Sendio: Spam fighter gets $4M in series A : Lifetime to become an overnight success

Sendio has one of the aggressive spam fighting system. It’s product, the I.C.E. Box performs Sender Address Verification (SAV). SAV is different than filtering because it is not content-based: Messages are not read or scanned, and no guesses are made as to proper content. Every message is checked to evaluate whether or not the purported sender of the message has been added to the recipient’s Accept List.

Little too aggressive and inconvenient to the sender for my taste but I guess everything is fair in love and war and no war has been fought with more vigor then the spam war.

Sendio received $4M round A funding from Momentum Venture Management. previously it had received bridge funding from TechHarvest.

However, that’s not the story; Sendio has a few large customers and it was expected that it will secure financing. Investor’s Daily had an interesting article about them a few days ago and the background story is illustrative of very many startups.

For more than three years, Tal Golan tried to persuade venture capital and angel investors to invest in his startup company. He struck out each time.

Golan had been developing a spam filtering technology since 1996, when spam was just a blip on most computer terminals. By 2002 Golan decided his technology was ready for commercial production and founded Sendio, in Irvine, Calif.

He needed funding for marketing and production to make it big. But investors turned him away mainly because Golan lacked management experience.

And for a good reason too; ideas are dime a dozen: its the execution that counts. Also, this was 2002, the bar was a bit higher then.

Working out of a bedroom, then a garage, and then a one-room office suite, Golan tapped his credit cards and took out a home equity loan to cover his costs. He got the customers the investors asked for. But he still couldn’t get the money.

He got the customers but he was still missing the “management” that is critical in getting from the product phase to a venture phase.

Many startups are finding that traditional routes to raising money are closed. Venture capital investment firms won’t write checks for companies without solid track records. Angel investors — typically a collection of wealthy people who provide startups with capital for ownership equity — used to step in where VCs would fear to tread. But they’re acting more like venture capital firms, wanting higher qualifications than times past.

It is true that the angel investors are looking for higher qualifications, but that’s not necessarily a bad thing. Earlier one has all the ingredients gathered, better the souffle will be.

What Golan really needed — and what he finally found — was a venture management firm. They are early stage advisers who often become interim executives to help young firms get business traction. Venture managers know how to structure a company, attract key partners, customers and capital.

The tipping point for Sendio was finding such a firm, Momentum Venture Management, in Los Angeles. Managing directors Matt Ridenour and Andy Wilson first did an extensive, thorough review of Sendio and agreed to help.

Golan agreed to hand his chief executive title over to Ridenour.

Having been on all three sides of the table (as a startup looking for funding, as an investor evaluating the company and as an attorney putting the deal together) I am not sure whether to fully endorse this route either.

Often, founders won’t let go of senior management titles. The company was their idea; they’ve invested 18-hour days over a period of years and bet the farm on a dream. It’s hard to admit they just don’t have what it takes to go all the way. Not getting folks like this to step aside — when it’s necessary — is a reason many startups fail.

This is a myth, especially for companies that are seeking round A financing like Sendio was at this point. There are several transition points where it is appropriate for founders to cede the management but I have also seen way too many situations where the company was taken away from the founders a little too early, making the passion and “the force” disappear.

“It can be hard to give up control, but for me it was the right thing to do,” said Golan, the firm’s president and chief technology officer. “One of the reasons Sendio could not raise money was me.”

That is exactly the point; most of the founders recognize when they are out of their depth.

Sendio has gone beyond the most difficult stage for a startup — getting the first round of funding and the first few million dollars in sales. The investors who turned Golan away are now coming to him.

“It’s like the saying, ‘It takes a lifetime to become an overnight success,’” Golan said.

I couldn’t agree more! It does take a lifetime to become an overnight success.

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3 Responses to “Sendio: Spam fighter gets $4M in series A : Lifetime to become an overnight success”

  1. By Cliff on Feb 13, 2022 | Reply

    Interesting story. The timing was a bit off for Sendio too; 2002 was not a good year for VC funding or for a good Shiraz wine.
    I don’t think Ridenour had experience in this space, so giving up the CEO post to an outsider must have been tough for the founder.

    I am glad it worked out and anybody who spends time fighting spam has my full support.

  2. By Bobby on Feb 13, 2022 | Reply

    One can’t compare the experiences in 2002 to experience in 1998 or 2006. bubble, dot bust, and the new surge; its a different ball game every time.

  3. By Duba on Feb 13, 2022 | Reply

    I don’t like this method of spam fighting. Sure you can make a fortress so very few can enter, thats not spam fighting, thats hiding from spam.

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