The CEO of a startup that raised $40 million from Goldman Sachs without a pitch deck explained why companies should hold out on funding as long as possible

• George Azih raised $40 million from Goldman Sachs' merchant banking division in November 2019 for a Series A for his lease-accounting software LeaseQuery.
• It was the first outside investment Azih for the company, which was created in 2011.
• Azih didn't create a pitch deck to raise the round, instead circulating an Excel spreadsheet of the company's financials to investors.
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George Azih has simple advice for startups contemplating raising money: Wait.

Azih knows first-hand the benefit of holding out, waiting more than eight years before looking for outside money for his startup LeaseQuery. His patience landed him a $40 million check from Goldman Sachs' merchant banking division in November for his Series A, and an important lesson in the benefits of proving out a company.

"One thing this has taught me is run as hard as you can and as long as you can without raising money," Azih told Business Insider. "For every month or quarter you can show growth, that increases your valuation."

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At a time when startups have been able to raise millions of dollars from investors flush with cash often times on the basis of potential, not profit, Azih and LeaseQuery stand apart.

But holding off on raising money for nearly a decade isn't the only thing that's noteworthy about his story. When he did choose to raise capital, he did so without putting together a pitch deck.

Instead, Azih, who describes himself as the farthest thing from traditional CEO, simply sent out an Excel spreadsheet with LeaseQuery's financials.

"I don't know any better pitch deck than actually showing you results of what we've done and showing you the trend," Azih said. "Pitch decks, I feel, are necessary when you don't have numbers to back up."

Azih funded LeaseQuery by taking loans out against his 401K

LeaseQuery is software built specifically for lease accounting. Azih came up with the idea around 2010 while working as an accountant at a Fortune 500 company.

He saw the firm was struggling to account for leases appropriately, and realized there was a series of regulations set to kick in that would require even more complex calculations for companies.

"A: We're not getting it right. B: There is no software that could get us compliant," Azih said. "When the new rules do come out, it will be very, very difficult to get compliant."

Azih saw an opportunity, launching the company in September 2011. While he did reach out to some potential angel investors in his network, interest was limited because, as Azih explained it, "no one wants to do business that is based on an action the government is going to take in the future."

As a result, Azih bootstrapped the company, taking out loans against his 401k. Growth was steady until 2015 when the company started to face a liquidity issue, struggling to get enough cash to pay employees. However, instead of looking for investment, LeaseQuery changed its payment model, pushing for three-year contracts where customers paid in full up front, as opposed to month-to-month or annual deals.

At no point, Azih said, did he consider trying to raise funds.

"I'm an accountant by trade, and for accountants, running a profitable business is what matters," Azih said. "Cashflow matters. Right? So, so how do you get cash flow from existing operations."

The pricing model was the boost the company needed, leading to 708% year-over-year revenue growth by the end of 2018.

LeaseQuery was eventually flooded with interest from investors

Numbers like that didn't go unnoticed by potential investors, three of whom sent unsolicited term sheets, Azih said. The courting didn't stop there, with one going as far as sending flowers to Azih's mother.

"My mom calls me up and says, ... 'These are the most beautiful flowers I've ever seen in my life. You should go work with them'," Azih said. "That actually kind of worked, because I spoke to them."

By the summer, Azih decided to start taking meetings, speaking with 20 different growth equity firms. Nearly all of them - 90%, according to Azih - sent term sheets.

In the end, though, Azih landed on Goldman. The opportunity to work with one of the most prestigious firms on Wall Street was too good to pass up, he said. Adding the bank to the cap table instantly gave LeaseQuery more credibility and a sense of security for its potential customers, who are mainly accountants and inherently conservative and risk-averse, Azih said.

Azih chose Goldman despite the bank not offering the company the highest valuation, which Azih declined to provide, amongst potential investors. The decision was based on the long-term benefits he felt the bank brought his company.

"People think about the wedding and not necessarily the marriage," Azih said. "They could provide value that when we need help, we knew we could utilize them as a resource."

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