Aaron Houghton sold iContact in 2012 for $180 million. The first round of growth was financed by convertible debt, which Houghton recommends for its simplicity. Hear how he parlayed an initial investment of $250,000 into a $180 million exit.
In the last five minutes of this episode, Houghton talks about the importance of getting your LTV:CAC ratio up to at least 3:1. Determining your LTV:CAC ratio is something we tackle in Module 5 of The Value Builder Engagement – get started for free by getting your Value Builder Score™ now.
About Aaron Houghton
Aaron Houghton is a serial entrepreneur who builds web marketing products for small business owners. He is currently co-founder and CEO of BoostSuite.com, a group advertising tool that enables small businesses to band together to beat their larger competitors.
Formerly Houghton was co-founder of email newsletter leader iContact.com, which was sold to Vocus in 2012 for $180 million.
Houghton was the Ernst and Young Entrepreneur of the Year in 2008, was listed in Inc. Magazine’s 30 under 30 list in 2010, and was named one of the Top 10 Most Influential CEOs in 2010.
In his free time Houghton is an avid mountain biker and outdoor adventurer.
Some Highlights of the Show
4:33: “Our solution was to move [these physical mailers] to the digital world.”
5:42: “I had one co-founder… He helped me commercialize the product.”
6:20: “We looked outside of our region [for financing]; we raised early capital locally.”
7:55: “We had equity investors, debt investors and both.”
8:15: “We raised a total of $65M, mostly in our second round.”
8:33: Convertible debt explained.
14:00: “We didn’t know if .5 or 20 was the right multiple.”
14:24: “[The valuation] roughly stayed pretty consistent… You never get better deal terms than the first deal you take. Every future investor … wants to one-up the previous investor.”
16:33: “Our vision from day one was to build something that was meaningful, that could have a large impact. We had over a million users, over 80,000 businesses… We had customers all over the world; we felt like we were really making an impact for small businesses.”
17:30: “We always thought it was a business that would be right for someone else eventually, that could take it to the next level, give us bigger reach.”
17:54: “When we added investors … there was an expectation; they want to get their money back… It kind of sets your destiny [when you get series B financing].”
20:00: “We weren’t profitable ever; we were profitable the last two months before we sold.”
20:50: “The same crash crunch that was hurting other businesses became our best years.”
21:30: “As the economy was dropping, our growth was accelerating.”
21:55: The triggering event.
23:35: “We eventually just got a really good offer.”
25:10: “The private equity firm made the introduction to [the eventual acquirer].”
27:20: “One of the advantages of having a warm introduction through our board members … they knew the number that needed to work for our investors.”
28:02: A $180M offer.
29:40: “There were some incredibly complicated details that went into this deal.”
34:10: “Ryan and I complemented each other really well… We personally share very few interests… In the later years we didn’t see each other much. We were always friends but our business relationship really worked.”
36:15: “There are millions of small businesses around the world… I felt like David against the Goliath out there… There’s is this huge learning curve with learning new digital products.”
37:47: “We’re four years in and we’ve pivoted four times.”
39:50: “I can now be the investor in [boostsuite.com].”
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