Fundraising in a Pandemic: 4 Lessons Learned (And, The Deck That Helped Us Raise A $65M Series C)
Each fundraising at Aircall has been a memorable moment, and never went as planned
People often smile when I say that, because they only see our Crunchbase history : four fundraising rounds with cool investors, and a company that’s consistently growing in size and valuation over the past 5 years.
But I know the truth below the surface: while we (probably) know how to execute, fundraising has always been met with challenges. To fully understand, let’s rewind back eight months from today.
In November 2019, we’d consumed 70% of our previous round. We’re a fast-growing, loss-making venture, and we’re ready to secure additional funding.
This time — I think to myself — I’m going to master the game.
No way we’re going to repeat the mistakes of our previous round, where we got dragged into lengthy, time-wasting discussions about crazy liquidation prefs… Or the round before where we almost accepted a super low valuation, but ended up closing at twice the amount… Or our seed round, where I met with 130 investors, 129 of which ended up in the “Pass” column of my “Target Investors” Trello board.
No, I’ve learned from that. We have solid metrics and great prospects ahead. The market is bullish. It’s only a matter of self-confidence and process-mastery.
So I thought.
In the second half of 2019, we decided to delay our initial fundraising efforts and wrap-up the year first. We wanted to present clean metrics and prove the value of a few additional growth engines. We’d get started in January. As I go through the story, I’ve framed it with four key learnings — from past rounds and this one — in mind.
— intermezzo: in —
The core fundraising team consists of me, our CFO, and one of my cofounders, Jonathan — who generally has strong intuitions. He’s concerned about changing VC markets and doesn’t want to delay our funding search longer than necessary. I see his point, but I feel the market won’t shift drastically before Spring/Summer 2020. We decide to give ourselves a bit of time to prepare.
Side-learning: listen to your intuitions…
— intermezzo: out —
Lesson #1: Polish, polish, and polish your story
One of the acknowledged mistakes of our B-round is that we started fundraising without having a really compelling deck. You can only fool me once! We take January to refine and polish our investor deck and develop a crisp story (embedded below — confidential revenue/strategy information has been hidden. Aircall eyes only, sorry!). So far so good.
Lesson #2: Maintain relationships with VCs, even when you aren’t actively fundraising
End of January: Our roadshow is scheduled.
- Start with European VCs — we know them well and we have a bigger reputation over there
- Then NYC — I’m based there I have built inroads with a network of VCs
- Lastly, the West Coast — toughest turf, where we have a limited network
From our series-A round, I learned it helps to maintain regular conversations with VCs at partner level ahead of fundraising. These relationships paid off, and we lined up 40 meetings easily, with added help from our existing investors, too.
Lesson #3: Fundraising is a numbers game
What we experienced in our Seed round remains valid — Don’t be too narrow in your VC target list — 80–90% will pass for whatever reasons.
With this in mind, things are going well. At the beginning of March, we get the first 3 term sheets in, and after 4 weeks of effort, we still have a long list of investors completing due diligence.
Then things start to change, fast.
March 10th. We’re making quick progress with 3 investors on deal terms, approaching final stages.
March 11th. We’re reflecting with my cofounder on how to drive valuation up. It’s already substantially high, but we feel we can push it further up. Later that day, President Trump announced a travel ban from Europe.
March 12th. We sync up with our potential investors. Hmmmm. They’re still very interested to do the deal, but wonder aloud about valuation. Other interested investors have pushed the pause button. The Nasdaq loses 10% in a single day.
At this point, we talk with our Board and face 2 options:
1/ close the deal now, at a somewhat lower valuation than desired
2/ wait 1 or 2 months, hopefully get past nervousness in the market and get a higher valuation.
We choose option 1 and engage with the investor furthest along in negotiations. We summarily introduce them to the other investor we like, agree on terms, and execute the term sheet. Confirmatory due diligence is planned for 3 weeks and starts at high velocity. A good step, but there’s still risk with extreme volatility in the market.
Then something unexpected (and fun) happens. The 3rd week of March is our best sales week ever. The 4th week of March is even stronger, making March 2020 our record month for growth, putting us 20% above our Q1 target.
Work from home… Aircall becomes vital for companies switching rapidly to modern and flexible solutions. And that raises a question in our mind: Are we closing at the right valuation?
Investors who passed on us earlier start reconnecting, looking for winners in the post-covid world. At this point, we’re getting too much interest. We can’t free up enough space in the round, unless we accept massive dilution.
What should we do?
Lesson #4: Go for the money, over the valuation
Our reasoning is we know we can triple (or more) our future valuation if we have cash to execute and accelerate now. At the same time, we do NOT know what’s going to happen to the market in the coming months. The potential downsides of not having cash are too high.
We like our potential new investors, we’re excited to get back to work and execute, and we know the next years will be rewarding — reason enough to make the mental shift and put ego (and dilution) aside.
These are troubled times, and there are many other lessons we’ve been fortunate to learn firsthand. Having a supportive Board is massively helpful, and focusing on potential investors in whom you feel a genuine sense of trust.
But finally, when under stress, you root back to who you truly are. At Aircall, we know nothing will be given to us easily. We are the underdogs, and we achieve because we never give up. In tough times, hard work beats talent.
Each fundraising at Aircall has been a memorable moment, and never went as planned.
I can’t wait for Series D.
