Sometimes Diligence Takes a Decade: Announcing Our Investment in Scout RFP
Our belief is that every great investment starts with picking the right trend and market. But the real force behind a successful high-growth company is its leadership team. Often, getting to know that team is a hurried affair of daily “dates” over a hot and heavy few weeks of diligence. Sometimes you’re lucky and you’ve known the team for a year or two. The length of my courtship with the Scout RFP team has been something else entirely.
Timing is everything
I first met Alex Yakubovich and Stan Garber a decade ago as they were commercializing a college dorm room experiment that they turned into enterprise-grade software that gave customers like Applebee’s online ordering functionality. That might not seem revolutionary now, but back then the iPhone was barely a thing, online food ordering apps hadn’t scaled, and GrubHub was only available in Chicago. I was very impressed by what these two young founders out of a small technical school in Ohio were building. I didn’t get a chance to invest, though -- a theme that would recur.
Alex and Stan successfully sold that business to LivingSocial and we lost touch until a chance encounter at a conference in Las Vegas years later. Instead of resting on the laurels of their early success, they were in the midst of relocating to San Francisco because they felt the Bay Area would be the best platform to launch their next business. They pitched me on an early version of Scout RFP in my old living room. I immediately loved the business, but since we don’t do seed investing, the timing wasn’t right to invest—again—though I did get a chance to recommend our good friends at NEA.
I vowed not to miss the next opportunity. But as luck would have it, timing didn’t line up and I missed the Series B, making it three missed opportunities to work with Alex and Stan. So when they started talking about their Series C, I jumped.
Scout RFP fundamentally improves enterprise sourcing
While this story is very much about the team, I want to highlight why Scout RFP is particularly thematic for Scale Venture Partners and why we love the trends and market. Businesses are increasingly outsourcing everything outside of their core differentiators (a simple example is the migration to cloud hosting or the rise of the gig economy). Doing so, however, creates a new set of operational challenges clustered around sourcing, evaluating, and managing an increasingly complex vendor ecosystem.
Procurement software is a multi-billion-dollar market, but the legacy products are designed around the work that happens after a vendor has been selected. Sourcing those vendors, however, is a process that is still mostly done in spreadsheets. The few sourcing systems that exist are add-on modules attached to large procurement solutions. Imagine recruiters not having Applicant Tracking Systems and being confined to whatever solution their HRIS systems provide.
Scout RFP solves these inefficiencies by leading with a focus on the upstream sourcing problem. They help procurement departments as well as business executives throughout a company migrate to the cloud and ditch the custom spreadsheets, documents, and forms. “Visionaries” is often tossed around lightly, but Scout RFP is clearly a case where the founders’ experience as industry outsiders was crucial to approaching strategic sourcing from a completely different perspective.
What do Zappos, Conagra, and VMWare have in common? Scout RFP.
We love that Scout RFP’s opportunity is broadly horizontal: the more a company outsources non-core business functions, the more benefit the Scout RFP platform can deliver. We are stunned by the quality of enterprise logos for such a young company (if you click that link, be prepared to keep scrolling). We may have never encountered such an enthusiastic set of customers for an enterprise-grade product. Simplicity and ease of use is core to the Scout RFP solution and one of their key measures of success is how quickly a new customer creates their first “sourcing event”. In an industry where the competition counts in months, Scout RFP delivers in days: 89% of Scout users launch their first event within a week.
I’m incredibly excited to announce that ScaleVP is leading Scout RFP’s Series C. Thank you Alex, Stan, and the rest of the Scout RFP team for the many years of patience to finally make this happen. I’m also looking forward to collaborating with our friends at Menlo Ventures, NewView Capital, Salesforce Ventures, and Workday Ventures. Onward and upward.
Originally published January 15, 2019.