Melbourne-founded retail marketplace MyDeal has raised $5 million from investment firm Gandel Invest after bootstrapping its growth over the past four years.
MyDeal founder and chief executive Sean Senvirtne says he had received multiple investment offers before deciding to partner with the investment firm led by Tony Gandel.
“We had a lot of people coming in and wanting to invest money into the business in the last couple of years but we were a highly cashflow positive business from day one,” Senvirtne tells StartupSmart.
Securing a spot on the 2016 Smart50 list, MyDeal recorded revenue of $15.6 million in the 2015-16 financial year. By the end of this financial year, Senvirtne says MyDeal is expecting to hit $38 million in turnover.
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The company, which allows other businesses to sell online without paying big overheads, has also grown from a team of three to 50, says Senvirtne, with 1 million visits to its site each month and over 500,000 million active users
With plans to rapidly grow MyDeal’s customer base and footprint in the Australian market, Senvirtne says the decision to shift from bootstrapping to external investment was about bringing in “smart money”.
By partnering with Gandel, Senvirtne says MyDeal has secured a strategic partner who can help it get it to the next level.
“Nothing’s changed — it’s business as usual,” says Senvirtne.
“[But] we do have more ammunition to increase our land … for the next six to 12 months, it’s essentially a land grab.”
In addition to launching a new app and further developing the platform, Senvirtne says MyDeal will be increasing its “brand footprint” through targeted advertising campaigns and a stronger marketing effort.
“We will be in the media,” he says.
Skipping venture capital
“There’s a saying in the Valley: You should raise the money when you don’t need it,” says Senvirtne.
In MyDeal’s case, Senvirtne says the decision to prove the business has legs rather than knocking on investor doors early on has been fruitful.
“We actually waited till the model itself is actually firing 100 percent,” he says.
Because capital raising can be an “extremely time consuming and challenging” process, Senvirtne says it’s critical that founders really plan and consider the best route forward.
If the business is strong and robust on its own, founders are in a better position to raise “smart money” and build great strategic alliances, he says.
“It all comes down to terms,” he says.
“There is a very good reason why we have not taken the venture capital path.”
Because MyDeal is now a mature business with a proven model and solid customer base, Senvirtne says he has been able to secure a better investment deal than he would’ve been able to if he had raised much earlier or from a venture capitalist.
“It was more friendlier terms for the business itself and our values aligned for our vision for the company,” he says.
“We have grown 480 percent across the past three years. Now it’s really about how are we going to continue this momentum and grow this thing even faster.”
Gandel has pledged to use his wide networks and experience in retail to help MyDeal through this next chapter.
“I have many years of experience in retail and property, and see the online space as being critical in the retail landscape,” Gandel said in a statement.
“With strong leadership from Sean Senvirtne, the influence of my industry ties and MyDeal.com.au’s sustainable structure, there is certainly endless opportunities for significant growth.”