After Quickly Raising $11M, BevSpot Aims For Smart, Rapid Growth
Somebody forgot to tell BevSpot it’s supposed to be getting hard to raise venture capital right now.
The Boston-based startup, which makes software for bars and restaurants, just nabbed $11 million in a Series B round led by previous backer Bain Capital Ventures. The deal came together quickly—about six weeks from the first conversation to inking the papers, BevSpot co-founder and CEO Rory Crawford says.
“I think that’s very different than what most people are finding in the market today,” Crawford says in a phone interview.
Indeed, after several years of venture capitalists pouring eye-popping amounts of money into tech companies around the country, the boom is showing signs of slowing down. This year, the narrative has shifted away from free-flowing investor dollars and startups emphasizing expansion ahead of profits, and toward companies tightening their belts as investors reward firms with healthy balance sheets.
Localytics and InsightSquared are two Boston-area software examples. Both laid off a chunk of their workforces this year after recent hiring sprees, and both companies’ CEOs cited a need to address the bottom line.
“The capital markets have certainly tightened up, and that’s put a real premium on businesses focusing on the bottom line, or at least a path to profitability,” BevSpot’s Crawford says. “That has increased our focus to ensuring that after this raise we can turn cash-flow positive. It’s really about taking control of your own destiny.”
Crawford says he wants BevSpot to avoid the trap some startups have fallen into, where they aren’t profitable and they can’t raise more capital to sustain the business. “That’s the purgatory we don’t want to find ourselves in,” he says.
BevSpot will try to have the best of both worlds—continue its rapid expansion, but execute in a responsible way. Or as Crawford puts it, “stay maniacally focused on underlying efficiency metrics,” such as how much BevSpot spends to sign up and keep customers.
It will likely be a tough balance to strike. Crawford says the key is “you have to be ready to pause hiring and pause that acceleration and expansion.” He adds, “you can always accelerate again” later.
BevSpot has risen quickly since Crawford and his co-founders, Alex Lesman and Chidubem Ezeaka, founded the company in March 2014. At the time, Crawford was pursuing an MBA at Harvard Business School, and Lesman and Ezeaka were studying computer science and engineering at MIT.
The trio gave themselves until the end of the summer to develop a working version of their Web-based software product—which helps bars and restaurants track and manage alcohol inventory, place orders with suppliers, and crunch sales and operations data—and raise seed money. They accomplished those goals, and Crawford and Lesman opted to drop out of school before finishing their programs to work on BevSpot. Ezeaka was able to complete his master’s degree before joining the company full-time, Crawford says.
They went on to raise almost $19 million from investors in less than two years, and grow their company to more than 80 employees.
BevSpot has signed up 400-plus customers, with most of its sales coming since January, Crawford says. “That story resonated with investors,” he adds. (He declined to discuss specific revenue figures.)
Most of BevSpot’s customers are located in 43 U.S. states. But the startup has also dipped its toes in international waters with a handful of clients in Canada and Nigeria, Crawford says. The plan is to more aggressively pursue international customers with the help of the Series B money.
The capital will also fund product development and more hiring. Crawford says BevSpot intends to add another 70 to 80 employees over the next year or so.
“It’s very exciting,” Crawford says. But “we don’t believe we’ve really accomplished anything yet. It’s about ensuring we stay focused and utilize this capital to maintain this trajectory.”