Is Seed the new Series A? (Video + Transcript)

Since 2010 we’ve seen more startups, funds, and capital than ever before, but with this drastic increase, investors are seeing unexpected new trends reshaping the future of the industry. Join this panel of investors from Connect Ventures, Blossom Capital, Dawn Capital, The Family, and Indico Partners as they provide an overview of the current investment landscape, and discuss whether the seed stage is emerging as the new Series A.

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Pietro Bezza | Managing Partner @ Connect Ventures

Ophelia Brown | Founder, Partner @ Blossom Capital

Emilie Maret | Fellowship Team @ The Family

Evgenia Plotnikova | Principal @ Dawn Capital

Christina Fonseca | Venture Partner @ Indico Partners (moderator)

FULL TRANSCRIPT BELOW

 

Cristina: So first of all, thank you so much for joining. The panel that we are in is called Is Seed the New Series A, and this is a question that I’ve been asking informally yesterday and today. The answer is yes, of course. People have been telling me, “How come is that a question?” We’ve seen funding rounds going up in size, but actually Christopher from Point Nine, he did an analysis last year of the seed stage funding during the past ten years, and one of his biggest surprises was that $2 to $3 million seed rounds were an exception and not the rule and most rounds were below $1 million, so I guess there’s a lot we will have to discuss here today.

Cristina: Before, I would like to remind you that we are open for questions. We might take questions. I might pick some questions from the audience. If not, there will be room at the end, so use Slido for that. Go to slido.com and the hashtag is #saastreuropa. I think that’s the correct one, but tell me if that’s not right.

Cristina: I’m Cristina Fonseca, venture partner at Indico Capital Partners. I co-founded Talkdesk before, that’s why I’m here. We are a $50 million fund based in Lisbon, and we invest mainly in seed stage. Super happy to be moderating the panel. So I will ask you to quickly introduce yourselves. Name, role, and also the stage in which you are investing.

Emilie: Hello everyone. My name is Emilie and I work at The Family. For those of you who don’t know of The Family, what we’re doing is recreating aEuropean infrastructure from scratch to help ambitious founders create very successful companies. I work in fellowship, which just means selecting companies, supporting them, helping them raise. Our portfolio today is valued north of $3 billion. We have 250 active portfolio companies today. Most of them are still in France. Trying to change that. Some of them you might know. Algolia, PayFit, Site, Comet, and I’m really excited about this discussion.

Pietro: Salud. Hello everyone. Pietro Bezza, Connect Ventures. Our mission is to back the best product founders in Europe and yes. Ophelia.

Ophelia: Hi everyone. I’m the founder of Blossom Capital. We started the fund last year, actually. We’re a team of former investors and operators from the likes of Facebook, Deliveroo, and the Swedish payments company Klarna. We focus on Series A, and we only make a small number of investments, probably four or five a year, precisely because like to work very closely with the companies that we invest into to really help you scale out of Europe.

Evgenia: Hi. My name is Evgenia. I work with Dawn Capital. We are a purely B2B fund, focused on software and fintech. I guess I’m sort of the latest stage on that panel. We do do Series A, but we also do Series B, so we invest anywhere between $5 to $50 million. We’ve got half a billion into management. We had some fantastic successes like iZettle, Collibra, Mimecast in our portfolio and so we’re looking to back more founders. We’ve got two deals, two companies here in France, but we invest across Europe. So if you’re a software founder in that stage, come talk to us.

Cristina: Thank you. So let’s start with a early stage. Emilie, do you agree that the bar is higher for seed investors right now given that the amount of capital available increased significantly?

Emilie: So, yes.

Cristina: And how do you differentiate?

Emilie: Okay. So yes, I do agree. The bar is definitely higher, but I don’t think that it has to be. The way that I see it, there’s been a great success which has been education. Education has impacted both the supply of … we’re talking about the B2B SaaS entrepreneurs and the supply of investors. So on the entrepreneurial side, what we see at The Family, we take around a hundred companies per year. Maybe fifty of them are B2B SaaS. What we’ve seen is the playbook to start a B2B SaaS company has become quite obvious. It’s become cheaper. It’s become quicker to build your first product, test your market, and people really have role models around them and understand how to get that started.

Emilie: On the other side, you have investors. There was the funny tweet the other day about someone was saying, “If you don’t have a bunch of 50 year old founders running B2B SaaS companies, then there’s something you have wrong because the B2B SaaS playbook has been around for twenty years.” On the investor side, funds have matured, investors have learned from the companies that have been successful and have understood how to invest in these companies.

Emilie: The way I see it, the bar is higher because on the … because of education, there has been a metrics war. So what we see when our companies are pitching to investors is that you know what metrics investors will open the email. You know when they’ll answer, and the thing is because everything has become more or less standardized and we understand the way it works, anyone that’s slightly top of class who has better metrics in a shorter amount of time will have all the VCs herding towards them. I think that VCs are essentially making it harder on themselves and perhaps omitting some opportunities with less obvious models that are less well understood.

Emilie: I can think of Payfit, which was reinventing payroll. Super tough market, difficult playbook. Companies like this are the new companies to fund and seed, so to answer your question about how do you stand out, I think it’s really important to think about the cost of conviction. Today it doesn’t cost that much to make a conviction on something that’s obvious and I think that’s why there’s also discussions about the different ways that B2B SaaS companies will be funded, perhaps a mix of equity and debt, because it’s becoming so understood.

Emilie: But the cost of conviction on a model that’s not obvious yet, that’s where funds like Connect and stuff have been really able to stand out. It’s taking the bets that will take longer to prove just because it’s new. I mean, it’s the way that things have always worked. Once something becomes the norm, then there’s always one or two people that will push and bring the model to the next level. I think that’s the way to differentiate. Accept that the cost of conviction might be higher today.

Cristina: So Pietro, so what should the seed capital fund nowadays, when is a company that she invested in based on conviction be ready for you and when is the company ready for a Series A round? Is there an old playbook and the new playbook? How do you see that?

Pietro: Okay, that’s quite a question. So, let me start on the bottom from the playbook wise. Historically, what I’ve been observing is being a seed investor in the last eight years in Europe, in a simplistic way, is the following. The seed money is to fund the product energy. Series A money is to fund the growth energy and the Series B money and C the expansion and the scale up. So let me focus in on the seed, which is what we do.

Pietro: We are a seed only investor. We see it as a journey. It starts from the founders having a great insight, found a unique problem and a great solution to tackle this problem. That’s where we start, so at Connect, we invest through the old seed spectrum. 50% of our SaaS investment, out of 30, 16 has been pre-product. So it starts from really the founders, the problem and the solution, maybe a prototype. Then we deploy the capital to build. To build the initial team, to build the product, to build the initial go to market, to build the first customers and to build the ARR, the starting.

Pietro: This journey used to end at the legendary, mythical product/market fit. We can discuss at length what product/market fit, a great product/market fit means, but let me give you two heuristics that we use at Connect. So one qualitative is when the customers love the product and the metrics for measure the love is phenomenal engagement, great retention, let them expand dynamics into the customers, growth led by expansion MRR more than the new business MRR, and ideally negative share. So that is … you know that company has built something that the company values. In terms of more like quantifiable product/market fit, rule of thumb I think is $1 million ARR still is valuable.

Pietro: At that point, I’m not looking on the left side of the funding stock, is Series A ready, but I have to say that we are observing that the bar for Series A is getting higher and higher. The good thing is … this is the good news, bad news. The good news is that the buy is higher but also the round and the size, the ticket of Series A is larger, which is great because you can raise more money. You can really deploy and grow and hypergrowth and start really scaling up the company. The bad news is that of course there’s investors who sign a check ranging from $5 to $50 million. They want to … the evaluation, of course, is connected so the evaluation gets higher and to justify this kind of evaluation, they want the company go further in the seed journey. So there are more pieces of the company building that you need to prove, namely like the repeatable machine, at least an initial of that. That means more money, pre-Series A to be funded from the seed investors.

Pietro: So we as founders and seed investor must be super aware of this and take action. So the actions are define and design the funding strategy seed extremely well. Second, and of course, when I say well and right means like bigger than the past. You can underfund the company, much mistake. Second is understand that probably after a seed, there could be another seed. Sizing the evaluation and the round is a strategic decision. Third is syndicate well with funds that you can not breach if there is a last might to do before the Series A. So the new playbook is probably … there is no longer a playbook, there’s not like a super monolithic seed, A, B. It’s more the ability for the founders to navigate through early stage funding stuff.

Ophelia: For me, I’d actually have to say I’ve never believed in a playbook. I actually gave a talk here last year why a $100K MRR isn’t one of the right metrics to think about for raising your Series A. If I look at where we’ve invested in companies, we’ve done a Series A where there’s no revenue and we’ve done a Series A where there’s mid-single digit recurrent revenue. Really what we’re trying to understand is some kind of form of product/market fit, but that can be seen in a number of different ways. I think we put the impetus on us to make sure that we get to know the founders as early on as possible because one of the most critical things that we want to understand is execution ability and ambition and ability to drive the company forward. We might see something within two months and we might see within 18 months, but we really like to understand the journey that the company is on.

Cristina: Evgenia, same thing with you? Do you still … is there … I assume there’s no framework in terms of KPIs and is more conviction, and another question I’m curious about is do you feel you need to work with the founders a little bit earlier also to be able to get in the round?

Evgenia: Yes, I do. I’m kind of with Ophelia on the point that … I mean, traction’s great, don’t get me wrong. If people are paying you dollars for your product, that means something’s working, right? If they’re not buying your product, then probably something isn’t. So in a certain way, it’s great to have metrics and yes, SaaS … I mean, we’re at SaaStr. Everyone’s in the SaaS napkin from point nine. Everyone probably knows all the metrics that Jason talks about.

Evgenia: Now, that being said, parking that aside, I think the things that we look for are product and execution. In terms of product, I don’t mean technology. It’s important to have good defensible technology and have a mote. What’s important for us is your ability to define a category and become a centerpiece of a value chain and attract people to you rather than the other way around. There’s a lot of companies now in our portfolio that have been very successful like Collibra, who became sort of a data insights category and it started with cataloging and then they added lineage. This is how they outpaced Elation and Informatica and became the leader in the Gartner Quadrant, right? They defined what data insights is. Now that’s success, right?

Evgenia: Once you’ve defined what constitutes your core capabilities and you created the category around you, what’s the next important step is executing on it and the go to market. That cannot be an afterthought. You want to think about the top of the funnel. You want to think about lead generation. You want to start thinking about customer success and that’s not just support. That’s also retention and upsell. You want people to be thoughtful. By no means at Series A and B you haven’t had to figure it out, otherwise my job would be real easy. I think it’s more around a consciousness of what you know, or what you may not know, and then hiring around it to become successful.

Ophelia: I also think that some founders get stuck and we need to prove certain things before we go and raise our A. To give an example, I was talking to one founder before his B2B SaaS company, and he’s like, “Well, I want to hire a VP of sales to prove what our cost of acquisition is and our payback, et cetera, et cetera.” I’m kind of like, “Even if you make one or two sales in the next couple of months, with your VP sales, it’s going to take you three months to go and hire.” That’s not proven. You can’t go and raise an A off that, and I think a good investor can also say, “Well, it’s a known that you can probably hire a good sales person. It’s known that you can probably sell those first couple of contracts. Why do I need to wait that five months for you to demonstrate that to me when we could just start working together today and actually create some value along the way?” That’s kind of how we think about it before we come in and invest.

Cristina: You also want to comment on the most voted question from the audience. Do you think between B2B and B2C, are there two raise for B2C companies?

Evgenia: Personally, I don’t think so. I mean, you’ve got so many really well-funded businesses in Europe that are B2C. I mean, let’s look at latest Deliveroo round with Amazon investing tons of dollars there. I think historically there have been a lot of really well funded B2C companies in Europe. I think B2B and software is becoming more en vogue these days in Europe and I was like, “Darn, this is what we used to do.” Everyone wants to do software.

Evgenia: I think no. I mean, there’s successful businesses on both sides.

Ophelia: I think yes, actually.

Evgenia: Let’s debate.

Ophelia: No, I think distribution is getting much, much harder. I think the cost of distribution and the cost of acquisition on the consumer side and I think a couple of years ago before people were willing to take the risk on the acquisition cost, I think that is becoming harder at the early stage because people no longer, as you know, we live in this deep fear of whenever the recession might come, if it might come, what happens if you’ve just been paying for growth along the way.

Evgenia: I’m not sure it’s just for consumer. I think from my perspective, because the cost of creating a startup is so much lower today than it used to be, so $5 million in the 90s to $500K early 2000s. Now it’s like $50K and some Amazon credits and you’re kind of done. For me, sort of, there is a multitude of people that Pietro probably has to face today, right, and that top of the funnel is a lot larger. Once those winners emerge, I don’t think whether they’re B2B or B2C doesn’t really matter.

Ophelia: For sure. What you’re in, you’re not … but I think the appetite to fund a lot of early stage consumer ideas with kind of the monopolies we are facing in certain categories, I feel it’s hard. But you see it earlier than that.

Pietro: My point of view is that it’s much easier if you are B2C because that’s so rare. Sorry, we are in B2B territory here, so I’m not making problem myself. If we back a consumer proposition and it’s working, it’s working, like it’s killing, you guys just call and email because it’s so rare. It actually sounds more hundred billion company consumer, right, than B2B. So when some VC downstream sees something never before that is a consumer and a phenomenal attraction, there’s much more demand because it’s a rare beast.

Ophelia: But that kind of supports my point, right? If it’s working, people will jump on it but if it’s not working which is the majority of consumer company-

Evgenia: That’s true for all-

Pietro: We agree. How hard is fundraising for a company that isn’t working? We all agree it’s fucking hard. And they shouldn’t. They shouldn’t even fundraise.

Emilie: Yeah, and I think the fact that you say they’re much rare, we see them super early stage. I think we have … half our portfolio is B2C companies. One of the big problem is the bias of how people want to get in to B2C and a lot of the categories that they seem to want to go into are the ones that are just so hard to fund. The number of sports fans social networks or partying apps. I mean, the ideas, the imagination, the creativity around what a B2C company is is still really bad and I think that’s partly because we aren’t very good at building brands yet. We don’t know how to do it. We don’t have that many great examples. So that part of the ecosystem hasn’t matured as much, and I think that it creates a very strange bias of people as consumers imagine what they would want. So they’re much less attuned to what an industry needs. When you try to solve your own personal problem it’s a very different thing than trying to understand what a market generally needs and that creates very strange deal flow bias. The average quality of a B2B apply at super early stage compared to B2C is incomparable.

Cristina: So B2B or B2C, one of the things that we all know is that the conversion from to Seed to Series A is very low, is around 20%. Emilie, I guess that was one of the reasons why you created the program to help your founders get to the next stage. Can you tell us a little bit more about it and which type of help and what do you work with with founders that will make a difference?

Emilie: We’re trying to … we created the program to get nice companies in front of both of you guys. We see, in fact, that the conversion is around 15, 20% graduation rate from Seed to Series A and up. We started the program in London because I think things are worse in London. There’s just even more over-funding for early stage companies. The program we created is called The Family AAA. We created it because there’s lot of educations now around how to raise a seed, but raising a Series A, and I know that you guys have published great content around it, but there aren’t that many entrepreneurs that can help entrepreneurs or are willing to do so yet, so there’s kind of a gap. I think by the time that companies get to you guys, often they could be great. They’re just not in very good shape. They don’t look very sexy.

Emilie: What we do is that we take our time with founders, six to eight months before they want to raise a Series A because that’s how long it takes to prepare, in our opinion. We start the program and the idea is that every week we address on of the points which we know will be a huge pain for them. I would say the biggest one, and maybe we can talk about this later again, is just storytelling. In Europe, this is such a pain. Nobody knows how to tell a good story, and it’s not even about being a showman. It’s not about getting on stage and saying something that will excite people. It’s also telling a story to yourself, and it’s not about making things look nice. It’s about building your company in a way that aligns with a coherent story. Whenever we speak to Americans, I always step back and put a filter on. I’m like, “Great storytelling alert. This is not reality.”

Emilie: In Europe, we have the advantage of being very direct and more honest and we should take that and that’s what we teach companies to do in AAA, is take that honesty and put it into a form that fits with VCs expectations. Also, on top of that, it just takes many more months because you need to reach the right metrics and metrics are so much more detailed. Founders don’t expect that, so much more detailed in Series A. You need to … all the metrics you were talking about, you need to break them down. You need to focus on the right ones and anticipating that eight months ahead of time will send you the deals. You’ll let us know what you think. I think we really are able to transform within that amount of time entrepreneurs from company builders to really leaders that know how to explain what they’re doing to virtually anyone. Honestly, this goes back to 360 communication. It’s like, “Okay, you need to tell the story to your investors, but if you can nail that story, all these recruitments, all the whatever press you’re doing, it’s going to get much better as well.”

Emilie: So that’s what we do. We have eight companies that are going to graduate soon, so if there are any Series A investors in the room, happy to shoot you stuff. But yeah, we’ll see what it gives and I’m very excited about it.

Cristina: Thank you. So another interesting statistic that I have is from the Journey to Series A in Europe report, and one of the conclusions was that companies that raise $2 to $3 million in total, pre-Series A, convert better than the ones that raise less, but raising more than $3 million won’t change the conversion. Is this something that you’ve seen in your portfolio, Pietro?

Pietro: So the question’s about graduation and what is the right funding.

Cristina: How much should a company raise in seed?

Pietro: Yeah, so-

Ophelia: It’s kind of related to the top question, actually.

Pietro: Okay. So I think your point, your conclusion on this stat, is reflected in our portfolio somehow. It’s not such a strict correlation because the old playbook, we got company like Marvel …, they were able to work together … they were able to raise a good Series A raising less than $2 million. Actually, …, for example, they raised a Series A raising more than $4 million. So the trend is that the graduation is better if of course company has more capital to invest before Series A.

Pietro: My point here is I think what is important to discuss is that I think the point of what is right sizing, not too much, is absolutely directionally right. The way we spend a lot of time on the funding strategy with the founders we want to back. Once we build conviction about the founders and the company, we spend a lot of time designing the right amount and what’s the right round looks like. I was at Starbucks here because there’s no like any hipster coffee around, and I went there and there was the short, the twenty, and the grande, the size of the coffee, the cappuccino. This is the issue the same for seed, right? So you don’t have to go short, because otherwise you underfund the company, which has been the classic problem of early stage startups in Europe. Historically systematic underfunded, which means compromise on quality. Should I hire two backend developers or a product design? You have to hire both, you can’t compromise on that.

Pietro: But if you go too much, so because sales get bigger, evaluation gets bigger, more time sheets triggers higher valuation which trigger higher side. Everything compounds, then you end up raising too much and you go off stage, which our mantra is “Founders, you have to play your stage. When you raise a round, when you’re in the seed stage, you don’t have to invest money in doing things that belong to a different stage,” like hiring super senior VP sales when you are pre-product/market fit for example.

Pietro: So because raising too much trigger problems, that less obvious that the unfund. So if you are overfunded, you lost focus, right? Instead of doing things that doesn’t matter, you lose discipline on burn or visa versa, which is even worse. You have this infinite runway and you just lose because of habit. You’re just like … you don’t have any pressure. “Yes, we sold a ton… Oh we have 36 months to run with,” and then take it easy, which is not innovation technology. You just like … the time that you’re ready, you’ve been past over three times.

Pietro: So what is the conclusion of this point is yes. Is important get the right funding for us and is very good that is big and bigger for the European ecosystem. Finally, I think there is an entire early stage funding stock that enable companies to get off in their journey and build super good strong foundation for growth.

Cristina: So successful companies raise closer to $2 to $3 million rather than $1 million, is that-

Pietro: Yes, absolutely. So our stats is … since 2012, median size of the run is almost tripled and the valuation as well. It is a good thing and most of the time, we the ventures drive this size because we didn’t want to underfund the company and so after talking with the founders, said, “Well, you should raise more.” So we go out, we help the founders. We leave the round, but we help the founders to raise more capital to really, really be sure that the milestone that these guys want to see are nailed.

Evgenia: And we see the extension is also kind of the new thing where there has been on the rise in the past few years, which I think was your point.

Cristina: So moving to the later stage, again, what are the mistakes you see in Series A fundraising, and I think we can also take that question. I know founders are very focused on valuations, so all you want to know is how can I go in terms of valuation, which I don’t think is the right question. But can you comment a little on the valuation range that is expected right now? Or any other metric that you think is more relevant than valuation, which I believe-

Ophelia: Yeah, I mean, we don’t start with valuation. Where we start is we really try to figure out the runway that you need for the next 18 to 24 months before you raise your Series B. When you’re raising your Series B, you have meaningful revenue. It’s normally when people start thinking about multiples of revenue to drive your valuation, develop public comps. It’s all kind of known, and so we kind of work back from that. If you’re thinking about raising … your Series B should typically be, rule of thumb, two and a half or three times step up to your A. If you’re shooting for that on a multiple revenue, you’re basically going to kind of work back to where you’d need to be from your A.

Ophelia: So we sit down and say, “Okay, how much do you need to put into sales and marketing? How much do you need for the team? et cetera, et cetera,” and that will form kind of the basis of the round size. Valuations are typically worked out as a function of how much dilution are the founders wanting to take and how much ownership do the VC want? Then it’s tossing them between and you’ll end up somewhere between probably 15% to 25% and that’s kind of how you figure out your valuations. So to Pietro’s point, Series A round sizes have been going up which is a good thing. I’d say the average Series A in Europe is probably around $8 to $10 million. So if your VC wants 15% to 25%, that’s your valuation.

Pietro: Another term sheet… that competes coming, and scramble everything up. Happens to us as well at seed.

Evgenia: Just sort of the same thinking as Ophelia, but just valuation per se is bit of an ego metric. I might sound horrible for saying that, but if you’re just chasing the valuation to feel like, “Oh, I nailed it. I’m at $100 million, or $200 million,” or whatever that it is, it doesn’t mean anything unless you’ve actually exited the business and you created real cash for yourself, for the employees and eventually for the investors, but frankly you also probably penalizing the people you’re going to hire, particularly if you move to the U.S., where the valuation of your stock option is a science and is based on the valuation of your business. If you are chasing that really high number, you are disadvantaging everyone else that you’re going to bring into the business.

Cristina: That’s a very good point. So regarding moving to the U.S., which it’s kind of the way to go we believe, at what stage should a U.S. VC come on board and you incentivize the founders to go and try to raise in the U.S. or combine a round with a U.S. investor?

Evgenia: Maybe I’ll start on that one. So we actually, in our software portfolio, most of our businesses have raised with American funds and that’s great because once you move, and we can address that question about whether you need to move or not, but part of your business will move. I don’t think, as a founder, you necessarily have to go to the U.S. In fact, you probably don’t have to go to the Valley. It’s good to have American VCs to help you with that.

Evgenia: Now one thing I would be careful about is that there are a lot of fantastic U.S. funds that we work with and they’re phenomenal. A lot of them are very large. A lot of them will be $1 billion, $2 billion, $3 billion, $6 billion funds and as a founder, people are great at placing themselves on the competition slide and kind of like up and to the right. Haven’t seen one where it is opposite. You kind of have to think about your VCs in the same way, because if it’s a $10 million check for your Series A or a $20 million for your Series B and your VC is $2 billion, $6 billion fund, the percentage that you present is not going to be an up and to the right and you want people to talk about you at the Monday meeting. You want to be significant and you want to be top portal of resource for capital and people.

Evgenia: I think having a U.S. fund is fantastic, just at the right kind of stage and time. In terms of sort of where does it have to be, well, we’ve got both scenarios. We’ve got Collibra where Felix is in New York, we’ve got Dataiku where Florian stayed in Paris. I think it doesn’t matter. I think sales presence in the U.S. for software business will become a necessity. We’ve got some fantastic engineering talent here in Europe which tends to be not only cheaper but also twice as loyal, so it makes absolute sense to keep that base here and perhaps have part of your team in the U.S. Some people, like Frond…, actually, are doing the opposite. Move now, bringing back their CTO and engineering teams back to Paris.

Ophelia: We actually started Boston because all of us as partners, we spent a significant amount of time in California. I personally spent half of my time there in the last ten years, and it’s very clear that the talent and the ambition in Europe is as good as, if not better than, some times what is going on in California. At the same time, California’s getting very competitive. It’s incredibly hard to hire people, very expensive. So what we saw when companies were coming to raise their A, you still want to go to Sand Hill Road, and fundraise and the reality is the funds A, didn’t see themselves as best positioned to be doing your A in Europe where they’re not close to you, and B, also won’t be getting on a plane for a five time million dollar investment.

Evgenia: And the eight hours behind as well, right?

Ophelia: So we felt that there was a gap in the market where you can get a West Coast start and VC or former operators and we can support you in those early stages, really helping you figure out a go to market in the U.S. where you are then better positioned for your Series B from a U.S. growth fund. We’re fortunate enough to have many of those best funds, many of the partners that have invested into Blossom just symbolize those relationships that we have with them, be coming back to France or board seats, et cetera when we know that they will come in in a meaningful way, whether $20 million, $30 million investment at Series was the right time to think about bringing a fund like them up.

Cristina: So, what are the recurring challenges that you see your portfolio companies going through when fundraising? I guess this is the last question, so I’ll ask one minute each and also give a little bit of advice to the founders that came and are looking to close the next round.

Emilie: For seed stage, I would say it’s where you meet VCs in the sense if an entrepreneur is on this end of the spectrum, a VC is on this end of the spectrum, it’s where do you have to meet them? So figuring out what is the amount of information that you’re able do disclose, what is the way that you should be speaking to them, and I think when we spend three hours preparing entrepreneurs to go meet with VCs, these are always three hours well spent even for people who think it’s natural. Although investors and seed stage investors are very good at evaluating entrepreneurs, it’s the feedback that we get from them is that it’s very hard to speak to them on a level playing field and speak to them in the same language. So I think a big part of the challenge is just translation, what the entrepreneur thinks, what they want to achieve and putting that in words that suit the investor. That’s one of the big things.

Emilie: I saw a question up here, do we always need to show you the deck? It’s just these kind of things, these kind of questions and what’s forbidden, what’s expected. I think that the absence of transparency sometimes about what investors want to see, if they told that to entrepreneurs, it would be super valuable because entrepreneurs want to be cooperative. It’s just you need to understand where you meet investors. So storytelling and understanding how to speak the same language in seed are part of the biggest challenge that we see.

Pietro: Yeah, the challenges are if you are very unique propositioned, great AP, great in your category, the challenge is show me the traction, the commerial traction. Visa versa, if you’re amazing traction, strong revenues, growth, they tell me how do you stand out in the crowded market. You need both. You have traction and just indulge, have an unfair advantage.

Ophelia: I think fundraising, and I can say this actually, being a founder and fundraise, it’s nuanced. I think actually the best founders succeed with their investors helping them behind, because VCs speak a weird language between us. We kind of … look at things the same way we analyze things in the same way and these poor founders come into the room and, to Emilie’s point, they literally don’t have a clue, nor should you, right? You’re building a business and that’s what you should be doing. I think one thing that we really help our founders is with fundraising, because we think about this is what the deck should look like, this is important, you should tell them these things, don’t say that, et cetera. Hopefully you can get through the process rather easily.

Cristina: Do you think founders … I feel founders sometimes at the earlier stage, they really have a problem in asking for help to perfect the story or help with the deck. I think the deck question is a good one, but actually circulating your deck is actually a great way to have feedback so when you go and meet the partner, it should be pitch perfect.

Ophelia: I mean, the deck question is very related to the top question, upvoted on Fontify which is one of our portfolio companies. The deck is a really good way and a opportunity for you to present the company succinctly and show off the kind of design and the thought behind the product and how you’re positioning it and what you stand for et cetera. VCs have very limited attention spans, very limited. No longer than-

Evgenia: Goldfish.

Ophelia: … three sentences in an email, please. So a deck just kind of saves you a lot of preamble before the meeting. Also, you will then know when you go to the meeting whether that ambassador’s at all interested, weather they’ve spent time on your deck, whether they’ve bothered to kind of spend any time thinking about the market, the opportunity, because is one piece of advice I always give as well. Don’t forget you’re the customer. It’s not the VC who’s the customer. You are. You’re going to be giving up part of your company to let them in on the journey. You should also be doing the work in advance as well.

Evgenia: Yeah, no, I couldn’t agree more. Your deck is your business card, frankly, and so unless you’ve spent time on it and shared it with people, it just doesn’t work. Sort of the little bit of that question was about should I wait for a partner meeting? Don’t be that person. VCs are constructed of people of different levels, but we all work as a team and every single person is important and every opinion is valued. If your title on the card is an analyst or an associate, it doesn’t matter. They are the gateway to then go and pitch your business to the rest of the team, so everyone is equally important, the same way that every single developer in your business is important and not just your CTO.

Evgenia: Then in terms of where the people … the challenges that they face, I think less is focus. Us being able to help the founders and hold their hand through the journey of fundraising very similar to what I feel I mentioned. It’s very exciting where a lot of our businesses all of a sudden get a lot of in-bound and you kind of can get a little bit carried away. I think it’s about maintaining a sane head and kind of taking a step back and saying, “Okay, who is the right partner for me for the next stage, both in terms of the fund but also in the person,” because they’re going to be on your board and you can’t kick us out. It’s very hard. So that’s also a very important decision. We are there to help. In fact, as VCs, we work for you and kind of not the other way around.

Cristina: Great. Thank you so much. We are out of time. There’s people dropping the mics already, so I’ll ask for a round of applause to our amazing panelists.