Doctrine's story from Seed to Series A 👣 Nicolas Bustamante, CEO

🎥 Jan 18, 2019 📺 Startupfood ⏱ 19m

At The Family, we believe that anyone can become a great entrepreneur. Find more info here: http://www.thefamily.co/ By Nicolas Bustamante ( / nico_bst , CEO at Doctrine (https://www.doctrine.fr/) Mind The Gap: Out of 100 seed funded enterprise software companies, only around 25 raise an A round - a 75% mortality rate ⚰️ It takes an average of 18 months to go from seed to Series A but the energy deployed is monumental. And lots of startups struggle to get the metrics investors are looking for to invest in an A round. This jump is strenuous -- What are the best practices you should absolute...

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About Nicolas Bustamante

Nicolas Bustamante, cofounder and CEO of Doctrine, discussed the company's journey from seed to Series A funding in a 2019 talk. He described Doctrine as a legal research and analytics platform that uses artificial intelligence to provide legal professionals with data to support their clients and decision-making. Bustamante stated that the company was founded in June 2016 with two cofounders and raised €2 million in seed funding in September 2016 from investors including Awesome Ventures and Khema Ventures. He noted that the company grew from zero customers to 850 customers in 11 months and raised €10 million in a Series A round in June 2018. Bustamante emphasized the challenges of the seed-to-Series A transition, citing a 75% mortality rate among seed-funded enterprise software companies. He attributed Doctrine's success to rapid iteration, listening to customers, and prioritizing investment in engineering talent over early marketing. He also advised against building products for free users, stating that startups should focus on paying customers who see value in the product. Bustamante reported that 10% of judges in France use Doctrine.

Source: AI-verified profile updated from Nicolas Bustamante's recent appearances. Browse all interviews →

Transcript (18 segments)

Nicolas Bustamante0:11

Hi everyone, I'm Nicolas Bustamante, I'm the CEO of Doctrine. And who knows Doctrine here? Raise your hand. Okay, we have a couple of few friends. So Doctrine.com is a legal research and analytics platform for legal professionals. So we provide them with analytics so they can better defend their clients, if they're lawyers for instance, or if they're a judge, they can take better decisions because they have the good information. At Doctrine, we basically use the latest technology and artificial intelligence to try to change the law, because the law is not very tech savvy.

He has a PhD in computer science, Antoine was previously working in artificial intelligence, and myself, I have a legal and technology background. Quick story: to ensure our products, we were in the seed phase without basically any money. We started here as a family where we worked for four months for free, basically on the table upstairs. And so in June, we got contacted by a lot of investors because we had a lot of traction on our minimal viable product, which was free at the time. And in September 2016, we found a very bold investor: it was Awesome Venture and Kheema.

We had three, five, zero. So we were basically three co-founders and one employee when we raised this amount. Back in the time, it was a huge seed round, but now you see more and more companies raising 5 million, 6 million in seed round in France. Okay, so three founders, one employee. And so because we talk about a lot of customers, how many customers did we have at the time? 20, 50? Okay, 20, 50, 100? Well, okay.

In your bank account, so it's a lot. Like two million, like just four people. So you can imagine how much money you have proportionally. And then you have to find a way to have a lot of customers because you have to find a way to go roughly from zero to 1 million in annual recurring revenue in 11 months. So when you have zero customers and you have to find and route 50 customers in 11 months, and you don't have a fully developed product, you don't have a sales team, it's a challenge. It's a huge way to do that. At Doctrine, also if you raise, you have the pressure, your own pressure and the pressure of your team, because you want to be successful, you want to grow, you want to give your product to anyone. So it's a huge pressure. And my thought is like you have to do whatever it takes. For us, if we had to sleep under our desk to be successful, probably the only issue is to sleep under the desk and just be successful. So we worked very, very hard. I know that in France we like to do master plans on how we are going to conquer the market, what will be our marketing channels. But when you are at seed stage, as someone told you previously, you know nothing. So the only way I think to get from zero to one is to just do it.

You are a data science company, and then we had really trouble to find sales people because we were such a tech company. Finding the first sales people was very, very hard. So I did the job myself, selling the product. And then I hired one, two, three sales reps. Just one person, he wasn't very experienced in sales, having a lot of background going from companies such as Salesforce, blah blah blah. We were just like, his name is Wesam, he still is at the company. He was a very, very small dude. And like all the people we hired back in the time, they were just people that wanted to have an impact in changing the law. So it was just people with a legal background wanting to do sales or marketing.

Our core value is release often, release early, and listen to your customers. Okay, we made a lot of iterations about the product, just listening to customers, what they wanted, and improve the product while continually selling. And so after 11 months, we managed to go from zero customers to 850 customers. So it was really challenging. We didn't plan everything we did, and it was really just listening to the market, to the customers, and trying to improve every day. So we reached the milestone. And then to give you some perspective, now we are 70 people. So we basically grew from one employee to 70 people.

A lot of people for Doctrine. So basically, if you want to work at Doctrine, Hoban has to say yes, sir. Just talk to him, be kind with him. So we hired a lot of people. And then once we reached the 1 million annual recurring revenue milestone, we raised another round. And of course, if your revenue goes up so quickly, you will have a lot of investors just coming at you, trying to better understand your business. And so we chose to raise another round of money. We raised 10 million, and it was in June 2018. So now we crossed from seed to Series A, basically just hustling, putting a lot of effort.

The core value of Doctrine is challenging the status quo. So we're just challenging everything and trying to make things work. And then once we hit the 1 million annual recurring revenue, we raised this a little bit after, we were just 10 million round. And so now the target, because once you are in a Series A, you have to unlock the keys to go from Series A to Series B to C. Or if you don't want to raise money, you have to have not 150 customers but maybe 2,000 customers. And 400 customers is basically what you are trying to achieve with Doctrine, is a 300% growth every year. So it's a huge target. And so we have a lot of work to do.

I'm more than happy to answer your questions. Thank you.

Audience Member9:25

Thank you very much. I'm gotcha. Did you have three customers in the beginning? Three customers for testing? Trick? Did you have three customers in the beginning?

Nicolas Bustamante9:40

So at the beginning when we started Doctrine, because it was, I told you about the value release early, release often, it's like iterating very fast on a product side and listening to your customer. So we had a minimum viable product. It was free, because basically we needed traction. But there were free users. And among the free users, some of them were really power users. And once we told them, okay, we need to make money to survive, and we're going to make a product that will be so good and provide you with so much value that you're going to pay for it, and it's going to be like half the price of the competitors, no free users paid. Basically, the lesson is: when you have three users, don't build a product for free users, because they are often free riders, students, or blah blah blah. And if you build your product only for these free users, they won't pay, and ultimately you will die. So just find someone who will pay.

Audience Member11:11

Holidays? And I'm kidding. Say we did. We took the money, was basically to hire adventure people because you are a data science company doing natural language processing. We hired the best talents in NLP, AI. So if you want to compete with Facebook, with Google, you have to pay a lot. Basically, we are a company of engineers. And then we didn't spend any money on the marketing side. It was mostly organic traffic. Because if you want to be successful raising a Series A, you have to have a product-market fit, okay? Like customers that want your product. And you have to have one thing: a lot of money in the bank account. Because obviously, the best time to raise money is when you have money in your bank account. So we try to be super efficient using the money. It's not because you have like two million, ten millions, that you can spend the money. And at Doctrine, we challenge this. The other value is liberty and responsibility. So we try to be super careful about the way we spend the money. We want to spend the money where we can invest and have like huge returns. Basically, we are looking for 10x returns when we invest our money.

At what stage would you recommend hiring your first salesperson?

Nicolas Bustamante13:10

I was doing the job myself. Then I closed maybe 10, 20, 30 customers. I tried to hire experienced people having a huge sales background, but when they saw Doctrine, like 10 guys working in artificial intelligence and having no sales, no marketing, they were like, no, it's not for me. Bye. And so it was really hard. And then I found Wesam, this incredible sales ninja. And it was like, he was working in a restaurant. After that, he studied law and he tried to go into the bar exam and become a lawyer, but he has this fiber of being a salesperson. He had no experience going to scale the team, but I think you're not ready. So we tried to hire a manager, but it was mostly me managing the team. And we hired just very smart sales guys. And after the Series A, in June, we started seriously looking for a VP of Sales. Because right now we have 30 people working on the sales team, and we're going to double the team this year. We're going to grow to another country. So right now we need a person with the energy and the experience to lead the revenue team.

Audience Member14:47

Thanks. Well, my question to you is regarding your seed round. My co-founder and I are building a lending business that is based on income share agreement. The KPIs of growth, and you made a seed round without having a customer. So what kind of record-breaking KPIs did you have to put forward to the VCs to convince them to give you that 2 million? I mean, did you have to prove something, a good patent, or something more scientific? Thank you very much.

Nicolas Bustamante15:32

So back in the time, it was only the team. Because investors, they can also, and mostly in seed, they invest in the team. So I thought we had a good team. We had good technology, because doing Doctrine, we were basically Google for lawyers. So it's really hard to build a search engine like Google. And in search, it was like mostly users, free users, just like Facebook back in the time. We were not obviously raising money. We were just like a bunch of students. So no issue really with money. And we felt we weren't ready to raise money. So I said no to many, many investors, all of them. And one of them, Autumn Capital, they were really like sending emails, calling me. And I think they were really smart in their approach. And I understood it was maybe the best moment. Or they understood that was the best moment. They explained to me, maybe it was the best moment. I understood that was the best moment.

Audience Member17:11

Last question here. Hello, my question is about the valuation. If I understood well, you raised your Series A with 800 clients and something like a million euro turnover, if I'm right. Yes. Sorry, you raised okay. So if you raised ten million and with a classical 30% dilution, I guess the valuation was around 30 million. And when you have a million euro turnover, there are some methods to calculate how much you can aim as a valuation. And we hear about multiplicator about the annual recurring revenue.

Nicolas Bustamante18:11

Doing a fundraising round, first of all, at seed stage, it's mostly a negotiation because it's mostly the investors taking the team, the technology, and saying, okay, here is your valuation. Talking about dilution, you talked about 30%. I think today you can raise money at 20%, even 15%, if you're a super good company, a trendy company. So that matters a lot. And at the Series A or Series B, it's more like a scientific approach because basically they take your revenue, your growth rate, your net revenue retention, your growth rate. And these determine the valuation. Thank you.