The article below was created as a collaboration between Built In Idaho, Boise Startup Week and Trailhead.
PlexTrac founder Dan DeCloss shares insight into securing $10M in Series A funding, launching successful startup
PlexTrac got its start around 2016 offering clients automated reports about a company’s cybersecurity. Founder Dan DeCloss (right) found creating such reports manually was a pain shared throughout the industry.
Today, after developing the SaaS based solution idea through Trailhead and with the supportive mentorship of companies like StageDotO, PlexTrac has secured $10 million in Series A funding to grow a newer side of the business: providing companies with teams of individuals who not only assess threats but help mitigate those threats as well.
Boise Startup Week, Built In Idaho and Trailhead appreciate the opportunity of getting to ask DeCloss some questions:
What's next for PlexTrac after securing $10 million in Series A funding?
Dan DeCloss: Everything's kind of based on the model, sales and revenue drive the model but, as we continue to track on our revenue targets, our goal is to continue to grow the team substantially. Where we're focused on initially are a few strategic hires at a leadership level. But then, (our next step is) really growing out the product engineering side of the house, continuing to grow on the sales and marketing capacities. Headcount wise, we're currently at 25-26; (we) want to continue to grow, to almost double that by the end of the year, if not more. (It) just kind of depends on how we're achieving the plan, and, we may not need to grow that much to still achieve what we want to achieve. So we just kind of take that kind of a month at a time, but early on definitely focusing on product and engineering. And then sales. How would you describe PlexTrac’s growth and traction that is inspiring the venture backing
DeCloss: We grew substantially through 2021, both in terms of, getting to certain AAR milestones through the pandemic which, you know, was obviously a huge blessing. So not only that but also the kinds of customers that we're attracting, and in the growth opportunity that we have, we’ll have a land-and-expand type of a model. So that's really how we position ourselves when talking to investors: “Here's what we've done; here's where we fit (in the market), and here's where we want to grow into.” And that's really what we'll utilize the capital for. So, in terms of percentages, we grew almost 1,000% from 2019 through 2020 (high growth our venture backers are looking for), you know, and (we’re) off to a great first Q. And (we’re) trying to continue that momentum on through each quarter here on out. Transitioning into your more early entrepreneurial days, if you will, what was it like when you realized you could create a business that would mitigate the pain points that you felt in industry?
DeCloss: I think I always felt like I had a business. There's certain stages that you go through, like, what kind of businesses is it going to be; is it going to be something that is more of a what I would call lifestyle business, where (it) meets the needs for some people and we continue to fill that niche, or is it something that we can actually scale and make large. What was first exciting is, like, you kind of get some of those early customers that are actually willing to pay money for it, and actually fill the use case. There's certain people, even early on, that were willing to become a customer, but weren't feeling the immediate use case (saying), “Hey, well, we really need it; we're gonna use it for this,” which is great, but, then being able to see, here's the initial use case, and then we can grow into some of these other ancillary use cases.
So, you know, it was exciting when we got a couple of first customers, and (when) it really started getting feedback. If you kind of adhere to the Lean Startup principles, like iterating quickly, really understanding the problem, early on was really exciting. And then to kind of start to realize, “Hey we're actually attracting some logos that are bigger companies, like well-known names ... that's when you start to kind of realize, “Hey there actually might be something bigger in store here.” At what point did you realize that PlexTrac was no longer a side gig?
DeCloss: Well, that's a good question. I think I finally reached a point where I could tell that the business was suffering by me not being able to devote my full attention to it. And that's when I kind of realized, “OK, I need to start making a plan with my day job.” There were no secrets about what I was doing, but I also wanted to make sure (I left) them in a good spot. It was always in the back of my mind this was gonna be the plan, and (it) finally reached a point where it's like, “Hey, now I'm recognizing that the business is actually suffering. I have enough clients that reach this critical mass, in my opinion, but (also) recognizing the use cases that I could go solve if I could devote full time to it. What was your daily life like when you realized that you needed to be devoting more time to PlexTrac in order to make it the successful vision that you had?
DeCloss: I mean, it was always kind of getting up early and staying up late working on the business, you know, then doing my day job during the day. I think, when I started seeing more and more stuff was popping up throughout the day, like from an email perspective, or like, you know, things that I couldn't attend to because I was at my day job, that really started to make me realize this is actually becoming a thing where I have customers that need support during the day on the product and it's not just kind of, “Hey this is cool, I'll get to it what I need to kind of a thing.” So I think if you're going to go that route of building a side hustle and making a side gig, just be conscientious of when it feels like you could actually have time during the day that you need to address certain issues. Early on, it's just like, “Hey I'm writing code early in the morning or late at night and interfacing with friends and potential customers in random times, you know, in the evenings or whatnot. And even on weekends. Realizing here's definitely enough work here to be doing all the time, is an important kind of marker. What changes have you had to make for PlexTrac to become a viable business? What did you learn that you kind of had to change?
DeCloss: I wouldn't say I had to like change anything around like the vision or the plan. At least, you know, early on, it was just a matter of being able to execute on it. So, having the resources, I think that's where the investment discussion started to come in. Early on I wasn't sure if I was gonna raise money or not. But, as I continue to grow, (I) recognize that this can help grow fast. If there was one goal ... I either wanted to make sure it was gonna work or it wasn't gonna work and I wanted to get there as quickly. As we realized that there is something here, let's use this capital on the seed investment side to really try to grow this thing and validate that we have something that's substantial.
I would say from there, then it's holding convictions strong, but, you know, loose at the same time … “This is what we feel our gut says where we head in the market, but things might change as we get rolling.” Being open to understanding that, especially in cybersecurity, demands and needs can change, and do. “What are the things that we can do; should do and will do,” are always the lens in which we look at potential opportunities from a product and solutions perspective. Did you have to start offering something that you didn't expect early on?
DeCloss: I would say we started to offer more (than) an assessments module ... its initial purpose was (to kind of be) a self assessment (to) understand where you might need to get started in cybersecurity, but that has really grown into more of the people that are actually conducting assessments and eliminating spreadsheets. That grew a lot more organically than I anticipated. And then I had always had this concept of a true purple teaming platform ... We built out a module and released it in the fall of last year; that really helped facilitate that a lot better. We'd also like to know, what's your experience been like being a StageDotO portfolio company, and how has that helped in the venture?
DeCloss: StageDotO has been a fantastic resource, opening our exposure and opportunities to the greater investment community. We’ve gotten great introductions, on the investment side; the caliber and pedigree of people that just come in and can help from an advisory perspective, and being able to bounce ideas off people, they really have been able to open up that network, which has been great. And just their expertise in just helping early stage companies get to a point (where) we can get a Series A investment, and the things to really stay focused on, and not thinking too small … (to) anticipate a bigger outcome than than we were initially focused on. It's been a great partnership, great relationship. What advice do you have for a startup or entrepreneur who might be ready to approach one of those levels of (seed, Series A) funding?
DeCloss: In the early angel (investing) and seed area, a group like StageDotO, they're going to be very focused on the entrepreneur and the domain expertise those folks have. The idea may not be fully fleshed out from like where can it go, but there needs to be some kind of understanding of how big (it) can get and an understanding of the market, but I think most importantly is “Are you solving a problem that you know a lot about?” And that's something that I think early stage investors are going to be very keen on, is the domain expertise, but that’s not to say you can't be a young entrepreneur that doesn't have a whole lot of experience in a given industry or whatnot … Staying focused on things like what is the market; what kind of product market fit do I have; who are the competitors in that space or how are we unique and setting ourselves apart from other people that might be doing a similar thing.
It (also) depends on what stage you're at, if you're at an ideation stage or do you actually have something that you're now looking at scaling, and every investor is going to be different too, and what they focus on. It's also important to keep in mind that you're not just trying to get money and their connections, you're trying to find a good partner, people that you're going to be able to work with for the next 10 years or whatever. These are people that you need to be able to be comfortable with, and that you're aligned on the mission.
“Staying focused on things like what is the market; what kind of product market fit do I have; who are the competitors in that space or how are we unique and setting ourselves apart from other people that might be doing a similar thing."
Are there any resources in the community you want to give a shout out to that helped you in those earlier stages, such as that ideation?
DeCloss: Early programs (like) Idea. Set. Go. and Startup Now, that was just a fun time for me, learning about the entrepreneurial side, you know, I obviously understood the security stuff (he laughs), but things to be thinking about (like) how to position the product and where to stay focused on in terms of what are the problems that we're actually solving; what are customers needing; what kind of feedback are they giving; where does this fit, and truly, is this something that you could actually sell and grow versus it’s just kind of a hobby. Those early days at Trailhead were a ton of fun. I have been blessed to have just good mentors along the way, people in the community that have always been willing to just have a coffee meeting or a lunch and just lend an ear even in a non-official capacity. That ultimately led to getting introduced to StageDotO, which helped ... to get them excited about what we're doing and want to invest. You’ve given a lot of great advice, but is there any advice that you would like to give to entrepreneurs trying to grow their startup that you haven't been able to share yet in this conversation?
DeCloss: I think it can be a very lonely job. Continue to build a network of people that are there; have some mentors willing to lend an ear, and it's OK to be open and vulnerable and honest with some of these folks in terms of what you're scared about; what you're struggling with ... But, the perseverance is really what matters, being able to say, “I'm not gonna give up; I believe that what we’re doing is going to make an impact and we're gonna be able to be successful. We have something, we just got to execute on it.
It's not an easy road. And there are going to be days when you just don't feel like you're making any progress, and, it's OK to have those days; everybody goes through those. So the biggest thing is like how do you continue to persevere and stay gritty, and figure out ways to solve the problems that are in front of you. For the most part, it's unlikely that people have not faced the same thing before, but, there might be times when you're gonna have to make a decision, like, “This isn't going to work.” Fortunately we're not in that position right now, but I would say, largely, the fact that we're not in that position is because we just didn't give up. We found a way to keep plowing through whatever challenge laid ahead of us, and it's not easy, but it does take some work and you gotta just kind of dig in and do it. Oftentimes, the biggest driver for success is just showing up and getting the job done. And trust me, we are far from our goals, (he laughs). You know, we still have a lot of work to do.