In this SaaStr Europa 2022 Cantina Stage conversation, the speakers discuss how startups should handle uncertainty in a down market, focusing on transparent communication with employees and investors, and strategic fundraising planning. They describe weekly management meetings where leaders openly discuss worst‑case scenarios, back‑up reassurance with data showing healthy growth, and emphasize the need to prepare for potential headcount reductions or marketing cuts. The founders stress the importance of always staying in "fundraising mode"—maintaining ongoing relationships with investors, sharing regular updates, and not waiting until cash runs out to start conversations. They advise extending runway expectations from the typical 12‑18 months to 18‑24 months or longer in volatile conditions, raising slightly more capital than initially thought necessary, and starting the fundraising process early. Lessons learned include that investors invest in "lines, not dots"—valuing continuous engagement and the founder’s ability to attract talent and customers. They also recount practical experiences of pausing fundraising during market shocks (e.g., COVID‑19, VC Twitter turmoil), adapting to virtual deal‑making, and the importance of having a well‑prepared data room and clear project prioritization before engaging investors.
Chapters
And I mean, you can see our booth out there, right? Like it's all the time busy with people. Like they're so creative in what they put to the table, both from a sales perspective or features for the product. And I think having that healthy balance of junior and seniority early on is really very important.
Makes a lot of sense. I'd love to transition a little bit to what's happening in the market right now. Obviously, you know, based on what we've talked about right now, commercially things are going very well. But if we look at the broader macro context, tech stocks are down, right? Many startups are laying off people amid uncertainty about whether or not they're going to be able to raise their next round. How are you communicating about this uncertainty with your team or with investors? And how do you think that's going to impact when you go out to raise again?
Yeah, so with the team is something that we've— and existing investors is something that we've spoken about. And of course, for those in the team that are a little bit more senior and they've had a longer career, they've seen ups and downs. So we take it with, well, you know, this will pass. We just need to understand, okay, if something was to happen, what would be the actions that we would take so that we can, you know, continue living as a business? That's the most important thing. Of course, for people that have less experience in management positions and that they've maybe lived during the past 4 or 5 years that they've been really great, right, for companies. And so we, there we are very, we still have a very transparent communication as to, okay, these are the risks for the company given the, the, where we are now in the market. But with those people, we make sure that we help them understand it's not that the company has a problem, but we just need to talk about it. Like, what if, right? And that's something that they've not had to do before.
And how do you approach that? Like, you're bringing up, you know, the what if or like worst case scenarios, right? Which is being transparent, but also can be scary, whether that's to employees or to investors. Like, how do you approach that communication? Give me a little bit more detail.
Yeah, so we have— so on like every week in the company, we have a management meeting where we talk about these issues. And you can see people's concern, right? And then they start asking, OK, do I need to— like, are you telling us this because we have a problem? So then you need to make it very clear, no, we don't have a problem. And then we even back it with data. Look, we don't have a problem because look at all these curves going up and to the right. We are actually onboarding more customers every week. So the company is healthy. There is no issue. But we just need to be responsible managers of this company and leaders of this company. So we need to make sure that we understand what would be the implications if something was to happen that we had to maybe reduce headcount or stop investing so much in marketing events. So we just need to see what's the impact for the, for the business if that happens.
And how do you think that the current market conditions are going to affect how founders more generally, yourself included, should think about when to raise and yeah, how to go out there in the market?
As founders, and I can talk for myself here at least, we are always thinking about fundraising, even if we are not fundraising. So we are always Having conversations with investors, understanding where the market is, giving them, you know, like the update of where the company is. It's so important to, to not wait until you need the money to have those relationships with investors. And, and then from, from our perspective—
sorry, the question, your perspective on timing about fundraising.
Yeah, so I think now what's change maybe is that you need extra time because especially when the markets are a little bit more volatile, you want to make sure that you raise enough to get to your next or to hit your next milestones that will enable you to, to raise your next round, which in tougher market conditions maybe it will take longer. So rather than 12 to 18 months, we need to be thinking 18 to 24 months or even longer if you can, right? So how much can I extend my runway to make sure that, that we can hit those milestones? Because in the end, the main reason why startups die is because they cannot raise the next round, right? So that's what you need to optimize for.
I think it's funny that you said you're always thinking about fundraising, always in fundraising mode. And I've heard many times from founders that this can be so distracting. Like you have to run this business, right? You have many people, dozens of people to look after, business to run, but you also have to do fundraising. How have you balanced that as a founder?
So when I say we are always raising, so what it means is we have those conversations and we make sure that we share the information with investors. But, and sometimes it happens, right? They say, okay, what if we were to do a round now? And they ask us the question. I was like, well, we are not ready, right? Like we want to prepare the data room, we need the pitch deck. They will want all that information, right? So you will have to get out of your way to prepare that. So usually what we do is we say, look, we are not raising right now. So let's wait until February next year. We will start around then. And we then engage in maybe a more regular cadence of conversations with those funds that really want to, or that they show that initiative to want to potentially even preempt around so that they are the first ones that we email by the time that we are ready. But yeah, to your point, it's so distracting once you get into fundraising mode. It's like, okay, you will have all those meetings. You've prepared your beautiful data room, but there is always other data that they want to see, questions that come up. They want to meet with your team. They want to talk to your customers. So you need to make sure that the company can absorb that. And we make sure that we, if we have certain projects, okay, we finish that project, that only then we want to start, because only then is when the company has the resources available to make this a fast and smooth process.
And so you've raised several times now, right, from different investors. What were some of the lessons or takeaways from these, the funding that you did? And maybe it would be interesting if you could reflect on something that you didn't understand or you think you got wrong, but then you kind of reversed course.
So something that I've learned is that investors invest in lines and not dots, right? So you need to make sure that they can follow your progression over time. Sometimes you think, okay, I spoke with you 2 years ago and I'm speaking with you now that I need capital. But in the end, it's more than that. Like, it's that ongoing relationship, and that is very important because ultimately the numbers are important, but they also want to know, can I work with this person? How does this person can attract talent? How can this person can attract other investors? How can they attract customers? And you only really learn that by having that ongoing relationship. Then what else as key things? I would say is this: whatever you think you need in terms of capital, try to always raise a little bit more of that, because for sure it will take longer to get to where you want to get, and you want to make sure that you are not stressed by not having enough capital to achieve your objectives. And always start earlier than what you think you need. So we always start with plenty of time. We've been very— somehow the timing for us has always been curious. We started raising our seed round just as the world was closing down in 2020. And, uh, yes, so we were like, oh my God, what's happening now? So we put the pause to the whole process very quickly. OK, let's wait here, right? You know, we were having conversations, but nobody was willing to pull the trigger. Definitely not for the first 3 weeks when we were talking to investors. And we said, OK, let's stop. Let's think about it. And we could do that because we had plenty of runway still when we had started. And then we learned, OK, how is it to raise a round over Zoom? Like, what is changing? Like, how do we need to interact with investors, which is different to when you are interacting in real life? And then from there we learned those lessons and we decided to restart, and then it went very smoothly. And actually now it happened something similar. So as a company, we wanted to start raising in February originally, and then the world started collapsing in, you know, there was a VC Twitter meltdown, and we decided to also pause pause because it's like, well, we don't know what's going to happen. Maybe we'll spend a lot of time and nobody will move. So we put a pause to it. And then now that we see that, okay, things are counting down, deals are still happening. If you are a good company, good metrics, amazing team, you will raise. So now that's why we say, okay, we have suster, so let's get suster out of the way and then let's
