Startups need capital and often fundraise from investors. This requires pitching, numbers, stats and a story. And the time has to be correct. The key to timing is easy, according to this CEO: Fundraise when your confidence is high.
Each week on Live, investors and entrepreneurs share lessons learned from personal experiences. And Front CEO and co-founder Mathilde Collin knows about fundraising. She raised $138 million from venture capital over several fundraising rounds, including from Frederic Kerrest, COO of Okta and venture capitalist. They spoke on several topics, and the entire Live event is available on YouTube or through a podcast.
Timing can make or break a fundraise, and Collin advises to look for outside investment when you feel great — like you, the founder, feel great. Unfortunately, sometimes this doesn’t correlate with your company’s numbers.
“It could be you hired someone amazing,” she said. “You just signed a very big customer — whatever makes you super confident in the future of this company.”
Why? According to Collin, investors are very good at assessing if a founder is genuine in their motivations, which revolves around confidence and excitement for the company. This means she always starts presentations with why she’s doing something, even if it gets more complicated as it scales.
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Frederic Kerrest agrees, noting as an investor, he wants to spend his time with people who care and are motivated and interested.
Collin says each time when raising, she evaluated investors based on the needs of the company. Then, when it came to Front’s later-stage Series C, she turned to several operators who could provide capital and an insider’s take on the industry and corporate guidance.
Front turned to Sequoia for its Series B, something Collin says continues to be helpful. Yet as her company was growing, she said, she felt the need “to reinvent the wheel. She turned to those who she felt were previously in a similar situation and could lend her guidance. This turned out to be a series of industry leaders such as Michael Cannon-Brookes from Atlassian, Eric Yan from Zoom and Jared Smith from Qualtrics — and yes, Frederic Kerrest.
These are all people who Kerrest laughingly said get their hands dirty in the running and building and growing of businesses.
“There’s a lot of great value you can derive from institutional investors,” Kerrest said. “At Okta, we were fortunate to be backed by some well-known firms — Andreessen Horowitz, Sequoia and Greylock. They’ll bring a lot of networks. They’ll bring a lot of ideas on how to grow. They’ll bring a lot of ideas on advisors.”
But there’s more to building a company, Kerrest said. He pointed to building a sales team or when to scale internationally. Like the CEO of a much larger, similar business, operators can assist with critical steps.
And it doesn’t get more predictable as the rounds progress, either. Collin feels founders get it wrong, saying that as the company grows, fundraising becomes harder.
“You need to have good reasons to [fundraise],” she said. “I think it’s because the scale of everything you do is larger; the impact is larger, if you screw up, it has more consequences on your employees, your customers and others. So it definitely doesn’t get easier.”