Caffeine Daily: When self-funding makes sense
We were delighted to speak with Caffeine Daily recently to share our learnings and experience around self-funding the growth of companies in NZ.
Our feature in the article is highlighted below, or you can read Libby Schultz’ article here.
Having a firm resolve
Jonathan Morgan and Kathleen Webber are founders of ResolvePay, which specialises in holiday pay remediation for businesses. Launching as a side hustle in 2019, they’ve steadily grown the business to compete alongside the big-4 consulting firms.
In his previous career, Morgan worked for venture-backed and listed companies like WayBeyond and ERoad. When starting ResolvePay, he knew they wouldn’t be pursuing investment – for several reasons.
“Although we’re solving a problem and are competing with very large companies, I’d describe us as a lifestyle business. I’ve worked at startups where I’ve done the 80-hour weeks. We wanted to build this company in a way we can spend time with our kids and have a normal life.”
Secondly, he says ResolvePay is not the kind of business model that’s suited to investors.
“We’re essentially a fixed-price consulting model, and if you don’t have a subscription or recurring revenue, it’s very hard to get VC funding. We just wouldn’t meet their criteria.”
ResolvePay has a 100 percent contractor and part-time workforce, offering people flexibility in how they work.
“That’s also one of the benefits of being self-funded...you can run your company any way you want.”
Having been on both sides of the fence, Morgan says growing a business organically requires the discipline to “only build stuff you know you can sell”, and to keep a close eye on your fixed versus variable costs.
“The VC funding model is almost the complete opposite. You grow your business really fast and end up with lots of fixed costs that are very hard to get rid of. In my 20-plus years’ working in IT, I’ve been through multiple restructures. There’s nothing wrong with that...it’s just not a business model we’d want.”
