Rupert started Vault at 29 years old, which is a secure cloud housing solution for government and critical industries. He somehow managed to raise a staggering $350 million committed capital, which has to be about one of the biggest raises in Australian history for such an early-stage startup.
Mike asks Rupert about his fundraising experience, as well as the business lessons he learned along the way.
3 of Rupert’s startup experiences
The process of raising capital
When Rupert started the process of looking for investors, he already had two really good indicators against his name.
Firstly, he already had a proven track record with his first business, Hivetec. Secondly, he invested a large portion of the capital from Hivetec into Vault, which shows that he’s willing to put his own skin in the game, and he means business.
The pros and cons of capital
“There are some advantages and disadvantages of raising capital,” says Rupert. The advantages he lists are acceleration for your business, financial de-risking for yourself, and you aren’t the only one spending money on the business.
However, with that last point come the disadvantages. “You’ve obviously now got other parties and other stakeholders that may have a different vision for the future in the business than you do,” says Rupert. And once you’ve jumped on that escalator, he explains, there’s really no getting off. “You can’t tell an investor you want to slow down because you’ve probably spent a fair chunk of their money, and the valuation has gone up into a one-way street.” It’s very rare that you can afford to buy out your own business again. You need to ensure that you’re willing to go at the pace of the investor before you commit.
“So as we talked through a number of parties, those that wanted material rights to have control of the business, we effectively didn’t continue the discussions,” explains Rupert. “And that left, of course, a very small number of investors that were willing to go on that journey with me.”
When does it make sense to assemble a board for your business?
During the Hivetec days, Rupert was CEO without a board. All decisions rested solely on his shoulders. “So for Vault,” Rupert recalls, “the reason that we got a board was partly because in the government space, people need to have trust in your business. A single person with a free-range dictatorship over the business is not something that necessarily inspires trust. So we got a board at a pretty early stage.”
There are also different types of business boards, so you need to decide which one would suit your needs best, if you decide you would like to assemble a board.
There are a lot of decisions to be made regarding fundraising and business boards alone, and Mike and Rupert take the discussion further on the How to Be Moderately Successful podcast. They cover the recruitment process, the responsibilities as a leader beyond payroll, and more.
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