Cliniko is 100% privately owned. There are a lot of businesses that are privately owned, but sadly that’s become quite unique in the software industry. There’s a large amount of money available to software entrepreneurs, and investors are desperately hoping to get in on the next Facebook, Google, or other billion dollar success.
The way it works, generally, is an investor will put in anywhere from tens of thousands to millions of dollars into a software company for a share of the business. The percentage of equity given to the investor depends on how the business is valued and how much investment was made.
The most important thing to note is that almost every investor wants their money back (with a big return) within 5 years. They are not looking to invest in a growing profitable business and they’re not interested in getting their fair share of profits over an extended time period. They want you to spend all of their money as quickly as possible to grow as fast as you can. Then, they want an “exit” within 5 years, perhaps even earlier. The “exit” might be an acquisition of your business, going public, or anything that lets them cash out in a big way.
This does make sense for some businesses. Google is a good example. They needed a lot of infrastructure to make Google as fast and reliable as it is, and to store the massive amount of data they house. This isn’t cheap and would be almost impossible to do without funding.
For a business like ours though, we don’t have that need. The only motivation to raise money and grow fast would be so that we can cash out big. It’s not that we don’t like money (we’re not that unorthodox!), but it’s certainly not why we built Cliniko and it’s not our primary motivation. We just want to make the best software possible for our customers and be proud of our work.
So if we raised money, why would that be so bad for you as a customer of Cliniko?
First, we’d no longer be able to focus on making the software as good as possible. Right now, we’re spending our own money (we haven’t forgotten this money comes from you and we really appreciate it). When it’s our cash, we can choose how to spend it. However, if we raise money, we’re now spending someone else’s funds. Even worse, we’re spending someone else’s money and all they care about is fast growth and a big payout. As you can imagine, that would mean a lot of our time and effort would have to go towards sales and marketing instead of building a great product and providing great support.
Second, the “exit”. The exit can be many things but, for the most part, it’s selling Cliniko to the highest bidder. This highest bidder may not care about Cliniko or our customers. If we’re lucky, it’s doing an IPO and going public. Perhaps we still get to retain control of the company, although now we’ll have a board and be answerable to our shareholders. The shareholders still only care about profit and growth. If we’re not so lucky, and probably the most likely scenario, we get acquired. This means another company now owns Cliniko.
Who knows what happens to it if we’re no longer in control: Cliniko could get shut down or maybe we get acquired by a competitor who just wants to move our customer base over to their product. It’s possible that we get acquired by a large company that only wants our team and our expertise, but doesn’t need Cliniko to exist. It could be anything, but it’s unlikely they just want to make Cliniko as good as it can be for our customers.
It’s very rare an exit is a good thing for the customers of a product. Rdio recently got acquired by Pandora and was promptly shut down (Rdio: Goodbye… for now). Facebook have made many acquisitions, this is Mark Zuckerberg’s thoughts on acquisitions:
We have not once bought a company for the company. We buy companies to get excellent people… In order to have a really entrepreneurial culture one of the key things is to make sure we’re recruiting the best people. One of the ways to do this is to focus on acquiring great companies with great founders.
As a business, we’re always spending someone else’s money. However, it’s our decision where the money comes from. We don’t want it to come from an investor who wants fast growth at all costs. We want it to come from our customers who use Cliniko. In order to do right by our customers, our motives need to be aligned with them.
Our mission is to make the best software possible. Raising money would prevent us from doing this. We plan to be around for for a long time, much longer than the 5 year ticking time bomb that funding gives you. We appreciate the generous offers of funding that are made to us regularly, but we’re not interested.