There and back again … a Startup’s Tale by Luke Catlin

MergerGreat things are done by a series of small things brought together.
Vincent Van Gogh 

In an earlier post I recounted some of how Flourish started.  If you’ve not read it, I suggest you do.  Before I continue, a bit more backstory.  In 2004, my business partner & I changed the legal name of our company, Pink Office to Vertical Office.  We did so after we launched our 2nd brand,  Consultant Office, so not to cause confusion to those customers.  Ok…back to my yarn.

I decided to start Flourish primarily out of the frustations of running a bootstrapped start-up, one in this case that just happend to unknowingly morph into a Lifestyle business.  So there I was, I owned a piece of a profitable SaaS company, just not one that I believed was growing at the pace it could or should be.  I attributed this to the fact that one founder was semi-retired and the other, yours truly, was raising a young family and still in need of supplemental income.  Which for me, came from providing tech support and consulting to individuals & small businesses.  But you see, I’ve always held onto this belief that if I could only raise outside capital then the sky was the limit for my true passion, that of building a wildly successful software company.  One that would could benefit like-minded people doing their best to provide the best life possible for their families and themselves.

I knew that outside investment would enable me hire someone else to handle my tech support biz and free me up to focus my full attention and time to my new startup.  Then I could finally stop concerning myself with how I was going feed the kiddos or pay the light bill and just get fanatical about growing the new venture.

Let’s fast forward to the fall of 2010.  I approach my business partner in Vertical Office one Sunday afternoon with a proposition.  I ask if he’d be comfortable with me utilizing the company’s codebase, aka the intellectual property of the business to launch a new SaaS company .  One that would market to all the other direct sales companies that Vertical Office did not.  Without much hesitation at all, he graciously agreed to license it to me, with the condition that any improvements or innovations would stay the property of Vertical Office. I agreed and as a token of my appreciation for his consent,  I offered him an equity stake in Flourish as well as an advisory role.

Now armed with the keys to the castle, I decided to approach Danny, a friend and sub-contractor for Vertical Office about joining Flourish as a Co-founder.  After a little coaxing and with the understanding I would try raising seed money, he came aboard. We both quickly set off to conquer the direct sales world.  I turned my attention to raising capital, something I didn’t have any experience in (given my first two companies had been bootstrapped) and Danny took the lead on product design and managing the functional changes we needed to the application.  Surprisingly, I had early success (first investor I asked actually) finding a local angel investor that provided us with the kickstart we needed.  This investment was instrumental in allowing us to get up and running.  We used it to form the corporation, join a couple industry groups, start modestly advertising and begin work on a mobile version. Granted it wasn’t near enough to make it our only gig, mind you.

Shortly after we got the ball rolling, I returned to searching for a much larger investment   My efforts were answered in the fall of 2012 when I was introduced to small venture capital firm in the Midwest.  It wasn’t very long into our discussions that the question of intellectual property arose.  The firm made an offer to invest under a condition we would merge Flourish with Vertical Office, given that Vertical Office owned all the intellectual property.

After considerable deliberation between Vertical Office & Flourish we agreed to merge, unfortunately we were unable come to terms with the VC on the equity stake of the investment and parted ways.  This turn of events caused an immediate dilemma for Danny and I, since we were near the end of Flourish’s angel capital.  So I proposed to Danny that we pitch Lloyd (the principal in Vertical Office) on moving forward with the merger anyway.  This wasn’t a hard sell, as all parties had just seen the logic in doing so while debating the that condition for the VC investment.  An added side benefit of deciding to move forward with a merger was a much needed morale boost to the founders.

So here we are today, a combined company that has chosen to adopt the name Flourish.  Also the name of our core product offering for direct sellers.  Our new structure is well suited to “flourish” and we’re extremely exited to see what the future holds for us and our customers.  Sure we’re still “bootstrapping”, but maybe that’s not such a bad thing after all.  But more on that later.


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