How Secureframe Maximized the Value of Its Cap Table With a Roll Up Vehicle

"It felt like we were managing one check instead of 50."

— Shrav Mehta, Co-Founder of Secureframe

Background

Secureframe is a data security and compliance startup that helps companies automate their security compliance processes. The company attributes much of its early success to its strategic investors.

When Secureframe raised its $4.5M seed round, co-founders Shrav Mehta and Natasja Nielsen offered allocations to operators—including angel investors, other founders, customers, and employees.

These individuals proved to be motivated members of Secureframe's cap table—introducing Secureframe to new customers, sourcing qualified candidates, providing tactical advice, and helping propel Secureframe to an $18M Series A in less than two years.

The Problem: Raising Money From a Lot of Investors is Expensive and Time Consuming

When it came time to raise their Series A, Mehta and Nielsen knew they wanted to let more operators in on the round. But this presented a significant challenge.

Secureframe sought to add a few dozen operators to their cap table. To do this traditionally, they would need to solicit a few dozen signatures, collect a few dozen checks, and review the accreditation status of a few dozen investors.

Managing these obligations would slow down the financing process, while driving up Secureframe's legal fees. Having too many names on their cap table could also present logistical challenges and bottlenecks as the business scales.

"There's so much complexity involved in raising from a lot of investors that it's almost not even worth it," said Mehta. "We needed something that would reduce all this friction while still allowing us to include all of these smart and resourceful people we had built relationships with."

The Solution: Allow Operators to Invest Through a Single Link Using a Roll Up Vehicle

Mehta was considering using a special purpose vehicle (SPV) to offer allocation to small investors. He reached out to the RUV team, who offered him an option more tailored to his needs: a Roll Up Vehicle (RUV).

Roll Up Vehicles are private SPVs that don't require a stand-in investor to act as GP to avoid conflict of interest issues for the founder. They can be created by founders themselves. RUVs on AngelList allow for many accredited investors.

Within two days of contacting the RUV team, Secureframe's RUV was live. Mehta was then able to send a link to the deal page where investors could commit and send funds. RUV team oversaw capital collection, accreditation, KYC, and signatures—and wired Secureframe the funds at close.

All in, Secureframe raised from over 50 world-class operators—including DoorDash executive Gokul Rajaram, Carta CPO Webb Stevens, and Brex CRO Sam Blond. These investors comprise but a single line on Secureframe's cap table.

Shrav estimates adding these investors via direct investment would have cost Secureframe over $100k in admin and vendor fees. With RUV, he paid a one-time fee of $8k.

"It was cheap and I barely had to involve myself," Mehta said. "After the RUV was set up, we sent it out to our customers and other operators who wanted to help us on this journey, and watched as they filled the allocations (minimum check size: $1k). After close it took an email or two to get the wire from the RUV. It felt like we were managing one check instead of 50."

Build With Great Investors Using a Roll Up Vehicle

Secureframe's $18M Series A was led by Kleiner Perkins. Shrav said they were supportive of Secureframe's RUV.

"It's smart to find a way to involve as many value-add investors as possible," said Mehta. "I think using an RUV in a fundraise is going to become the norm because it makes founders' lives so much easier."

Mehta and Nielsen used the funds to scale the team and launch new products. Meanwhile, Rollups & AngelList oversee all filings, tax documents, and distributions for Secureframe's RUV investors.

When the time comes for Secureframe's next fundraise, Mehta says Rollups will be his first call.

"Roll Up Vehicles aren't just for early-stage financing," Mehta said. "Rollups makes it possible to collect checks from anyone you want to be in business with at any stage of the company. Founders looking to simplify their logistics while raising money from a lot of great angels should use a Roll Up Vehicle."