There’s a generally accepted script in Silicon Valley: Identify a startup idea. Sell a chunk of your company to raise venture capital. Make sales. Raise more venture capital, and make more sales. Repeat until the company goes public, or gets acquired, hopefully for billions either way.
But what if you didn’t get on a fundraising treadmill after taking a first round? What if you structured your company to sprint to profitability through slower, sustainable growth, rather than the reverse — unprofitable growth — as so many VC-backed companies do?
That’s the question that Pukar Hamal, founder and CEO of SecurityPal AI, asked himself after raising a $21 million series A round in 2021 and, a year later, almost running out of money. The round was led by David Sacks’s Craft Ventures, with participation from Andreessen Horowitz’s Martin Casado and Okta co-founder Frederic Kerrest.
“I started the company back in March of 2020. It’s my second company that I founded,” he said on Tech Zone Daily’s Equity podcast this week.
His previous company, which sold via an acqui-hire, had raised its first capital before product market fit, he said. That’s pretty common. Founders often raise before they’ve got a product that they know customers will pay well for.
In retrospect, Hamal described that decision as his big “mistake.”
So for SecurityPal, he did the reverse. He waited until the company hit $1 million ARR, which took about a year, and then did his first and only raise, the Series A.
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SecurityPal uses AI to speed enterprise security due diligence, which occurs in every large enterprise transaction when signing new IT contracts. SecurityPal promises to shrink the security review from months to days or even hours, helping companies to save money on the process while closing deals faster. It has big-name customers like Airtable, Figma, LangChain, and Grammarly, among others.
But in 2022, he faced a crisis. Interest rates rose and crashed the venture capital market. Raising more funds would be tough. “We were burning a lot of capital,” he said. “We were, like, 14 months away from running out of money.”
It was a wake-up call. Hamal had to drastically cut expenses, which meant a big layoff. That was so painful, he said, that he vowed to do things differently. “We extended our runway, and we tried to drive the company towards cash flow break even, cash flow positive profitability,” he said.
Although in 2025 VC money is flowing again, especially for AI startups, “we haven’t raised another round,” he said. The reason? He sees now that VC money comes with its own price tag.
“The more capital we raise, the more expectations there are going to be, the more we’re going to sort of give up control of the company, the more pressure we’re going to feel to just hire a bunch of people that might not work out,” he said.
“For venture capital, what matters is growth,” he said. For some investors, fast revenue growth is more important than improving gross margins, he said.
That means a company can fall deeper in the red even as it sells more. VCs trust that founders will figure out profitability later. Until then, they can keep raising funds. And if they can’t, the company might not survive.
Hamal wanted what he described as “durable growth” for SecurityPal: slow and solid. If sales were limited to a handful of deployments at any given time, his team could ensure that all customers were well onboarded, even for their edge cases.
He didn’t want fast sales only to have customers not use the product and churn come renewal time. “That story happens all the time because there’s so much pressure on companies to grow,” he said.
On the other hand, he said he found that slow ARR can lead to “healthy gross margins, great cash collection.”
Hamal is clear that he’s not advocating against venture capital. Other startups may have to keep raising and chasing fast ARR. He’s not even ruling out another round for SecurityPal. He just wants more founders to think about the slow-growth, nuanced alternatives.
“I raised venture capital. And I haven’t raised it again because what I’m trying to do is put the business in a position where it doesn’t need venture capital over and over again,” he said.
Listen to the whole conversation on the Equity podcast, which includes Hamal’s suggestions on how to find capital outside of venture.
