Lisa
I’m Lisa Calhoun, General Partner at Valor Ventures. We’re an Atlanta based seed-stage firm and this is the Atlanta Startup Podcast where I get the opportunity to interview some of the top founders in and around Atlanta. This time we have a real treat Louise Wasilewski, who is the founder and CEO of Acivilate. Welcome, Louise.
Louise Wasilewski
Thanks, Lisa. Happy to be with you.
Lisa
So, you have amazing news. You walked in this morning with it. Please go ahead and share it with our listeners.
Louise Wasilewski
Yesterday we heard we won a contract we didn’t even bid on. How often does that happen?
Lisa
It sounds like it’s a pretty serious contract too. What effect is it going to have on your revenue this year?
Louise Wasilewski
The effect on revenue, it’s going to be more next year and out years because it’s a multi-year contract. There will be integration revenue this year but the important thing for us is it opens up a new market segment for us. This is a project to serve people who are caught up in opioid addiction. There’s been a lot of federal money trying to make a difference around the opioid crisis. We’re working with a partner, and you know, this partner bid on the contract and they just let us know yesterday that they were awarded that. We’re delighted to be able to bring our tools to help vulnerable people and the people helping them into that space as well.
Lisa
Congratulations! That is so exciting. I want to rewind and let everyone catch up with what you do at Acivilate. Could you give us your elevator pitch for the company?
Louise Wasilewski
Sure. At Acivilate, we built a software platform to connect and empower vulnerable people and the caseworkers that work with them. In simple terms, we help prison commissioners cut the number of people who go back to prison after they’re released. If you look at foster care, we’re helping birth parents get their children back faster. In the opioid case, it’s about helping individuals find the assistance they need and helping the emergency services and treatment providers help those individuals when they’re struggling.
Lisa
I feel really honored that I was among the VCs that heard your first pitch a couple of years ago and have seen the platform really expand since then. I still think you have such a powerful origin story though, would you mind sharing that?
Louise Wasilewski
I am happy to share that. My background, I was a genuine teenage rocket engineer and I have an MBA from Emory. I have five patents. I helped invent digital television and I’ve got a 30-year career in technology. I’m perfectly qualified to do the work that I’m doing but the reason I’m doing it is that when I was a teenager, my father got a criminal conviction. As a result of that, he lost his job. He couldn’t get hired again. He spent six months looking for work and then he started day laboring because that was the only work he could get, and then ended up being an independent contractor. My family went through the social and economic consequences of involvement in the criminal justice system. It’s a little bit difficult to talk about because he passed away in May. But he made the front page of the local newspaper with his obituary because he had been such an important part of the community in the art scene. There was nothing about his background in that story because it wasn’t relevant. It was not who he is, or even who he was. It was just a thing. He was proud of the fact that that terrible experience that he had was going to lead to being able to transform second chances for people like him and for kids like I was too.
Lisa
Thank you so much for sharing that and really sorry for your loss. But the way you’ve transformed the inspiration of those hard times for him and your family is fantastic, and an engineer of your caliber turning to software to do it? Wow. For the founders of our audience, I really want to focus on how you’ve built the company because it’s also a very difficult industry. You’ve picked one of the most challenging industries. Let’s start at the beginning. How did you first raise capital to build the very first product and approach your first customers? I am really thinking about those founders out there who have similar motivations, who could really relate to your story and feel overwhelmed by the size of the mountain they’re climbing.
Louise Wasilewski
I have to say, Lisa, if I knew how big the mountain I was going to climb was, I don’t know if I would have been able to start. But with all the optimism and energy and the vision that you have, when you can see how to solve the problem, you decide you’re going to go do it anyway. That’s what I did. I spent two years researching the marketplace before starting to build anything. You might look at us and say, “Gosh, you started the company in 2014. How come you’re only raising a series A now?” The answer is for two years, I was basically in stealth mode. You could call it stealth funding, but really learning what was needed. I interviewed a ton of stakeholders, returning citizens, their family members, probation and parole officers, judges, people who worked in prisons, jails, academics, and policy people elected. The first thing that I did, and I got a ton of help from a place called Flashpoint at Georgia Tech, was to really understand the wants and needs of all the different stakeholders. That’s the cheapest time in the company, to do customer discovery before you’ve hired anyone. It means that we didn’t build a product that was really misdirected. That’s not to say we haven’t had to modify some things with learning after launch but we saved a ton of money that way. Those phone calls cost you next to nothing you can do while you’re in a regular job, perhaps. Through Flashpoint, we had some investor conversations but we were basically turned down because we’re selling to the government and nobody believed that the government wanted to fix this issue. I put in basically my retirement savings and so did my co-founder and we got a couple of angels. In terms of going after customers, I was talking to customers’ prospects before we had the product. One of the most awesome days of my life was when we showed a prototype-based basically and done in one of these prototyping tools with no code, Balsamiq, to a prospect and she said to me, “If you build that it will fix my problem.” That’s when we started building. In the end, that customer has had difficulties purchasing because of staff changes, procurement rules, the leader at that facility got promoted to the cabinet secretary, and then they couldn’t buy on behalf of the facility. I think the other part of that is attaching your wagon to people who are leaders, innovators, and that person as they rose, we’ve carried that relationship with them. It just meant the original prospect entity was not valid. We raised a seed round from BIP Capital. I think the real story is that our partner had told us no. One of my advisors here locally, Kelly Gay, who’s now the Chairperson of Venture Atlanta said to me, “When you have a pitch, practice your pitch on someone who you know is not going to invest in you but get them to give you feedback. Somebody you respect.” I went to pitch to Paul Iaffaldano because I really respect his opinion. I knew he would give me blunt, straightforward, painful advice, the kind of thing you need to hear. I knew he wasn’t going to invest so I wasn’t nervous, which also helped. I think you’ve provided that same advice, too. With Startup Runway, you give people an opportunity to pitch and to get feedback in a very safe environment. Paul kindly offered to meet when I asked him. I pitched to him and I literally sat there with my pen in hand and my notebook. I’m waiting for all the redding he’s going to pour over my pitch and all the stuff I haven’t fixed yet. Instead, he said, “You’ve really got something here. Let’s go and think about it.” It ended up being about six months before we actually got the term sheet signed. They were very good to work with us to help maintain the women-owned status after the round which clearly can be an advantage in government contracting. Paul was just fantastic to work with. Things took way longer than we actually expected. We ended up doing a convertible note. We’re now preparing for a series A, as we’ve just seen some tremendous things happening this summer with revenue. It’s been a much slower journey than you would expect, or than I would have expected.
Lisa
You heard that you really had something from a seasoned seed investor. Paul’s been, an investor for I want to say almost 30 years. If you’re listening, Paul, that’s all respect, not age. He’s amazing, right? BIP has led the seed round [with] so many strong companies. It is a shame that they’ve grown so much on their success. They no longer do seed rounds but fortunately, in our ecosystem, there are a lot of seed funds and firms coming along filling those big shoes. For people who are approaching those seed firms this year, what’s one or two things you would say? Give them the tough advice aside from it taking longer than you think. You’re like, “Hey, go pitch to people who you expect to know from and get real feedback.” Is there anything else that you would advise your younger self or your seed round self?
Louise Wasilewski
I would say, right now, investors’ biggest concern is how on earth are you going to survive COVID? Do they want to know what has your business done differently? What is the impact of COVID on your customers? Where does it present an opportunity for you? They also really want to hear where it has set you back. Investors don’t really trust founders, you have no negatives. I think it’s important to be able to grass and frame and be comfortable in the uncertainty. When we realized what was going to happen back in March, we completely rebuilt our financial forecast and spending plans. We built two plans. One was, this is what will happen if we win no new accounts. We were expecting some expansion in existing accounts but this is what will happen if we get no new accounts. This is what we’ll do if we go to a new business. By the way, we don’t expect that new business to show up until like October. We just put some kind of plugs placeholders in there. One of the investors we spoke to said, “Why does all this stuff show up in October?” And my answer was, “Here’s how the government funding cycle happens. Here’s what’s happening with prisons, here’s what’s going to be happening. I don’t know but for sure, but this is my best guess, based on these facts.” We’ve continued to have conversations with the investors. They want to know where the uncertainty is. They want to know the foundation. It’s not that they know your business better than you, they just want to learn how you think about your business. The one thing you can be sure of with the financial forecast in a startup is it will be wrong. It might be under, it might be over. It might be later, it might be earlier. It cannot possibly be right because too many things would have to happen at once. The investors are just trying to understand how you think about things that you have a grasp of your market and that you’ve reflected that grasp in that forecast.
Lisa
You’re so right. That is so pro. I think no investor out there believes the forecast but you want to work with a founder who can work with you on forecasting your relationship together when we’re both on the cap table. If the founder can’t talk about the high, low in numbers, not just in ideas and feelings and visions, but in numbers, then they don’t have a full grasp of what could happen, and it’s very hard to help change their trajectory. As an investor, you want to help the founder raise their trajectory. In theory, your capital raises it a little bit and then your coaching and connections raise a little bit more. But if you don’t have a sense of where things are in numbers, even the best and educated guess, that’s not possible. I think a lot of founders at the seed stage especially in the earliest of revenues, seem so irrelevant. It seems so meaningless. It’s hard work for them to do because they don’t grasp the why behind it that you so eloquently put together.
Louise Wasilewski
What’s really hard about it is I am an individual of very high integrity. That’s partly driven by my dad’s experience that I just don’t want to go anywhere near any gray lines. It’s particularly important to me personally. If I know there’s a wide range, it was a struggle for me to commit to things that I couldn’t with certainty, right? My whole career has really been built in spaces with risk and managing down that risk, right? When you run a $25 million software project, there’s a ton of risk and your job is to manage the risk down, right? Not to do things with no risk, founders will have never started companies, but to manage down that risk. I found it hard to say this is what it’s going to be when I know that’s not right. You have to go with your best guess with justifications for that guesstimate.
Lisa
Plus or minus 30% to 60% variance. Let’s talk a little about how the company has matured. Thank you for pulling back the past and helping founders see your life as it was then. Since your seed round, you’ve had a lot of growth and maturity and a lot of successes along the way on the path to opening up your A. I’d love to hear about some of those achievements after your first funding and really set up a conversation you were so gracious to say be willing to have about how you think about an A round. I’m looking forward to getting into that. I want people to see the path between the two phases and how you’re ready now for a.
Louise Wasilewski
The way we wrote our seed round, it was actually in two tranches. We did not hit the milestones for the second tranche on time. Our signed customer was telling us they were going to do X, Y, Z on a particular time frame. They were not able to do it. They didn’t know they were not going to be able to do it, but we’d kind of pin down our hopes on them following through and we still have a tremendous relationship with that customer. They just weren’t able to do it. We didn’t walk away, we stuck with them. Customers really appreciate it when you stick around when they’re going through difficult times and just about every customer is going through difficult times right now. It meant that we needed to go and raise more money because the revenue hadn’t come in and we couldn’t trigger that second tranche of equity funding. We did a convertible note. I’m very thankful that a number of our existing investors chose to join that note as well as a new firm. That money was starting to run out when COVID hit. We had to adjust our operations a little bit to allow for that. We got a PPP loan, and I’m very thankful for that. That wonderful customer that was not able to move ahead actually called one afternoon and said, “Can we pay you early?” That helped us through a liquidity challenge. We are still here and along the way, we got a federal grant for a randomized control trial. You might have heard of that as a clinical trial, just like we don’t actually need FDA approval. What it does is it shows that our tools have a positive impact on individuals’ lives. We won contracts with a couple of other states and some other smaller deals. We just heard last week that that original customer has got a $750,000 award to integrate our mobile front end to their back office and that integration shows that they’re going statewide. It also materially increases our revenue. We’ve got a number of other offers on the table that we’re expecting to come through again based on the federal funding calendar. We should maybe finish December at a time million a year run right in revenue. That is a four x plus growth rate. That’s how I know we’re ready for our series A. We really have traction, we have a tremendous opportunity and we’ve been around long enough to have very candid conversations with our customers about their needs. They’re going, “Okay, we really have this particular problem now. It’s called in reach. How can you help us within reach?” It’s exactly what we built for that nobody else does. Finally, they realize they need the thing that we worked out through Flashpoint and all that discovery four years ago, while they see their need now that they can’t do business face to face.
Lisa
When you think about it four years, it can seem like a long time. It’s not really that long a time. When you think about government services and industries like the prison industry. It’s a slow moving industry.
Louise Wasilewski
It’s an industry where reputation is really the only thing that matters. In many cases, it’s very difficult for governments to purchase from companies that are not three or five years old, or meet certain other thresholds. I knew it was going to be tough. I have to say, when I started the company, I did not expect to be selling to this customer. In fact, they were the last customer I wanted to sell to. I interviewed everybody else and tried to find anyone else who was willing to pay for my services. In the end, the only people who really cared about cutting the number of people going back to prison are the people who foot the bill for the President. It’s the commissioner or the cabinet secretary. Maybe I could have saved some time if I was willing to go sell to them at first. But on the other hand, I wouldn’t have learned all the needs of all the other stakeholders and it is bringing all of these stakeholders together that makes us different.
Lisa
When you think about that series A lead that will have the opportunity to next round, describe to me how you see the ideal series A lead for Acivilate.
Louise Wasilewski
First of all, they need to be patient to understand the intricacies of government sales. We have some shortcuts. We’re on a multi State Procurement vehicle but there are some things that just can’t change. We need an investor that is willing to understand that we would love somebody with a healthcare background. We believe we have the basis to build a self sufficiency matrix that might not sound very approachable, but to apply psychological concepts to our software, and to how we coach staff on interacting with clients. Somebody with a sort of healthcare or behavioral health background and understanding would be tremendous. We’re going to have to scale our customer support massively. Somebody with understanding in that area would be great. I think research is going to become important for us. We may end up needing, for example, a setup of a nonprofit arm to a nonprofit sidecar. I’ve heard a lot of talk about nonprofit side cars, I haven’t found many people who’ve done them. An investor with that kind of experience that can understand that there might be situations where we’re better to go to market with a nonprofit that buys from the for profit perhaps, or that we’re better to go to market with a for profit, somebody who understands that nonprofit for profit balance that’s driven by the fact that we’re working with governments and potentially with non nonprofit treatment providers,.
Lisa
Who are some of the leading foundations that work with formerly incarcerated and people who are on the path to regaining their independence?
Louise Wasilewski
Arnold has been doing a ton of work in this space and MacArthur Foundation. With Gwinnett County, we were like a sub awardee on a MacArthur Foundation grant. The Ford Foundation has done material work in this area. What I’d say Lisa is, we started in criminal justice because investors say, “Get a foothold in a market and build a brand in a market.” But we built the product to expand really broadly across human services. It could be worked with veterans and with domestic violence survivors. We’ve got a tiny homelessness pilot getting started with the opioid crisis that I mentioned. Any foundation that is working to move forward vulnerable people will find whether they want to or not that they are involved in criminal justice reform because in the US behaviors of vulnerable people have been criminalized. People end up on probation for something trivial. If you’re working with vulnerable people, those vulnerable people are working with a criminal justice system whether you realize it or not. We want to help change that by working with the people who are in a position to implement the change.
Lisa
One of the things I’ve noticed is that a lot of the larger investors who traditionally back venture capital are getting more aggressive about how they fund the innovation that they need. I think that’s a failure on the part of venture capital to fund meaningful innovation at times. Some of those foundations that would usually and do still invest in VC are also getting more aggressive about going direct. We’re in an interesting period in time. When you look at how venture capital is traditionally deployed and avoiding industries like the one that you’re in just because of the timelines, well, those timelines really align with mission driven organizations. It’ll be interesting. You mentioned the Ford Foundation and the good work of MacArthur. I also think about Annie Casey Foundation, the Kellogg Foundation and even the new venture fund launched by American Family Insurance is over a $200 million fund looking for new markets in more vulnerable populations as a part of their perspective.
Louise Wasilewski
Nyra Jordan has given me great advice and I’m very thankful for conversations with her.
Lisa
She is a powerhouse. It’s great to have her involved in Startup Runway, and I know she’s very impressed with you. I think there’s probably some innovation coming even in your A round. It’s quite possible because things are a very dynamic time right now.
Louise Wasilewski
Yes. I think the other thing is some businesses have really struggled with COVID I don’t know what I would have done if I’d been in the restaurant business. It’s a tremendous challenge. For us, it really shut things down in the spring when we were expecting some prospects to move forward. They delayed, but what’s happened is they are now realizing that they cannot do their job remotely without tools to bring people together. Our customers are being forced to change rates they have never considered possible before. We have this tremendous point of inflection and openness of mind that a trusted party that’s been hanging around asking for business and trying to be helpful for a while. We’re really in an opportunity to do that. I think what it’s also revealed is that cracks in the system that a single agency didn’t realize was there. They didn’t realize how their staff were bridging cracks in person. they’ve not been able to do it remotely. There’s just tons of innovation opportunities everywhere and it’s unfortunate that it has taken such a painful crisis to reveal these contours.
Lisa
You’re absolutely right, though. COVID is accelerating a lot of technology, a lot of transformation, because it’s needed. You said it very well. A lot of the cracks that were filled by people by going above and beyond doing that extra thing, they’re not able to do that in person. These processes are suddenly broken in so many industries? It’s interesting. It’s a great time to be in venture capital. I think it’s a great time to be a founder. If you’re trying to solve a big problem, the big problems are bleeding.
Louise Wasilewski
Yes. I think you have to change your vocabulary and the way you express the way you’re working on problems. For us, we’ve sort of ripped out some of the academic language that’s usually used to say your evidence base. We’re just going straight for the jugular in terms of here’s what your staff are dealing with now that we can help with. Here’s what your vulnerable people are dealing with now that we can help with. Before, you had to sort of get through that evidence based academic hurdle to get to the other conversations, and now everybody’s just, “Here’s my problem. I’ve got 18,000 people getting out of prison, and they have no way to get connected with services, they are going to come back if they don’t get help, can you help? How many can you help with?” But our answer’s got to be to all of them. The answer has to be all of them but without budget getting in the way, right? Because we are in the business to help people. We cannot let numbers get in the way at a time like this.
Lisa
For someone who hears this and thinks, “Oh, my goodness, that’s our problem and I just happened to be listening to this podcast.” How should they get in touch with the Acivilate to get the fastest help or onboarding onto your platform?
Louise Wasilewski
Well, we onboarded an elder care agency in New Hampshire in three days. Speed of onboarding is not an issue. We can do that at scale. We’ve got procedures for that, but in terms of getting in touch with us, we have contact information on our website. You can sign up there for a pilot and I would recommend just use that form and we’ll follow up with you there. My email is pretty simple. It’s louise@acivilate.com. If you want to reach us by phone, it’s 770-POKKET. Pokket is our product.
Lisa
Awesome. I just wanted to make sure anyone who heard that segment was able to get in touch. But I did want to segue that and talk about building and managing a team, and some of your lessons learned as your team has evolved on this journey. What’s one or two things you would share with other founders that are building young, volatile dynamic companies that can onboard 18,000 people in a few days?
Louise Wasilewski
In your pitch deck, team is a single slide which makes it look unimportant compared to slides on your financial forecast. Here’s a slide on your market size, here’s a slide on your exit options, lots of numerical things. The team slide feels kind of fuzzy. Even as I’m asking investors that were talking about our A round, “What’s most important to you even at the A round?” The answer they put first is team. It’s not intellectual property. It’s not even traction. If you have traction but you don’t have a team, you’re going to spin your wheels. It is very easy as the CEO when you’re out there selling and raising capital, and you just don’t have time for anything else. Do I even know if my husband has a beard or not, kind of thing. If you’re just that busy to think, “I’ll get back to the team later.” Those dynamics are very important. If you find you’ve got a problem, you need to step in and do something about that. When I have an issue like that, I seek advice from multiple people before addressing it, because often there are multiple perspectives. When you try and address something, you can end up with unintended consequences. You’ve got to have in mind the individual’s well being, whatever that means. Start your conversation that way and to really plan your conversations. I think it’s also important where you look for people to find people who are going to have a similar values fit. I don’t really like the term fit, because fit has too often been used to exclude people who come from a different socio economic category. As a woman, that’s worked to my disadvantage. But things like honesty, integrity, admitting you’re wrong, those things have no correlation with gender orientation, race, ethnicity. That’s what I mean when I say fit. Do they have the same values as us and not if they went to the same business school or something? Most colleges have hiring fairs which are a great place to find young people but you’ve got to have leadership that can make sure that they are living the values. If you see behaviors that are not correlated that you address those. If you’re in a very relational industry like us, something like payments is perhaps not a terribly relational industry. As we are basically not a transactional platform, we are a relational platform. That’s how our customers think and behave. They work with you because of your values and because of your integrity. Because they know they can rely on you. It was interesting to me to hear somebody just say integrity is doing what you say you’ll do. For my customers, integrity is doing the right thing. Those are not the same things. If you say you’re going to do something and it’s the wrong thing to do, in our company, you shouldn’t do it. Even if you committed to doing it, you should instead stop and say, “Gosh, we’ve realized that wasn’t the right thing.” Instead, we think this is the right thing for these reasons. Can we change tack, right? I think it’s a very interesting time right now when words are being appropriated for meanings they didn’t originally have. I think that’s also an important thing when you’re talking with your teams not just to use words, but to explain what those words mean. You got to care for your team and be more elastic. Give your team more flexibility than you might have done before and recognize we’re all humans. We talk about bringing your whole self to work. I believe that builds greater loyalty in your teams when we are caring for each other. That also means when I struggled like when I lost my father, that my team was caring and supportive of me and I’m very thankful for that.
Lisa
Very well said. I so agree that the words have to be defined, especially in today’s multicultural environment, which is a great blessing to perform. It’s a great blessing to forecast but some of the words that one member of the team uses don’t mean the same as how the other team member might use it or get associated with that language. I think you’re really onto something. [You’re] some of the most brilliant founders to focus on the behaviors. It’s such a strong sign of a strong leader, Louise, it’s really great to hear that and thank you for sharing that. I know you’ve got a busy business to run. You’re expecting an incredible October and I’m sure you’re scaling for that. You’re in the middle of a fundraise, so I definitely want to let you get back to it. But before you go, I know you’ve already mentioned Georgia Tech and what you learned there, but we always close with asking our guests to talk about three people that they feel that every founder in Atlanta, should get to know on their journey. For you, right now, who are three people that you would suggest founders get to know?
Louise Wasilewski
I would start with Jill Burks. She might not expect me to say that but she gave me one really, really valuable piece of advice with something that she’d had a difficulty with that opened my eyes to that risk. That’s been an important part of thinking about our series A. She’s got a small fund but she’s very engaged in the community and as a successful entrepreneur. I would say Bob Cramer from Chairman Partners. Bob is an investor in us, Joel isn’t. You know, full disclosure. He is very realistic. He saw the potential for what we’re doing and he has stuck with us for a long time now since 2014. Often advice I don’t want to hear, I don’t take all of it. The part of advice is listen to it and sift it. Somebody’s giving you advice and never knows your whole situation. I’m very thankful for that. I would say Kelly Gay if you can find her. Kelly is the Chairperson of Venture Atlanta. People were recommending her to me for about two years before I was able to earn her attention. She served as an independent on our board and when I am struggling with board management issues, Kelly is who I turn to because she has been there and done it. She is so generous and also forthright.
Lisa
She has worked on a couple of boards to great exits in her role as CEO and she is a board whisper among many other skills. Those are three fabulous recommendations. Folks jot it down, get your networking kit out, go to LinkedIn These people are there. They’re there for you. They love helping founders. They are founder focused. Louise, thank you so much for your time and your transparency today. I know that several people got what they needed from this conversation. I really appreciate you showing up and sharing.
Louise Wasilewski
Well, thanks, Lisa. Thank you for what you’re doing right. You certainly gave me advice back at 3686 whenever that was. I can’t remember which year
Lisa
it was a long time ago.
Louise Wasilewski
It was quite some time ago but we are both still standing.
Lisa
Absolutely. Good luck with the series A I know it’s going to go fabulously and I look forward to your amazing powerful updates. Take care.
Louise Wasilewski
Thanks, Lisa.
Lisa
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