Editor’s note: This is a guest post by Mark Evans, Author and Marketing Consultant at ME Consulting
When Nancy Peterson, Founder and CEO of home renovation contractor marketplace HomeStars, approached Espresso Capital for venture debt, she refused to take “no” for an answer.
Espresso reviewed the opportunity but declined to invest. Notwithstanding, Peterson convinced Espresso CEO Alkarim Jivraj to become an advisor to HomeStars.
“I was thinking about making structural changes to the team,” she said. “Not knowing Alkarim well but based on the questions he asked, I felt he had the expertise to provide valuable guidance to us, so I went out on a limb to see if he would be willing to join our advisory board.”
Jivraj’s first piece of advice to Peterson was to hire an experienced SaaS CFO to help the company better understand its unit performance metrics. This led to HomeStars hiring Steve Wilson, who has played a key role in retooling the company’s sales coverage model, revamping its financial reporting, improving cash flow management, and ultimately helping HomeStars to get to a stronger financial footing.
Four months after their initial meeting, HomeStars had demonstrated enough progress to convince the Espresso team to provide funding to support HomeStar’s ambitious plans.
The financing was completed in less than a month. The company explored other options, including VCs and bank financing, but ultimately selected Espresso because it could move quickly, the terms were more flexible and did not involve dilution for shareholders, and, equally as important, Espresso had proven its capacity to add value beyond just financing.
While HomeStars received much-needed capital from Espresso to grow their business, Peterson said Espresso has also become a strategic partner: “They meet a lot of companies and are constantly connecting the dots, and so have been very helpful in making strategic introductions. They’re also very knowledgeable about what makes companies valuable, and in particular have a deep understanding of SaaS businesses at the operational level.”
Peterson says Espresso has helped HomeStars think like a software company and positioned it for strong growth going forward. “We now have a strong foundation, are profitable, and still growing at a double-digit rate. Working with Espresso was a big jump for us.”