ScaleupFest 2017: Carol Leaman (Axonify Inc.)
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Closing the Post-Seed Gap In the last 20 years Carol Leaman has successfully led four early stage technology companies, and has used some combination of government funding, debt, venture capital, and private equity to finance all of them. Carol will talk about the Series A gap and how to navigate from angel capital to institutional capital. She’ll share her insight and practical tips on how to position your company successfully for the first major raise and how to get over the hurdles you will inevitably encounter.
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ScaleupFest 2017: Carol Leaman (Axonify Inc.)
- 1. Startup+Fest 2017 Closing the Post-Seed Gap Carol Leaman, CEO July 2017
- 2. Funding My last 4 Companies Fakespace Systems Debt Venture Capital Private Equity RSS Solutions Private Equity PostRank Angel Capital Venture Capital Axonify Angel Capital Venture Capital Debt (Gov’t & Private) Private Equity
- 3. Who is looking for a Series A now? Who is planning for one?
- 4. It’s Never Been HarderIt’s Never Been Easier to Raise Seed Funding. And it’s Never Been Harder to Move Past Seed.
- 5. Seed Sources are Proliferating: • AngelList • Angel Groups (city by city) • Accelerators with Intro’s • High Net Worth Individuals Lulling you into a false sense of security
- 6. And then this happens…….
- 7. The Trap Just because it was easy to raise seed funding doesn’t mean it’ll be easy to raise the Series A
- 8. Some Data: A study by Mattermark says between 2009 and 2012 only 31 out of 100 startups successfully raised a Series A. And, the drop off was about half again with each successive round to Series F. Not great odds.
- 9. Series A Funds are bigger than they’ve ever been and they’re writing bigger cheques: • Mattermark says the average YC Series A went from $2M to $10M from 2008 to 2014. • Prequin says the average Series A was $12M in the first half of 2016. But the number of deals didn’t grow proportionately. What’s Going On? 9
- 10. More Pressure on Series A Funders to Make the Right Bets with Bigger Money Tougher Milestones for Startups to Meet Fewer Startups Moving Past Seed (and a large group of deserving but frustrated founders)
- 11. Old Way: 1) Raise $750K - $1.5M in Seed 2) Find early product/market fit 3) Hit $1M in revenue 4) Raise $2-3M in Series A New Way: 1) Raise $1.5M - $2.5M in Seed 2) Nail product/market fit 3) Hit $4-5M in revenue 4) Raise $10-$15M in Series A
- 12. 12 So How Do you Increase Your Chances of Success? 1) Think about raising a bigger seed round from the start and keep going until you hit $2 - $2.5M 2) Be careful about who you have invest in that round 3) Leverage government funding wherever you can 4) Leverage MRR debt funding as soon as you’re able 5) Watch your spend to get to milestones; be laser focused on getting traction
- 13. 13 So How Do you Increase Your Chances of Success? 6) Keep your seed investors informed and engaged 7) Understand your inflection points; know your metrics cold that demonstrate growth, traction etc. 8) Re-assess where you are at least 6 months before cash out and decide if you need a post-seed round (and be realistic on valuation) 9) Don’t try for a Series A too early
- 14. Bridge Post Seed Round Current Runway < 6 Months > 6 Months Opening CEO Statement “I need a few months to see if ________ will work” “I am 2 or 3 quarters away from de-risking my _______” Ratio of New Funds : Prior Round A fraction: e.g. $500K after a $2M round A multiple: e.g. a $3M round after a $2M round Total New Runway About 6 months 12 – 18 months Structure of New Money Debt Priced Round Poker Analogy Flip one more card to see if something good happens Push your chips into the pot because it’s working, but early Ability to attract third party investor Zero to low: Only an existing investor would put more in Moderate: a post-seed fund might invest based on metrics A Post Seed Round is not a Bridge……….(via Paul Martino, Bullpen Capital) 14
- 15. And Then When You’re Ready 1) Practice Your Pitch with Lots of Smart People 2) Realize it’s easier to grow the size of a round that shrink it 3) Take a hint – if you don’t get early interest don’t over-shop it
Editor's Notes
- We live in an era where access to information is instantaneous and effortless, buyers are more educated, the pace of business is accelerated, and employees face higher demands to keep up with unprecedented change. Employees must retain and apply vast amounts of information to be successful in their roles. Whether that means understanding the details of an extensive product portfolio, the actions they need to take to remain safe on the job, or following a variety of policies and procedures, the demand on employees’ knowledge is enormous, and only continues to increase. A study by Deloitte indicates 65-75% of organizations have an “overwhelmed employee” problem, which is due to the high volume of information that employees are faced with on a daily basis. In the deskless space, employees don’t tend to be connected to the business and rely on their direct superiors and their peers for the knowledge they need to do their jobs. Often inconsistent across the business and conflicting with business priorities, policies and procedures. For this reason, it is more important than ever to make sure employees have the right information at the right time - consistently. Otherwise, employees can make costly mistakes, including missing sales opportunities or even confusing safety procedures that result in injuries and compensation claims. What employees know or don’t know can have a huge financial impact.
- [THE PURPOSE OF THE NEXT FOUR SLIDES IS TO ESSENTIALLY STATE THAT TRADITIONAL METHODS AKA THE LMS ARE NOT MEETING THE NEEDS OF THE MODERN BUSINESS OR THE MODERN EMPLOYEE AND THEREFORE READY FOR DISRUPTION. DON’T PAINT L&D AS THE LOSER, JUST THE TOOL THAT HAS LET THEM DOWN ] I want to start by talking about a significant disconnect in corporate learning. What we have found is that the business wants help in achieving their business objectives, whether it’s reducing safety incidents, improving customer service levels or increasing sales. Like everything, they want learning to help contribute to the bottom-line. How do they want to achieve this, by helping create more engaged and knowledgeable employees. Employees that correctly answer customer inquiries; employees that incorporate safe work practices into their everyday; employees that live and breath your corporate culture. They also want a way to connect with their “deskless” workforce – those individuals who may not have email. How do you connect with those individuals on the frontline who don’t have corporate email? This is what the business is asking for. What the employee/associate wants. They want a fun engaging experience that is personalized and relevant to them short and non-disruptive to be able to learn Background on the Ipsos Research Study: Late last year, Ipsos conducted a study on behalf of Axonify to get a sense for what employees today want from their employers around corporate learning. What we found is not surprising and consistent with other research on the market. The study included more than 1,000 workers across sectors revealed a number of things, including (note: this numbers are slightly different for retail): 90 percent of respondents say training that is easy to complete and understand is important to them, with 55 percent saying it is very important. A large majority of employees (87 percent) feel that it is important to have access to training information anytime, anywhere they need it to do their jobs, and over half of employees place a premium on this ability (51 percent say very important). 85 percent of employees say it’s important that training is engaging and fun, with two in five (39 percent) citing this as being very important. Another 85 percent of employees recognize the importance of training that’s personalized and relevant to them, with another two in five (42 percent) rating personalization as being extremely important. Read full case study and access infographic - http://www.axonify.com/news/axonify-announces-workplace-research-reveals-one-third-us-employees-receive-no-formal-job-training/