How a raise and a relationship led to the 8-figure sale of this software business

AI might be the hottest thing in startups right now. But founders have been successfully scaling and selling artificial intelligence-driven businesses with far less hype for years. Michael Rumiantsau is a prime example.

In 2016, Rumiantsau, together with Alex Zaytsev and Alexey Zenovich, co-founded FriendlyData to enable businesses to use plain English to query their databases.

Less than three years later, they sold the company to publicly traded AI-focused B2B software giant ServiceNow in an 8-figure deal.

FriendlyData’s need for speed in the early days

Originally from Belarus, Rumiantsau started his career there as a software engineer before taking on the CTO role at local startup, Flatlogic. In 2017, he moved to San Francisco, where he founded both a web and mobile development consultancy and FriendlyData, initially running both simultaneously.

As Rumiantsau explained on his blog, being an immigrant first-time founder pushed him to focus on speed.

For first-time founders, “if your company runs out of money, you have to close it,” he wrote. “I think this motivates you to enter the market faster. Serial entrepreneurs often invest their own money, delaying the launch and wasting the momentum.”

And Rumiantsau knew FriendlyData had momentum. In an interview with The Heroes, a platform for Russian-speaking tech entrepreneurs, Rumiantsau explained he had a prototype built within six months and began reaching out to potential enterprise customers.

“The first sales should be done before the MVP is ready. The best possible feedback you can get is from people who will be using your product,” he told The Heroes.

Investors took notice of the fast-moving company. FriendlyData was selected for batch 20 of 500 Startups’ seed program in 2018. It was a transformative experience for Rumiantsau.

“Going through 500 Startups was a pivotal moment in my founders’ journey,” he told They Got Acquired. “As an immigrant, having social proof and investment from one of the most respected at the time early-stage funds was crucial and it opened many doors. Also, mentorship and support from world-class experts like Marvin Liao and Chris Neumann helped to overcome many challenges I faced as a first-time immigrant founder.”

FriendlyData went on to raise a total of $1.2 in investment, including the investment from 500 Startups and an initial seed round in September 2018. The company had six employees at the time and had just begun closing enterprise customers.

Rumiantsau wasn’t thinking about selling, but then FriendlyData caught the attention of a giant in the field of enterprise software.

Selling software to an industry giant, ServiceNow

ServiceNow, a Santa Clara-based, publicly traded company that provides a variety of software solutions to large enterprises, was investing heavily in AI and machine learning at the time.

“ServiceNow was interested in building the most advanced NLP (Natural Language Processing) capabilities in the world. FriendlyData’s technology outperformed all known Text-to-SQL benchmarks,” explained Rumiantsau. They reached out to FriendlyData shortly after the seed round closed, which led to the strategic deal.

FriendlyData’s technology was complementary to ServiceNow’s existing offerings, while ServiceNow could offer FriendlyData the resources and relationships necessary to bring their technology to many more customers.

“Inside ServiceNow, we got access to important resources — not only human resources, but also marketing opportunities, new customers, internal technologies, and company infrastructure. In many ways, access to real customer data helps to quickly train the system and scale it. The benefits are mutual,” Rumiantsau explained to The Heroes.

The deal made sense for both parties, but ironing out the details was stressful for Rumiantsau. “Selling to a public company was challenging because of all the scrutiny and due diligence you have to navigate,” he told They Got Acquired. “For reference, the people who were involved in the deal on our side: myself, CTO, a lawyer; from the buyer’s side: 70+ people.”

A low 8-figure deal closed in October 2018, and the FriendlyData team, including all three co-founders, moved over to work on integrating their technology within ServiceNow.

Rumiantsau has since left ServiceNow to found a second AI-driven startup, Narrative BI, as well as investing in other startups through his platform @founders.a.

He’s been open about what he learned from selling his first company, sharing a long list of takeaways on X (formerly Twitter), including the importance of negotiating with multiple potential buyers, the importance of seeking support among executives when selling to a large organization, and having a plan in case the transaction doesn’t close.