The Path to Series A

While there’s no one-size-fits-all approach, we asked founders for the best advice they got as they prepared to raise millions

Real Ventures
Real Ventures


By Lauren Jane Heller

XpertSea CEO, Valérie Robitaille (centre)

Raising a Series A takes a lot more than many entrepreneurs think.

Of course, there’s the pitch deck, but that document is informed by months of preparation: countless hours of distilling the essence of the company, building a bullet-proof narrative and formulating the insights that reveal how effectively the startup can — and ideally will — disrupt its chosen industry.

As a venture firm that supports companies from the beginning of their entrepreneurial journey, we see the Series A as an important milestone on the path toward massive global success. While the seed round is about validation, the Series A is about scale. It’s when an investor looks at a company and says: this startup has what it takes to become a billion-dollar business and I’m willing to bet on this team and their vision.

“We created this firm to help Canadian companies get the right support at the earliest stages so that they can go on to make a major impact,” said Real founding partner, Alan MacIntosh. “Last quarter we had seven impressive Series A rounds and we’re looking forward to seeing many more of our companies achieve on the same or even higher levels. Knowing that our guidance makes such a difference also keeps us inspired to push ahead with our mission — to help build the world’s best tech companies out of Canada.”

But how does a company know that it’s time to raise a Series A? And what is the best way to ensure success? Over the course of the next few months, we will share deep dives into Series A preparation based on the formula that has helped dozens of our companies raise millions of dollars.

For this first installment, however, we asked our founders about the process and what they learned from what many consider the toughest challenge of their professional lives.

Building the story

The first part of the Series A process involves peeling away the layers to isolate the essence of the business — a long and often difficult process.

“[Real partner] John [Stokes] kept saying that it’s always bigger than that first version of the story or deck that you put together,” said Mikael Cho, co-founder and CEO of Unsplash, a free curated photography marketplace that raised a $7.25 million Series A in February. “I’d share the deck and he’d say, ‘It’s bigger than that. There’s more there than that.’ We went through 20 iterations before the first version and by the time we had finished fundraising we’d gone through another 20 iterations. At Series A, it’s a big deal to tell your story right and [communicate] the confidence that you are the ones that can pull this off.”

“Series A brings with it the burden of Series A prep,” said Steve Barha, Instant Financial CEO. Instant recently raised their $14.3 million Series A to scale their tech that enables companies to pay shift workers at the end of each day. “Sam [Haffar — a partner at Real] mentioned one time, ‘Steve, just stop. There’s way too much goodness here. You can’t tell everybody all this incredible stuff. You need three, four, five things and you need to focus on that as the story.’ Without having put the work in with Sam to get the story right, we wouldn’t have gotten the deal we did. Period.”

CEO, Steve Barha (centre) and the Instant Financial team

The burden of “no”

Yet, regardless of how much preparation is done, most founders still hear a lot of “no’s” when speaking with investors.

“Your Series A will take everything you’ve got,” said Carlo Perez, co-founder and CEO of Swift Medical, a wound care management company that raised $11.6 million to further develop their technology. “The experience was one of the hardest things I’ve ever done. I think it came down to the pure psychological challenge. If you’re not out there selling snake oil — you’re out there with real traction, a real company and a team that’s kicking ass — then really it’s on you to be able to burden all the ‘no’s’ and all of the stress and all of the fires. I play a lot of sports and I’ve trained pretty hard in the past but [the fundraising process] is like nothing else.”

For Cho and Unsplash, their fundraising effort was also long and arduous.

“There were points where we were doubting that it was going to happen and we had all of these backup plans, but at the core we were never going to give up,” he said. “And when you know that you’re never going to give up, you’re going to keep trying to find ways to keep going. You keep learning and you keep using everything you learn to improve.

“It was only really in the final three months that I felt that we had the right mix of how much money we were asking for and the confidence in presenting the story. It felt really good. We had multiple term sheets coming in and that’s the weird thing about it: it can be so dry and then all of a sudden, if you hit on all of these things and there’s interest, it all accelerates and creates momentum.”

“Now I feel almost grateful that we went through this process. Because we had 200+ meetings with 43 investors and heard tons and tons of ‘no’s,’ we now have information and the ability to speak about the company at a whole other level.”

On believing in your team and vision

But surely with tons of ‘no’s’ comes a lot of self-doubt. How do co-founders get through the challenges of the fundraising rollercoaster? According to Cho and Perez, they look to the support of their teammates and partners.

“I have two co-founders,” said Cho. “We did most of the fundraising together. It’s really helpful to have the people there with you. I found that above everything was probably the single most beneficial thing. We’re in it all together: we could have multiple points of view, we could iterate on the story, we could improve much quicker than if we were doing it alone.”

“There was something that the team — and by team I mean Sam and Alan at Real — kept saying to me. It was this idea of ‘It’s gonna happen, you’ve just gotta keep going,’” said Perez. “‘You follow the process. You keep going.’ And that’s what we did. I imagine a mule pulling a barrel through the desert and someone telling the donkey — I guess I’m the donkey in that scenario — to keep going. That advice: ‘Believe in the process. Follow the process,’ was something that kept me going.”

Carlo Perez, Swift Medical CEO

On finding the right investors

Another insight that comes up again and again is the value of having the right investors and supporters.

“Be very thoughtful when you pick an investor,” said Liran Belenzon, CEO of BenchSci, an AI-powered search engine for biomedical researchers. “An investor is almost like another founder that will be in the company. It really really matters who you pick for seed because that’s who’s going to make your A round either easier or harder. [It will affect] which investors are going to come in later, which employees are going to want to work with you. I’ve had the experience where because of our investors, we’ve had employees who’ve reached out and joined the company. Even though people think it’s just money, it really really matters.”

This sentiment was echoed by Carlo Perez and the Swift Medical team:

“We were very lucky to have very good, supportive investors from the start. It’s not always easy to keep — everybody has different goals — but with Real Ventures and some of our early investors we were so lucky that they were really supportive and really helped us raise that second round.”

For Cho at Unsplash, the mission and style of the VC is also of great importance.

“For us it’s not just about the sales and the bottom line. We have a big community and we want to help support everyone involved in that ecosystem. So we’re looking for investors who are mission-driven and that was one of the big keys for us. What have they done to prove that they believe in this mission? What investments have they made? How did they treat those sorts of companies? How did they think? How did they operate? One of the things that we said is: any investor we’re looking at, especially any investor we’d look at taking on the board should be someone we would want to hire.”

And for Valérie Robitaille, CEO of XpertSea, a company that recently raised $10 million for their technology that allows producers to count, size and image aquatic production, it was also about getting investors with the right industry connections and knowledge.

“We wanted to find investors that had industry knowledge plus tech contacts and knowledge. It took a while but we didn’t settle and were able to find the right partners. We could have optimized the deal by 10 to 20 percent but having the best partner is definitely the way to go. Sometimes we hear things and it doesn’t always work out that way for other companies, but for us, it was great.”

On being a Canadian startup

Finally, if you’re curious about whether or not Canadian startups are treated differently in Silicon Valley and New York, founders had a few different opinions.

Belenzon found that in their fundraising process, BenchSci could use the fact that the company is Canadian to stand out:

“I think there’s an advantage for Canadian companies to raise their A round because they’re not from the Valley. It allows them to create scarcity. In this A round, we were very strategic in terms of who we spoke to — when we started talking to VCs — and also in terms of the prep work we did. You also need to make it as easy as possible for VCs to make a decision. Give them all the information they need. If you run a really good process it can lead to very good money in a very smooth and fast way.”

Cho, on the other hand, feels that there’s definitely a difference in the way that Canadian startups are treated:

“People won’t really say it but I believe there’s an apprehension toward Canada. People haven’t heard of Montreal in the sense that there’s X big unicorn company that’s come from that place, so why should I care? It’s just another risk factor for some investors. I think it’s a piece of the pie — I don’t think it’s a major one — and it matters more for certain people than others. I think it matters more in Silicon Valley than in New York, from my experience.”

Perez believes that the biggest obstacles for Canadian startups has less to do with nationality and more to do with attitude:

“I think investors everywhere understand this is a common language of disruption. Whether you’re a Canadian company, a US company, a Brazilian company or Chinese company, I don’t think it really matters to them [the investors]. From the cost of living to the strength of the talent pool, there are so many advantages to being north of the border. I would say that the challenge of being Canadian is, potentially, just being Canadian. We can be very humble. We can be very accommodating. We can be less brash and outlandish — and I think the only thing we really need to do is go out there and ask for the massive raise that the companies in the States are raising and the valuations that they’re asking for. I think that’s the only difference. The best part is that Canadians have just a good a set of talents as anyone else around the world — it’s just a matter of attitude.”

And the final word on the matter goes to Barha from Instant:

“I know there are some funds that don’t invest in Canadian companies — that’s just stupid to be perfectly honest. It’s 2018. How do you make a decree like that? For most funds, if they’re actually willing to do the diligence and see how easy it is to invest in Canadian companies, they’ll see there’s nothing notable in terms of legal cost or taxes. To be perfectly honest, our last two rounds have been led by American VCs but written on Canadian paper. There are incredible companies north of the border that should definitely be garnering interest and I think it’s lazy on a VCs part to say “No, we don’t invest in Canadian companies.”

We definitely agree.

Learn more about the Series A fundraising process in Sam Haffar’s Series A Preparation series, where he digs into the importance of narrative and how to go about distilling the essence of the company. 👇

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Real Ventures
Real Ventures

Canada’s leading early-stage VC firm dedicated to serving entrepreneurs and nurturing the communities in which they thrive.