“If you’re going to start a company, have a really big idea,” says Transmit Security Co-Founder and President Rakesh Loonkar, “and have a plan of how to get there.”
Loonkar recently brought his voice to The Founder Formula podcast hosted by Trace3’s Vice President of Marketing, Todd Gallina. The episode focuses on the recent record-breaking Series A funding round completed by Transmit Security — a capitalization that raised $543 million to kill off passwords for good.
“I’d like to give our audience a little bit of context on why that is so monumental,” Trace3 Chief Marketing Officer Sandy Salty begins, “So I’m going to share some stats:
“The average seed round equates to about $2.2 million in funding. And I’m talking not industry-specific. To add, only ten percent of companies that manage to reach the seed round are successful in raising their Series A. It’s safe to say that going from seed to Series A is pretty monumental in its own right.”
She points out that the average Series A round is about $15.6 million in the US, while the Series B and C rounds are $33 million and $59 million respectively.
“Transmit Security raising $543 million in just in their Series A is orders of magnitude higher than the average,” she continues, “which puts them in unicorn status. What’s the story behind the $543 million you have to share?”
“First, let me assure you that the venture capital industry and the private equity industry are not totally crazy,” Loonkar laughs. “There is actually an incredible business achievement behind the numbers.”
Loonkar founded the company with his business partner Mickey Boodaei in 2014 with bootstrap funding. They eventually paid themselves back over time, and the company will turn over $100 million in revenue this year.
“Our net retention, or the measure of how much customers like us and want to keep doing business, is excellent. It’s 121%. We were able to generate more than $90 million in cash, so by the time we got funded we had more than $75 million on our balance sheet. Behind that funding number, there’s this incredible business story that no one ever heard of.”
Loonkar explains how the big idea behind this success — completely eliminating passwords — is directly responsible for the company’s meteoric rise. The problems of passwords are immense, he says, and the ways in which Transmit Security solves those challenges are in high demand. Loonkar points out the many technical difficulties that companies face when attempting to achieve genuine passwordless authentication and the streamlined solutions that Transmit Security uses to help them tackle those problems.
The subject turns to the essentials of disrupting an existing market as an entrepreneur. Loonkar notes that the likelihood of success when taking on a much bigger idea might discourage some entrepreneurs from taking action.
“Most enterprises fail. If you’re going to do a startup, you might as well do something big. Because if you apply the probability of success and multiply it by the potential outcome, you’ll see that the outcomes are always much, much bigger and better,” he concludes.
“That’s the core advice to anyone. If you’re going to start a company, have a really big idea and have a plan of how to get there. And that, in turn, will help define you as an entrepreneur. It will define the quality of your ability to be an entrepreneur by how big you think.”
Bringing a wealth of experience from the cyber industry, Rakesh founded OneSecure (acquired by Juniper Networks) and co-founded Trusteer (acquired by IBM). As an active voice, pioneer and mentor in the cyber industry, Rakesh has invested in many promising cyber-security start-ups which have evolved into industry leaders. Today, he is the President and Co-Founder of Transmit Security where he leads and inspires the sales, services, support and pre-sales engineering teams. In 2020 and 2021, Rakesh was recognized as part of Goldman Sachs’ annual 100 most intriguing entrepreneurs.