"In one sense, I'm pleased Diligent is acknowledging BoardPro has taken serious ground in the governance software market," BoardPro minority holder Michael Stiassny says. Photo / File
"In one sense, I'm pleased Diligent is acknowledging BoardPro has taken serious ground in the governance software market," BoardPro minority holder Michael Stiassny says. Photo / File
NZ governance software maker BoardPro has closed a $2 million "bridging" round ahead of a Series A raise that founder Brett Herkt says will be in the US$10m to US$15m range.
Herkt, who now has 23 staff, says he'll use the new money to continue an offshore push for hissoftware, which allows directors to build an agenda, keep minutes, share and annotate documents, communicate and vote in a single online system - which works with popular platforms like Zoom if you're in virtual meeting mode during the pandemic.
His company has just opened an office in Australia - its first expansion market - and the BoardPro CEO says he was on the very first flight to Melbourne after the bubble opened on April 19 to meet new hires, including new chief marketing officer Nick Rameka - a marquee signing who formerly held the same role at LiveTiles.
While Covid has created a "new normal" of hybrid and remote work for many staff, Herkt says some roles are better suited to a more traditional setup.
BoardPro founder, chief executive and major shareholder Brett Herkt says his company has grown through the pandemic. Photo / File
Herkt says software development roles are best suited to remote working, while marketing and sales will get best results if they can collaborate face-to-face in the office.
BoardPro has also felt some heat from its older sibling, Diligent - which delisted from the NZX after a $941m buyout by a New York private equity firm.
Herkt says BoardPro, founded in 2015, has always had a booth at the NZ Institute of Directors' annual conference, which is being held on Wednesday and Thursday this week at the Cordis Hotel in Auckland.
"It's been one of the most popular stands for four years in a row, but this year, Diligent's locked us out," Herkt says.
Past Institute of Directors president Michael Stiassny (who holds a 0.6 per cent share in BoardPro, says: "I'm a user of both products and an investor in BoardPro. In one sense, I'm pleased Diligent is acknowledging BoardPro has taken serious ground in the governance software market. On the other, I'm disappointed by Diligent because the products are in completely different parts of the market."
In response, current IoD chief executive Kirsten Patterson says: "We have a national sponsorship agreement with Diligent that does give them exclusivity over our conference. It's very standard practice for commercial sponsorship agreements and consistent with our sponsorships in other categories such as banking."
BoardPro could still reach IoD members through other methods, such as advertising in the institute's magazine, Patterson said.
Herkt said Diligent's demand for exclusivity was flattering but also "a bit silly" given their different markets. BoardPro has around 1000 small-to-medium business and not-for-profit customers and costs from $150 to $400 a month for commercial customers, depending on the level of features, support and training, with committees charged separately at $45 to $120 each.
BoardPro founder Brett Herkt with NZ Rugby chief transformation offier Nicki Nicol. NZR uses Diligent to run its own board, but inked a deal to use BoardPro for provincial unions. Photo / File
Diligent aims at the top end of town, and includes the likes of MasterCard and Heineken on its hero customer list. The now New York-based company could not be immediately reached, but on its website it says 86 per cent of NZX companies use its software.
It doesn't publish pricing, but Herkt says it typically costs north of $10,000 per year. The BoardPro founder says his product doesn't have features offered by Diligent for its multinational customers, and has no plans to add them. If someone needs to download board meeting minutes to read on a plane, for example, Herkt says he steers them to Diligent.
"Exclusion only serves to inhibit progress," Herkt argues. "Diligent's action actually slows down their own pipeline. Good governance helps small and medium enterprises grow into their target customers."
It's horses for courses, he says. A case in point is NZ Rugby, which uses Diligent's software for its national board, but inked a deal with BoardPro for its provincial unions.
Regardless of their different points of focus, there is no love lost between the pair on Google Ad Words, where their respective hijack efforts mean a search for "Diligent" returns sponsored results for BoardPro and vice versa.
Who's onboard
With new hire Rameka, BoardPro's new Melbourne outpost is being styled as the startup's international marketing head office.
Herkt says his company needs to get a wiggle on. While the Institute of Directors spat has again drawn older sibling Diligent into the narrative, the Boardpro founder is mostly wary of an emerging US competitor in his company's SMB and not-for-profit market.
Hence the thoughts of a Series A round, which is currently pencilled in for 2022 but which could be accelerated.
Then NZ Shareholders Association chairman Bruce Sheppard, in foreground with horns, assesses board performance during a 2008 Contact Energy AGM. Photo / Brett Phibbs
The $2m bridging round just closed was 85 per cent filled by current shareholders, who include investment vehicles for Sir Stephen Tindall and Sir David Levene, plus Winnow Software, which numbers enfant terrible Bruce Sheppard and Kevin McFall, one of the co-founders of local email security firm Mail Marshall, sold to US company NetIQ for US$45m in 2002.
The 15 per cent of new money came from Icehouse Ventures chief executive Gavin Lennox, Ice Angels chairman Michael Murphy and ex-Ryman Health CEO Simon Challies, Herkt says.
Herkt made his initial money as CEO and part-owner of Auckland ISP and data centre operator Maxnet, growing it from a $2m to $15m business before its sale to Vocus in 2012.
Herkt at Auckland's GridAKL shared-space in Auckland's Wynyard Quarter, where BoardPro has based its local operation. Photo / File
He won't disclose current financials but says his five-year goal is to reach $100m in annual revenue.
BoardPro continued to grow through Covid, Herkt says. He was initially bracing for a revenue crash, but a pandemic switch to a free offer proved so popular - in terms of organisations who chose to pay to upgrade to a premium version with more features - that it had to be abandoned by the end of April. At that point, Herkt just didn't have the manpower to bring more customers on board.
Herkt says his BoardPro now "dominates" its market in NZ, which he broadly describes as organisations who want to spend $3000 or less per year on governance software.
His immediate plan is to focus on growing market share in Australia, although BoardPro now has customers in 15 countries.
And if Diligent throws more shade, Herkt says he'll ignore it.
BoardPro will "stick to its knitting" and try to ultimately dominate its niche of the market worldwide.
"And whoever does that will build a unicorn," Herkt says - referring to the startup jargon for a yet-to-IPO startup that hits a US$1 billion valuation.
