YL Venture’s Managing Partner Yoav Leitersdorf tells his side of the story, working with this startup to grow and reach their exit
Tech companies define themselves through their successes, so when a startup achieves a good exit, it’s easy to overlook all the hard work and setbacks that led up to it.
It’s not always a straight line from founding to funding to success. My experience with BlazeMeter, whose acquisition by CA Technologies closed this week, shows how the path to a successful exit is often a winding one.
My firm, YL Ventures, was the first investor in BlazeMeter. I’m sharing this story to show a bit of what goes on behind the scenes. I hope that when you read this, you’ll understand the life of a VC-backed startup a little bit better.
My partner Ofer Schreiber and I first met BlazeMeter’s founder, Alon Girmonsky, in 2010. His Tel Aviv-based company was then called PerformanceXpert. YL Ventures’ first meeting with him was not auspicious, to be honest. We believed he was a solid entrepreneur and a brilliant engineer, and the idea he had for a cloud-based load-testing tool was a good one. But it was too early for us to invest.
A few months later, we heard through a friend at a social event that PerformanceXpert had made a lot of progress. We set a second meeting with Alon for May 2011. We came away from that meeting excited by the progress the company had made. It took about three months to finalize our investment, which closed in August 2011.
Rolling up our sleeves
We immediately got to work helping PerformanceXpert with its most critical need: Rebranding and relaunching with a more effective marketing strategy, a new website, and a new name.
We introduced Alon to Geva Perry, an online B2B marketing expert based in San Francisco with roots in Israel, and he agreed to join the fledgling company as a board member and interim Chief Marketing Officer.
Geva led the process of selecting a new name, and together with him the company eventually settled on BlazeMeter. The company relaunched itself with the new name and new website in late 2011, gaining a lot of press coverage in the process.
Getting down to business
In 2012, BlazeMeter discovered that its conversion funnel was not working nearly as well as it should, especially on developers who weren’t already familiar with the open-source technology it used. We moved immediately to address it, starting by making changes to the website. We mobilized several worldwide CRO experts to analyze the website and offer recommendations. After several weeks, Ofer and I helped BlazeMeter hire one of those experts to join BlazeMeter full-time as SVP Digital Marketing.
By mid-2013, we could see clear signs that BlazeMeter’s broad ecosystem strategy was paying off. Its cloud-based load-testing services were accessible to hundreds of thousands of developers. The company had secured strategic partnerships with key companies serving these developers. And it was posting strong growth in monthly recurring revenues (MRR) and in its average selling price (ASP). The company was well on its way to success, despite having spent less than $1MM to date. From the very beginning, Alon had the precious entrepreneurial ability to achieve a lot with little money.
BlazeMeter closed out 2013 with a stellar quarter, landing major clients, securing more key partnerships including Amazon Web Services, and releasing unique features to the market.
I led a major Series A follow-on funding round for BlazeMeter in December 2013, which the company announced in early 2014. It continued its phenomenal growth, landing huge bookings month after month and building an incredible customer list and partner list.
By the end of 2015, BlazeMeter was able to report 2x year-over-year growth in revenues, customer logos, and management.
By mid-2016, BlazeMeter received a term sheet for a follow-on round from a highly reputable VC firm and also got a letter of intent for acquisition by CA Technologies.
The entire BlazeMeter board of directors was involved in helping BlazeMeter evaluate and negotiate both of those offers. By late September 2016, BlazeMeter had signed a definitive agreement to be acquired by CA.
At the time of acquisition, BlazeMeter has 3,000 customers, of which 300 are large enterprises, including the NFL, Tesla Motors, KPMG, Sony, Target, BT, Disney, Walmart, Pfizer, Adobe, Nike, Mattel and Citi.
But as you can see, the story didn’t have a smooth start. It wasn’t “love at first sight” for the investor and the startup, and it took a while to sort out the kinks in BlazeMeter’s branding, marketing strategy, and conversion funnel.
If you have dreams of raising VC funding and growing your business to a successful exit, keep these points in mind: First, it takes time to close your first investment. Second, the best investors will want to get their hands dirty and help you with strategic and tactical issues. Finally, it may take a year or more to start seeing the results of these improvements.
And at the end of the day, no VC can do the hard work for you. It takes constant focus on key metrics and on execution, on all fronts, to make a company successful.