This is a transcript of a live SaaStr Europa 2022 panel featuring Christina discussing fundraising essentials for Cledara. Key points: maintain an active communication strategy with investors so they can add value; choose VCs based on the next strategic challenge (sector and geographic experience matter — e.g., fintech- or SaaS-focused funds; European vs US investors for US expansion); prioritize capital efficiency (deliberate hiring, validate before scaling) given market conditions; initially test the US market from the UK before hiring on the ground. Closing advice: pick investors you trust/‘select the fund that you love.’
Questions this video answers
Anthemas; Notion Capital.
"We load in the US in February this year." (as stated in the transcript)
Chapters
Along to our journey. The more they can help us, the more they can do for us, the more they know the business. And by the time we sit at the board meeting, it's not just an update on metrics, it's like, no, actually we can talk about meaningful things about the business because they know us so well that they can actually add a lot of value. And I think that's sometimes where maybe investors, they cannot add value if you don't bring them along to your journey and they let them understand when what you are going on and what you are building, what you are doing next. So I think that it's important to have an effective communication strategy, I would say, with your investors.
So yeah, obviously as you said, you want to like the people that are investing in your company because you're going to be spending a lot of time working with them. Are there other criteria or things that founders should look for from VCs in terms of value add or areas where you should be looking for chemistry or synergy?
So the way we've chosen ours, so it's always depending on what's the next challenge for your business. So when we raised the first BC funds we were building the fintech part of the business. So then we decided to look for a fintech focused fund because we thought, well, they will understand what we are building, they will know other companies in their portfolio that they can put us in contact with if we face challenges. So then that's why we went with Anthemas at the time then when we were doing our seed round, we then chose a SaaS focused investor because, well, we were going to build a whole SaaS side of the product and we wanted to then people that could help with that. And now the capital has been a great investor and notion capital as well, they've been great investors from that perspective. So I would say think of what is it that you're going to be building and that you think that you want the investor to bring. So our next step, right for the Series A. So we want to. We are expanding in the US which means that we want either an investor here in Europe that has seen plenty of companies help European companies, hope US investor.
Yeah, that was going to be. My next question was you said that you'd been talking to both US and European investors before, but until now you've really wanted to go with European investors. That's been your strategy?
Well, we were mostly. So we are operating in UK and Europe so therefore they have a lot of connections here, they know a lot of people here. They know the ecosystem here. And then obviously now as we are opening up, we load in the US in February this year and we'll start having people on the ground towards the end of the year. So now we want someone that has experience with the US market.
Makes a lot of sense. So we talked a little bit about how once Saster is done, you're going to be going into, you know, really going forward raising the series A. What's next for you and what's next, do you think, for founders that are looking to fundraise, you know, what should founders be paying attention to for the next three, four months?
I would say more, more than ever now given the, you know, the market conditions. It's important that your metrics are, are there. Right. So it's, it's harder now to raise on the back of a fantastic vision and, and you know, what do you want to achieve and all those dreams that we all have, which are fantastic. But I think now you need to back it much more with, okay, these are the metrics that I have now. This is where I want to go and have a reasonable burn rate, which nobody was taking much look at it before, but now this whole capital efficiency has become a widespread thing. Before there were only some funds that were really focusing on capital efficient companies. But I think now every fund is looking for founders that are managing the companies in a sensible, capital efficient way.
And how have you been trying to demonstrate that or has your strategy towards capital efficiency and using capital changed during the current market conditions?
So we've always been very prudent with hiring. I remember very early on, I'll mention Rob, he wanted to hire a team very quickly and we said, well, let's test things first. And it was great. He embraced our way of wanting to operate that obviously in the US it's different. You just throw a lot of money to every problem and hopefully something will work. So we've taken a different approach where we say, well, let's make sure that what we are doing now works. When we validate it, then we scale it like this. You could say that in some ways. So I wouldn't say it's necessarily slower. I would say the things you do, you do them much more deliberately. Like the way you allocate the capital is much more focused and hopefully if you take the right decisions, that means that the whole company is much more aligned, which means that you can get farther, faster. But you need to do that thinking beforehand before you choose to put money to problems.
And you touched on the US thing a Little bit too. But going forward, obviously, as you expand into the US Market, how are you thinking about capital efficiency there? And, yeah, trying to build a business out there.
Yes. So we've in our spirit of trying to not spend a lot of money on that, so we started selling onto the US from the uk so usually a lot of companies create a landing team that will go to the US and then they will be doing that and pushing that expansion. We decided to do it all from London until we can prove that that market actually is a good market for us. And now, obviously, we're already starting to get some traction. We have customers there. They love the product. We've learned, okay, what are the differences between what we see on our customers in Europe versus what we see of our customers in the US We've changed a little bit the way in which we sell. And then, yeah, now we, let's say, have that early playbook for the US So now we are starting to be ready to say, okay, let's go and hire people on the ground, rather than say, okay, let's do all the experimentation with people on the ground, which are two, three times more expensive than obviously hiring people here in Europe.
That makes sense. So just to close things off, because we don't have very much time, the title of this was when, how, and how much to raise. Can you just kind of sum up in three bullet points what your top advice to founders would be, who are going out to raise?
Top advice, I would say just, you know. Yeah, select the fund that you love. I mean, you need to really trust the partners that you will be working with. You need to feel that you can really work with them. I think for me, that's the top advice, because otherwise you'll always regret it. You'll say, why did I accept that money like I should have not done it? And I think that is so important.
Well, thank you so much, Christina. This was wonderful.
