Image Credits:SecurityPal <\/p>\n
There\u2019s a generally accepted script in Silicon Valley: Identify a startup idea. Sell a chunk of your company to raise venture capital. Make sales. Raise more venture capital, and make more sales. Repeat until the company goes public, or gets acquired, hopefully for billions either way.<\/p>\n
But what if you didn\u2019t get on a fundraising treadmill after taking a first round? What if you structured your company to sprint to profitability through slower, sustainable growth, rather than the reverse \u2014 unprofitable growth \u2014 as so many VC-backed companies do?<\/p>\n
That\u2019s the question that Pukar Hamal, founder and CEO of SecurityPal AI<\/a>, asked himself after raising a $21 million Series A round in 2021 and, a year later, almost running out of money. The round was led by David Sacks\u2019 Craft Ventures, with participation from Andreessen Horowitz\u2019s Martin Casado and Okta co-founder Frederic Kerrest.<\/p>\n \u201cI started the company back in March of 2020. It\u2019s my second company that I founded,\u201d he said on TechCrunch\u2019s Equity podcast this week.<\/a><\/p>\n His previous company, which sold via an acqui-hire, had raised its first capital before product-market fit, he said. That\u2019s pretty common. Founders often raise before they\u2019ve got a product that they know customers will pay well for.<\/p>\n In retrospect, Hamal described that decision as his big \u201cmistake.\u201d<\/p>\n So for SecurityPal, he did the reverse. He waited until the company hit $1 million ARR, which took about a year, and then did his first and only raise, the Series A.<\/p>\n SecurityPal uses AI to speed enterprise security due diligence, which occurs in every large enterprise transaction when signing new IT contracts. SecurityPal promises to shrink the security review from months to days or even hours, helping companies to save money on the process while closing deals faster. It has big-name customers like Airtable, Figma, LangChain, and Grammarly, among others.<\/p>\n But in 2022, he faced a crisis. Interest rates rose and crashed the venture capital market. Raising more funds would be tough. \u201cWe were burning a lot of capital,\u201d he said. \u201cWe were, like, 14 months away from running out of money.\u201d<\/p>\n It was a wake-up call. Hamal had to drastically cut expenses, which meant a big layoff. That was so painful, he said, that he vowed to do things differently. \u201cWe extended our runway, and we tried to drive the company towards cash flow break-even, cash flow positive profitability,\u201d he said.<\/p>\n Although in 2025 VC money is flowing again, especially for AI startups, \u201cwe haven\u2019t raised another round,\u201d he said. The reason? He sees now that VC money comes with its own price tag.<\/p>\n Weiterlesen <\/p>\n \u201cThe more capital we raise, the more expectations there are going to be, the more we\u2019re going to sort of give up control of the company, the more pressure we\u2019re going to feel to just hire a bunch of people that might not work out,\u201d he said.<\/p>\n \u201cFor venture capital, what matters is growth,\u201d he said. For some investors, fast revenue growth is more important than improving gross margins, he said.<\/p>\n That means a company can fall deeper in the red even as it sells more. VCs trust that founders will figure out profitability later. Until then, they can keep raising funds. And if they can\u2019t, the company might not survive.<\/p>\n Hamal wanted what he described as \u201cdurable growth\u201d for SecurityPal: slow and solid.\u00a0If sales were limited to a handful of deployments at any given time, his team could ensure that all customers were well onboarded, even for their edge cases.<\/p>\n He didn\u2019t want fast sales only to have customers not use the product and churn come renewal time. \u201cThat story happens all the time because there\u2019s so much pressure on companies to grow,\u201d he said.<\/p>\n On the other hand, he said he found that slow ARR can lead to \u201chealthy gross margins, great cash collection.\u201d<\/p>\n Hamal is clear that he\u2019s not advocating against venture capital. Other startups may have to keep raising and chasing fast ARR. He\u2019s not even ruling out another round for SecurityPal. He just wants more founders to think about the slow-growth, nuanced alternatives.<\/p>\n \u201cI raised venture capital. And I haven\u2019t raised it again because what I\u2019m trying to do is put the business in a position where it doesn\u2019t need venture capital over and over again,\u201d he said.<\/p>\n Listen to the whole conversation on the Equity podcast<\/a>, which includes Hamal\u2019s suggestions on how to find capital outside of venture.<\/p>\n