Staying Sustainable in a CLM Funding Minefield
As the VP of Finance here at Malbek, I know that business is always in flux. No months present the same challenges, so we have to stay flexible to keep up with the changes. And believe me when I say change is the only constant, especially with fundraising in the contract lifecycle management (CLM) space.
When I first joined Malbek a year ago, VC money was flowing and the fundraising outlook was red hot. Several CLM companies had recently completed >$100M fundraises at valuations previously unheard of. It was wild that players in the CLM space had raised almost $2 billion in less than twelve months. Although Malbek was a newer CLM player, we had amazing year-over-year growth and a growing list of Fortune 500 customers. So, I envisioned Malbek as next in line for a big check, a unicorn valuation, and a night of laughs and champagne.
Almost overnight, the fundraising outlook took a total 180. After ballooning for years, valuations returned to historical norms in what felt like a few weeks last summer. Investors who for years trumpeted “growth at all costs” became born-again efficiency gurus overnight. Combined with growing pressure from the macroeconomic downturn that we are currently experiencing, these changes in VC sentiment have made way for a more sustainable and sane business environment today.
A new perspective that I developed this past year is that cheap capital, in the form of big fundraises and oversized valuations, is not in and of itself GOOD for business. Moreover, cheap capital that perpetuates a culture of growth above all else, I would argue is BAD for startups.
Being sustainable is more important than an inflated valuation. At the end of the day, a customer does not care what our worth is. They care that Malbek will deliver value and will be around for the long term. Being a solid, reliable CLM with a reasonable valuation and steady growth is much more attractive, safe, and valuable than others who must reach lofty (some would consider unattainable) goals dictated by aggressive VC funding rounds in order to survive.
As a frugal company, with experienced leadership at the helm, Malbek never chased growth as a top priority. Consequently, we never cashed out on an oversized valuation. And as a result, Malbek today is a higher-valued enterprise, using historical average ARR multiples, than during our last fundraise in 2021. In this regard, we are as viable an investment today as we were one year ago. Had I gotten my champagne and the big fundraise that I envisioned when I first joined the company, this would not be the case.
While the economy and fundraising environment have changed dramatically, we at Malbek are staying the course: responsible growth, calculated risk-taking, and delighting customers above all else. We are continuing to experiment, invest and hire, while improving operational efficiencies in every area of the business. There is much to do and much to be excited about, as we are building a great company and having fun doing it.
If you’d like to learn more about how Malbek can help you accelerate your business while saving you time and money, please request a demo today!
