Venture Capitalist Turned CFO Finds Perfect Fit

A startup firm’s CEO, product and stage of development add up to an opportunity that was too good to pass up for a first-time finance chief.
David McCannMay 10, 2013

Imagine you’re a venture capitalist who invests not directly in companies but rather in capital funds. Your firm’s portfolio includes 120 such funds, which have investments in 3,500 companies. Most of them are in the technology sector, so you have a bird’s-eye view of what’s working, not working, in demand and missing in that sector.

If you were of a mind to step out of the investment business and help run a company, you could probably find a perfect fit with so many to sift through.

“Very few people can say they had a view into 3,500 companies before picking one of them to work at, as I did,” says Spencer Punter, appointed on May 2 as CFO of SnapLogic, a three-year-old integrator of cloud applications. He had been managing director and head of U.S. venture capital for Capital Dynamics.

Punter has been in Silicon Valley for his entire 20-year career. Most of that time he’s worked for investment firms, although he had two previous forays into working directly for startups: Aztek Networks, a networking and communications-equipment company; and ApexMD, which focused on indexing health-care professionals. At the former he wrote the business plan and lined up the Series A funding but took the title of marketing director. At the latter he again wrote the business plan but was the company’s CEO.

“As an investor I had a great deal of sympathy for the entrepreneurs we invested in, but not a lot of empathy,” he says. “Now I have a great deal of empathy for the plight of an entrepreneur, understanding how difficult it is to go from nothing –no product, no customers ­– to something. It’s incredibly hard to do.”

So why venture again into the entrepreneurial wars? Punter says he had three good reasons.

First, SnapLogic’s CEO is Gaurav Dhillon, who founded enterprise-software developer Informatica Corp. in 1993 and ran it for 12 years. The first investment firm Punter worked for, Integral Capital Partners, was an early backer of Informatica.

“Even had Informatica been a much more modest success, SnapLogic would have been just as enticing to me because of the shared history and mutual respect [between Punter and Dhillon],” Punter says. “That was more than half of the decision.”

The rest of the decision was largely about the particular business opportunity SnapLogic presented. Clearly, cloud software integration services is a business poised for huge growth. “Big companies are going to have hundreds of cloud applications,” says Punter. “The [demand for integration services] is already 10-fold what it was in the 1990s for client-server software.”

But more than getting into a growth field generally, Punter says he had acquired so much experience in evaluating technology companies that he could easily spot one with a high degree of differentiation from its market competitors.

He says SnapLogic does not merely build “pipes” that connect applications, it also offers an easy-to-use system for managing and monitoring data flow among numerous systems. To implement multiple pipes among disparate systems and have all the data they transmit look similar normally would require “a deep-in-the-weeds programmer,” but SnapLogic, Punter claims, is a better alternative.

“The opportunity for us is a multiple of what Informatica’s was,” he forecasts. Informatica, which went public in 1999, expects to surpass $1 billion in revenue for the first time this year.

So far SnapLogic has taken $30 million in venture funding, mostly from Andreessen Horowitz and Ignition Partners. Recent customer wins, the company says, include Netflix, Best Buy, Fox News, Activision, ING Direct and Pandora.

That points to Punter’s third reason for taking the job: “Unlike the first two startups I was directly involved with, they had crossed that chasm from nothing to something.”

For at least the next year Punter will spend most of his time developing the company’s strategic plan, closely monitoring sales execution and productivity, tracking ROI from marketing expenditures, and making sure the company, which currently has about 70 employees, hires the right people. About that last item, he says, “This time around I’m going to be much more focused on people” than he was with the previous two companies.

Asked what kind of mind-set the CFO of a technology startup should have, Punter says, “Fundamentally, this valley is built on optimism. You have to have faith in the people around you and conviction that the market you’re serving will be there.

“You know, sometimes the technology needs to be built ahead of the market need. We didn’t know we needed smart phones until Apple showed us. Everyone in the company, whether a finance person or the engineer building the product, needs to have that optimism and faith.”