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20VC: Raising $105m in Just 13 Months Over 3 Separate Rounds, The 5 Core Ways VCs Can Add Value & How Founders Can and Should Fully Leverage Their Cap Table with Kurt Rathmann, Founder & CEO @ ScaleFactor

Jan 10, 2020

Kurt Rathmann, Founder and CEO of ScaleFactor, shares his journey from landscaping to revolutionizing bookkeeping with an automated solution. He discusses raising over $105 million in 13 months across three rounds and the mental shift from scarcity to abundance. Kurt emphasizes the critical role of venture capitalists, outlining five ways they can add real value. He also dives into building a strong company culture amidst rapid growth and shares insights on recruiting talent outside traditional tech hubs.

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ANECDOTE

Early Entrepreneurial Spark

Kurt Rathmann's entrepreneurial journey began with a real-time inventory problem at 18.
This sparked his interest in business operations and led him to ScaleFactor.

INSIGHT

Mission-Driven Expertise

Expertise is crucial for founders, either gained quickly or through prior experience.
For complex businesses like ScaleFactor, mission-driven expertise is vital.

ANECDOTE

Rapid Fundraising

ScaleFactor raised Series A, B, and C in 13 months after 3 years of bootstrapping.
Pre-emptive rounds allowed for a longer-term focus and problem-solving.

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Kurt Rathmann is the Founder & CEO @ ScaleFactor, the startup providing an automated bookkeeping solution at its core, bringing all of your company's important financial information into one place. To date, Kurt has raised over $105m with ScaleFactor from the likes of Byron Deeter @ Bessemer, Coatue, Canaan Partners, Stripes Group and Firebrand to name a few. As Michael @ Coatue told me before the show, there is no way Kurt was not going to be the founder of a bookkeeping company given his background. Prior to ScaleFacotr, Kurt was the CFO of KNS Communications and a Senior Audit Professional @ KPMG.

In Today's Episode You Will Learn:

1.) How did Kurt make his way into the world of startups and come to found the gamechanger for bookkeeping in the form of ScaleFactor? Does Kurt believe that Founders do need to be mission-driven or can founding a company be a more analytical exercise?

2.) How did it come to be that Kurt raised 3 separate funding rounds and over $105m in just 13 months? How does Kurt feel about the saying, "when there is money on the table, take it"? Having had his B and C pre-empted, how does Kurt feel about the rise of pre-emptive rounds today? How did Kurt approach the mental challenge of transitioning from resource-starved to relative resource abundance? Was that tough to do?

3.) What is Kurt's biggest advice to founders when it comes to investor selection? What does Kurt believe are the 5 things that VCs can do to add value? Why does Kurt believe it is the responsibility of the founder to extract that value from the VC? What can founders do to really get the most out of their investors? What has Kurt found to be the biggest value from his cap table? Where do founders think VCs add value but they do not?

4.) What are some very unique and deliberate things that Kurt does to create an amazing culture at ScaleFactor? How does he advise on creating great energy in the office itself? How does Kurt think about retaining that core ethos with the expansion to multiple offices? What have been some of the biggest challenges in scaling communications internally?

5.) Does Kurt believe that being outside of a core tech hub severely limits his ability to hire the best talent? What do founders outside of these hubs need to very strategically do? How does being outside of a core hub also impact how Kurt thinks founders need to approach fundraising? What specifically can they do to increase their odds?

Items Mentioned In Today's Show:

Kurt's Fave Book: The Empowered Challenger Playbook: How Brands Can Change the Game, Steal Market Share, and Topple Giants

As always you can follow Harry, The Twenty Minute VC and Kurt on Twitter here!

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.