In this post, Maria Sipka, CEO of Aussie startup Linqia, shares some invaluable lessons from her experience immediately after announcing a successful USD3.5M investment round in the US. Maria’s generously agreed to let us run this, adapted from her original post to a group of investors and friends of the company.
We just raised $3.5 million for Linqia and it was announced this weekend in techcrunch.
What did we learn in the lead up to raising this round?
To be honest, I thought it would be much, much easier to launch a company in Silicon Valley and raise capital. There’s an abundance of funding, hundreds of investors, talent, partners and infrastructure right? Well actually no. Having left Australia eight years ago to fulfill on a dream and living in Europe for most of that time, I decided it was time to debut Linqia in the USA as the market timing was right. I found a solid local co-founder through the network and we incorporated November 2011, built a team of 10, delivered a bunch of pilots for big brands and started the fund raising process.
Reflecting on the experience, here’s what I learned:
- Being connected. With the abundance of deals available, to get cut-through and straight to a partner at a firm, you need a strong introduction either from a founder/ executive at one of their portfolio companies or somebody they deeply respect. Going through associates can take weeks and months to work the system. Do not get introductions from loose connections — it will do more harm than good.
- Having an amazing pitch deck and well-practiced talk track. We worked with Martin Soorjoo from Investor Pitch Clinic out of UK who we found through Quora to advise us on the pitch and formulate a deck. We paid a reasonable fee and it took 10 days to complete. Every pitch we did we received positive reviews around the deck and we even referred a few of them to Martin.
- Iterate your pitch. Surprisingly, investors that decided to pass were extremely diligent in providing well thought-out and detailed feedback. After the first three passes, we iterated our pitch to address the reasons why the investors were passing and backed it with data.
- Traction. A common reason for passing is traction, however being a Series A company, most companies don’t have significant traction until you reach the B round. The Tier 1 VC’s in particular want to clearly see your solution gaining significant ground beyond the test budgets.
- Back channeling. Within hours of a meeting, the VC’s were calling and emailing people we had in common to validate us as entrepreneurs and the solution we are bringing to market. Reputation is everything. We had briefed everybody we suspected could be approached to update them on what we were doing and the kind of questions they would be asked. Investors are looking for a reason not to invest and this is one sure way for them to get to a no quickly.
- 100% American. To be considered by a local VC, in most cases a company has to be 100% American, with visas sorted for all key employees, messaging and communications within your site needs to be American, clients, copyright, IP, etc. People in Silicon Valley are remarkably particular about being ‘local’. Anything that smells foreign risks the deal.
- Process. My co-founder managed every detail of the process and we followed it relentlessly. We started with a well-documented strategy, listed all the potential investors and prioritised them, how we would reach them and prepared the materials. Every communication from the initial response through to answering questions was well thought out and timed.
What do you think? Are US investors still reluctant to invest in a Series A unless they perceive you’re ‘local’? Do you have more advice for Aussie startups seeking a US Series A? Let us know.
How’s it feel to secure USD3.5M in Series A backing, Maria?