Can you explain exactly what your company does and what problem it solves?
Exiger is transforming compliance, third-party and supply chain risk management by delivering insights through our advanced technology platform. Our clients are heavily regulated corporations, U.S. federal agencies, the public sector allied partners, and financial institutions. Exiger helps them to conduct automated tech-enabled due diligence on their markets, suppliers, or supply chain. We look at their ongoing risk exposure across four major categories:
1. Financial crime, fraud, and reputational risk: Since its inception, Exiger has been helping clients grapple with major challenges in these areas.
2. Foreign ownership, control, and influence (FOCI) Risk: Exiger helps clients determine where they might have supply chain bottle necks, supply chain disruption, or industrial espionage risk related to the foreign ownership or influence of their vendors or customers.
3. Operational / ESG risk of vendors / suppliers, customers, or supply chain: This is the operational risk organizations are exposed to by the parties they conduct business with, such as a software supplier with poor cyber health, a critical supplier of components or parts that has abusive labor practices, or facilities with poor environmental standards.
4. Financial or industry risk: As an independent part of assessing their supplier, market, and customer eco-system, we help clients identify major issues in financial or industry risk that might exist in their corporate infrastructure.
With Exiger, our customers can quickly, effectively, and comprehensively ensure that they are maintaining a resilient and secure supplier ecosystem.
How has Exiger evolved since it partnered with Carrick Capital Partners?
Exiger has evolved from a financial services compliance and consulting firm into a risk management and compliance technology company with tech-enabled services –– and Carrick has been a catalyst for many positive operational and go-to-market (GTM) initiatives along that journey. As a growth equity firm that has a portfolio of tech-enabled companies, Carrick has provided insights into comparable industry benchmarks. Exiger has utilized Carrick for strategic advice around GTM and identified objective measures that can help us to achieve maximized results, like what good MQL and SQL conversion metrics look like for an organization our size, such as growing our ARR at 65%+ per year.
Carrick has also given us visibility into how similar companies are managing key SaaS margin enablers, like data cost operating leverage, by sourcing metrics across their portfolio. A timely example is the advice and guidance they have provided over the past few months around the potential recession and downturn. Learning what other companies are doing to maintain their growth rate, while also managing costs and seeing where Exiger fits comparatively with companies of a similar size and growth trajectory, has been critical to our decision making.
They have helped us to prioritize initiatives to maintain our rapid growth, including: enhancement of top of the funnel business development resources and sales development resources to increase our SQLs, better use of digital marketing, and leveraging industry analysts in evangelizing our product, which is seeing widespread adoption and growth. Finally, identifying the right organizational structure for a fast-growing technology company has also been an area where Carrick has provided tremendous value.
What are some of the specific challenges you’ve faced as the company has grown and how have you successfully addressed them?
As we’ve expanded, we’ve had to move from a largely financial services risk and compliance company into new markets like the federal and corporate security markets, while dominating what we are doing from a technology perspective. Shifting the roadmap to meet the needs of the market as third party and supply chain risk management has become such a clear need of our customers has been an exciting challenge. We’ve had to invest heavily in the user experience aspect of the technology and develop much more specific use cases to ensure product-market-fit with the addressable needs of customers. We had to take a data aggregation and data risk flagging engine and build workflow components and specific user journeys and analytics on top of the original technology so that customers could make immediate and actionable use of the data our technology was providing. Carrick helped us to do that based on their experience investing in technology in similar market situations.
Another challenge is that we went from a seat-based technology company focused on a small total addressable market in 2017 to an enterprise technology organization working with the biggest corporations, financial institutions, and federal agencies in world in 2022. In evolving to enterprise technology, we faced challenges of scale and costs. Better managing data and data partnerships helped us to contain those costs, improve unit economics and increase the value of our risk modeling. We also faced challenges maturing and innovating in our product with fractured development capabilities in different business units. In 2020 the centralization of our product development team drove incredible efficiency and organizational alignment, which was one of the things Carrick advocated. This helped us to gain control over the product development pipeline as a single company. We were able to build an enterprise product that has now been deployed to over twenty-six federal agencies and two hundred different corporations. The next challenge is to bring this enterprise product to the Fortune 2000 and the heavily regulated, small and medium business enterprise market to help corporations compete, manage risk and protect their intellectual property across the global corporate eco-system. Carrick is helping us to tackle this challenge of “going down market” that many fit-for-purpose technology companies like Exiger - Crowdstrike, Carta and Datadog to name a few – have previously achieved successfully.
Tell us about your decision to bring in an equity partner?
Exiger is a high growth company. We are a team that has built, scaled, and transacted multibillion dollar companies. That is an important differentiator from other technology companies in our space. We intend to grow at scale. When we look at a decision about whether to take capital to grow and retain smart businesspeople who can provide guidance, we have a view toward exponential growth. Our decision was to partner and provide resilience to Exiger when we executed the transaction in 2018 to fund our SaaS growth story, while working with a partner who could help provide a good sense of the market and provide best practices for how we could scale. Pulling in Carrick -- their operators, and infrastructure deal making and operating experience -- was important for us to maintain our view toward hyper growth. I think about bringing in equity partners like bringing in key management employees. They are investing money and time into making you successful and you want total alignment.
How do you plan to leverage a private equity firm like Carrick as the CEO?
The one thing I can predict about the next six months is that they will be unpredictable. We are in a completely unique market. There is a downturn or potential recession on the horizon, but the job market is relatively buoyant. Although there is still strong market competition for jobs and a viable talent market, we are in a period of bearishness for investment. Exiger is in a unique position to be profitable in 2022 and to start to leverage our balance sheet for acquisitions. I’m looking forward to leveraging Carrick’s strategic guidance to get better insights into where there might be market blind spots that could inhibit our growth and to get a fresh market view for where we might look to make acquisitions or to scale inorganically.
What’s your advice for other businesses considering private equity?
Great advice I got from my predecessors, Michal Beber and Michael Cherkasky, is that you want to achieve the metrics that prove out the most valuable attributes of a company in your space as opposed to being focused on an exit number. That is, establish, accomplish, and improve the characteristics of the most valuable version of the company you want to become on a continuous basis. Focusing too much on trying to achieve a specific exit number - once you commit to a number it’s hard to walk back – will set you up for failure. But if you focus on achieving valuable attributes and continuously improving against those metrics you will get to the exit number anyway, while managing your business in a more practical, tactical way in the short and medium term.
The second consideration is that you want to make sure any equity firm you partner with are people you want to work with. You will spend a lot of time with them – more than you expect as the horizon is usually 1-2 times farther away than you estimate. Choose a partner who is aligned to you and prioritize value and personality over the highest bid. Your relationship is proven not when you are hitting your forecasts, but when you are not hitting forecasts, and they help you recover –– and eventually outperform.
What are your goals for Exiger over the next five years in terms of growth; and what do you believe will be Exiger’s impact on how global financial institutions and corporations combat financial crime, risk, operational and compliance challenges?
I strongly believe that there is no such thing as an unrealistic goal, just unrealistic plans to get to that goal. We are ambitious, but we measure twice and cut once. Our pillar for Exiger is that we want to be THE global third party and supplier resilience and risk management platform for the largest corporations and the global corporate ecosystem. We want to be the name everyone counts on when thinking about supplier, supply and market due diligence or any of the aforementioned areas of risk. That means we are doing good for our global market: helping people to stamp out modern slavery, manage cyber risk, fulfill ESG goals that help to curb climate change, etc. In other words, helping companies do business with companies that are aligned with good and ethical operating practices. In five years, ideally, we are effectively tripling our size today because we want to achieve our year-on-year ARR percentage growth goal in 23, 24, 25 and 26. If we put one foot in front of the other on ARR growth, it improves unit economics, EBITDA and potentially improves our current share price by five times. That is the type of company we want to be over the next three to five years.