Holly and Mike von Carted ran the most effective fundraising campaign to win the support of world-class VCs with a record $ 13 million seed round. These headlines and deals don't just happen, there is a process behind them.
Read on for an overview of their fundraising strategy.
For disclosure purposes, we are pre-seed investors in Carted through TEN13.
We supported founders Holly Cardew and Mike Angell as they set out to change the face of social commerce originally through their product Vop. At Carted, this became a bolder goal. Our attachment notes can be found here if you want more background on how they shifted their focus to building a universal Commerce API infrastructure platform and how they plan to change the way trade is done in the future .
A question many will ask is how did Holly and Mike manage to convince some of Australia (and the world) 's top investors to back them with AU $ 13 million in their early stages.
Before raising funds, we sat down monthly with Holly and Mike to discuss the company's future plans and develop strategies for trading.
Fair to say we were thrilled, this problem is massive and your proposed solution is potentially category-building. However, this is firmly placed in the venture investing category, it is high risk, requires serious capital and resources to build, and so they needed a strategy and a playbook to raise the capital required to carry out their plan.
The team had an investment offer for ~ 10% of the business of highly respected Angels in their industry in January 2021 in front of solid investors, preparing the pitch and due diligence materials and optimizing for the outcome and required they want Capital to implement their bold vision.
So we set out to run a $ 5 million fundraiser and planned the process as described below.
Fast forward 3.5 months, the metrics as follows:
How did you do that?
The raising of capital was effectively limited to a few core areas:
Prepare in the important areas
Network and meet as many relevant investors
Generate Interest and FOMO. create
PART 1: Prepare in the key areas
The founders and the team worked on some areas that were very helpful in the preparation.
Create a pitch deck that effectively tells the story
Holly and Mike put their pitch deck together and then tested it out with friends including their existing investor base like us (TEN13), Matt Allen, David Wurtz (co-founder of Google Drive and Google Fonts)
The pitch deck will never be perfect, but honest feedback helps refine the pitch and messages. Stress test and do a few practice runs as if you were proposing to an investor.
There are many examples of good deck structure. You can check out the deck that Clipchamp used to release its Series A, which we posted in the Acquisitions article last week. See Sequoia here and a great one from Pikochart here. Decks are a good entry point and lever to start the conversation.
Prepare data room
Everyone has seen the data room lists with the requirements – we have made our own list of things to be put in the data room available as open source. Make sure you do this step, set up a clean version in Dropbox / Google Drive and add all the core materials like legal documents, company structuring, contracts, org charts, finance, etc.
The more interesting part was the way the team shared their views on the future of eCommerce (their sector) and how they think about different aspects of their business. They delved into the core commercial areas that needed reporting and then wrote detailed responses (2-5 page documents) about their monetization plans, go-to-market strategy, competition, etc.
Think of it as an investor FAQ. If you can quickly prepare the expected questions and answers, your answers will already be available when they come in from investors. It makes the investor <> start-up process as lean as possible.
As a founder, you want to expand every investor's knowledge about your company and share your view of the world as quickly as possible. You want to achieve knowledge parity.
Agree on who will be the contact person for raising capital:
Agree on who will manage and lead this for your company – that is, who is the person you need to invest a lot of time to run the fundraising. Understand that they will likely focus on investor talks, meetings, material preparation, and more. Effectively, you need to assign a project leader who is usually one of the founders, often the CEO. Fundraising is inherently value destructive as founders are distracted from focusing on their business, but the result of a successful capital raise is what they go through the agony of fundraising and history repetition to get the capital to build their business procure.
Holly ran Carted and managed all the administration and logistics, the data room, etc.
Start an investor tracker sheet and find the top investors that fit your stage and industry. You need to be focused, even at the level of those you can best connect with at the venture firm, given the past deals they've done, or the thought leaders in your industry, etc. The more focused the better.
Once you have a good list as a base, go to your existing network (can be existing investors, other founders, consultants) and share the list. Be specific with your request for two things: 1) review the list and add if they have any connection with the companies or partners and 2) get them to add their own contacts and potential investors.
The hit list will build up quickly, but try to get action from your investors right away to start building a target of 30-50 investment firms or angels.
Target list for investors
Here is the template we shared and used with Carted. It's not rocket science, but it helps tremendously when shared in a collaborative space (e.g. Google Sheets) to keep yourself and your stakeholders updated on the progress. Should be kept up to date like a CRM for future investors.
You can check out the google spreadsheet here! Make a copy!
Live by this document
This will become your master document, including all meetings, responses, contact information, and the status of each discussion. Trust me, if you have 4-5 meetings a day for a month, you will forget what happened in each conversation and the next steps and who is in or out.
PART 2: Network and meet as many investors as possible
Now is the time to get in touch with investors. Often a good strategy is to emphasize that you are not officially “raising capital” and that you are going to be in the market soon. Helps build a relationship without the need for a quick investment decision before embarking on a fundraising process.
In general, with our portfolio of companies, we advise that you should set a target time frame for the fundraising process. A good fundraising process is usually completed within 3 months.
Carted started fundraising in mid-January 2021, had term sheets in February and closed the capital at the end of April 2021 (legal advice and structuring can often take a month or so). 3.5 months to raise one of the largest seed rounds in Australian history!
We started by introducing them to investors in as warm an intro as possible. Some came through existing investors like us – I think we ended up introducing Holly & Mike to over 30 VCs from around the world to complement their process. My outbox looked something like this:
There was a lot of email involved
As a founder, you should share a blurb to arouse interest and make it easy for your contacts to do their intros:
Template for opt-in intros
Intro notes from investors or advisers to other investors look like you want it to be punchy, include enough information to go to the next step, which is an intro with the founders. Things that are important, why it is suitable for an investor (perhaps tailored to his previous investments, content, stage), why he should hold a meeting (arouse interest) and a call to action:
A few simple formatting tips
Personal booster. Why do you turn to this person?
What's in it for me. Why should they be interested in your company.
Build trust early on. Why should they invest in you?
Have a single call-to-action. It's not about investing, it's about getting to the next email / meeting on the first reply.
Holly was in charge of managing the process and opening the doors to the right investors. In the end, they were connected to 115 investors and pitched to over 85 companies or angels. The recommendation here is to consolidate these in a timing that is as compressed as possible, suggesting 2-3 weeks for intros and initial discussions. It is not always possible to keep the timeline tight and on track, but try to make this the best you can to keep the process going.
Some key takeaways
If you let this extend over a longer period of time, ie: 5-6 weeks, you will find that some investors are already well advanced and are at their 3rd) and others will attend the first intro meetings. This creates a discrepancy in bringing investors to a similar timeframe and making decisions, and is more difficult to navigate.
This creates a discrepancy in moving investors to a similar timeframe and making decisions, and is more difficult to navigate.
Try to go for a warm intro (after opting in) rather than going directly or through social networks. Social will work well for the back end of the process if you have good momentum.
During the boost process, take as many intros as possible, refine the pitch, understand the recurring questions and how best to answer them.
In such a large process, you will find that you know pretty quickly which investors "get" and which investors are not and may not be the right ones. Optimize to devote your time and effort on those that suit your vision and space. There is enough capital out there, you will be able to find the right investors and supporters for you.
There is enough capital out there; you will be able to find the right investors and supporters for you. Fundraising is a match-making process, don't let the "no's" catch you as they usually come before every YES ”. Take in any insights and move on to the next call. There are investors who come up with your vision of the future find those who are most focused and excited about your version of the future and have overindexed to get it on the line.
PART 3: Create Interest and Create FOMO
How can you get investors excited about your business beyond the traditional Meet & Greet?
Things that Carted did really well was to cause a stir, they were known to have ambitious plans and interest in the investor market. This happened because investors talk and share deals ( a lot more than you think ), the more you meet, the more doors open to intro calls and interest in you.
In addition, they did one of my favorite tactics of building in public . This can be expressed by founders as foregoing proprietary information, excessive sharing of your company's direction, giving up proprietary knowledge, etc., moving quickly, being held accountable, being convinced of their views.
My absolute favorite from Mike, they don't aim small:
And more here:
Plus videos of your future product in action:
Holly is also active on Twitter and posted some great tweets to arouse further interest:
These tweets generated more interest and even brought investors to the table for their first chats. This type of content helps to arouse interest (read: FOMO) and bring potential investors to the table.
Build in public people
Find a lead
In a seed financing round, the focus must first be on finding a "lead" investor. That is a VC or investor who can set the terms, including the valuation and enter a solid check to show their skin in the game.
For your fundraising process, make sure you understand where an investor sits in this type of process and whether or not they can have a round.
Once you have a lead investor leading the indictment, you will find that it is much easier to close in other investors behind it.
In the case of Carted – The team ended up receiving multiple lead terms sheets and interest from major investors in both Australia and the US and UK. This was a great point to connect with a strong lead that is well positioned to work with them in the future.
That lead for Carted was Blackbird Ventures, an Australian VC known to have led investments in companies such as Canva, Safety Culture, Culture Amp, Zoox, and others. You are one of the big three funds in Australia and have shown great conviction and developed as the main investor for the Carted Seed round.
In the case of Carted they had great interest and eventually included the following investors in their group:
Where it ended
One of the largest funding rounds to date in Australia in 2021 and certainly one of the largest seed rounds we have ever seen. It is an honor for what Holly and Mike have built, and we are happy and excited to be supporting such a great team and its ambitious mission.
Read more about the announcement in the Carted blog here.
Thanks to Chris Gillings from the Cut through Venture newsletter for these ecosystem statistics. Another of our portfolio companies, Mr. Yum, can also be found on the list.
Stew Glynn is Managing Partner at TEN13 and leads the team at Australia's largest syndicated investment platform with over 300 investors.
Special thanks to Holly Cardew.