The Genesis of Ironclad's Funding

In 2017, Jason Boehmig, the founder and CEO of Ironclad, initiated a Series A funding round. Having previously practiced law, Boehmig approached fundraising with a defined methodology and a clear objective: securing the most suitable investors for his organization.

A key component of Boehmig’s strategy involved soliciting opinions from individuals within the San Francisco Bay Area regarding their preferred workplaces. RelateIQ, a company established by Steve Loughlin and recently acquired by Salesforce for $390 million, received frequent commendation, particularly given Loughlin’s recent transition into venture capital.

Boehmig's Pursuit of Loughlin's Insight

“My intention was to connect with Steve,” Boehmig explained, “and I had already begun to formulate a connection. I wanted to gain his perspective on building a successful company, and the timing coincided with his new role as an investor.”

During this week’s installment of Extra Crunch Live, Boehmig and Loughlin explored the factors that led Loughlin to spearhead Ironclad’s funding round. Loughlin was so enthusiastic about the opportunity that he even completed the necessary paperwork while at the hospital for the birth of his child.

Building Trust and Navigating Enterprise Challenges

The discussion also centered on how they cultivated mutual trust through constructive disagreement, and the inherent difficulties associated with determining the optimal pricing and packaging for enterprise-level products.

Consistent with the format of Extra Crunch Live, they provided critiques on pitch decks submitted by viewers. Those interested in having their deck reviewed on a future broadcast are encouraged to submit it via this designated form.

Extra Crunch Live Schedule and Archives

Extra Crunch Live is recorded every Wednesday at 12 p.m. PST/3 p.m. EST/8 p.m. GMT. A comprehensive archive of past episodes is available for viewing, and the schedule for March can be found here.

Key Takeaway: The Ironclad story highlights the importance of networking and seeking advice from experienced founders and investors.

Episode Overview:

This episode provides a comprehensive analysis of a specific business pitch. The discussion is segmented into key areas for focused understanding.

Key Discussion Points:

• The Initial Pitch – Commences at the 2:30 mark.
• Operational Mechanics – Detailed examination begins at 23:00.
• Pricing Challenges – An exploration of pricing issues starts at 29:00.
• Pitch Deck Deconstruction – A thorough review of the pitch deck is presented from 35:00 onwards.

The episode meticulously dissects the presented business model. It covers not only the core concept but also the practical aspects of its implementation.

A significant portion of the analysis is dedicated to the complexities surrounding pricing. This segment investigates potential pitfalls and optimal strategies.

Finally, the episode culminates in a detailed pitch deck teardown. This provides valuable insights into effective presentation techniques and areas for improvement.

The Initial Investment

Loughlin’s initial reaction to Boehmig’s pitch at Accel was one of measured interest. He was aware of the company and knew a former legal professional would be presenting a legal technology solution. However, a trusted referral prompted him to accept the meeting.

Boehmig’s presentation detailed a company with approximately a dozen enthusiastic customers, some of whom were expanding their utilization of the product. It wasn’t until the broader, long-term vision for Ironclad was revealed that Loughlin’s attention was fully captured.

A New Perspective on Contracts

Loughlin came to the understanding that a contract could function as a central element, facilitating collaboration across various departments within an organization.

“This realization was pivotal,” Loughlin stated. “It became clear that this wasn’t simply a legal tech venture. It represented a core, horizontal enterprise collaboration tool, addressing an unmet need for legal departments to effectively connect with other teams.”

He drew parallels to established collaboration platforms used by other departments, such as Salesforce, Marketo, and Zendesk. The prospect of a portfolio company reaching a similar scale was highly appealing to any investor, and Loughlin found himself increasingly engaged.

“A particular slide, which Jason likely didn’t prioritize, resonated strongly with me,” Loughlin explained. “It showcased that for every legal user added to Ironclad, nine additional users from departments like sales, marketing, and customer service were also incorporated. This validated the theory of cross-departmental collaboration.”

The Entrepreneur's Approach to Fundraising

Boehmig holds firm convictions regarding the ideal fundraising process for entrepreneurs. He believes the focus should be on identifying investors who genuinely believe in the vision and are prepared to actively contribute.

“The founder’s primary role isn’t to persuade investors to invest,” Boehmig clarified. “It’s to implement a process that effectively identifies those who are true believers.”

He indicated that a key indicator of this belief is an investor’s willingness to proactively brainstorm about the company’s future. Crucially, this brainstorming should lead to a sense of shared understanding and alignment between both parties.

Loughlin’s decisive action further demonstrated his conviction in the venture.

“Had we delayed the decision, we likely would have received multiple term sheets,” Boehmig noted.

Indeed, Loughlin anticipated this possibility, which motivated him to finalize the deal and execute the paperwork while at the hospital during the birth of his child.

Operational Dynamics

Nearly four years have passed since Loughlin and Boehmig formalized their agreement, an action that provided the company with $8 million in Series A funding and secured Loughlin’s position on the board of directors.

Their working relationship has matured over time, yet both individuals acknowledge the significant benefits derived from their initial collaborative efforts.

Boehmig emphasizes the importance of defining the board-founder dynamic before any agreements are signed.

“We consistently maintain transparency, viewing the board as an integral component of the organization,” stated Boehmig. “This entails full awareness of all company activities and a commitment to collaborative problem-solving through open dialogue.”

He further explained his preference for seeking input on matters extending beyond standard board-level concerns, fostering a team-oriented approach that transcends formal reporting structures.

Loughlin highlighted how proactive planning facilitated a productive and trust-based partnership.

Significant time was dedicated early on to defining the company’s mission, vision, and core values, clarifying the founders’ roles, and establishing goals for team growth and composition within a year.

“My aim is to understand your aspirations for the company, enabling me to challenge your thinking and engage in constructive planning discussions,” Loughlin explained. “This prevents situations where I receive inquiries about critical hires, such as a head of customer success, without sufficient background or a guiding principle.”

He noted that this process demands considerable effort from both parties but fundamentally shapes the nature of their relationship.

A regular communication schedule was also established. They initially scheduled a weekly meeting, which Boehmig could cancel within one minute of the start time if needed, ensuring dedicated time for addressing any concerns.

This time was frequently utilized, and as the company expanded, the meetings transitioned to a bi-weekly cadence, eventually evolving into a more flexible, asynchronous communication style involving texts and calls as needed.

This consistent dialogue fostered a strong level of trust and a shared understanding, allowing for efficient communication.

“Due to our alignment, I can now respond asynchronously,” Loughlin described their current dynamic. “He might ask, ‘What are your thoughts on this negotiation?’ and I’ll immediately respond with my intuition, and he’ll concur. Previously, this would have required a lengthy phone conversation.”

He added that the initial investment in understanding the company’s direction now allows them to reach decisions more quickly and efficiently.

Addressing the Challenges of Pricing Strategies

Establishing appropriate pricing remains a significant hurdle for founders, especially those operating within the enterprise startup landscape. Effectively determining pricing represents a critical balance point where the needs of the customer, the financial viability of the business, and long-term company objectives must converge.

Boehmig noted that, after extensive observation, a definitive solution to pricing remains elusive for most. He posits that the primary aim of pricing should be continuous refinement, striving for increased accuracy over time. Initially, companies often provide substantial value exceeding their charges, a practice he deems acceptable.

During Ironclad’s early stages, a case study revealed a considerable disparity between pricing and the return on investment (ROI) delivered to clients. Specifically, one customer was paying approximately $50,000 while simultaneously realizing millions of dollars in ROI.

Boehmig emphasized the importance of aligning pricing more closely with the value generated for the customer as time progresses. He acknowledged that optimizing pricing is an ongoing process, likely to continue for years, but believes each iteration brings improved accuracy.

Loughlin concurred that pricing is a multifaceted and demanding subject. He cautioned that some startups prematurely establish pricing structures before fully comprehending the sources of value for their customers. “A company’s first step should be an honest assessment of whether it is creating value, and precisely where and how that value is being generated,” he stated.

Following this assessment, founders must effectively communicate the product’s return on investment to customers, and then set a price point below that demonstrated value. While seemingly straightforward, achieving this requires considerable time and thorough investigation.

Our discussion with Boehmig and Loughlin also explored the optimal timing for price adjustments. How long should a founder maintain a fixed price? Should pricing be a constant consideration, or are periodic reviews sufficient? And if so, what should be the duration of those review cycles?

Loughlin highlighted the rapid pace of product development within enterprise companies, which continually reshapes the pricing discussion. Founders must decide whether new features should be incorporated into the standard price or offered as premium add-ons. Consequently, a faster release cadence of new features necessitates more frequent pricing evaluations.

“Dynamically adjusting pricing in response to product development and competitive pressures are arguably the two most important factors to consider,” Loughlin explained. “The third crucial element is understanding how pricing impacts business growth and the achievement of planned objectives.”

Pitch Deck Evaluation

A comprehensive understanding of a company’s progression – encompassing its history, current status, and projected future – is crucial for investors.

The Importance of Temporal Context

Investors require a clear grasp of where a company has been, where it stands now, and its anticipated trajectory. This timeline provides essential context for evaluating potential returns.

Credibility of Feedback Sources

Direct communication from developers or existing customers holds significantly more value than generalized positive commentary found on social media platforms from individuals who are not customers.

Feedback originating from those directly involved with the product or service offers more reliable insights into its strengths and weaknesses.

Specificity in the "Scribble Slide"

When utilizing a “scribble slide” – often used to illustrate complex ideas or future plans – it’s vital to be precise in its presentation.

Avoid vague representations and ensure the slide clearly conveys the intended message to the audience.

Maintaining Concise Content

Overly dense, text-heavy slides should be avoided. Investors prefer presentations that are visually engaging and easy to digest.

Conciseness is key to effectively communicating your message and maintaining audience attention.

Focus on delivering key information in a streamlined and accessible manner.