Why the CEO of Aha! rejected the venture capital model and thinks more founders should do the same

“I get notes daily,” he tells me.

But his answer is always the same: Not interested.

Aha!, a remote product development software company primarily based in Menlo Park, Calif., is de Haaff’s third business—and the first one he and his co-founder, Chris Waters, bootstrapped themselves. After nine years, it has swelled to around 120 people, and it surpassed $100 million in annual recurring revenue in the fourth quarter of 2021—up from $40 million ARR at the second half of 2018. It’s been profitable on a net income basis since approximately 2014, though de Haaff declined to get any more specific with me about the company’s financials.

Prior to Aha!, de Haaff and co-founder Waters had collectively raised about $7.5 million in seed and Series A funding from investors across their last two startups: Network Chemistry, a wireless security provider that they eventually sold to Aruba Networks in 2007, and Paglo, which was sold to Citrix in 2010.

But when the two of them decided to start company No. 3, they wanted to do it differently. The venture capital model was “really hard on people,”  says de Haaff, who is CEO. It incentivized them to make promises during fundraising that were “quite optimistic,” and then pressure the team to meet those goals. Then there was the matter of scaling really fast.

“When things go well, it accelerates growth—sometimes at an unnatural level,” de Haaff says, noting that it’s hard do exceptional work, find space to experiment, build the proper infrastructure, offer proper clarity around where the business is headed, and put the right policies in place when a company is growing too quickly. “We thought there was a better way,” he says. 

That way included personal cash (“It was a small amount,” de Haaff says), and a focus on margins and people rather than capital-infused growth. As a company the size of two, de Haaff and Waters developed a beta version, then rolled out an initial product for 125 enterprise customers at a profit. They then began to hire employees and scale.

“The underlying belief in all of this is that organic growth gives you the best chance for healthy growth, and definitely gives you the best chance for building a lasting sustainable company,” de Haaff says.

That’s part of the reason that Aha! has launched an online community for founders who have bootstrapped their own businesses, where founders can connect, and companies can list job openings. 

Venture capital or private equity dollars don’t necessitate unhealthy growth, de Haaff says, but he argues that the model breeds it by design. “I’m not sure it’s the best for founders, and definitely not sure it’s the best for people in organizations,” he says.

Near the end of our conversation, I asked de Haaff twice if he would consider selling Aha!

He says he doesn’t know what else he would do with his time other than run the business. “That’s a no.” In other words: Not interested.

More layoffs at Better.com… Online mortgage company Better, whose CEO Vishal Garg has taken heat over his handling of the last round of layoffs, is reportedly planning to let go of 3,000 more people, sources told TechCrunch, and has already begun doing so. Some of the impacted employees are reportedly learning of their termination by discovering a severance check in their payroll app.

Sunscreen for all skin tones… Cay Skin, a SPF-infused skincare brand for all skin tones launched by model Winnie Harlow and led by CEO Cass Devor, raised $4.1 million to launch its sunscreen and hit Sephora’s shelves in the coming weeks. Harlow was inspired to launch her own brand after a photoshoot where she wasn’t permitted to wear sunscreen—an episode that led to the worst sunburns in her life. Similar to the start of her modeling career, raising capital started with a lot of “no’s.” You can read more about it here in Fortune’s Broadsheet newsletter.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Jackson Fordyce helped curate the deals section of today’s newsletter.

VENTURE DEALS

- Stax, an Orlando, Fla.-based an all-in-one payments platform, raised $245 million in funding from investors including Greater Sum Ventures, HarbourVestPartners, and Blue Star Innovation Partners.

- Axonius, a New York-based cybersecurity platform for asset management and SaaS management, raised $200 million in Series E funding led by Accel and was joined by investors including Silver Lake Waterman, Alta Park Capital, Owl Rock, Bessemer Venture Partners, Lightspeed Venture Partners, Alkeon, Stripes, ICONIQ, and DTCP.

- Health Gorilla, a health data aggregation platform for patients and providers, raised $50 million in Series C funding led by SignalFire and was joined by investors including Epsilon, IACapital, and Nationwide Ventures. 

- STAQ Pharma, a Denver, Colo.-based medication outsourcing facility, raised $43 million in Series C funding. Froedtert Health, UNC Health, LCMC Health, and University Hospitals led the round and were joined by investors including Rev1 Ventures, Nationwide Children’s Hospital,and Cincinnati Children’s Hospital.

- Forma (formerly Twic), a San Francisco-based life benefits platform, raised $40 million in Series B funding led by Ribbit Capital and was joined by investors including Emergence Capital, Designer Fund, Upside Partnership, and AngelPad. 

- Glorify, a London-based Christian worship and prayer app, raised $40 million in Series B funding led by SoftBank Latin America Fund.

- Mighty Jaxx, a Singapore-based company that designs and manufactures collectibles and lifestyle products, raised $20 million in Series A funding led by East Ventures and was joined by investors including Mirana Ventures, Easternwind International, Pan Solar Ventures, and Teja Ventures, KB Investment,and Korea Investment Partners.

- Cayena, a São Paulo, Brazil-based B2B marketplace connecting customers to restaurants, raised $17.5 million in Series A funding led by Vine Ventures and was joined by investors including MSA Capital, Picus Capital, Canaan Partners, Clocktower Ventures, FJ Labs, Femsa Ventures, Gilgamesh, Astella, Endeavor, GraoVC, and others.

- Milo, a Miami-based fintech company focused on loans, raised $17 million in Series A funding led by M13 and was joined by investors including QED Investors and MetaProp.

- Lightforge, a Raleigh, N.C.-based video game studio, raised $15 million in Series A funding led by BITKRAFTVentures and was joined by investors including Galaxy Interactive, NetEase, and Dune Ventures.

- Dianthus, a Cambridge, Mass.-based e-commerce brand roll-up company, raised $11.5 million in seed funding led by PJC, Underscore VC,and angel investor Jason Calacanis. 

- Gumball, a Los Angeles-based advertising platform from the podcast company, Headgum, raised $10 million in Series A funding led by Union Square Ventures and Good Friends and was joined by investors including Craft Ventures, Vertical Venture Partners, Animal Capital, Calm Ventures, Gaingels, and Riverside Ventures.

- MDisrupt, an Austin, Texas-based digital health intelligence company, raised $6 million in funding from investors including Bren Investments, Matthew Holt, Chantell Preston, Grail co-founder Jessica Owens, and AKESOgen co-founders Mark Bouzyk and Robert Boisjoli. 

- Noh, a São Paulo, Brazil-based fintech startup focused on shared finances, raised $3 million in seed funding led by Kindred Ventures, Biz Stone, Monzo co-founder Tom Blomfield, and Harry Stebbings.

- Calico, a Toronto-based A.I.-powered supply chain management platform, raised $2 million in seed funding led by Serena Ventures and was joined by investors including MapleVC, Inovia Capital, Hyphen Capital, and others.

- Barnfox, a Hudson, N.Y.-based work and retreat club, raised $1 million in funding from Foster Supply Hospitality.

PRIVATE EQUITY

- Clearlake Capital Group agreed to take private Intertape Polymer Group by acquiring the company for $2.6 billion in cash, including net debt.

- True Global Ventures acquired a minority stake in Iomob, a Tallinn, Estonia-based transportation platform for urban mobility systems.

EXITS

 - HLD acquired a majority stake in ba&sh, a Paris-based women’s ready-to-wear clothing company, from LCatterton. Financial terms were not disclosed.

OTHER

- Google agreed to acquire Mandiant, a Reston, Va.-based cyber defense and response company, for $5.4 billion in cash.

- EnergyHub acquired Packetized Energy, a Burlington, Vt.-based software platform focused on the distribution of clean energy. Financial terms were not disclosed.

- PPRO acquired Alpha Fintech, a Melbourne, Australia-based payment processing platform. Financial terms were not disclosed. 

IPOS 

SPAC

- SatixFy Communications, an Israeli company that provides semiconductors for satellites, agreed to go public via a merger with Endurance Acquisition Corp., a SPAC, per Bloomberg. A deal would value the company at approximately $813 million.

FUNDS + FUNDS OF FUNDS

- Bain Capital Crypto, Boston-based private equity and venture capital firm Bain Capital’s new crypto arm, raised $560 million for a fund focused on crypto and Web3 investments.

- Pi Labs, a London-based venture capital firm, raised $90 million for a new fund focused on proptech startups.

- Neotribe Ventures, a Menlo Park, Calif.-based venture capital firm, raised $90 million for a third fund focused on growth stage companies developing new tech. 

- Contrary, a San Francisco-based venture capital firm, raised $75 million for a third fund focused on finding talented individuals and connecting them with founders and companies. 

- Arrowroot Capital, a Marina Del Rey, Calif.-based growth equity firm, promoted Matt Klein to partner.