How to compete without losing your mind – and your runway
Increasingly, competing A crowded space can be nerve-wracking. Increasingly, competing It’s a crowded field in a challenging fundraising environment. even more Nerve-white.
We all know that money in 2022 will not be as readily available as it was in 2021. This puts beginners in a position where they have to compete without losing their minds – or the runway.
At TechCrunch Disrupt 2022, I interviewed Ramp CEO Eric Gleiman, Airbase CEO Thejo Kote, and Anthemis partner Ruth Fox Blader on the topic. Gleiman and Cote share how they work to secure capital, while Blader offers some advice for her portfolios. And she’s not holding back.
For those unfamiliar, Gleiman and Cote both run startups in the expense management space. As friendly competitors, they acknowledge the importance of being different and continually innovating even if the category isn’t winning.
“One of the things we’ve done in our business is to look at the cost of acquisition – to get the full cost of allocation – and we’ve reduced that threshold,” Gliman said. “And our view is that we want to grow as fast as possible, but with very fast tolerances — the same way you can get high yields elsewhere, apply that strict framework to where you choose to deploy capital. We think that’s the right approach for this area.”
For Cote, it’s mostly about focus. He noted that Air Base has historically targeted mid-market and early enterprise spaces. He cited the “crazy season of 2021, when there was a lot of craziness around investing in this space,” with investors “willing to pay 100x, 200x multiples.” Instead of frantically changing the Airbus model to meet expectations, Cote continued to operate the way the startup always had.
“So the silver lining from this year’s perspective for us is ‘You know what? It doesn’t matter,” Cote said. “We were very focused on subscription revenue and high-margin subscription revenue and net ARR — not gross ARR. So we stuck to what we’ve always done, which is focused on the middle market. That meant we freed up resources using multiple channels and gave us more runway.”
Meanwhile, Blader – whose firm invests in all stages of the lifecycle – shares her belief that “this is an industry driven by emotion, and when the music plays, everyone dances.”
“The people who danced and raised a lot of capital in 2021 — maybe enough capital to hit a little bit of a burn cutter,” she said.
