Podcast Summary: This Week in Startups

Episode: The Anatomy of a Startup Acquisition with Cacheflow's Sarika Garg | E2028
Date: October 18, 2024
Host: Jason Calacanis (absent for most of this episode) / Guest Host: Alex
Guest: Sarika Garg, CEO & Co-founder of Cacheflow

Episode Overview

This episode explores the journey of founding, scaling, and ultimately selling Cacheflow—a B2B SaaS startup focused on streamlining sales and billing—to HubSpot. Sarika Garg, co-founder and CEO of Cacheflow, shares deep insights into the realities of building enterprise software, achieving product-market fit, making critical fundraising decisions, and ultimately navigating a high-profile acquisition in a tough exit market. The conversation addresses the entire startup lifecycle, from inception to exit, with practical lessons for founders, investors, and operators.

Main Discussion Themes and Highlights

1. Genesis of Cacheflow and Identifying the Core Problem

[03:51 – 06:59]

• Sarika left Tradeshift in 2021 to found Cacheflow, inspired by the seamless, consumer-centric buying experience of Tesla.
• She realized B2B software buying and selling was stuck in inefficient, manual processes despite technological advancements.
• The pain point: after verbal agreement on a deal, the "nightmare" of assembling quotes, emailing PDFs, and billing stays tedious, often leading to slow deals and lost revenue.

Notable Quote:

"If a car buying experience can shift, why can our B2B buying experience not shift in the same way?"
— Sarika Garg [03:51]

2. Product Vision: Streamlining B2B Transactions

[07:42 – 08:18]

• Cacheflow leverages lessons from consumer products (Tesla, Uber) but adapts for both buyers and sellers, simplifying quoting, billing, and payments in one no-code platform.
• The proliferation of SaaS in businesses (average mid-market company uses 130 SaaS apps) increases the need for workflow efficiency.

Notable Quote:

"Every department not being able to do their job without software, but wasting a lot of time. So it's just kind of a little insane and actually needs to be simplified on both side, the seller and the buyer."
— Sarika Garg [07:42]

3. Building Cacheflow: Fundraising and Early Growth

[08:33 – 10:34]

• Seed round raised pre-product, with key support from GGV’s Glenn Solomon, Pelion Ventures, and South Asian women-led Nathri Futures Fund.
• Sarika, a female founder, noted a smooth fundraising process due to deep market expertise.
• Second round (Seed Plus) came as product matured and first customers onboarded.

Notable Quote:

"I had heard things like if you're a female founder, there's a 2% chance that you will get funded. I did not have that experience."
— Sarika Garg [09:15]

4. Achieving Product-Market Fit and Scaling

[12:24 – 18:15]

• The team prioritized listening to the market, iterative product development, and go-to-market discipline.
• Key inflection: Product-market fit identified about three quarters before acquisition, as organic customer demand and repeatable sales cycles emerged.
• Early traction came from personal networks and investors; scaling happened when word-of-mouth took off.

Notable Quotes:

"Frankly, I went underground for two years. I think people did not see me because all I was doing was trying to sell and build."
— Sarika Garg [16:00]

"If we see this repeatability 3/4 in a goal, we go scale. And that's exactly the point at which HubSpot inbounded to us."
— Sarika Garg [14:18]

• Growth was explosive—350% YoY with quarters of 100% growth.
• Larger companies (50+ employees) became ideal customers; organizational complexity made Cacheflow a "must-have."

5. Acquisition by HubSpot: Process and Decision Factors

[17:53 – 26:29]

• HubSpot reached out as Cacheflow was about to raise its Series A—timing was “almost perfect.”
• Initially reluctant to sell, Sarika valued independence and planned for IPO.
• Deciding factors: alignment on vision, HubSpot’s culture, massive distribution reach (300,000 customers), and the allure of scaling faster with a strong partner.

Notable Quotes:

"Our goal has been to go IPO. But the more we talked to them, the more we realized their vision was very aligned to us."
— Sarika Garg [18:16]

"We see this not as closing doors, but… as having a bigger platform to take the same vision we have and to get there faster."
— Sarika Garg [26:29]

• The deal was not rushed: multi-month discussions, exploratory at first, then moved to specifics.
• Investors were very supportive, prioritizing the team’s interest and vision over maximizing time-to-exit.

6. Tactical Advice for Founders: Fundraising, Exit Prep, and Organization

[22:24 – 37:25]

• Series A would have targeted $10-15M, focused on continuing efficient growth, not solely maximizing raise size.
• To prepare for both fundraising and possible exits, Sarika recommends:
  • Hiring a part-time CFO early
  • Keeping scrupulous records (P&L, budgets, plans)
  • Using simple organizational tools (Google Drive, ClickUp, Zendesk, HubSpot)
  • Being transparent and direct in negotiations—avoid posturing

Notable Quotes:

"My big learning was get your part time CFO early. Just getting a bookkeeper to start with… they will always mess up your books."
— Sarika Garg [34:24]

"We put in the right tools right from the beginning. That actually paid off."
— Sarika Garg [35:02]

• Organizational debt is as real as technical debt: Clean operations enable agility and make due diligence (for fundraising or M&A) much smoother.

7. Market Insights: SaaS Buying Trends and Customer Needs

[39:59 – 45:48]

• Since 2021, business software buyers now sort strictly between “must-have” and “nice-to-have”; CFO scrutiny is much higher.
• Growth now comes from delivering demonstrable operational value—solving essential pain, integrating with modern workflows, enabling fast changes (e.g., pricing models).
• Legacy enterprise products are expensive, inflexible, and require expensive consultants to make changes (e.g. $80,000 to change pricing logic).

Notable Quotes:

"If you're a software founder, you have to make sure you're a must have product. Otherwise, I don't know, change your product, change your go to market."
— Sarika Garg [39:59]

"Number one is deciding what to do. So what I'm quoting to you is a company that was 800 employees where it actually took them $80,000 in consulting hours to put in that pricing."
— Sarika Garg [43:32]

• Customers value transparency and self-service, appreciating the demystifying effect of modern SaaS platforms on complex business processes.

8. Post-Acquisition Future and Team Culture

[38:19 – 39:00; 46:19 – 47:23]

• Cacheflow will join and expand HubSpot’s Commerce Hub, bringing CPQ, billing, and payments together for a wide range of customers.
• Sarika intends to stay at HubSpot for the long term, citing continued vision alignment and positive team culture.
• Cacheflow was built as a remote team from day one, focusing on talent across North America, proof that modern SaaS companies can thrive across geographies.

Timestamps for Notable Segments

• [03:51] – Inspiration behind Cacheflow and challenges in B2B SaaS sales
• [07:42] – Chaos in enterprise software buying and need for simplification
• [09:15] – Fundraising as a female founder
• [12:24] – Achieving product-market fit and growth inflection
• [14:18] – Identifying organic repeatability as the sign of PMF
• [16:00] – Sacrifices founders make in early company-building
• [17:53] – HubSpot reaches out, acquisition process starts
• [18:16] – Motivations for considering and ultimately choosing HubSpot acquisition
• [22:24] – Detailed discussion on prepping for Series A, focus on fundraising realities amid AI hype
• [24:35] – Weighing AI-First branding and market realities
• [34:13] – The value of early organizational and financial rigor
• [39:59] – Macro market changes in SaaS buying behavior
• [43:32] – Legacy CPQ software pains and value of modern alternatives
• [45:48] – Impact of better organizational processes and transparency for SaaS growth

Memorable Quotes

• "If a car buying experience can shift, why can our B2B buying experience not shift in the same way?" — Sarika Garg [03:51]
• "Frankly, I went underground for two years…trying to sell and build." — Sarika Garg [16:00]
• "Our goal has been to go IPO. But…their vision was very aligned to us." — Sarika Garg [18:16]
• "If you're a software founder, you have to make sure you're a must have product. Otherwise…change your product, change your go to market." — Sarika Garg [39:59]
• "Get your part time CFO early. Just getting a bookkeeper to start with…they will always mess up your books." — Sarika Garg [34:24]
• "Number one is deciding what to do. So what I'm quoting to you is a company that was 800 employees where it actually took them $80,000 in consulting hours to put in that pricing." — Sarika Garg [43:32]

Actionable Lessons for Founders & Operators

• Focus early on organizational hygiene: Clean records and regular financial check-ins streamline both fundraising and M&A.
• Iterate relentlessly on product-market fit and recognize when organic, repeatable demand truly emerges.
• Don’t fear leveraging your personal network (and investors') in early sales—network trust is a real asset for first customers.
• Stay open to acquirer overtures: Even if the plan is independence, great partnerships can accelerate your original vision.
• Understand market shifts: Today’s buyers opt only for “need-to-have” solutions—constantly reassess if you’re mission-critical for your ideal customer.
• Remote-first can work: Talent and culture matter more than location; distributed teams can execute quickly.

This episode delivers a highly candid, strategically rich blueprint of what it takes to build, scale, and exit a modern SaaS company in today’s environment. Sarika Garg’s journey—from thinking like a product leader to executing as a CEO, and ultimately aligning with a high-velocity acquirer—offers inspiration and practical direction for the next generation of startup founders.

End of summary.