How Suneera Madhani’s Rejected Pitch Led to a Unicorn Startup- Foundr


Foundr Journal publishes in-depth interviews with the world’s biggest entrepreneurs. Our articles spotlight key takeaways from every month’s cowl characteristic. We talked with Suneera Madhani, founder and CEO of Stax funds, about how she turned a rejected pitch right into a unicorn startup. To learn extra, subscribe to the journal.


On a transparent and comfortably heat afternoon in Orlando, Florida, Suneera Madhani and her group floated to a restaurant throughout from their downtown workplace. It was St. Patrick’s Day, and gleeful patrons crammed the green-hued bar, however Madhani had one thing to have fun in addition to the vacation.

Her enterprise, Stax (previously Fattmerchant), had simply obtained a time period sheet for $17 million. Simply 4 years prior, in 2014, Madhani began the all-in-one fee platform utilizing $50,000 in startup capital from family and friends. Madhani by no means thought that she, a girl with immigrant dad and mom and minimal startup connections, may construct a million-dollar enterprise.

“It’s a really thrilling time for a founder any time you obtain something tangible on paper,” Madhani says.

The subsequent day, she introduced the provide to her board and began pursuing the diligence course of with the investor.

“Lengthy story brief, my intestine was not clicking,” Madhani says.

However the board saved pushing to proceed till the traders adjusted their bid. When Madhani noticed the provide, she was shocked.

“I stated, ‘There’s no approach I’m going to f***ing settle for this.’”

Madhani’s instinct proved right. At present, Stax has greater than 300 staff and $100 million-plus in recurring software program income, oversees $23 billion in funds, and was acknowledged by Forbes as one of the vital progressive fintech firms.

Madhani knew Stax was value extra. Way more. We’re speaking billions, not hundreds of thousands.

Household Dinner

Earlier than boardrooms and valuations, Madhani labored for a bank card firm promoting transaction machines out of the trunk of her Volkswagen Beetle.

Her dad and mom immigrated to the USA from Pakistan, met in Chicago, married, then moved their younger household to Dallas, Texas. It was via her household that Madhani discovered the highs and lows of entrepreneurship.

“I come from this line of entrepreneurship out of necessity,” Madhani says. “To ensure that them to have their American dream, they needed to begin a enterprise.”

Her household’s companies ranged from quick meals chains to a advertising and marketing company, and Madhani spent her childhood serving to after faculty and on weekends. Mockingly, her dad and mom’ imaginative and prescient of the American dream was to offer Madhani and her brother an training—to not grow to be entrepreneurs.

“I noticed firsthand what it took to construct a enterprise, what it took for companies to fail, the hardship, the great, the unhealthy, the ugly, and every part in between.

“However all of that credit score goes to my dad and mom, ” Madhani says.

However credit score isn’t only for her dad and mom’ actions however for what they stated at a fateful dinner that modified Madhani’s life.

Suneera Madhani foundr magazine cover
Suneera Madhani on the quilt of Foundr Journal subject 120.

‘Why Not You?’

In 2012, a uncommon snowstorm hit Texas whereas Madhani was visiting her dad and mom in Dallas. As a result of she was caught 1000’s of miles from her residence in Orlando, she had her subscription containers rerouted. She was obsessive about the early-adopter subscriptions like Birchbox and BarkBox in a time she describes because the “pre-subscription economic system.”

“[Then] that mild bulb went off, and I used to be like, ‘Holy s***, why isn’t there a flat subscription in funds?’”

As an alternative of going residence on that journey, she ended up routing her ticket to Houston, the headquarters of the bank card firm she labored for. She secured a gathering with the C-suite and labored on the presentation for per week whereas binging the primary two seasons of Shark Tank to good her pitch.

“All I needed was to see this success in my very own firm,” Madhani says. “[But] they laughed me out of the boardroom.”

Distraught and annoyed, Madhani returned to Dallas simply in time for Friday’s household dinner. She defined the frustration of the assembly and why the thought of a subscription fee platform may work.

“My household checked out me and stated, ‘Why not you?’”

It was the primary time Madhani realized she may do it herself, however she instantly blurted out excuses—no growth expertise, no traders, no business connections.

“My dad and mom stated, ‘What’s the worst that might occur? Give your self six months and provides it a go,’” Madhani says.

She stop her job and moved into her dad and mom’ home. With $50,000 of startup capital raised from private financial savings, buddies, household, and her now-husband, she shortly spent half of the funding on compliance with bank card firms like Visa and Mastercard. She didn’t have leftover capital to rent staff or contract out work, so she leaned into what made her distinctive.

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“By not having capital, it truly compelled me to assume, ‘How am I going to do that in a different way compared to the business?’”

In 2014, most bank card firms went to market via bodily banking channels. Utilizing her background in digital advertising and marketing, Madhani constructed an internet site, began writing blogs for website positioning, and invested $500 in Google Advert Phrases.

“I encourage founders to leverage any white-label options which are already there to get an MVP off the bottom,” Madhani says. For instance, she partnered with a banking establishment to white label a transaction software program to check the speculation of a subscription-style mannequin versus a percentage-style mannequin.

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“We took a wager on that thesis and constructed our expertise to be a funds hub,” Madhani says. “We have been in a position to construct our platform with our clients.”

She found that as an alternative of attracting clients like small enterprise eating places, they have been reaching healthcare {and professional} companies that wanted an omnichannel platform for in-person and on-line funds.

“That was the thesis that introduced us the place we’re as we speak,” Madhani says.

Stax turned the primary subscription-based bank card processor to return to market with flat charges and limitless bank card utilization. Shortly, they have been thought of the Netflix of bank card processing. Inside six months of her dad and mom’ urged timeline, she processed greater than $5 million in funds.

The three Minds

The largest lesson Madhani discovered in her profession occurred when she met together with her board following the primary time period sheet provide.

“It was a s***present of a board assembly,” Madhani says. The traders had decreased their preliminary $17 million provide to $12 million. “In the event you’re negotiating with one occasion, you’re negotiating with your self.”

However the board nonetheless needed to take the deal.

“I stated, ‘You guys simply invested on this enterprise. What has modified within the final six weeks that you simply’re able to take this minimal provide simply incrementally greater than you invested in?’”

Madhani didn’t again down. She relied on what she describes as her “three minds”—analytical, coronary heart, and intestine.

“I would like all three to make the choices, and when one isn’t feeling proper, I’ve to belief that.”

Shortly following the rejection of the bid, she obtained one other time period sheet for $50 million. It was a personal fairness deal that purchased out their preliminary traders—the boardroom naysayers—and exited them 18 occasions their funding.

Your instinct is probably the most highly effective device you may have, [so] use it and don’t low cost it and hearken to it,” Madhani says.

So far, Stax has raised $500 million in capital and is rising triple digits year-over-year. In March of 2022, Stax formally turned a unicorn startup with a valuation of greater than $1 billion.

How one can Make Enterprise Selections

Beneath is how Madhani makes use of her “three minds” technique for making choices.

  1. Analytical: What do the numbers and tendencies present?
  2. Coronary heart: What are your trusted advisors, group, and clients telling you?
  3. Intestine: What do you are feeling down in your core that’s the right determination?

If one of many 3 minds is off, meaning there’s a drawback. When all 3 are unified, you possibly can belief your determination.

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