$5 Million Investment in Bootstrapped Refine Labs Helps Company Scale 250%

In May 2022, TIMIA Capital provided a $5 million investment facility to Boston, Massachusetts-based Refine Labs. The investment will help Refine Labs scale its growth and product development and free up more working capital by replacing its revenue financing facility.

Refine Labs builds unique revenue strategies and research to help its clients “stop doing marketing and sales like it’s 2013.” Refine Labs’ philosophy is that B2B buying has changed, the old structures and frameworks are breaking, and revenue teams need to start doing what’s best for their company and customers, not what’s easiest to track. 

Validation of the company’s model can be seen in its growth trajectory — in 2019, Refine Labs had $600,000 in ARR; in 2020, it grew to $2 million; in 2021, it grew to $8 million; and in 2022, it is on track to close $21 million.

Where It All Began

Chris Walker, founder and CEO of Refine Labs, is not a first-time founder. He started two eCommerce businesses in the 2010s and took lessons from those ventures to Refine Labs.

Refine Labs started out as a consultancy where Chris would work with companies that wanted to try innovative things with their revenue engines. “I had this weird dream that the biggest, most well-known companies in the world would come to us to innovate how they generate revenue in the future,” said Chris. 

Chris hired his first employee when the company was doing $15,000 a month. “The hire took us from profitable back to zero again, but I knew that I wanted to build something substantial, and in order to build anything substantial, you need people,” said Chris.

The first year, Refine Labs grew from one to four people; the next year, it grew to 30; and now it has more than 80 people working across its distributed workforce. 

Supporting Customers Through a Downturn

Many Refine Labs customers are venture-funded or private equity-funded SaaS companies. This target audience was arguably the hardest hit in the current downturn. Valuations have decreased, and funding is harder to come by. 

“Today, B2B companies need to operate with lean in-house resources, quickly identify ineffective programs to reduce costs, make deliberate strategic adjustments, and focus investments on high ROI activities,” said Chris. 

Throughout 2022, Refine Labs went back to the drawing board to understand new market needs and make deliberate strategic adjustments themselves. The company is known as one of the best B2B demand generation agencies, but Chris says they intend to leave the category and pave their own way with “Revenue R&D.” 

Refine Labs is transforming from a demand generation agency to a “Revenue R&D Laboratory” by revamping its entire professional services business, rapidly accelerating innovation cycles and IP creation, and increasing investments in product development for its new revenue analytics solution. 

“The combination of intellectual property, analytics tools, and experimentation services to deliver a proprietary go-to-market strategy clearly separates us from the competition. Customers will have a clear choice whether they want a demand generation agency or a Revenue R&D Lab.”

Evolving a True SaaS Business

TIMIA’s investment will help Refine Labs accelerate the development of a SaaS technology platform to accompany its experimentation-oriented professional services. 

The first product, The Vault, aggregates data and insights collected from Refine Labs’ programs and experiments conducted at 100+ B2B companies. It then shares a complete library of objective revenue research and IP to help companies plan, execute, and optimize revenue strategies with data-backed credibility and confidence.

There are approximately 30 customers already using The Vault, and TIMIA’s investment will help Refine Labs accelerate product development to expand this product to a full Revenue R&D solution over the next three years.

In January, the company plans to announce a suite of new products and services that help companies adopt and thrive with Revenue R&D.

Pioneering Revenue R&D

“I continue to challenge the current reality of B2B “Marketing” and “Sales”, said Chris. “This traditional organizational structure & division of responsibilities is failing B2B companies. We are designing and building a new future for how B2B companies and Revenue Teams operate, including a new category of Revenue Professionals called Revenue R&D.”

In August, Refine Labs released a new proprietary framework and methodology called Revenue R&D to provide structure and process for companies to accelerate revenue growth using the scientific method. The crux of this new paradigm is that companies should be innovating how they generate revenue in the same way they innovate with product development.

Revenue R&D is the holistic and scientific process of planning, developing, and commercializing a pipeline of new revenue programs, in addition to evaluating, improving, and sustaining existing revenue programs. Just like Product R&D, Revenue R&D activities focus on building a sustainable competitive advantage, increasing market share, and creating breakthroughs in revenue growth. 

“As a B2B company, what do you need to do to win today? One, you need a great product. And two, you need a great go-to-market. Both of these critical imperatives need an R&D function that consistently delivers innovation to the revenue team,” said Chris. 

Building a Winning Culture

Many startups know that culture is important but find it elusive, hard to define, and even harder to control. This is not the case for Refine Labs. 

Chris and his team understand that a company’s culture is the output of the people who work there. They carefully thought through and documented the values they want Refine Labs and its people to champion. So, although Refine Labs has a distributed workforce, its strong values create a solid culture that attracts the best talent from around the world. 

Values Shaping the Culture at Refine Labs

• Be a multiplier: Together, we’re greater than the sum of our parts. 
• Strength in diversity: We value our differences and commit to creating an inclusive environment that fuels our unfair competitive advantage. 
• Embrace failure: We succeed, or we learn.
• Play the long game: We think and act to service our long-term strategic vision. 
• A growth mindset: We are energized by the endless pursuit of personal and professional development. 

Refine Labs’ Financing Journey

When Refine Labs reached $2 million in ARR, it sourced some non-dilutive revenue financing on a 12-month term. Revenue financing can be a really appropriate financing strategy for companies that are at a smaller stage. However, as Refine Labs continued to gain traction, revenue financing became unsustainable as it removed too much working capital from the business.

“We just reached a scale where revenue financing wasn’t going to work anymore. Because it is based on a percentage of revenue, the debt repayments were between $300,000 and $500,000 per month due to our scale,” said Chris.

The leadership team at Refine Labs was not interested in raising equity-based capital. It wanted to maintain full control over the business model and its growth.

“We decided to choose debt over venture capital because we have a unique business, and we take a very different approach to our growth strategy,” explained Chris.

Chris and his business partner had witnessed multiple instances where the pressure from venture capital prevented startups from doing the right thing for their customers and employees. 

“We wanted to finance our growth differently and pave the way for how other companies can do it in the future,” said Chris. “As the business continues to generate profit and growth, this is a really interesting model.”

Financing with debt over equity also costs Refine Labs a lot less in the long run. “In 2022, we’ll grow about 250%. Using someone else’s money that we paid 15% on to grow at 250% with no loss of equity sounds like a pretty good deal to me,” said Chris.

Non-Dilutive Financing Tips from Refine Labs

1. Onboard well-suited, profitable customers to bootstrap early growth
2. Use revenue financing to get to a stage where the business is stable (up to $2 million ARR)
3. Find a suitable term loan provider (e.g., TIMIA Capital) that understands your business ($2-$20 million ARR)
4. Seek out traditional bank debt ($25 million+)

TIMIA’s Investment

Refine Labs had advised TIMIA’s marketing team about its LinkedIn advertising approach. Interestingly, those same LinkedIn ads brought Chris to TIMIA when Refine Labs required some investment capital.

“Working with TIMIA has been great. The team promised a 60 to 90-day process, and within that time frame, we had completed the process and had the cash in the bank,” said Chris.

The debt facility TIMIA provided will help Refine Labs free up working capital. 

“We bootstrapped this company, and our expenses have scaled. TIMIA’s investment will provide a buffer for working capital and help us invest in both growth and product development,” explained Chris. 

Refine Labs is in the process of expanding its revenue and product development teams to achieve its bold vision. 

What’s Next for Refine Labs?

Today Refine Labs is approaching 100 employees and is on track to hit $21 million in ARR in 2022 — a 250% year-over-year increase — while remaining in complete control of the company thanks to its smart bootstrapping and financing strategies.

Chris and his team intend to continue operating a capital-efficient company that maximizes its growth rate without the need for venture capital investment. When asked about the end goal for Refine Labs, Chris said, “We are really focused on how we deliver the right things for our customers. I believe that when you operate your business as if you’re not going to exit, you ironically end up being in the best position to exit at some point down the road.”

For now, Refine Labs is focused on continuing to adapt to customer and market needs, developing its SaaS product, and bringing its Revenue R&D methodology to companies everywhere.

TIMIA Capital is proud to be helping facilitate the growth of such an exciting company and is excited to see what lies ahead for Refine Labs.

Check out Refine Labs’ popular Revenue Vitals podcast to hear Chris Walker discuss modern marketing strategies with today’s top B2B leaders.

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