.
While I could have gotten a deal done on my own, it wouldn’t have been with the terms, structure, and timing that I achieved through Vista Point. I could not be more thrilled with the choice we made.