When You Take Other People’s Money, You Don’t Sleep at Night

When You Take Other People’s Money, You Don’t Sleep at Night

Show Notes

It’s not just businesses and individuals that need cutting-edge technology to operate more efficiently, nonprofits need it too. In fact, nonprofits and charitable organizations need it more than most because they’ve been falling behind in that area. Fortunately, tech startup Keela is helping to fix that problem by offering technology that can help non-profits in a variety of ways, from processing donations to engaging with donors to converting donors, all in the interest of helping them to raise more money for their cause and do more good in the world.

Keela founder and CEO Nejeed Kassam joined startup coach Roland Siebelink on the latest episode of the Midstage Startup Momentum Podcast. They talked about the need nonprofits have for better technology, how Keela is solving that problem, and other facets of Keela’s journey.

  • Why and how Keela decided to pivot in its approach to the market.
  • What startups should keep in mind when building partnerships.
  • Keela’s approach to standardizing its sales playbook.
  • Navigating when it’s appropriate to follow your vision or listen to customer feedback.
  • The less traditional approach Keela has taken to fundraising.
  • Why fundraising shouldn’t be considered an achievement.


Roland Siebelink:Hello and welcome to the Midstage Startup Momentum Podcast. My name is Roland Siebelink, founder and CEO of the Midstage Institute. And we help fast-growing startups thrive and keep up their momentum. And one of those fast-growing startups is with me today. Here is Nejeed Kassam, the CEO and founder of Keela, dialing in from Vancouver, BC. Hello, Nejeed, how are you today?

Nejeed Kassam:I'm really well. Thanks so much. Roland, it's a pleasure to be here and happy to be supporting the important work you do and sharing a little bit about the Keela story.

Roland Siebelink:That's awesome. Yes. We have a lot of listeners, founders especially, who are just about to reach product market fit and want to know what comes after.

Nejeed Kassam:Find lots of Tylenol. There's my short answer.

Roland Siebelink:Excellent. Very good. Let's hear the Keela story. Let's start with what do you offer? Who do you serve? And what difference do you make for them in the world?

Nejeed Kassam:Great question. Keela is a technology company that serves nonprofits, civil society organizations, and local governments. We build fundraising technology that helps these institutions, these organizations unlock generosity from their constituents, from their donors. Specifically, our technology - there's a range of ways people use the tech - helps people process donations, helps conversions on them, helps them steward and engage donors, and ultimately get them to give again. For some of our clients, we're the system of record. We're a CRM or a donor management tool. For others, we sit on top of their existing CRM tools. But all of our technology is powered and backed by data and by data science. We have an incredible machine learning team that helps to empower organizations. I saw this really incredible statistic that less than 40% of nonprofits actually use their data. I would bet that's under 20% or 15% for using that data effectively. We try to bridge that gap and do it in a way that you don't need a computer science degree to benefit from. Ultimately, our customers raised hundreds and hundreds of millions of dollars a year collectively and change the world. They're empowering our communities. They're helping folks in need. They're defending the environment and standing up for civil rights. And it makes it pretty easy to get up in the morning and work these 80-hour weeks.

Roland Siebelink:Before we go into some of your customers, can you tell us a little bit about the origin story of Keela?

Nejeed Kassam:Yeah. I feel like I should start by making the declaration, I'm a recovering corporate lawyer. It's an important thing to note.

Roland Siebelink:Oh, no, I'm so sorry to hear that.

Nejeed Kassam:I know. But all of us get out, or at least many of us do, so I'm grateful for that. The origin story of this business is a little bit - it's very personal. My family has lived in three continents over the past three generations, and not always leaving because of choice. My mom and dad were able to get over some very difficult circumstances because of the support of civil society, because of the support of nonprofits. Since I was three years old, I've been involved in the nonprofit sector, as a volunteer, as a fundraiser, eventually as a founder of a nonprofit, multiple executive director, board member, charity lawyer. I've sat in many seats in the sector and have a deep and intimate relationship with the sector. The origin story of Keela is pretty boring. It's like every entrepreneur's story. I was sitting on the board of a nonprofit. I was frustrated by the lack of great technology. I felt the problem. I was the problem. I wanted to solve the problem for our organization. And that began what is a few years now of the beginning of an incredible journey. What's exciting to me is we're innovating for a sector that doesn't get a lot of innovation. There's a lot of money in this space, a lot of technology spent, but it's very antiquated. To be able to serve a sector that has purpose but also do it by bringing incredible transformative tech to solve the problem that I, Nejeed, felt six, seven years ago, 2014, 2015. That's the origin story. We sold our first package in Q4, our first software, Q4 of 2016. And since 2017, we've been on this truly incredible rocket ship up into the right, as they say. Not always comfortably up into the right but definitely now grateful to be considered high-growth and fast-growing and doing incredible work for our customers.

Roland Siebelink:Excellent. Okay. That sounds like a great story. You've been at it for a while. What is the market like? You said there's not much investment in this sector, not that many solutions out there.

Nejeed Kassam:I want to correct the record on that. Nonprofits in the US spend $10 billion a year on software. It's a big market. It's a growing market. They also spend $40 billion a year on professional services and consultants. A space this large has multiple billion-dollar players in it. They've built great businesses around what they're doing, but they haven't built great technology. The tech is clunky, especially for large organizations.

Roland Siebelink:Can you talk a little bit about the traction you've had? I don't know if you can share numbers or some customers that make the story very concrete and how they benefited from your products.

Nejeed Kassam:Yeah. I won't share revenue numbers, but I can share value. Cause I really talk about value. Small to medium sized non-profits who use our technology grow 46% on average. I think it's 30 to 45% after their first year and 10 to 20% year over year. Now that's not the biggest charities. We have an organization that does a hundred million dollars of donations - we're not increasing that by 46%. But on average, especially the orgs sub 5 million or sub 10 million - I forgot which one it is - it's a marked jump. It's real. I don't know how else to say that. It speaks to the value of our technology.

Roland Siebelink:It's really your technology that makes those fundraisers more effective. What exactly does that mean? Is it telling them who to reach out to? Suggesting campaigns? Can you illustrate that a little bit more?

Nejeed Kassam:Obviously, our customer count is in the thousands. When you get to that point, the use cases are truly diverse - there are people that use our tech in ways that I never imagined. That's an honor. It's a badge of honor, I think. Our technology, some of our core features - our forms tools, for example. Roland, where are you calling from?

Roland Siebelink:From San Francisco, California.

Nejeed Kassam:I don't want to say almost certainly, but probably you've made a donation using our technology. Because it's the back end. It's a form on a donation. It's embedded into a website. You'd never know it's us unless you look really carefully at the code. It's embedded. You make a donation through a form, that's our tech. The receipt, you automatically receive that's IRS compliant, that's our tech. If our customer is using our CRM, that's automatically recorded in the CRM. That's our tech. If you want to send a thank you letter and a series of emails or text messages or schedule a thank you call, that's our tech. It's truly workflow and process management tools all informed by that data science and all that stuff. An organization, whether they use our CRM or not, they're running their fundraising operations through our work.

Roland Siebelink:You did mention also in the beginning that sometimes you offer the CRM and sometimes you run on the top of a CRM. Which use case have you found the most compelling and is one or more of an ideal customer than the other?

Nejeed Kassam:Yeah, it actually was never supposed to be this way. If you have a lot of founders who listen, this is the story of the pivot. It's not really a pivot or repurposing, but what we found is a couple of things. The first one is that CRMs are a commodity. But they're a commodity that people are very, very attached to. Even when they hate them, they're attached to them because change is hard. That's the first prep comment or premise of this. The second is Keela's CRM is built really for small to medium sized non-profits, sub 10 million. But all the technology that we built on top of our CRM - our forms, our automation, our predictive analytics, our wealth screening, our demographic data - all of the things that make the CRM powerful are actually not suited only for small nonprofits or medium sized non-profits. We had customers or prospects, organizations who came to us and said, "We have no interest in leaving our CRM. That sounds like a headache that I never want to have in my life. But we want all this cool innovation. We want all this transformative leading edge stuff. Can you offer it?" And it was always no, come join our CRM. We wanted to displace. And then one day we looked in the mirror and said, "Why are we limiting our market? Why are we limiting it to those people when the technology is fundamentally the same?" Yes, there are differences, and as we grew and as our revenue hit different milestones, we were able to take on that capacity, take on a little bit of that risk. And I think that's where - our ideal customer for the CRM or the full suite tool is one to 10 million in total donations. And then the other tool is 10 to 100 - I think we're the largest we have is 100 but it probably scales up to a couple hundred million in donations. But they're only using one slice of the technology stack for whatever they need. That ideal customer is a fundraising organization, and it's only a sliver of their team using it.

Roland Siebelink:Can you talk a little bit about those partnerships? Many founders are extremely interested in how to even get started with partnerships.

Nejeed Kassam:Partnerships are a long game. If you try to get a partnership done in a week or a month, even a quarter, it's probably unlikely. But when you have the relationships or you invest in the relationships, they come to fruition. And I think being a good person, understanding that other companies have their own business requirements and values and their competitiveness. And just being upfront about that. And the other part - we have a lot of partnerships with the sector too. Nonprofit associations that have tens of thousands of nonprofit members or fundraising consultants, or education institutes or whatever in this space. It's a sales pipeline, Roland. For those that don't have those relationships, you treat them like a sale. It's just one-step removed. And you got to work on it. You got to invest in it and you got to bleed for it.

Roland Siebelink:How important are those partnerships for your go-to market?

Nejeed Kassam:Fundamental. I don't know the numbers, but it's material for sure. And I would say it's fundamental. And in this next chapter of our growth, as we continue, there are only so many damn sales calls you can make. No matter how many people you've got. They really do add that network or exponentialized effect. And I would say once you've got product-market-fit or you're damn close to it, that's a great opportunity to start thinking about that because it's really a scale question, but fundamentally important.

Roland Siebelink:Tell me a little bit about your team. You already started that discussion. How big is the team? What kind of people are on it? What are the huge departments?

Nejeed Kassam:Yeah, good question. I think we're 40 something now. I don't know the exact number. It's hard to keep track, but let's say around 50. A couple of things I'm really proud of. We're 40-plus percent women, 42% people of color, which makes me really happy. We're a little more product heavy than go-to-market. It's right about equal. I don't know what the number is, but if you add UX, UI, product management, engineering, delivery, all of that, it's about up the middle. I think a little bit more product heavy, probably. Of course, on the go-to-market side, we have our customer care department, which is what we call customer success, our marketing team, and a couple of people working on the sales team, mostly to catch all those leads and convert them to sales.

Roland Siebelink:Yeah, and partnerships, is that a team too?

Nejeed Kassam:One person, and she is amazing. I guess two. It's two people.

Roland Siebelink:That actually shows how seriously you're taking it at. You're actually putting full-time people in partnerships.

Nejeed Kassam:I think she is the most - I'm saying this in an interview and I'm happy to share it - her return on investment is incredible.

Roland Siebelink:Okay. Very good. We talked a little bit about competition, but I wanna talk about competition in the focus of the go-to market. If you said there was a lot of legacy software out there, I'm assuming many companies were already working with something, how did you break into that market? How did you try to get people to even consider the inherent pain of having to consider switching solutions?

Nejeed Kassam:Absolutely. The crazy data point is 40 or 37% of nonprofits in the US still don't use a CRM. And that's why we started small. I don't think that's why we started small. I should not take credit for a strategy that mostly just happened. The reality was our first customers were people - well, we didn't know our very first customer - but our first early customers were folks that we knew in the communities I worked in or I had relationships in, as every startup is. And those were small sub-$2 million organizations. Thankfully, those are also the ones that are most underusing CRM. That's how it started. There's a greenfield opportunity for a new market entrant, the innovative, easy-to-use played really well for these non-CRM-using customers or prospects. And it just worked.

Roland Siebelink:How long did it take for you folks to figure out what's your standardized sales playbook? What maximizes your chances of closing a sale?

Nejeed Kassam:A good founder - and I'm going to pretend I'm one for the sake of this conversation, or aspire to be one - says that you don't figure that out, you keep tweaking it. It's always changing. As the stock market crashes, as COVID, and God knows whatever happens, that's going to be tweaked and changed. I would say it took about 18 months to figure out the cadence. What's our normal sales cycle? How do we understand that? We just needed enough data to be able to see trends and to pattern check, and to look at a little bit of cyclicality, and the different kinds of leads and the different channels and how they converted in the rates. What to me is basic, maybe not to all folks - basic data analysis. But you need to have enough data and enough mistakes and learnings to be able to confidently assess it.

Roland Siebelink:Was there a particular point in your sales pitch that you were sure was going to be a killer point that didn't land at all?

Nejeed Kassam:Good question. That didn't land? That's a good question. When we originally launched, we had more of a project management element as well, because we thought with CRM, projects are the other half the work. And not landing is an understatement. It crashed, it burned. I would say that would be an example. Stay the heck away from it is what I tell our team now. We've got 50 customers that still use it. We can't get rid of it.

Roland Siebelink:That happens. You have a few people using the feature and even if you don't consider it a core part of the product anymore, those 50 users will want you to keep it open for them.

Nejeed Kassam:And 50 customers in a B2B SaaS business is a real customer base. It's real revenue. But that crashed and burned pretty hard.

Roland Siebelink:I'm asking this example because a lot of founders are struggling with how strong I should attach myself to my vision and not give up versus what I learned from customers and then adapt to customer feedback. What's your learning there?

Nejeed Kassam:Yeah. I think it's a hybrid between the two - I think it's really important. You've got to run through the wall with your vision and know that sometimes you got to change directions. You might've run through the wrong wall. To answer your question, I think founders have got a shout from the rooftops but be strategic and assess. If your message isn't hitting, you're either way too ahead of your time, you’re too behind your time, or you're saying the wrong message. I think it's a balance. Now, with our innovation, we're able to lead the industry. I heard this great quote on a TV show. It was some philosopher in ancient France who was like, "Oh, there go my people. Tell me where they're going so I can lead them." And it reminds me of your question. You both have to have their attention to be able to lead them where you want because transformation is big in terms of what we do. But you got to have your customers to do it. You gotta have a voice. You gotta have an audience. It's a balance between running through the wall of what you believe and listening to what they have to say.

Roland Siebelink:Yeah. I love that. It also reminds me of another - I'm not sure he merits the title philosopher - but he said you have to be ahead of your people but not more than one street length or they cannot follow you around the corner. That was the famous business guru Vladimir Ilyich Lenin. I guess he was a leader. I wanted to hear a little bit about your fundraising strategy for your own business.

Nejeed Kassam:Oh, God. We've taken on capital, not a huge amount. We're not bootstrapping.

Roland Siebelink:Was the seed round two, three years ago, I believe.

Nejeed Kassam:Yeah, in two parts but yes. We've taken a less traditional approach. For the first couple of million bucks, we just went out as we needed it, to be honest with you. Friends and family and angel investors. And then we did a seed where we got a couple of glorified angel investors. An angel and a couple of their friends, they started this little seed fund. We didn't really feel the need to get an institutional investor early. Now we're having those conversations. What I like to say - and I've taught this to many founders, groups and individually - fundraising doesn't look like it does on TV. It's not like I have this idea, get pre-seed, then get seed once you get your first $50,000 of ARR. It doesn't work like that. Sure, for three startups that you know that became billion dollar companies, but there's 3,000 other ones that didn't go like that, that might still be equally or more successful. But even the survival bias, the narrative - and I think VCs are either to credit or to blame, depending on what side of the table you're at - they've created this because there's a power dynamic too. And that's neither good nor bad; it's just true. What I would say to founders is don't raise capital unless you absolutely have to.

Roland Siebelink:It has to be a part of the business model almost.

Nejeed Kassam:And that business model has to scale. That's the part of the sentence that people forget.

Roland Siebelink:It's only worth it when it scales for investors. Otherwise, there's no point.

Nejeed Kassam:Exactly. Stay away from external funding. Friends and family, fine. Take your first 20,000, 50,000, a hundred thousand, a million, whatever you can do and keep the valuation as low as possible. And don't take capital unless you are certain if I spend money on this, I'm going to see this return on investment. Again, it's not that simple. It's not that black and white. But when you take other people's money, you don't sleep at night. That's the truth.

Roland Siebelink:Okay. That might be a good title for the podcast if you're willing to use it for that.

Nejeed Kassam:And I'm very grateful to our investors. And I want to be super clear on the record. They're incredible, wonderful people. But it's a different game then.

Roland Siebelink:Yeah. As somebody said when we interviewed them for our Midstage Momentum book, the term funds raising is really a misnomer; it's an irrevocable sale of part of your company, if not part of your life.

Nejeed Kassam:And it's a marriage. You can get divorced, but it's messy, it's expensive. And it takes a long damn time.

Roland Siebelink:And most founder relationships last a lot longer than most marriages these days.

Nejeed Kassam:I'm very happily married, so I will say that.

Roland Siebelink:Good for loyalty. How big do you see Keela become, Nejeed?

Nejeed Kassam:Our target's a hundred million in revenue. It continues to be a hundred million. I don't care about the valuation, although that would make a nice valuation. I care about a hundred million in revenue equals this many customers spending this much money every year with this much reliance on our technology. And then from a product perspective, what do we need to do for their bottom lines - and even nonprofits have bottom lines; they need to scale, they need to raise, they need to whatever. How much value can we create? What's really cool is if it's a 10X rule, which is what I want, if we have a hundred million of revenue, we need to create a billion dollars of value to our customers. I don't care what the valuation is, although I do care. I care about what is the ROI for my customers. Because if that's good, the rest will fall into place because that's how math works.

Roland Siebelink:Yeah. And I really love how that's your true north star, the value you create for your customers.

Nejeed Kassam:We don't announce our raises publicly. It's a policy. We did it once and I'll never do it again. Never say never, but you shouldn't celebrate raising capital. You should celebrate launching a product or a staff member overachieving targets or creating impact for your customers.

Roland Siebelink:Or a hundred or a thousand or 10,000 customer lifelines.

Nejeed Kassam:Yeah, that’s a celebration that's worth it. Releasing a new version of your software, rebuilding something, adding a new department, these are things that create value for the business. Raising money, somebody described it to me yesterday as a necessary evil - necessary is the adjective, evil is the noun. You shouldn't celebrate that. You should celebrate the stuff that matters and is adding value to the market.

Roland Siebelink:I love that insight. That's really good, Nejeed. As a last question, if people want to hear more about Keela, figure out more, where should they go? And is there a particular thing that they should look at or download?

Nejeed Kassam:I don't know about download but it's a good question. Just go to keela.com, K E E L A.com. You're going to learn a ton about our technology. I think from a content perspective, our blog is awesome. It has got so much incredible content that we create internal, external. It's got great premium stuff that you can download to learn more about specific things in the sector. It's a beautiful homage in terms of the team and to our company and our growth. That's where I would start.

Roland Siebelink:Okay, excellent. Thank you so much Nejeed Kassam, the CEO and founder of Keela. Thank you so much for your time, your honesty, and your amazing insights.

Nejeed Kassam:Of course, it's a pleasure. Thanks for having me.

Roland Siebelink:And thank you to all the listeners. Once again, we'll have a new episode for you next week.

Roland Siebelink talks all things tech startup and bring you interviews with tech cofounders across the world.