How Build38 became a cybersecurity leader and secured €13M with The Startup CFO’s support
In an age where mobile security is more critical than ever, Build38 has emerged as a key player, setting new standards in protecting mobile applications. With a commitment to innovation and a clear focus on delivering top-tier security solutions, Build38 has become synonymous with excellence in the cybersecurity landscape.
However, the path to industry leadership wasn’t without its challenges. As the company expanded and the demand for their solutions grew, Build38 faced the complex task of scaling their operations while maintaining financial stability. It was during this crucial phase in financial management and needed to secure additional funding to support its ambitious R&D projects.
With the assistance of The Startup CFO, they successfully structured their financial department and secured €13M in a funding round led by Tikehau Capital through its European Cybersecurity Growth Fund. This enabled sustained expansion and improved their competitive position in the market.
The challenges
Despite early success, Build38 found itself at a financial crossroads. Rapid expansion and growing demand for its products created an urgent need to improve its financial structure and secure additional funding to drive its R&D projects. Without a robust financial structure, they risked missing out on fully capitalizing on market potential and falling behind better-positioned competitors.
Main Challenges
- Reporting + Forecasting: Build38 has a complex corporate structure with entities in three different countries and various intercompany agreements (service provision and commercial distribution). Additionally, their billing model varies depending on the client. These factors necessitated the implementation of processes and a financial model that would allow for consolidated reporting. The aforementioned factors, combined with a commercial presence in different countries, long sales cycles, and varying contract sizes (ranging from €20k to €500k), made it necessary to have a detailed and always-updated forecast to project revenue growth, expenses, and cash flow.
- Relationship with the Board + Investors: The financial complexity of Build38 (as previously mentioned) required constant communication with board members, current investors, and potential investors. Our relationship with Build38’s management is very close, as we lead the financial area and support the company’s strategy, participating in board meetings to provide our vision and expertise. From the outset, our main priority was to prepare the company for raising a Series A (achieved at the end of 2022).
- Fundraising: Beyond the funding round, a startup must support its growth with non-dilutive funding sources. The challenge was to extend the runway to buy time and improve our metrics to be in a better position for Series A.
Impact of the Problems
The lack of a solid financial structure and uncertainty about securing funding directly affected Build38’s ability to make strategic decisions and attract new investors. The scarcity of resources and funding also threatened to slow the development of key innovations, putting their competitive edge at risk in a highly dynamic sector.
Turning Challenges into Opportunities
The Startup CFO began supporting Build38 in February 2021 by providing expertise in the financial management of tech projects through Fractional CFO services. The objective was clear: to estructure Build38’s finances, optimize resource management, secure the necessary funding for their R&D projects, and lead a successful investment round to establish Build38 as a global leader in cybersecurity.
Specific steps taken to implement the solution
- Initial audit: A thorough audit of Build38’s finances was conducted to identify critical areas for improvement. This included a detailed assessment of cash flows, cost structure, financial reporting processes, and intercompany structure.
- Financial structuring: In response to the complex corporate structure of Build38, which includes entities in three different countries and various intercompany agreements, advanced financial reporting systems were implemented to consolidate information into a single, comprehensive report. Simultaneously, a detailed and dynamic forecasting model was developed, becoming a key tool for projecting revenue growth, expenses, and cash flow, especially considering the long sales cycles and variations in the billing model depending on the client. This approach not only optimized resource management but also enabled the identification and activation of key levers to improve the main financial metrics, ensuring greater transparency and efficiency across all company operations.
- Funding strategy: The available funding options were evaluated, and the most suitable ones for Build38 were selected, including public and bank financing programs. A funding strategy was jointly designed to align the company’s needs with the requirements of these programs.
- Strategic support in the funding round: As Build38’s Fractional CFO, our involvement extended beyond leading a successful investment round that secured over €13M. We also maintained a constant and close relationship with the Board and investors. This comprehensive approach included ongoing support in investor negotiations, management of the data room, advising on the company’s valuation, and overseeing the financial due diligence. Our regular collaboration with the Board not only ensured the success of the funding round but also strengthened Build38’s financial strategy, aligning their long-term goals with investor expectations and market demands.
Positive Impact
Quantitative Benefits
At a crucial point in Build38’s growth, securing significant funding was vital to support their expansion and innovation. We at The Startup CFO led a successful investment round, securing over €13M in additional funds. This capital allowed Build38 to accelerate R&D, enhance products, and expand their market reach.
In addition to equity funding, we also secured €3M in non-dilutive financing. This provided Build38 with the necessary resources to invest in key areas while preserving equity. This funding not only extended Build38’s financial runway but also provided them with the flexibility to invest in critical areas without compromising ownership stakes.
Qualitative Benefits
- Better decision-making: With the implementation of a new, robust financial structure, Build38 was empowered to make more informed and proactive choices. This system provided access to accurate and up-to-date financial data, allowing the leadership team to analyze trends, forecast future outcomes, and make decisions that were aligned with their long-term goals.
- Increased investor confidence: As Build38 secured additional funding and demonstrated a solid financial foundation, it became increasingly attractive to new investors. The transparency and reliability of their financial reporting reassured stakeholders and potential investors alike, leading to heightened interest and investment opportunities.
- Sustainability and growth: The capital secured through the successful investment round was instrumental in driving Build38’s long-term sustainability and growth. With these resources, the company was able to significantly advance its R&D efforts, leading to the development and launch of innovative new products.
A Success Journey with The Startup CFO
What Build38 Says About Us
“Working with The Startup CFO has been essential for our growth. Their team not only helped us secure crucial funding, but they also established a solid financial foundation and led our latest investment round. Thanks to them, we’ve been able to keep our financial department under control, secure funding to accelerate our R&D projects, and strengthen our market position.”
Build38, facing significant challenges in financial management and funding needs, found an ideal partner in The Startup CFO. Working together, we helped optimize their financial structure and guided a successful investment round, setting the stage for sustained growth and enhancing their ability to innovate in the competitive cybersecurity sector.
The story continues…
Contact Us
If your company is facing similar challenges or if you’re looking to improve your financial management and secure funding, contact us today to discover how we can help you achieve success.
Together, we can turn your challenges into opportunities and take your business to the next level.
- Website: www.tscfo.com/en/
- Email: info@tscfo.com
- LinkedIn: The Startup CFO on LinkedIn
