After three funding rounds in its first three years in business, paid-for startup Doxo has seen its momentum stall and investor enthusiasm wane. Instead of signing an unfavorable term sheet to move forward, CEO Steve Shivers chose to reject venture capital entirely until he could reset the company.

The Seattle-based company announced Wednesday that it has raised $18.5 million in Series C funding led by Jackson Square Ventures, its first new round in 11 years. That’s a small size for a funding round at this point — perhaps more representative of the corporate atmosphere when it last raised than in 2022 — but a decade of startups has taught Shivers to be conservative with the capital. He says he deliberately took on less venture capital funds so that a smaller portion of the business would be diluted in favor of outside investors. Instead, he’s betting his business is self-sustaining if venture capital money dries up again. Doxo became profitable in 2020 and now generates annualized revenues over $40 million, he says Forbes. “We think we’ll have over $100 million in about 24 months.”

Doxo’s valuation after the new round is more than five times its previous mark, Shivers says, although he doesn’t elaborate on the number. PitchBook lists the new valuation at $119 million, but Shivers maintains that figure is too low. Either way, Doxo doesn’t seem likely to trade at ten times or more of its revenue, as is often the case for tech startups at this stage of funding. “When there are irrational valuations in the market, you see companies taking advantage of them,” says Shivers. “Some of these companies then get bought out or go IPO, and now they have very frustrated investors because they end up having to take a ride down.”

VC-backed CEOs, Shivers says, can either “try to grow the business to catch up on funding” or they can take the opposite approach, as he thinks Doxo has done. He says he twice turned down opportunities to raise new venture capital in the past four years because the terms were too one-sided to benefit the investor. “In the meantime, we’ve raised as much or more capital with much less dilution,” he says. In the meantime, a new segment of Doxo’s business – which the company launched during its business reset – has begun to take off, helping to push the company’s revenue ahead of the $29 million in capital. -risk that she had raised during her lifetime.

Founded in 2008, Doxo was launched as an all-in-one bill management platform for consumers, charging a fee per bill or a monthly subscription for unlimited service. Business growth was slower than expected, so after its Series B in 2011, the company reduced hiring and experimented with new products. “Our choice was to be lean and capital efficient, or to go up and take a ton of dilution at a valuation that we felt didn’t reflect potential,” Shivers says. In 2015, Doxo added a business-to-business software offering aimed at billers (such as utilities or healthcare providers) rather than bill payers.

Shivers says the billing business started to take off in 2018 and has contributed to 10x revenue growth since then. More than 120,000 billers are now Doxo partners. Especially for small businesses, which account for the majority of customer numbers, Doxo’s software can streamline a process that would otherwise be done through paper-based invoicing. Shivers says most of the Series C will go to growing that segment of the business. It plans to double the number of employees to at least 200 people, some to integrate more billers and others to improve the software, such as adding self-service features to allow companies to manage different types of data. without the need for an IT department.

While Doxo will now prioritize growth over profitability, Shivers believes it will be able to return to balanced cash flow if necessary. For new hires at a startup who receive a common stock option grant, this should be a key consideration, he argues. If a startup raises a lot of money, but then implodes — Shivers cites Better.com as a high-profile example — venture capitalists, who own preferred stock, will receive financial returns before common stockholders receive their share. “You get a company that becomes like the living dead because common stock isn’t really an incentive anymore,” Shivers says. “The fact that we have strong earnings means that employees can be very confident that common stock is worth as much as preferred stock.”