A SaaStr Fundraising Primer with the CEOs of Front, Automile and Algolia

Good afternoon, everyone. My name is David Apple. I'm head of the software and SAS vertical at Intact, where I've been very happy to be the sponsor of the Tactical Stage here at Saastr. This is our last and final seminar. It's going to be a great session. I got a question for the crowd. How many people here are European? Okay, welcome. What time zone are you on? Thank you for coming. You probably already know some of these people. All these people in the background. We were talking a little bit about what the session's going to be about. This is for you. This is their story. What did they go through? How have they made the decisions that they have on building their businesses and particularly on how they went about raising funding. So we'd love for you to, the time you're spending with us to walk away. That's our investment back in. You learn some of the lessons. They went through it. So you can take some of the avoid the bad, double down on the good. We've got four great speakers coming on right now. I'm going to let them introduce themselves as they come on up and I don't want to take away from the moderator. So, Teddy, come on up. Thank you.

All right, I think let's just all get on stage. So we have a great group of European founders today. We have two French founders, one Swedish founder, and two of you guys have done yc. And Jens has done the YC of Life, as he told me a few days ago.

That's right, YC of Life.

But the common theme is all of you have raised money from Jason Lemkin in one way or another. So it's a huge, huge coincidence you end up on stage here today.

Big coincidence.

We're going to talk about the stories of fundraising, the kind of the good, bad and the ugly of European SaaS funders fundraising their businesses. And let's start with you, Nicholas. So you had the US venture funders already in your seed stage, but then you ended up raising around in Europe. Can you tell us a little bit about that, how you kind of bent back and forth?

Sure.

So I'll be honest. When we were fundraising for our Series A, we mostly spoke to U.S. investors, but then what happened is that the most, like, the most bullish investors actually was the one who had known us for the longest, with whom we had a long relationship. And that's how we ended up with Accel UK and Philippe. Philippe had known us for like two years before. And so we saw the progress of the company along the years. And I think that really was a key part of having him being probably bolder on one side than the others. And then it was a great brand anyway. Axel global brand. So for us it was good one anyway. And the fact that it was from the UK actually was also in a way an advantage given we already had US investors because he knew what it took to go from Europe to us.

And Jens, for Automalley, you ended up raising your Aron from a very well known US VC called Sastor Fund.

That's right. We were the first investment in Disaster Fund that was, I think it's $75 million or something similar than that. And I was still partially living in Europe at that stage. And something I learned with Jason Lemkin is that, you know, he spends a lot of time during the due diligence phase with your customers. He's learning what makes Automile so great. And what I learned during that phase is that, you know, I think he already made up his mind regarding me as a founder. He wanted to invest into me and wanted to know how good is this product really. He also were knowing that this is a big market, it's a $30 billion market. But ultimately I think what's really killed it is that he basically talked a lot with the customer before making up his final mind and giving me a term sheet and even having multiple term sheets. You know, you always want somebody that has traction, that has a record, can support you as a founder. You can help you with all difficult decisions. And I think that is Mr. Lemkin. He helps you with these difficult decisions.

All right, that's the sales and marketing pitches done.

Yeah.

And Mathilde, you're like an expert on this topic. You even wrote a long form blog post about the difference of rate when you're raising your seed run US and Europe, but then you've gone on to raise a Series A and so forth. Do you feel the same dynamics apply to Series A? And what have been your kind of key learnings when you talk to investor on investors at both sides Atlantic?

Yeah. So for me, I think the reason we raised a Series A seed in the US is mainly because we couldn't raise in Europe, which I think was not true for a Series A I think we could have raised. But I just enjoy my experience working with American VCs. As a European founder, I have a lot of, I don't know, European roots. And so I think I needed a bit more American touch in this company. And that's why we choose social capital.

For us, a lot of people in Europe say that, oh, you can't raise money from US VCs if you don't completely relocate your business to the US so let's try to debunk that myth a little bit. So how did you, how did you guys go about it? What functions did you move before you raced your round? Maybe Jensi, can.

I only move myself. So I left my team in Sweden. I left them with one of my strong co founders and I decided that I will drop myself in the US only with my family, three kids. You know, it is super easy to take care of everything. But ultimately that was the best decision ever because basically I was forced to build a new team and that excites me. And on top of that, it's hard. It's freaking hard. And every day I woke up like, I need to find these great people I need to hire and ultimately I did it. We have 20 people today and I believe that it depends on what you're looking for. Some founders bring their full team with them and may lose a few ones on the way, but ultimately it depends on what you're looking for. I was looking for really coming to us, really showing and demonstrating that I'm capable of recruiting. And that was like my ultimate goal from the beginning. And leaving the Swedish team still working on the European market.

Nicola, how did you go about it?

Actually, when we raised our sales a, we didn't have really anyone in the US yet, so we are already headquartered here. We already had most of our customers here, but it was a lot of back and forth and a lot of hustling and I was committed to moving. So it was not a question of am I going to move or not. But the team would stay in Paris anyway. All the tech teams stayed in Paris. It was never been a problem, actually. Never been a question from investors.

And if you think about the us, there's this again, this meme in Europe that, oh, if you are recruiting in the us, all the resumes are super inflated and you need this culture of like, everything is pitched really hard and you have to be overselling and forget all the modesty. But does this also apply to when you were pitching US investors or would you tell the story in the same way as you would have told it in Europe? Mathildarians.

Yeah. So I think it's true. I think as European founders, you're really bad at pitching and overselling your company. So I have this funny story where when I applied to AC, one of the question was, how big could this ID be? And I had to rehearse at least 30 times, it could be a billion dollar company to feel like it was natural. And then I just like, then I went to AC and I asked someone that was American, how big do you think this company could be? And it was like obviously a billion dollar company and it was so natural. So I think we have a slight disadvantage on that. However, I think that the only so for hiring, pitching customers, I do think that we need to improve on that and I worked on that. But for fundraising, I think it's one of the only times where if you have good numbers, it doesn't really matter to oversell anything. I think you need to be patient and have good traction. And for us at least it worked out for CD and series A.

What about the rest of you? Did you notice? Did that change the pitch somehow?

Well, I'm a salesperson from the beginning, so I always try to sell. And that means that you always try to do your best pitch. And I believe that coming to us, you have to be clear about your goals and your visions and you should be bold about it. You should not be afraid of telling the VCs that this is my vision, this is what I want to achieve. And even if you are yourself, only one person sitting in a garage, you can still be bold and tell them that vision. It doesn't matter that you know you're not there today, you'll be coming in that direction in the future. And I think that matters when you come to us, that you have to be clear on that. But overselling, I would say that we Europeans are better than, you know, we are pushing ourselves down a little bit sometimes I think we should just put ourselves up a little bit. That's what I have learned.

Yeah. And I think coming here in the US is a good way to push you up because I think when you're in Europe, Europe and you're just watching on, I don't know, social media or watching sester, et cetera, it seems like American founders are far better than you are and you have this shitty company that no one wants to use. But truth is, the first time I came three years ago and I was sharing the product and everyone was telling me, whoa, this is amazing. And then I was looking at the products of our competitors that had such great websites and marketing assets, then that's when I think I built my confidence because then you can see for real how potential customers react to your product versus other products.

I think that's exactly the right point. Ambition is more important actually than overselling. I don't think I ever oversold the company or the Matrix or anything. However, our ambitions definitely changed a lot when we joined YC and when we came into the US Being an like at the contact of local founders kind of showed us the way to free our mind. I mean, in Europe you think small, here you think big. And it helped us to think big. And then it was not overselling anymore. It's just like selling the vision.

So it's more about like painting the really big vision and kind of being bold enough to think big.

You still need to believe in your own vision.

Yeah.

And for some reason, US companies, at least startups in the Valley, has more respect for bigger enterprises. I don't say it's easy to sell to enterprises when you're small, but it's easier to be in the Bay Area because you have a lot of respect. Just because you're innovating stuff, you're disrupting stuff, they believe in you, so it's easier to get people to visit you here. Actually, specifically from the enterprise sector.

And when you're looking for investors, what were you really looking for in terms of are you looking for somebody who has a vertical experience in what you were doing, or you're just looking for overall good quality of investor or, you know, access to customers? Was there a specific angle when you were kind of choosing who's gonna be lucky one to fund your company?

I mean, I can, like, for me, really, it came down to who I enjoy having dinner with. So, I mean, for our Series A, we had term sheets from, like, amazing investors. But the reason I chose Mamoon from Social Capital was just because I had known him for two years, I trusted him. And I think the main thing about the way I think about it is I think building a company is super hard, even if you're doing well. And so if you're not feeling good when you're going to your board meeting, I think it's just like adding a lot of pressure. Whereas I trust Mahmoud. So whenever I go to a board meeting, I know that I'll do my best, you will help me, and I'm not scared at all. So that's how I choose.

So Mathilde is telling us a great story here that I have to repeat. So basically, I think the same way that it's all about that trust and engagement from the investor. You know, it's like a little bit like dating. You're meeting, meeting, and then you may get excited yourself about this investor and the investor gets excited about you, and then it's the Time to try to move to a term sheet, of course, independently, not spend too much time in the due diligence space. But I think that engagement, that investor believes in you truly and also in some way wants to support you when it's really difficult. You know, it's hard, it could be stressful, it could be hard to go to a board meeting without having a full deck or a bad deck or whatever, a bad day. And I think that that's when it matters, to have great investors that really believes in you, wants to support you when it goes like that. And it goes like that because even if you're a great company, sometimes it will go like that. It's just fundamental in all companies.

And talking about the process which you mentioned, the dating phase, I'm not going to get much into that analogy, but how long did it take you guys to raise your Series A from the kind of first series conversations with investors?

In our case, it was a bit special because in a way we got pushed to rise with a lot of external interest. So that was. We realized, oh, that's the right time. And between the time we thought it was the right time to sign, internship, maybe six weeks. So it worked really well. But we had built a lot of relationships with the key investors we wanted to speak to before that. And that helped a lot. They didn't have to discover the company, they already knew a lot. I mean, they had never seen a pitch deck yet. It was really conversations. But that helped to create that engagement, that understanding, that trust, that helped them to go faster.

Yeah. And for us, I mean, for our Series A, it took literally six days. So it's like pretty unusual, but it was. What happened is I had built a relationship with a few SaaS investors. Byron Dieter, who is speaking at the moment, was one of them. He gave us a term sheet whereas we were not raising. It was expiring six days after. And he was a great investor. So I just called a few investors that I knew and told them I will make a decision by the end of the week. I think it can seem easy and too easy. Truth is, I had worked a lot with them before, always telling them about our progress and explaining what our vision was. So it was like six days. But a lot of time was invested before.

There's no general answer. It could take one day to raise money, it could take four weeks, it could take three months. And you should not feel a pressure if it takes three months. It depends on that kind of relationship you have been building with the investor. If the investor is not ready to commit. It will likely take longer time to build that commitment than consensus in the partner team if there's multiple partners involved. And I think in our Series A, actually our seed round also, most of the things were closed within, I would say, four weeks. Seed round went really fast. Series A took a little bit longer because we have multiple options and wanted to review them. Ultimately, I think it doesn't really matter if it's three months or four weeks or whatever. You're still a good founder if you manage to do it in under a year, I would say so it all.

Sounds like really, really easy, like six days, series days or whatever. But let's talk about the other side. Like, what were like the biggest mistakes you guys did when you were doing your fundraising at whatever stage you want.

To talk about raising before yc, if I can simplify. No, but in the end it turned out okay. But yeah, if I had one mistake, maybe that was our very first seed round that we did in Europe before, before joining YC in Insight. Of course that was a mistake. It would have been better to come here first. But yeah, you need to learn.

I think for me personally, since I'm a guy that believes strongly in customer relationships, I'm always giving my customer relationships to the investors that are willing to invest into us. And the mistake I've been doing maybe more than once is that I'm giving them too early and that's bad and good. The bad thing is that these customers are getting a few calls and, you know, the pressure that we are putting on the customers doesn't equate to really the interest of the investor. So I would say that in the future I would be more restrictive of giving out my references before I really know that this investor really wants to invest and wants to work with me.

And my team, I think the biggest mistake that I did is not being aggressive enough. So, I mean, for our Series A, now that I look back, I knew that we could have had better terms. But I think it's like this European thing where I don't know, I was probably not confident enough when I raised money. But yeah, so I thought, okay, if I can do it in six days, I'll do it in six days. And I will not look at what other options are. I think it was a mistake.

So to end, we're going to do a quick fire round. That from my colleague Harry Stebbings 20 minute VC podcast, but it's gonna be a bit faster. I'm gonna give you two options and you pick the one that kind of feels right and comes to mind quickly. So Nicholas, let's start with you. Growth or retention?

Retention.

Jens, outbound or inbound?

You know that I have my sales team listening here. It's inbound. I love you guys, but inbound is very important.

Okay, Mathilde, on pricing, modular or all inclusive?

All inclusive.

Okay, let's do another round. Nicolas, Paris or San Francisco?

I got my team too. San Francisco.

Jens, Mr. Robot or Westworld?

It's Westworld. All. All in.

Mathilde, slack or email?

Email, of course.

And then one for. I'm going to ask the same one from all of you. So Mathilde, hard work or lucky break?

Lucky break. I'm French.

Jens.

I don't know. I have no good answer on that question.

Okay, the next one.

Can I say both?

This wasn't a very impressive last round. So just for ending one key tip for someone European founder or who was raising their Series A or thinking of raising it, what's kind of like the one piece of advice you would give them, Nicholas?

Nurture your investors. Like the investors you think are going to be the good one for your Series A. I mean, when I say nurture, don't spend too much time but like a call here and there. It's always useful to keep them up to date.

Would you use like marketing automation software for that?

No, I don't, but I should. But yeah, it's really getting them excited about the next round and making sure they are excited all along and not discovering you are raising two weeks before.

I would say the deck. And you know what? Matilda has shared her deck. So now it's super simple for Everybody to raise $10 million. I haven't shared mine yet. Have you shared yours? But independently, I think working through the deck in iterations, presenting it to potential investors, receiving the feedback and going back and redoing your homework, it's like it's super crucial. That deck has to be perfect, otherwise you're lost. That's my key advice.

I think if it's for European founders specifically, I would say two things. One is you should come here. I know that some people will watch that talk. And I think the best thing that happened to front was when I decided for the first time three years ago to come here and actually pitch to American vc. And I had never been outside Europe before, so it was like a big deal for me to come here. But I think that's one thing that I did really well and the second thing, I forgot about it.

Well, you only did one, so it's good.

Okay.

Cool. So that's it for our panel. Thanks so much, everyone, for coming. And I'm sure you can grab these guys afterwards for any more tips on fundraising. Thank you.

Thank you, everyone.

Thank you.