Justin Bailie said Y Combinator sprinkled on the “pixie dust” that helped Rose Rocket grow from a seedling into a full-blown transportation management system provider.
Bailie, the co-founder and chief strategy officer for Rose Rocket, shared the company’s journey with Brian Aoaeh, a FreightWaves columnist and co-founder and general partner of REFASHIOND Ventures, during the FreightTech Venture Summit on Wednesday.
“We saw an opportunity, almost five years ago now, that there was a need for, call it, midmarket enterprise-grade, cloud-based technology that could allow companies to modernize their business and serve their customers in a way they were going to be demanding,” Bailie said, going on to explain that “the tools need to be so much more scaleable and so much more nimble and robust than the traditional … legacy products have been.”
He said Rose Rocket was launched as a “pivot” from a TMS for shippers.
“We were trying to get the connections between carriers and shippers, and this was early days where APIs on the carrier side were very nonexistent,” Bailie said. “We really foresaw a problem that needed to be solved around getting carriers on the internet. So we started looking at pivoting the business in that direction.”
Then came the “pixie dust.”
“We were fortunate enough in the summer of 2016 to get into Y Combinator, which comes with it a certain amount of funding at the beginning, an incredible learning experience and a lot of cache at the end of it. That certainly helped accelerate the funding journey,” Bailie said.
He said that although it’s “well documented how big this market is and how ripe for disruption this market is,” Rose Rocket threw out a figure to get investors’ attention, saying, “‘There’s a $700 billion industry that nobody’s thinking about.’”
The founders returned to Toronto after about six months in California, opened an office with half a dozen employees and continued to fine-tune the Rose Rocket product.
They brought in funding through SAFE notes — simple agreements for future equity.
“We did that for the better part of two years, just kept going back to the well on SAFE notes. It made raising never a full-time job like when you are doing something more significant like a Series A,” Bailie said.
That well provided the financial nourishment that allowed the co-founders to focus on their full-time job of growing the business.