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Nathan Beckcord
Sometimes companies come up with ideas that are obvious in hindsight (Oh, of course—it makes sense!) It’s almost astonishing to learn that the product hasn’t been the industry standard for years. Product Management Platform product board is one such company.
After raising over $260 million at a total valuation of $1.725 billion, it’s clear investors understand Productboard’s value. But it wasn’t always the case.co-founder Hubert Pallan Early on, he tells me he made the mistake of pitching to investors who “don’t understand.”
He spent a good deal of time convincing VCs with no product background that there was a market for platforms like Jira and Salesforce that were specifically designed for product managers. A platform like Jira is integral to the task management process of developing an app and his web features, such as coding, testing and other aspects of engineering delivery.
“But product management is not. plan management,” says Hubert. “that teeth It’s about understanding who your customers are and what pain points they have. ”
Before Productboard, there was no end-to-end platform for the entire product management lifecycle. Product teams often relied on spreadsheets and a patchwork of workarounds to incorporate customer, design, manager feedback, and more into their processes. A better product management system ensures startups can “de-risk the entire delivery process,” adds Hubert. “And you end up building the right thing…not wasting years of your life building something nobody needs.”
Rest assured, it is no product board. Here, Hubert shares top tips for raising capital, whether you’re his next startup unicorn or not.
How to raise money for a startup
1. Know what you really need when raising capital
Productboard didn’t become an overnight success. Hubert and co-founder Daniel Hejl, who founded the company in 2014, are the first to bring the platform to the public. TechCrunch’s Disrupt Startup Battlefield September 2016.
And the road to unicorn status has been paved with quite a few funding rounds. Is not … “It’s a big number,” says Hubert. “But to me, absolute numbers are almost irrelevant. what are the opportunities?”
Of course, the opportunities are enormous. The product management space is vast and Productboard is fast becoming essential for businesses large and small, especially those with distributed teams.So Silicon Valley very Hubert and Daniel became intrigued when they found a VC that understood the value of Productboard. Dragoneer Investment Group and Tiger Global led the Series D, while previous rounds included funding from Bessemer Venture Partners, Sequoia Capital, Kleiner Perkins, Index Ventures, and Credo Ventures.
According to Hubert, the basic concept of fundraising is the same for Series A and D. You have to ask yourself what you really need. Is it mostly cash? Great board members with experience in specific markets or specific skill sets? Is there someone who can help you attract top talent to build your team?
“Optimize for your goals,” he says. “Please write clearly.”
By the time Hubert and Daniel raised their Series D last year, Productboard needed funding to scale the company. It has already grown to about 400 employees (now over 500) and includes household names like Disney and Volkswagen, giant start-ups like Zoom, legacy institutions like JP Morgan Chase, and “so many. We serve over 6,000 customers, including our small customers.
2. #IYKYK: Find investors who understand your value
Before Productboard was the hottest tech startup in Silicon Valley (and the Czech Republic where Hubert and Daniel built their first engineering team), Ilya FlashmanFormer partner at Index Ventures and former head of product at Dropbox.
Ilya was one of the first VCs to “see the problem,” Hubert recalls, because he shared his background as a product manager. “I didn’t have to explain to him what product management was. Zero time spent on it. how do you solve it?What proof points do you have?”
Index Ventures, backed by Ilya, co-led Productboard’s $1.3 million 2016 seed round (with participation from Credo Ventures and Spread Capital).
Lesson learned? Don’t waste time trying to educate investors who don’t understand the problem your startup solves. “There are people who invest in the space who understand the problem. Find those people,” says Hubert. “I want to take the easiest and fastest way”
That’s why it’s important to research and identify the ideal investor. Hubert took a “segmentation” approach to this step, creating a spreadsheet listing each company’s characteristics, partners, reputation, and even logo. He pointed out if the company or VC had previously invested in similar areas. But he cautions founders to beware of anyone who may have invested in a competitor. Reputable investors are quickly excluded from making transactions that represent conflicts of interest.
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3. Gaining Momentum Among Venture Capital Investors
When raising funding for subsequent rounds, Hubert asked investors, senior advisors and mentors to review that spreadsheet. He asked them to rank the companies, so to speak, based on how well they knew them, whether they had worked with them before, and how well they fit into the Productboard. Did.
“Later, we were already known, so there was inbound interest,” says Hubert. But before he was approached, Hubert sought referrals through his network of UC Berkeley professors and industry friends. He often did not provide digital information before his first conversation with investors. . . just paint a vision. This allowed him to assess his interests and compatibility without spending time on a formal pitch.
Each round got easier and easier. After Kleiner Perkins led his Productboard Series A investment in 2018, the startup became a household name in his VC community. Sequoia and Bessemer agreed to share the Series B round after the fundraising turned into what Hubert cleverly called “a highly competitive situation.” A representative from the team of interested investors “showed up in our hallway and said, ‘We’re not leaving until you sign our term sheet.'” They literally left at night. but was back there again at 6am the next day. ”
(Reader: If you walk into a venture fund office and tell them not to leave until you get a term sheet, you’ll probably get arrested. But I think it’s cute that VCs do that.)
4. Build your dream team and avoid assholes
A startup’s strength depends on its team, and Hubert stresses the importance of hiring top talent.
“Take the time to backchannel people and learn who they are,” he says. He recommends asking investors to introduce him to potential team members in addition to his fellow VCs. They may introduce “investments that didn’t work out,” even people from companies that “went through a rough patch” that proved their mettle, or went bankrupt, Hubert adds. “The best investors are happy to refer you.”
They may even be CEOs fired by investors, he points out.
“But was it for good reason? Was the investor reasonable and empathetic about this situation? The investor’s job is to protect the investment and do what’s best for the company. But if you’re the belligerent, brusque, ignorant, empathetic type of person…it tells you something,” he says.
“And I found people like that even in the top companies. I dug into the story and was like, ‘Well, I really don’t want to work with you.’ or people,” he adds.
Fundamentally, investors are human too and have personal differences and opinions that you may not agree with. “The ability to sort through these differences and opinions is very important,” says Hubert, who advises founders to choose their partners wisely and work to nurture those relationships.
“Sometimes people raise money and meet investors once at the board meeting,” he says.
Hubert suggests instead:involve them in things [even if] No input is really required. . . just get them there with the intention of building a relationship. Especially now, in this crazy “decentralized” world, how much time do you actually spend together? You have to design it. But it pays off. Because when things get tough, when you really need deep advice. . . you know them and you can trust them. It’s all about trust. ”
This article is based on interviews with Nathan Beckcord and Hubert Pallan. how to raise podcast.
About the author
Nathan Beckcord CEO of FounderSuite.com, Create software to raise capital. Foundersuite has helped an entrepreneur raise more than $9.7 billion in seed and venture capital since 2016.