Accidental entrepreneur | The man behind a Portland tech startup shares his fundraising story
Bob Neveu moved his family from California to Maine without a job. At his uncle’s headhunting business in San Francisco, he’d automated the manual paper-based resume management process — developing a database to match candidates to opportunities. Bob left that job in the late 1990s and found work in Portland with a recruiting software company.
Bob started Recruiternet in 1999 as a reseller of another company’s recruiting product. In 2001, Bob launched his own web-based recruiting product called Projectix, which featured online resume management and career site hosting for corporate clients.
Having raised money from a couple of Maine venture capital funds, Bob successfully sold that business in 2005 and after a short retirement, he and his partner and brother, Alan, raised $2 million this year to fund his next startup, Certify, a web-based expense management system in Portland.
Venture Builder: Describe how you started Projectix.
Neveu: After selling recruiting software to agencies, I could see the opportunity to develop a web-based product and, with my brother Alan as chief technology officer, developed a web-based job board targeting recruiting agencies and human resources departments. We launched Projectix in 2001, and pretty early on, we picked up a few “name” accounts, landing CVS as our first customer and later TJ Maxx, Dr. Pepper, Fleet Bank and a half dozen others. The business grew quickly and within two years we had acquired over 100 clients. We also established several key partnerships including Monster.com as well as distribution channels in the HR space. It didn’t happen overnight, but we grew from startup to 30 employees in just over two years.
You raised some money from the local venture capital market. Talk about that process.
We’d committed to developing our own product, versus reselling others, and saw that we’d need outside capital to develop the business. We talked to a half dozen firms and, in the end, Mark Kaplan at CEI Ventures agreed in June 2001 to lead a $500,000 round, bringing in John Burns from Small Enterprise Growth fund to co-invest. For the next three years, the business grew significantly and profitably.
In 2004, we expanded to Europe and had a partner who invested $1.2 million at 4.5 times markup to the price we’d raised in the 2001 financing. This gave us an important beachhead in Europe which resulted in a number of multinational firms selecting Projectix as its global recruiting solution. Our global expansion made the business attractive to several potential acquirers and in 2005, we joined forces with First Advantage Corp., in Florida. Over time, the new owner moved the company to Florida, which was disappointing ... but a rational decision for them.
How did you come to start Certify?
We researched markets that would leverage our background and experience and came to expense management. A couple of players dominated the high end of the market, but no one was leading at the small- and mid-size business level.
How was money-raising different this time around?
My brother and I put all the early funds in ourselves, so it felt very different going to the fundraising market to find others to come in behind our capital. We’d had a homerun with Projectix and so felt that we had a good story for prospective investors. Unlike Projectix, we were not gambling with the house’s money but with our own. It made us pretty firm about getting the deal that we wanted. We decided to raise money primarily from individuals and struck terms that were favorable to us.
We were also firm about finding investors who could bring more value than just money. We’ve found business development, networking and channel opportunities in bringing in new money.
Any suggestions for entrepreneurs?
Find investors you trust. Assuming you’re lucky enough to have choices, ensure that you get the right deal for yourself in terms of aligning terms to your needs and interests. We wanted individuals so we didn’t have the time constraints to realize value that closed-end venture capital funds impose.
My last piece of advice would be to remind startup owners that you have to be able to sell your company and your solutions. A CEO who knows how to win new business is an imperative for any new startup venture.
Michael Gurau, managing general partner of Clear Venture Partners and president of CEI Community Ventures in Portland, can be reached at mg@clearvcs.com
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