If you’re interested in who’s getting funding during the COVID-19 business slowdown, the story of Malbek, a New Jersey B2B startup reimagining contract management, is worth hearing.
Malbek closed $3 million in funding from Osage Venture Partners (Bala Cynwyd, Pa.) in May, while the business world was still reeling from the COVID-19 economic crisis.
NJTechWeekly.com first connected with the company when it won the Best Managed Startup of the Year award for 2019 from the New Jersey Tech Council (now TechUnited:NJ) at its Venture Conference, held in April last year
The founders of the company now are all working remotely and are in California, New Jersey and Philadelphia, but the company is headquartered in Somerset and will be establishing a physical office when it is practical to do so, said Matt Patel, COO.
The Startup Story
Malbek got its start in 2017 when the three cofounders — Hemanth Puttaswamy, Madhu Poolu and Patel — got together. They had all been working for a company in Philadelphia called “Revitas,” which offered contract lifecycle management software for enterprises.
“At Revitas, my cofounder and CEO in California personally struggled to find contracts and understand the obligations that his organization had with external parties. And he had a hard time managing those agreements in his organization. So, we had firsthand experience of being challenged with contract management ourselves,” Patel noted.
The older tools in the market were outdated, hard to use and costly to maintain, Patel said. When Revitas was acquired by Model N (San Mateo, Calif.), the three decided to start Malbek because the contract-management space “was badly in need of disruption by something new and something more modern.”
The company’s vision was to build a consumer-grade user experience for legal, sales, finance, IT and procurement professionals who were struggling with contract management use cases, he said. Its solution is designed to streamline and expedite contracting cycles, relying on artificial intelligence and data analytics to improve contract efficiency and effectiveness.
The Osage raise was the company’s third funding round. Patel noted that Malbek has always been conservative and cost conscious. The founders had been speaking to Osage since November of 2019. “Going through due diligence was a collaborative process in a collaborative atmosphere,” he said.
Of course, with COVID-19, the market changed, and a lot of the VCs in the industry started slowing down their investments, he pointed out.
“However, Osage and Malbek were far enough along where both sides were committed to making this happen, and so we worked out the terms that allowed us to close our round.”
Asked what advice he had for other startups seeking funding, Patel responded, “I would say it was challenging, but still possible. If you have the right team, the right culture, the right product and the right market, I think VCs are still interested in investing in the right solution.”
Nate Lentz, Emily Foote, Emily Kosten were the primary members of the Osage team that worked with Malbek, and Patel praised how they ran the deal and how they interacted with the Malbek team.
“The partnering is not just for the money. Of course, the funding is a big part of it, but it’s the network that’s important. It’s the support system, it’s the advisory role that they play. We are a young startup. Our team has experience and we have been through several organizations and solutions in our careers, so we bring that experience. However, that being said, Osage’s team has a network of other companies that they’ve invested in, as well as relationships with other VCs and other portfolio companies where they have seen things to do and things not to do,” he said.
“They know other CEO’s best practices, other sales leaders’ best practices, other operating leaders’, other marketing leaders’. We are now part of the Osage family, and as part of that family we learn from one another. They have introduced us into their network, introduced us to other portfolio companies that they own or have invested in. And it’s been a wealth of information and knowledge for us to share and extract from.” More about the startup’s funding round can be found here.
Bullish About New Jersey
Patel is bullish on New Jersey, and says that the support of the New Jersey Economic Development Authority (NJEDA) has helped his company tremendously. Malbek has 22 employees, three of them in New Jersey, and the cofounders are committed to growing their business here. Last year, the company was able to sell its New Jersey net operating losses and unused R&D tax credits to a unrelated profitable corporation for cash under the NJEDA NOL Program. Malbek is also looking into the NJ Ignite program, which provides rent support to startups that establish businesses in coworking spaces. But that’s not the top priority right now, Patel noted. The startup is also looking at the New Jersey Entrepreneur Support Program as a possible fit.
Malbek plans to use the Osage money to build on its successes. “We have customers that range from a few licensed users to thousands of licensed users, so the product scales up very well.”
While the product is mature, Patel said, the startup is adding additional investment in R&D to increase its capabilities across the platform with artificial intelligence. “We are planning to add additional modules to the platform that are adjacent to the CLM [contract lifecycle management] space. And we want to build out functionality that expands the use cases beyond just contract management. This will help Malbek expand its enterprise solution footprint,” Patel explained.
The company’s vision for Malbek is for the software to be a suite of solutions that is sold to the entire enterprise, and is used by sales, finance, IT, procurement and legal departments, he noted.
Malbek is hiring sales representatives to address businesses in the middle market. He added that the company will also be expanding its customer experience program to ensure that customer satisfaction stays top-notch.
Malbek is proud of its startup culture. In a statement, the company noted that “Malbek’s culture is one that empowers team members to share their input to shape product development and company direction all while cultivating a path for their own career growth. We value flexibility, creativity, and hard work, and we make fun a priority while doing it. We support our employees as whole people, not just as workers, creating a business environment that values transparency and social consciousness.”