Brisbane startup Outfit has bagged $19.5 million in funding as it looks to expand into the US, off the back of two years of 100% revenue growth.
The funding comes from Five Elms, a growth equity investor based in Kansas City.
Founded in 2014, Outfit provides software allowing enterprises to create and share branded marketing materials across their whole organisations.
Back in 2017, the startup secured $1 million in investment from Equity Venture Partners, and since then, it’s built up a customer base in the US and the UK.
Speaking to SmartCompany, Outfit founder and chief Bruce Stronge reveals revenue has more than doubled, year-on-year, for the past two years running. And the business has been breaking even in terms of cash flow for the past year or so too.
Now, the plan is to double annual recurring revenue again in the next 12 months, something that should be no problem “given we were able to do that without any cash in the bank”, Stronge says.
“We now have a nice war chest,” he adds.
Don’t break the brand
Having started out with what Stronge calls its “foundation customer”, international software giant Red Hat, as it’s grown Outfit has also landed “a handful of Australia’s largest banks” as clients.
The startup has also found something of a foothold in the university sector — something that came as a surprise to the founder.
After a year of working with Red Hat, he set out to find another similar client. What he found was Monash University.
“The target traits, in hindsight, are similar,” he says.
There’s a centralised brand and marketing. But while the challenge for Red Hat is empowering teams in different regions or departments, universities want different faculties to grow, “without stuffing up the brand”.
For the same reasons, the obvious next step is tackling the franchise sector, says Stronge.
“That’s the main value proposition of a franchise organisation. People are buying into the brand, so you want to let them use that brand, but not break it.”
This almost $20 million boost is mainly earmarked for ramping up the startup’s go-to-market strategy in the US, Stronge explains.
He will be growing the sales and customer support teams and investing into marketing, he says.
The business also has “some big product ambitions” and will be forming a second product team to focus on new strategic objectives for the next 12 months.
After six years in the enterprise space, “we have a lot of learnings and lessons and wishlists from our enterprise customers”, Stronge says.
“There’s a lot of work to do in distilling those.”
At the end of the day, the startup’s DNA is in technology, the founder explains. The plan is to reinvest in being a product-led business, “rather than a sales or a marketing-led business”.
A relationships game
Securing investment doesn’t happen overnight; Outfit has had a relationship with Five Elms for about 18 months, he says.
“It’s about building relationships,” he says.
He got to know the investors, met them a couple of times, and started sending them quarterly updates and generally checking in to let them know how the business was tracking.
“I had a number of people I was maintaining this relationship with,” he explains.
“If you keep in touch for long enough and they see that you’re hitting the numbers you said you would … they get excited, because it’s not often that happens.”
There’s value in keeping investors in the loop, even if they haven’t invested in you yet, he says. And, transparency is key.
“You have to take a risk. You can’t go round asking for NDAs,” he says.
“We shared our numbers and shared our hopes and goals, and when we hit those every quarter, who wouldn’t want to invest?”
“I kick myself”
That’s not to say Stronge is taking any of this for granted. He’s living the dream of many startup founders, and he knows it.
For our chat, he’s found a sunny corner of Los Angeles to chill out while he’s on the phone. He’s just had his first meeting with his new board, and he’s been hiring new team members. At the weekend, he went for a surf in Malibu.
“It’s kind of crazy,” he says.
Every win Outfit secures, “I kind of kick myself”, he says.
“It’s nice to have some cash in the bank now to put the foot on the accelerator, and it’s way less risky to do so now,” he adds.
“It’s a massive relief.”