20VC Construct Your Fundraising Process To Get 3 Term Sheets in 36 Hours, Why Slow and Steady Can Be Best For Startups & Why All Startups Must Know Their Zero Cash Day with Nathan Wenzel, Founder & CEO @ SimpleLegal

Summary Notes


In this episode of 20 minutes VC, host Harry Stebbings interviews Nathan Wenzel, the pragmatic and sustainably-minded founder and CEO of Simple Legal—a startup that has secured a $10 million Series A funding led by Emergence Capital. Wenzel shares his journey from consulting to founding Simple Legal, emphasizing a slow and steady growth approach that contrasts with the typical VC-driven, rapid-scale model. Despite initially facing VC rejections, Wenzel's persistence and focus on building a solid business led to multiple term sheets and a successful funding round. He discusses the importance of knowing when to accelerate growth and the balance between maintaining low burn rates and aiming for profitability. Wenzel's experience through market corrections has shaped his cautious yet optimistic outlook on startup growth and capital raising.

Summary Notes

  • Nathan Wenzel is the founder and CEO of Simple Legal, a startup that helps legal operations reduce legal spend and improve operational efficiency.
  • Simple Legal recently raised a $10 million Series A round led by Emergence Capital, with participation from Susa Ventures and Rincon Venture Partners.
  • Nathan is characterized as a pragmatic and sustainable leader, in contrast to the typical "growth at all costs" mindset.

"So in the hot seat today, I'm thrilled to welcome Nathan Wenzel, founder and CEO at Simple Legal, the startup that helps legal operations, reduce legal spend and improve operational efficiency."

This quote introduces Nathan Wenzel and provides a brief overview of his company, Simple Legal, and its mission to help legal operations.

  • Nathan's journey to founding Simple Legal was a "ten year accident" beginning with a consulting project in 2002.
  • He and his co-founder started a consulting business focused on dashboards and business intelligence.
  • They grew their consulting business for ten years, eventually transitioning to software after recognizing a gap in legal department software.

"Saw that the data was all the same, saw that the software was just universally not great, and then set out in 2013 to launch Simple Legal, the software company."

Nathan explains the realization that led to the founding of Simple Legal, noting the uniformity of data and the poor quality of existing software in legal departments.

Transition from Service-Based to Software-Based Business

  • The transition from a service-based to a software-based business was challenging, particularly in terms of customer expectations and revenue.
  • Nathan and his co-founder faced skepticism from customers accustomed to traditional service models.
  • They self-funded the initial development of Simple Legal, which involved personal financial sacrifices and a slow customer growth phase.

"For the first 18 months, we built software. It was just the two of us. We paid ourselves very little. So that was not a fun period of time."

Nathan describes the early days of building Simple Legal, highlighting the financial and personal challenges of developing a software company from the ground up.

Pragmatic Approach to Startup Growth

  • Nathan's approach to growing Simple Legal was slow and steady, focusing on product-market fit and reaching the right milestones.
  • This approach contrasts with the traditional VC-driven model of rapid scaling and aggressive sales tactics.
  • Despite advice to aggressively sell the product, Nathan chose to take time to ensure the product was right before expanding the team.

"We knew we had something and we knew we just needed to get to the right product market fit."

Nathan emphasizes the importance of achieving product-market fit and reaching key milestones before pursuing aggressive growth strategies.


  • Harry Stebbings promotes WePay, highlighting its integrated payments processing and customer service capabilities.
  • Pipedrive is mentioned as a sales CRM and pipeline management software used by the 20 Minute VC team.

"WePay helps online platforms increase revenue through integrated payments processing... Pipedrive is the sales CRM and pipeline management software to use."

Harry provides information about WePay and Pipedrive, explaining their benefits and how they are used by the 20 Minute VC team.

Conclusion and Acknowledgments

  • Harry expresses enthusiasm for having Nathan on the show and thanks Jason Lemkin at SaaStr for the introduction.
  • Nathan appreciates the opportunity to be on the show and is a fan of the 20 Minute VC.

"I'm now thrilled to introduce Nathan Wenzel, founder and CEO at Simple Legal."

Harry concludes the introduction by welcoming Nathan to the show and signaling the start of their conversation.

Slow and Steady Growth in Business

  • Slow and steady growth can be suitable for SaaS, particularly in enterprise SaaS.
  • This approach is not recommended after finding product-market fit but can be vital in the early stages.
  • The philosophy of "move fast and break things" is incompatible with businesses that require high levels of trust and compliance, such as those dealing with financials and legal issues.
  • Slow and steady growth is more appropriate for businesses that intersect with CFOs and general counsel due to the need for trust and compliance.

"I think in SaaS, especially in enterprise SaaS, it's probably okay to start that way." This quote emphasizes that a cautious growth strategy can be beneficial for enterprise SaaS companies during their inception phase.

"The idea of move fast and break things really doesn't work if you need to be socks compliant and if you're asking your customers to trust you with their financials." This quote highlights the incompatibility of aggressive growth strategies with industries that require regulatory compliance and trust, such as financial services.

"And so that slow and steady is probably the right approach and then those." This quote suggests that a measured approach to growth is advisable for businesses in sensitive sectors where trust is paramount.

Growth Strategies for Different Business Models

  • Consumer-facing businesses, social networks, e-commerce, and app-based startups benefit from rapid growth and user acquisition.
  • Products that are easy to adopt and use should aim for fast growth to iterate and improve based on user feedback.
  • Atlassian is cited as an example of a company that successfully grew with a large customer base and a product that's easy to buy and use.

"Anything that's more like an app that you can just start using, I think your best bet there is to just move as fast as you can and get as many people as you can using the product." This quote suggests that for app-based or consumer-facing products, a rapid growth strategy is ideal to quickly gain users and feedback for improvement.

Determining Sufficient Growth Rates

  • The appropriate growth rate is subjective and can depend on the founder's perseverance.
  • Early-stage growth may not be uniform but should show continuous improvement and learning from customer acquisition.
  • A near-zero churn rate in SaaS is a positive sign, indicating that even small accelerations in growth can lead to significant future success.
  • The focus should be on improvement and acceleration rather than a specific growth rate.

"So I think rather than the sort of rate of growth, it's more about are you improving it?" This quote suggests that the key indicator of healthy growth is continuous improvement, not just the growth rate.

"As long as you're accelerating, no matter how small, then I think, you know, the growth will come, because with SaaS, especially if your churn, our gross churn was near zero." This quote indicates that in SaaS, as long as there is some acceleration and low churn, growth is likely to follow.

Venture Capital Interaction with Slow Growth Models

  • VCs typically rejected the approach of slow and steady growth.
  • The company's founders were first-time venture-backed entrepreneurs but had previous founding experience.
  • Despite initial VC rejections, they found investors who were more aligned with their growth mindset outside the Bay Area.
  • VCs generally do not favor slow customer acquisition models as presented in early pitch decks.

"Well, they all said no, so that was pretty easy." This quote reflects the general VC attitude towards slow growth strategies, which is often unfavorable.

"I literally had in the first iterations of the slide deck, that we would just slowly add customers one by one and occasionally get large customers, and then we would start to grow." This quote reveals the founders' initial pitch to VCs, which emphasized a gradual customer acquisition strategy.

Market Corrections and Venture Capital

  • Nathan Wenzel has experienced market corrections, such as the dot-com bust and the 2008 financial crisis.
  • There is a concern that reliance on continuous VC funding without considering market corrections can be dangerous.
  • Companies that have not experienced market downturns may be ill-prepared for funding challenges.
  • The current generation of Bay Area millennials may have unrealistic expectations about the perpetual availability of VC funding.

"And I think this idea today that VC money is just always around the corner. And if you need more money, you just go and ask for it. It's a dangerous assumption to make." This quote warns against the assumption that VC funding will always be readily available, which may not hold true in market downturns.

Company Burn Rates and Profitability

  • Keeping burn rates low or at net zero is crucial, especially before finding product-market fit.
  • Companies should be aware of their "zero cash day" as well as the day they can become profitable.
  • It's important to balance burn rates with the ability to become profitable, allowing for increased spending when necessary.

"But we always keep an eye on what it would take to become profitable. And we know where that number is." This quote stresses the importance of being aware of the path to profitability, even when spending is increased post-funding.

Impending Market Correction

  • Nathan Wenzel hints at the possibility of an upcoming market correction.
  • The statement "one bin, one to go" suggests that after experiencing past market corrections, another may be on the horizon.

"Well, I think that depends on the stubbornness of the founder." This quote implies that the anticipation of a market correction may be influenced by the founder's perspective and experiences.

Natural Cycle of Markets

  • Markets operate on cycles influenced by greed and fear.
  • Valuations in both stock and private markets tend to revert to the mean after extremes.
  • Major downturns are followed by recoveries, as seen in the 2008 real estate and financial crash.
  • The concept of "making it" through a crash suggests a return to basic survival skills if the economy completely collapses.

"I think there's just natural cycle to it and that people operate on greed or fear. And when you see the stock market run up, when you see the valuation in the private markets run up, it's going to revert to the mean."

This quote emphasizes the cyclical nature of markets, driven by human emotions, and the inevitability of a return to average valuations after periods of significant growth or decline.

Sustaining Morale During Uncertainty

  • Leaders should focus on local successes during times of macroeconomic uncertainty.
  • Concentrating on the company's internal aspects, customers, and product helps maintain optimism.
  • Individual perceptions of success or failure are not necessarily altered by macroeconomic conditions.

"You look for the wins in the customers that you have. You focus on internal items, you focus on your company, you focus on your customers, on your product."

The quote suggests that during uncertain economic times, a leader should maintain morale by celebrating small victories and maintaining a strong internal focus on the company's core operations.

Raising Capital in the Tech Ecosystem

  • Raising funds is often seen as a measure of success in the tech industry.
  • The process of securing an A round of funding is strategic and can differ significantly from earlier seed funding rounds.
  • Building relationships with venture capitalists (VCs) and choosing the right partners is crucial for a successful funding round.

"We had raised a $2 million seed round at the end of 2015... And then as we approached the end of 2016, we thought, all right, well, the growth has been there. It's time to raise the A round."

This quote outlines the timeline and thought process behind moving from a seed round to an A round of funding, highlighting the importance of demonstrated growth as a precursor to seeking further investment.

Strategy for VC Engagement and Selection

  • The approach to engaging VCs involved targeted conversations without revealing extensive financial details.
  • The selection of VCs was based on their expertise in heavy enterprise SaaS and top-down sales.
  • The company sought VCs with specific knowledge and experience that aligned with their business model.

"We started pitching, actually, at the Saster annual conference at the beginning of February. And then a month later, we had three term sheets all come in within a day and a half of each other."

The quote describes the successful outcome of a focused and strategic approach to VC engagement, resulting in multiple term sheets in a short period.

Criteria for Choosing a Lead Investor

  • Experience running a business and understanding of P&L management were key factors in selecting a lead investor.
  • The ability to relate to the specific sales motions and customer profiles of the company was important.
  • The chosen VC, Emergence, had a partner with relevant operational experience and investments in similar business models.

"Santi in particular had run a business... And so that was a big part of what we were interested in. Plus, he's seen these kinds of businesses before."

The quote highlights the importance of the lead investor's operational experience and familiarity with the company's business type as critical factors in the selection process.

Flexibility in Fundraising

  • Not being in immediate need of funds provided leverage and flexibility in fundraising negotiations.
  • Having a profitable business and supportive seed investors as a fallback option strengthens a company's position.

"We didn't need to raise money. Had we chosen not to raise money, we would have been profitable by the beginning of the third quarter."

This quote underscores the advantageous position of a company that is not desperate for funds, allowing for better negotiating terms and the option to delay fundraising if necessary.

Reflection on Fundraising Rounds

  • Reflecting on the success of past fundraising rounds can be challenging due to the unique journey of each company.
  • Relationships and introductions play a significant role in connecting with the right investors.
  • Considering improvements for future rounds involves evaluating the process and outcomes of past experiences.

"It's hard to second guess yourself, looking back... And so it's hard to really think about what you would do differently because you would lose the journey of how you got there."

The quote conveys the difficulty of critiquing past actions in fundraising when those actions were part of a unique and serendipitous journey that led to the company's current position.

Personal Relationships with Investors

  • Personal relationships with investors can go beyond business interests.
  • Having a personal connection with investors can influence the reluctance to change past decisions, as the outcomes align with personal desires.
  • John Greathouse from Rincon had a conversation with Nathan, emphasizing personal investment over financial gains.

"And he just laughed at me and said, man, I'm in this for so much more than just the money at this point."

The quote reflects the investor's perspective that the value of the investment goes beyond monetary returns, indicating a deeper personal commitment.

Quick Firearm Segment: Immediate Thoughts

  • The segment is designed for rapid responses to short statements.
  • The responses are limited to 60 seconds, and the structure is strictly enforced.

"So I say a short statement and then you give me your immediate thoughts in 60 seconds. I'm very strict."

Harry Stebbings explains the rules of the quick-fire segment, highlighting the need for concise and quick responses.

Favorite Book: "Only the Paranoid Survive"

  • Nathan's favorite book is "Only the Paranoid Survive" by Andy Grove.
  • The book influenced Nathan's view on startups and their ability to compete against larger companies.

"To be only the paranoid survive. Andy Grove I think that book changed how I viewed startups, and it basically gave me the reason for why startups can win over these large players that should just dominate them from the beginning."

Nathan explains the impact of the book on his understanding of startups' potential to succeed against established corporations.

High Output Management

  • Nathan has not yet read "High Output Management," but it is recommended to him.
  • "High Output Management" is implied to be a valuable resource for startup management.

"Have you read a high output management?"

Harry suggests another book for Nathan, indicating it's a noteworthy read for those interested in startup management.

Contrarian Belief: Building Successful Businesses

  • Nathan believes that while many people in the startup world talk about building successful businesses, few actually follow through.
  • There is a discrepancy between what is often said and what is done in practice.

"I think a lot of it is just, especially in the startup world, is building that successful business is the key. And I think everyone says that, but no one does it."

Nathan expresses his contrarian belief that there's a gap between the rhetoric of prioritizing business success and the actual actions taken by people in the startup industry.

Y Combinator (YC) Experience Surprises

  • Nathan was surprised by the age diversity at YC, debunking the myth that it's only for young entrepreneurs.
  • YC's focus on business growth and development was more intense and less social than expected.

"I was 35 at the time and I was not the oldest. So I think the idea that YC is really just for 22 year olds is kind of a myth."

Nathan shares his unexpected realization that YC is not just for very young entrepreneurs, as there is a broader age range among participants.

Favorite Blog/Newsletter: SaaStr

  • Nathan highly values the SaaStr blog for its relevance to his business needs.
  • He has personally communicated with Jason Lemkin, the writer behind SaaStr, about the blog's insights.

"Well, there's definitely the Saster blog. I've spoken to Jason and told him I needed to sweep the office for bugs because it seemed like everything he wrote was just spot on, aimed right at us."

Nathan appreciates the SaaStr blog for its targeted and pertinent content that seems to directly address his business challenges.

Hiring Philosophy: Hire Fast, Fire Fast

  • Nathan disagrees with the "hire fast, fire fast" mantra.
  • He believes in finding ways for the team to be successful and taking time with certain hires, like the six-month search for a director of marketing.

"You know, I disagree with that one. I think the manager's job is really to find how their team can be successful."

Nathan challenges the quick hiring and firing approach, advocating for a more thoughtful process that ensures team members have a chance to succeed.

Hiring Speed for Different Roles

  • Nathan agrees that some roles allow for faster hiring due to more objective targets.
  • Account executives and sales development representatives (SDRs) were roles he hired for more quickly.

"Sure. I mean, we hired two account execs very early on as we started hiring people. And so that one, we definitely moved faster on."

Nathan provides examples of positions where he applied a faster hiring process, indicating that certain job roles can accommodate quicker decision-making based on clear performance metrics.

  • Nathan's focus for the next five years is on growth, building on the foundation of their legal department products.
  • After raising a Series A, Nathan's goal is to expand on the current successful strategies without changing direction.

"I think it's all about growth. I mean, we've got the products set. We have our core two components of our product that really lay the foundation for companies to operate their legal departments."

Nathan outlines his vision for Simple Legal, emphasizing growth and scaling up based on their established product offerings and customer base.

Acknowledgments and Excitement for the Future

  • Nathan and Simple Legal received positive feedback from Leo and Jason, indicating mutual respect and anticipation for the company's future.
  • Harry Stebbings expresses gratitude to Nathan for his participation and looks forward to future developments.

"Absolutely. Nathan and I cannot wait to see the future that lies ahead. As I said, I heard so many great things from Leo and from Jason. So clearly the love is mutual."

Harry Stebbings shares his excitement for Nathan's future endeavors and acknowledges the positive impressions shared by others in the industry.

Social Media and Content Promotion

  • Listeners are encouraged to follow Nathan and Harry on social media for updates and to suggest future show guests and questions.
  • The promotion of WePay and Pipedrive highlights their value to online platforms and sales professionals, respectively.

"And if you'd like to see more from us, then you can follow Nathan on Twitter at nwenzel. Nwenzel. Or you can follow me on Snapchat at htebbings with two B's."

Harry Stebbings invites listeners to engage with them on social media for further interaction and content suggestions.

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