Few Ottawa tech enterprises had more to cheer about in 2021 than Rewind.
The fast-growing firm that makes cloud backup and recovery software for Shopify merchants and users of other platforms such as QuickBooks had a monster year, landing more than $100 million in venture capital while nearly doubling its headcount to 120 as demand for its products soared.
In another year-end edition of Techopia Live, OBJ’s Michael Curran speaks with Rewind co-founder and CEO Mike Potter about the importance of gaining strategic investors and the challenges of hiring in today’s tight talent market.
February is Heart Month and the University of Ottawa Health Institute Foundation is back with its annual campaign. Get ready to #LightTheTownRed
This is an edited transcript of the second part of a two-part interview with Potter. Part one can be found here.
OBJ: In the first part of our interview, we really dug into Rewind’s backstory. In this episode, we want to look at some of the success you’ve had on the fundraising side. So twice in 2021, Mike, you guys announced some venture capital deals. Do you want to walk us through those from a total amount raised?
MP: Yeah, we raised a $15-million series-A round (announced in January) and then followed that up about seven months later with a $65-million series-B round that was led by Insight Partners out of New York and Inovia Capital out of Montreal and Toronto.
OBJ: Why two rounds in the same year? Why did one have to come hot on the heels of the other?
MP: It’s just a lot of demand for the shares of the company, honestly. There was a lot of inbound interest after our series A. I think we’ve generally run the business so that we’ve been raising as little money as possible. Our A was more like what companies would raise at a B. Our B was more like what companies would raise as a C, just because we bootstrapped. The company was executing extremely well and growth rates were really strong. The fundamental SaaS metrics that you would look at are really, really strong with Rewind, and so that obviously generated a lot of interest in the A round, which then spilled over into the B round. And obviously we wanted to take advantage of the growth opportunity that we see in front of us.
OBJ: Can you walk us through the process of raising the most recent round?
MP: So the B round that we raised, we weren’t actually looking to raise. We had just raised our series A. We had a lot of money still in the bank, but we had offers coming in. And so the process wasn’t really like a typical fundraising process. We didn’t talk to a whole lot of companies. I think we declined two or three term sheets and then started to realize that we need to be a bit more serious about what we were looking for from an investor. And so we started putting certain parameters on what we were looking to raise and what the valuation was, and we started getting ready to run a process that would probably be running right now. But Insight Partners came in a little bit early in that process and gave us a really great offer. Obviously we really wanted to work with them – they have a ton of experience in the SaaS backup space and they’ve got a ton of experience with SMB software, which is our target market. So when they came to us and gave us this really great offer, it was like the partnership that we had been looking for the whole time. Obviously we really enjoy working with Inovia, but when Insight came, we sort of found our match made in heaven.
OBJ: How did the pandemic impact the fundraising process?
MP: It impacted the process positively. In the A round we met with, I think, over a hundred different VC firms. It was just constant Zoom meetings. It’s not physically possible to meet with that many people, because if you add in travel time you wouldn’t be able to do it. So for us, the pandemic was fantastic because we could just meet with investor after investor on Zoom and try and get to know them as well as we could. We ended up with a very competitive round where we had multiple offers and multiple investors that we could select from, and we were able to pick what I think was the best partner that Rewind could possibly find (Inovia Capital led the round). It worked out extremely well for us. We didn’t meet the team at Inovia until about a month ago when we went to Montreal to finally have a celebratory dinner. It is a bit strange to, you know, have raised, let’s say a 100 million Canadian without ever having met somebody, or shaking their hands, or going out to dinner with them in person. So it was definitely an interesting time to be raising money.
OBJ: So, Mike, how are you going to use this capital to further your business goals?
MP: There’s lots of ways that we can grow this business. I mean, the immediate action is to just back up more platforms, right? We talked about the goal of the business being to back up every SaaS platform that exists. And so there are other platforms that we are going to be launching support for in the very near future. And obviously a lot of that capital is going to support that growth in hiring engineers that are needed to build the technology to back up those platforms, product marketing, product management people, customer support people. Really, the company is growing in every business aspect there is. So we’re hiring as quickly as we can. And then we’re obviously looking at expanding on the current partnerships that we have with Shopify, with (Shopify competitor) BigCommerce, with Intuit and QuickBooks, with Atlassian and Trello, and some other products that we’re going to announce shortly, and then obviously Microsoft with GitHub. We want to improve those partnerships and see what else we can get from them. So the strategy in the near term is to grow the number of platforms and then increase market penetration on the platforms that we’re currently on.
OBJ: Can you walk us through some of the potential barriers to growth that you’re actively looking to overcome at this point?
MP: I think hiring honestly is one of the biggest challenges that we have these days. When we first started, we’d say that we really just wanted to get bought by Shopify – that was really the initial goal was to build a Shopify app and then hopefully work for them. So we built our technology stack in the same technology that Shopify is built on, which is a great strategy when you’re trying to work there, but not a great strategy when you’re trying to compete for the same engineering talent. And I know (online health-care platform) Fullscript uses the same computer language, Ruby On Rails, so there’s a bunch of really fast-growing companies in Ottawa that are all built on the same technology that are competing for the same developers. So we’ve obviously had to go remote-friendly and hire people wherever we can find them. We have people located in almost every province in Canada. We’ve got a few people in Europe as well, and we’re growing a team there. So the challenge is really, how fast can we grow? How many engineers can we bring on? There’s just a ton of opportunity for the business to grow, but finding the people that can help us take advantage of that opportunity really is the No. 1 challenge.
OBJ: Your sales growth trajectory is like a hockey stick. How are you achieving that level of revenue growth?
MP: I think it comes down to allowing people to buy the software without having to talk to sales staff in a lot of cases, and then inserting a sales process when the customer asks for it. So you can come on to Rewind, you can sign up for the product and there’s no need to talk to anyone. But if you want a custom contract, if you’re working with larger deal amounts, if you have some legal changes that need to be made to our terms and conditions, we have a great sales team that’s going to step in and help walk you through that process. But it’s up to you to raise your hand. We think that’s very much aligned to how people want to buy these days – they don’t want to be put through a sales process if they don’t have to.
OBJ: If we were speaking to each other a year from now, what do you think you will have achieved in 2022?
MP: Rewind’s goal is to double its revenue year over year. We’re currently doing somewhere around $10 million (in annual sales), so we should be somewhere around $20 million (by the end of 2022). When you’re doubling revenue at that size, you’re probably doubling headcount. So you’re looking at a company that’s probably 250 to 300 people a year from now, with teams supporting over a dozen platforms for sure. We’re already into the tens of thousands of customers. I’m not sure we’ll get to 100,000 customers by the end of next year, but we’ll be in the 50,000 range.