Why we decided to raise $1.3M after 1 year bootstrapping and how everything happened

maxime berthelot
Dec 19, 2018 · 15 min read

First, sorry we’ve been quite silent in the past months since our last update about Phishing and how we went from 10 to 200 paying customers.
Being quiet doesn’t mean nothing happened for us and for PixelMe 😀

Transparency Alert 🚨

I’ll start with a Tl;Dr of the most interesting news and share the story right after 😊

  1. I joined Tom & Jérémie full time on PixelMe 💪(even though it was hard to leave my Buffer Fam💔 )
  2. Our very first PixelMe baby is on his/her way, expected “release” date mid-March
  3. We reached (“almost”) $10K MRR at the end of September 2018! Exactly one year after the launch

4. We raised $1.3M (€1M) with Serena led by Kamel Zeroual!and 6 amazing Business Angels:

  • Stan Massueras, EMEA Sales director at Intercom
  • Manuel Jaffrin, GetApp Cofounder Acquired by Gartner
  • Edouard Dessain-Gelinet, Founder of FBads, Former EMEA Gaming & Gambling Client Partner at Facebook
  • Thomas Rebaud, Cofounder and CEO of Meero
  • Christophe Chausson, CEO Chausson Finance
  • Gregory Gazagne, EVP Global Revenue, and Operations at Criteo
  • and last but not least… KIMA VENTURE. Read the story of how Jean de La Rochebrochard, Partner at Kima Venture convinced us while riding his bike 🚲, to get a seat a few days before the closing 😅 😎

We raised $1.3M at a $4M+ pre-money valuation! So our investors get 22% of the company and the three of us get 26% each.

Because we think transparency in business should be the norm — as it brings accountability and responsibility— In order to help, we’re happy to share the term sheet we signed (if you wonder what a Term sheet is — hi, mum! 😉).

Our Term sheet is fully inspired by the one created by the Galion project! Thank you to Galion’s team for bringing more transparency and helping VCs and Entrepreneurs avoid making mistakes during this tricky negotiation time 😊

I am sure you’re wondering what the hell a URL shortener is raising $1.2M for?

I’ll share everything 👇but you’ll have to read it 😜

From Boostrapping to meeting Kamel, everything started at Saastr Paris

Believe me, Saatr Europe can change your life! 😉

This year, Saastr conference decided to come to Europe for the first time. For those who don’t know this conference, it appears to be one of the best SaaS conferences in the world! The fact that they chose Paris over many great capitals in Europe shows that French SaaS companies are doing well 🙂 ❤️.

Long story short, Tom and I spotted the first batch of tickets and decided that for $100 we should go and talk to a few people. I usually don’t go to conferences unless I have a clear goal (except for Saastock) but this time it was close and cheap.

We were having a great time talking with friends when Kamel Zeroual, partner at Serena Capital stumbled upon us. (We learned later that Romain Dardour, Hull CEO, had told Kamel he should talk to us.)

The conversation went approximately like this:

Tom — “Hey, I am Tom, PixelMe’s cofounder
Max — “Hey, I am Max, PM Growth at Buffer and PixelMe cofounder
Kamel — “Hey guys, I am Kamel, partner at Serena…
Tom — “Ah ok cool, we’re not looking to raise any money, we’re bootstrapped and happy with it

…. small blank….

Kamel — “Ok great, no worries, let’s just have a casual chat, tell me a bit more about PixelMe…
… Tom went on talking with the other guys while I carried on chatting with Kamel…

The conversation lasted 15 min, we talked a bit about the story of PixelMe and where we wanted to go with it. I was pleasantly surprised with the questions Kamel asked me. His approach was totally different from the other VCs that contacted us over the year! I believe his entrepreneurial background makes him a totally different person from the other VC partners we talked with. At the end of the chat, Kamel gave me his business card and told me “let’s keep in touch!”.
I have to admit that, I threw it away when I found it in my pocket at home later 😅(Sorry Kamel 😬).
That being said, I had a short night that night reflecting on all the questions Kamel had asked me!

A few days went by, and then we received this intro email! It happened that we’re good friends with Emeric, CEO of Agorapulse, and Kamel is a good friend of Emeric’s 🙂— small world 😅

What a beautiful intro, isn’t it? (Sorry it’s in French, but tl;dr is basically Emeric confirming Kamel is a super duper entrepreneur 💪).

At that time I was living in Amsterdam and I was leaving a few days later. So we decided to have a morning coffee at the Hoxton Hotel (a place I used to love working from. They have an amazing coffee lobby, but now they put the music so loud that it’s hard to work from there. Not sure if they’re doing it on purpose though 😞).

Another great sign that we were meant to work together, at PixelMe and elsewhere, is we communicate through emojis a lot. It’s especially useful when you want to convey your emotions and feelings in writing!

Kamel’s reply to my meeting suggestion is epic

Changing our perspective about PixelMe

I met Kamel at the Hoxton then. We had one hour of productive, challenging, deep conversation around our vision (of PixelMe): how we wanted to do it, what strategy we had in mind etc.

We started PixelMe as a URL shortener because we knew URLs are the foundation of every acquisition campaign. Whatever your goal is with your online acquisition you have to start with a URL! With PixelMe being a URL shortener we’re positioning the tool at the first step of the customer’s journey! We knew from there that we wanted to help people easily create their advertising campaigns and eventually help optimize them 😀

So building a centralized dashboard where you could easily create your Ad and then simply launch it on any Ad platforms like Facebook, Twitter, Google etc. in a couple of clicks was our initial vision!

It quickly transpired that we were on the same page concerning the first validation of a Market fit. The vision was interesting, the market seemed large enough to build an interesting business, but there were 2 ways of achieving this vision:

  1. Carrying on as we had been doing: bootstrapping PixelMe. We could keep building the product, the team, the marketing effort step by step, and potentially use that vision to build a “lifestyle” business. This is a great path that more and more entrepreneurs are taking today. Probably less risky, but as stressful as the VC funded path. With this approach, it was probably going to take us 3 to 5 years to build the tool we wanted!
  2. Accelerating the development of the product and the acquisition of our customers by growing the team quickly. That would probably mean, raising a first seed round with people who knew our market to help us scale acquisition and scale a team — that’s how Kamel would help us if we ever wanted to consider choosing a different path than the bootstrapped one!

I really enjoyed talking these things through with Kamel. I went home feeling challenged and motivated to rethink our approach. And that day, Tom, Jérémie and I sat down and had a good, long chat about all of this.

What if we could go faster? What if Kamel, Serena and a few other BAs could help us grow our skills and fasten our learning curve? What if we could hire new people that could help us build the product and the company we were dreaming of?

Jérémie was the most skeptical as Tom and I had always told him you couldn’t trust VCs … 😬 Also we were aware that if we decided to go down that route, it would mean building PixelMe differently, and accepting losing a bit of freedom and meeting higher expectations.

Kamel and Tom were supposed to talk about it some more but the 3 of us ended up meeting Kamel at the Hoxton Hotel again instead. It was July 10th 😀

Just like in my first meeting with Kamel, the discussion went super well and everybody enjoyed the chat. Tom and Jérémie shared the same feeling and started to be more and more convinced that raising a seed with Serena and Kamel could help us a lot.

I think we will always remember how the conversation ended that day. During our conversation, Kamel frequently referred to what our potential next steps could be, but nothing was really clear yet.

Jérémie ended up saying to Kamel “I don’t have time to waste, so are the lights green for you or what?
Kamel — “ Yes it’s green for me
Tom and I laughed a lot 😂
then Tom said — “Ok, but raising a round always means “defocusing” and we don’t want to waste time, so how fast can you go?”
Again Kamel’s answer was priceless and is probably written in stone somewhere
Kamel — “ I can go faster than you guys…”

Challenge accepted 🚀

Challenging summer and busy September

Raising a seed round with Serena meant 2 things:

  • Meeting a few people that Kamel would introduce us to over the summer
  • Prepare a deck that we’d have to present to Serena’s board in September.

We have to admit, we’re usually not big fans of decks or business plans. VCs usually ask you to predict how much revenue or how many people you’ll have in your team in 3 to 5 years🙂. I can see these are good questions to ask yourself when you start a business, but it’s usually pretty hard for bootstrapped entrepreneurs that face the day-to-day reality of growing their business from 0 to $10K MRR to imagine reaching $10M ARR any time soon.

We did want to make PixelMe grow from a side project to a bigger company. Thanks to our 10,000+ users, the 5,000+ conversations we had with them, and the customer research we did, we’d learnt a lot about our customers’ difficulties and our market’s trends. Having said that, we had never really spent time looking into the future or looking at the size of our target market —

I believe this is where the difference between bootstrapped businesses and VC funded companies lies. As a self funded company you’re usually focused on your day-to-day operations and think that looking at your potential target market or spending a week on a business plan might be useless, because it’s usually not something that will help you grow right away!

On the contrary this is the first thing that VCs usually want to know. It makes sense that they need to know whether you’ll be able to grow your business enough so that they will make a good return on their investment!

To be honest we’ve been contacted by quite a few VC funds before. As we wanted to keep our options open, we typically had a chat with each one of them. All the discussions went the same direction and ended up with “Send us your Business Plan… “ which was an immediate deal breaker for us 😅. Sometimes even after having a few follow-up conversations, they told us “Oh sorry, we’re not excited by the Ad tech Market”… Come on, next time find another excuse, please!!!

Kamel was the first person we met who really dug into the market, the competitions, the value of the tool today and its potential! He was the first one to really understand and value how we created PixelMe, the complementarity of the team, the unique position of PixelMe at the beginning of the customer’s journey and how it was in the middle of two big markets: the Adtech and Martech!

When I shared the previous experiences we’d had with VCs with Kamel, he told me he usually likes looking where nobody else is looking or afraid of looking and that this is usually where he finds the best opportunities. (Was that a clever move? Let’s wait and see!). So it was very pleasant to chat, brainstorm and exchange with him over that period.The icing on the cake was all the intros we had with Kamel.

Most of the people I met were super nice, friendly and very clever. I had meetings with people in our target market who had already sold their companies, I met people who were still entrepreneurs or only Business Angels. In all cases the discussions were interesting and I had some good takeaways. Even with those that didn’t go as I’d expected 😉.

At the end of the summer, we clearly had a better understanding of some key parameters of our business. Kamel was already being helpful even though the deal had not been made — which was a very good sign for us.

Partners meeting and signing the Term sheet

To stay on schedule we had to ensure the partners meeting took place at the end of September. To be honest, at the time, even though the outcome of it would be positive, we were not 100% sure we would be signing the term sheet afterward. We were still reflecting on whether we wanted to raise a seed or not. I think we were waiting for the partners meeting. At that time we had only met Kamel and Marc from the fund and although we obviously got on well, we were waiting to meet the rest of the team to see whether we could understand each other well too 🙂
We’d done our homework though: we’d found entrepreneurs who were already funded by Serena to get some feedback on how useful they’d been for them.
We’d only heard good things about them. They don’t have a large portfolio in SaaS yet, but they have a very good reputation 🙌

D-day finally came and here is the Deck we used to pitch our project to the fund:

Slide Deck

The meeting took place in the morning and it went very well. We had great interactions with all the partners and they asked very interesting questions 🙌Ok! On our side, we were sold 😊and happy to work together with this great team.
Kamel called us in the afternoon. The 3 of us were working from the same co-working space in Paris. I put Kamel on speakers on my phone and put the phone on the table.

Kamel started to speak slowly:
[silence]…. Ok… so, guys …. [silence]

We all instantly looked at each other and thought, “ok something’s wrong…”
“[Silence] …. [laugh]… Ok, I’m just messing with you!

It’s a YES for everyone!”

We’d been pretty cheeky with him during the whole process so I think it was only fair he played that joke on us 😂

Serena is using the Gallion project term sheet, so here is the version we signed a couple of days later

Term sheet

For those who have never been through that process, the TS is a piece of paper that sort of makes things official. This is going to be the draft the lawyers will use to write down the Shareholder agreement that will be the final paper, which is going to make the investment official! So in case you’re wondering, it’s only after having signed this agreement that the money is transferred to your bank account🙂 (this process can take a little bit of time, unfortunately 😬).

Even if you were to use the Galion term sheet, I would advise you to ask a lawyer to go over the process with you. Key articles in the Term sheet and later in the agreement were discussed a number of times. Our lawyers had a lot of back and forth so we ended up officially signing October 31st 😱

We teamed up with Serge Vatine from Bold the night of the quarter-finals of the soccer World Cup 💪 We had a very good fit with him and Serge didn’t hesitate to spend some Saturday mornings with us, explaining the Term sheet and all the docs. It can get pretty dry but Serge is, without a doubt, the best lawyer in town 🤟😛

Salima and Lina, from Bold as well, took care of writing the shareholder agreement with Serena lawyers. They did the biggest and most tedious part of the job! Until the last minute 😅 (as Beyoncé says: Girls run the world 😉).
Long story short, we highly recommend Bold, they are amazing! 🚀❤️

You’d think that everything would go on just as smoothly but it was without counting on Jean 😊

Jean de La Rochebrochard, “First, break all the rules!

Have you ever heard about this rule in investment?
“The scariest thing for a VC is to miss the best deal in town!”
Some say that the hardest part of raising around is to get the first commit 😊. When you get one, they all come to you 🤑
I don’t know if it’s a legend or a true story, I’ll let you be the judge of that.

A couple of days after signing the TS with Serena, Tom received this email from Jean de la Rochebrochard, principal at Kima venture, Xavier Niel (Founder of Free, School 42…) fund.

Translation: Hey Tom 🙂 I’ve heard you closed or are going to close a round, I’m gutted I didn’t contact you sooner, especially as we have a lot of companies (in our fund) for you guys (ok it doesn’t really matter because deal or no deal we’re always happy to help great companies).

When you receive such an email, you’re super happy — it’s always good for your ego — and also because we’re just big fans of Jean, and of course of Xavier Niel! We’re assiduously following Jean’s publications on Medium and love what he is doing with Kima venture, trying to make VCs great again 😍 😅(excuse the bad joke…).

Tom replied to Jean saying we’d almost closed the deal and it was almost impossible to do anything with Kima at that time…. That was in theory and without counting on Jean’s skills as “the best closer in town”…

So we jumped on a call with Jean 2 days later. First, if you ever listened to Jean’s podcast on Le gratin (one of my favorite French podcasts) you know that Jean started to bike from his home to his office 😊 🚴 Now I have the proof that it’s a true story 😃

When we Zoomed Jean, he told us “I’m sorry, I have a last minute meeting in Paris” (he was at Station F) “so I’ll have to do the meeting on my bike” 😂 see by yourselves 👇

Jean lived up to his reputation: Straight to the point and no B.S.!

He started the meeting like this “I know we’ve never met, but I know what you’ve done, where you’re coming from. I don’t know what you’re going to do with PixelMe but that would be crazy if you raised a fund without us…” (flattering our egos is always a good start 😜).
We talked for about 30 min, understood he really knew what he was saying when he told us he heard about us. He offered us to invest only €50K rather than the €150 they usually do!
We agreed to talk about it with Kamel and get back to him asap!

Kamel said, I like Jean, he is great, I like working with him. It’s not an issue then, let’s make it work 😀
This is how we had Kima Venture investing in on our seed a few days before closing the deal 💥

After a few backs and forth, we ended up signing the definitive shareholder's agreement on the 31st of October 😅. Of course, nothing went as expected, Jérémie who was in New York at this time, signed us a power of representation before leaving, had to find a printer and a scanner last minute to sign a new one 😅

Now everything is good and the money is in the bank 😊


As takeaways, I’d like to say first:

  • Even though you have everything in place and you’re on the same page with one of the partners of the fund, raising around is time consuming and is always going to mean defocusing for a while. Especially your first round!
  • I do think we need to celebrate this round, but don’t get me wrong. As Ben Parker (Spiderman) would say: “With Great Power Comes Great Responsibility”! We know it’s only the first step of a long journey and we are aware that expectations are high!
  • Raising VC money is definitely a path that is not for everyone and that’s ok! I’d advise you to think a lot about it before doing it. It will have a lot of consequences on your business and on how you’re going to execute it 😊

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PixelMe

Smart attribution for savvy marketers. Measure ROI across marketing channels.

maxime berthelot

Written by

Founder @PixelMe, former PM Growth @Buffer

PixelMe

PixelMe

Smart attribution for savvy marketers. Measure ROI across marketing channels.