- Pukar Hamal, founder and CEO of SecurityPal, questions the conventional Silicon Valley approach of continuously raising venture capital after his company nearly ran out of money following a $21 million Series A round in 2021.
- The round was led by David Sacks’ Craft Ventures, with participation from Andreessen Horowitz’s Martin Casado and Okta co-founder Frederic Kerrest.
- Hamal’s previous startup had raised capital before achieving product-market fit, a decision he now considers a “mistake.”
- With SecurityPal, Hamal waited until the company reached $1 million ARR before raising the Series A round.
SecurityPal uses AI to speed up enterprise security due diligence, reducing review times from months to days or even hours. The company has secured big-name customers like Airtable, Figma, LangChain, and Grammarly.
The crisis:
- In 2022, rising interest rates crashed the venture capital market, leaving SecurityPal burning through capital and 14 months away from running out of money.
- Hamal had to cut expenses drastically, including a significant layoff, to extend the company’s runway and aim for cash flow positivity.
The realization:
- Hamal recognized that venture capital comes with high expectations and pressures, such as rapid hiring and aggressive growth targets, which may not align with sustainable business practices.
- He observed that the focus on fast revenue growth often leads to worsening gross margins and deeper losses, with the hope of eventual profitability.
Instead, Hamal steered SecurityPal towards “durable growth” – slow and solid. By limiting sales to a manageable number of deployments, his team could ensure thorough onboarding and customer success, reducing the risk of churn.
“I raised venture capital. And I haven’t raised it again because I want to put the business in a position where it doesn’t need venture capital over and over again,” Hamal said.
The takeaway: While venture capital can fuel rapid startup growth, it often comes with high expectations and pressures that may not suit all businesses. Founders should carefully assess their strategies, considering slower but sustainable growth models that align with their long-term goals.
