Cents · B2B · software for laundromats
Raise at a price investors can 4-6x, and turn down higher offers
Raised $140M at 10-20x revenue while profitable; guest says exit options stay open
Workedfinancing
What they did
Raised while above 20% EBITDA margin rather than out of need. Set the target valuation and terms up front from a share-price model (monthly to 2031) and the buyer profiles that could pay 4-6x the entry price later; higher term sheets did not sway them. Picked the lead (Sumeru) on partnership fit after 3-4 dinners (~12 hours) before the process. Goal: avoid a price that forces an IPO or leaves founders, employees and common holders underwater.
What happened
Closed $140M Series C ($110M + $30M tender) at a 10-20x revenue multiple with the chosen partner.
- Stage
- scale
“When we did this round, we said, "Here's this is the valuation we want to raise at and these are the terms we want to raise at." It wasn't if somebody offered 20% more or X percent this way or the other, didn't sway us. We had higher term sheets, we had different terms by different folks.”
“The way that I view it is, you know, when you're getting the multiple and that's driving the enterprise value, and somebody invests at that at that price, can you get, if it's growth equity, can you get four to 6x that price in an outcome with enough of a buyer profile”
“We've seen it more often than not where uh companies raise at large prices and the investors rarely lose, the founders will lose more, the employees will lose more, the common stock holders will lose more.”
Related topics
Get tactics like this every Monday
New tactics from the week's founder interviews, each linked to where it was said.
More from this episode
- Cents: Sign a 73-store operator as your first customer and build with themGot full access to their stores and back office; product a bit overbuilt but solid
- Cents: Walk into laundromats and call them, pitching a no-labor delivery add-on firstGrew to about 80 stores and ~$700K revenue in 2021
- Cents: Sell your own payment hardware at a profit, with software and payments attached~$140M a month in payments; 200-250K devices installed; 99% customer retention
- Cents: Buy a hardware company when building your own hardware gets too hardRevenue went from $6M to $36M the year of the deal
- Cents: Set aside $30M of a funding round to buy shares from employees$30M tender inside a $140M round; employee retention 98%
- Cents: Aim for $1M of revenue per employee and keep the team small~$750K revenue per employee, 20%+ EBITDA margin, 98% employee retention