Jesse Lipson knows better than most that a startup doesn’t necessarily need to raise money to be successful. After all, he bootstrapped his first company, ShareFile, to a $93M sale to Citrix in 2011.
Then again, the right kind of funding—and investors—can provide the rocket fuel to soar higher, faster, than would be possible without it. That’s why the Real Magic founder did something this week that he’d never done before: complete a funding round.
The $6M Series A from just three investors, including Durham’s Bull City Venture Partners, should provide 18-24 months of runway to help Real Magic achieve escape velocity. The Raleigh-based startup’s primary product, Levitate, is CRM (customer relationship management) software that functions as a “keep-in-touch” tool to help customers such as insurance and real estate agents stay top-of-mind with their current and potential clients. Levitate launched last April, had 30 customers by last August, and now has 300+ customers.
“It was the right time,” said Lipson. “We’d shown enough traction and built enough value that it seemed appropriate to do some risk-sharing.”
For investor Jason Caplain of BCVP, it’s a chance to do some reward-sharing. Caplain had hoped to invest in ShareFile but didn’t get the chance because Lipson never raised money. He’s excited to have a second bite at the apple.
“This is right in our wheelhouse: experienced entrepreneur, software, fast-growing, early-stage,” said Caplain. “Jesse is one of the best entrepreneurs I’ve ever met, and he happens to be in Raleigh. He’s a magnetic personality and a great recruiter of talent.”
It turns out he’s a great recruiter of investors as well, but that’s not because he spread a pitch deck far and wide or tirelessly worked a tiered list of targets. In fact, Lipson didn’t really approach anyone. Instead, the deal came together fairly quickly thanks to relationships he has built, both long-term and recent.
West Coast Co-Leads
The two co-leads of the deal are Andy Sheehan of Tippet Venture Partners in Palo Alto, Calif., and Peter Gassner, the CEO of California-based Veeva Systems, a publicly traded cloud-computing company for the life sciences industry with a market cap of $25B.
Lipson has known Sheehan for about 6-7 years, since Lipson joined the board of the New York-based startup Yext that already included Sheehan. The latter had told Lipson that he was definitely interested if and when Real Magic might raise money.
Lipson only met Gassner within the last few months, after Gassner reached out on LinkedIn on another matter and then the men met when Gassner was in the Triangle. Gassner doesn’t do much personal investing—though his latest was in the videoconferencing company Zoom that launched a very successful IPO in April—but he quickly fell for the Real Magic story and team and wanted in.
Caplain and BCVP were already on board, so the transaction came together quickly from there.
“We were going to raise less, maybe just a couple of million,” said Lipson. “But there was strong interest, and we were happy with the valuation.”
Sorry, we don’t know the valuation, but it wasn’t for a lack of asking. Though we can tell you that Real Magic has grown from eight employees last August (when we first profiled the company with a similarly punny headline) to 20 today to 25 by the end of the month. The new hires will be across the board functionally, but especially in sales.
Let’s hope they’re close to as good at selling customers as Lipson is at selling Real Magic to employees and investors.