In the tech world, a good idea is sometimes enough to get a company of the ground. But eventually there comes a point when every startup needs to prove its viability.
For many companies, that moment of truth comes in the form of a first major deal. We spoke to two Chicago tech companies about how they closed theirs, and how those deals ended up shaping their companies.
5thColumn is a cybersecurity firm that specializes in advanced real-time threat protection and enterprise data security. Although the company has been closing deals since it launched in 2012, director of marketing Michaela Neatherton and CTO and founder Ray Hicks point to a deal closed earlier this year as one of the company’s most impactful.
5thColumn became the first cybersecurity company to offer an industry-backed warranty when it closed a deal with Victor O. Schinnerer & Company, a specialty insurance underwriter, and Cyence, a firm that quantifies the financial impact of cyber risks.
“Cyber insurance doesn’t cover your internal costs to recover, so companies are left with these huge bills,” Neatherton said. “Sixty percent of SMBs end up closing their doors because they can’t bounce back.”
“Everyone in our industry wants to be considered a trusted advisor in their value-added partner and reseller role. But along the way, cost became the defining metric in the equation and not quality or impact,” said Hicks. “We provide our customers with a standard they can count on, ultimately creating trust and peace of mind.”
For Neatherton, closing this deal provided a sense of validation for 5thColumn’s platform and the team who built it. And while she said the company believes in the “work hard, play hard” mantra, this deal was celebrated quietly with after-work drinks.
The real celebration happened after the first warranty was sold. A certificate commemorating that sale is framed and hanging in Hicks’ office.
Hireology is a hiring and talent management platform that makes it easier for companies to find and onboard new employees. In addition to talent management, the company also offers solutions for payroll, disbursing benefits and time tracking.
CEO Adam Robinson said the company’s first big deal was with a large franchise brand, and he said it was important for two main reasons. First, it provided the company with a major revenue lift. But in addition to injecting fresh funds into the company’s coffers, the deal was also the first validation of Hireology’s go-to-market strategy.
The positive impacts of the deal, said Robinson, were both internal and external.
“We doubled our monthly recurring revenue run rate in 90 days, and we truly knew we were onto something,” he said. “We had a template for closing future deals, and we had proof that we could execute. That directly led to our ability to close our seed round.”
Hireology was founded in 2010. By 2012, it had closed an official round of seed funding, and a mere two years later the company announced a $10 million round.
The Hireology team went to Blue Frog to celebrate its first big deal. After a night of drinks and burgers, the team returned to work to start supporting its first big customer.
Responses edited for length and clarity. Images via featured companies.