When COVID-19 hit, Envoy CFO Sinohe Terrero quickly secured $30 million in venture debt. But the money was only partly about helping the workplace management software company get through the downturn. Even though Envoy's business model is built around people working in and visiting brick-and-mortar offices, it was looking ahead to what a post-pandemic future meant for offices, and it wanted to be prepared.
"We wanted to make sure we could hit the ground running in every aspect of our business," said Terrero, a 19-year finance veteran of several startups, including crafts marketplace Etsy. "We could have decided to raise equity, but with an environment that was so unpredictable, from a valuation standpoint, it was not a good time. So we raised a venture debt line for $20 million for operating as well as another $10 million bolted on for acquisitions."
Envoy launched in 2013 as a SaaS platform to help organizations manage visitors, process deliveries, and book conference rooms. Its latest product, which rolled out during the pandemic, aims to help organizations enforce capacity limits once workers return to the office.
"Your employees have to check in," Terrero said in a CFO Thought Leader podcast. "Once you reach [a selected limit], you're told you cannot come into the office because we're at capacity."
Terrero credits Envoy CEO Larry Gadea with the product's quick rollout. "We had all of these tools, so when COVID hit, all we did was tweak them a bit to respond to the needs of the customers," he said.
Terrero cut his teeth at startups, beginning with a venture within Citi. "It was basically an acquisition Citi had made and that group was like a startup," he said. "I was able to help implement systems and that allowed me to help that particular part evolve and gain more customers."
He joined Etsy as vice president of finance and analytics during its days as a startup. "It was in 2008 in a very quirky office in Brooklyn where, literally, you pressed down to go up in the elevator," he said.
Key to his rise as a finance leader was what he learned from Etsy's board, which he called a Who's Who of tech innovators. It included Fred Wilson of Union Square Ventures, Jim Breyer of Accel and Danny Rimer of Index Ventures.
"I couldn't have paid for the education," he said. "Nothing could set the bar that high."
At the time, the company outsourced its finance function to a bookkeeper. "My first [task] was basically taking the QuickBooks file and bringing it in-house," he said.
Because Etsy was a marketplace rather than a seller of products or services, its finance team focused on data analytics more than accounting. "We didn't send invoices. We didn't have bills. We didn’t have accounts receivable that you would normally have," he said. "So, understanding the transactions of the business on the data side was the primary responsibility."
That focus changed as the company grew. "By the end, obviously, we had a full accounting team," he said. "We had international operations. We had multiple offices and started doing the migration of our accounts payable to Ireland."
New revenue source
One of his recommendations helped Etsy spark revenue growth when it was looking to help its users sell more products. He and Isaac Oates, then vice president of special projects, convinced the company's leadership to charge for the product, which worked with the payment function.
"We were discussing whether we should just build this product in order to enable sellers to sell more, and therefore the uptake would be the additional transactions," he said. "We argued it can be a revenue source, and it should be priced to make money."
Today, the product is a major source of Etsy's revenue. "It was pretty game-changing," he said. "You look at the percentage of revenue that it now comprises for Etsy and it’s actually pretty sizable."
Scaling for growth
At Envoy, Terrero tracks the metrics that have come to be standard for a SaaS company, including annual recurring revenue (ARR), customer retention and churn. But he pays closest attention to customer acquisition costs (CAC) and sales efficiency.
"When you start bolting on that sales team, you have to make sure you're keeping track of the trends in efficiency in adding that net new ARR," he said.
If the company is spending too much to bring in new business, it can impact how attractive it will be when it seeks to raise more capital.
"I see it as a journey," he said. "Changing these numbers takes a long time. So I try to keep my focus on incremental improvements as we build a story for the next round and to build a scalable company. I’m always thinking 12 to 16 months ahead. How do I want my metrics to look? Which ones don't look good now and need to change? CAC and sales efficiency are the ones that can get away from you quickly."