Asking the CEO #3: What does venture capital investment mean for the business?
You secured backing from YSoft Ventures and Credo Ventures in a remarkably short span. What do you believe persuaded them to invest in your venture?
I truly don’t know. Looking back, if I were in their position, I might hesitate to invest (big smile). We had cutting-edge technology, passion, and enthusiasm. We also believed we were nearing the completion of our product and had a good understanding of the market. Sadly, we were mistaken on those last two counts. It took us significant effort to figure out how to structure the business around our technology. It was a major learning experience for all of us.
Still, the investment from both partners brought not only funds but also a wealth of knowledge and connections.
What does life with investors look like? What did it bring you, and what does this mean for such a young company with an investor from the beginning? In other words, what did it give you, and what did it take from you?
A lot depends on the case and the investors. We were lucky with our investors. They supported us through highs and lows, with a steady demeanor. This is not the case for every investor.
What did it give us? The first investment was 200,000 EUR, which was a decent capital and allowed us to present ourselves in North America. I found myself jetting off to the USA quite often, sometimes even ten times in a year, resulting in endless jetlag. However, thanks to this, we have built many relationships that are not accessible in our field to people from the outside.
The entertainment business is a lot about personal connections; many people have been working in the industry for twenty years or more, and it is not easily possible to gain their trust in a new company. This is very difficult to do through emails and PPC campaigns. So, the money from the investors helped us build these relationships.
How long did it take you to build relationships with clients?
For big deals, it’s a long shot. Winning ESPN took years. We met with one of their important people in San José, and he explained that what we have is quite unique and that we could replace the hardware we are buying today. It took us about a year to deliver the first product to them.
So actually, it was quite fast; the guy was quite an adventurer who wasn’t afraid to invest in a product from a small Czech company. This became our second product, which at the same time, ended up being the actual end product. We moved from Hollywood to live video production.
How is Comprimato doing today? What awaits you, and where do you want to go?
Comprimato has experienced a significant period of self-reflection and change. At the start, we did receive a good amount of money from our investors. However, we made several missteps. We weren’t familiar with the market, and our product wasn’t even ready. Our revenue grew at a commendable rate, but it was during a period when the company’s expenses were double that growth.
This financial situation nearly brought the company to its knees. With only enough funds for one more month, the cancellation of even a single client order could have been the end for Comprimato. We were somewhat lost, our workforce reducing from 25 employees down to 10. The original technology, the foundation of our company, had stagnated, leaving little room for further growth.
Yet, around four years ago, we began seeking new strategies and targeting new clients. As a result, the company started seeing growth rates of 20-30% annually. Another evolution for us has been our shift towards the Cloud. While many industries have already moved to the Cloud, the video enterprise sector has been a bit slower but is now actively beginning to embrace it.
The “Asking the CEO” series will continue soon.