Sarah Lerche on bringing a Silicon Valley success to Norway: —There is a steep learning curve
The Angel Challenge investor Sarah Lerche shares some of the insights she has gained from joining the program, and what the Norwegian ecosystem must do to grow better.
What is it like to build a company in the US and then bring it “across the pond” — back to the motherland of one of the co-founders? The CFO of Escalon Services, Sarah Lerche commutes back and forth to Norway from the US, as Escalon Services expands to the Nordics, starting with Norway. She brought Escalon Services’ Norwegian branch to her Scandinavian homeland late 2017 — and by that introduced a new market to the company’s services within finance, CFO controlling, accounting, taxes, HR, wages and back office. All this is offered to multiple companies part-time, meaning they get a better overview of their own situation — managed by professionals.
Initially, Lerche went to the US in pursuit of a university degree. She has an MBA in Business Administration & Finance from the University of San Francisco, where she was awarded the McLaren School of Business Fellowship.
I fell in love with San Francisco, and eventually decided on staying there. At first I worked in downtown San Francisco, before I moved to Palo Alto in Silicon Valley. I fit right in — the Californian lifestyle has got the “can do” attitude about it, and people support you. They don’t always fully understand the idea you’re working on, but they support and like what you’re doing. There is a culture for saying yes to opportunities — it’s all about leaning in to the new and unknown. Nothing is stupid, and no ambitions are seen as irrational.
With 25 years of experience in the technology industry, and starting as a financial analyst post graduate school, Lerche has had many roles managing financial operations in private to public organisations. This led her to found her own company Carzetta, providing CFO services to numerous technology companies in Silicon Valley and eventually merging it to co-found Escalon Services. She has served both private and public companies, building complex budgets, managing strategic plans, and implementing strategies for growth and scale.
For Lerche, who had grown up in Norway and was familiar with not only the Norwegian society — but also the mentality — coming to California was liberating.
For me personally, coming to a place where your success was all up to yourself was very liberating. In California, there are no limits to what you can do. Nobody said “you’re doing too much”, or “you’re not thinking about this the right way”. Having the freedom to be whoever you want to be is pretty fantastic — and once you have it, you won’t give it up so easily, says Lerche.
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Traveling with Angel Challenge
Sarah Lerche participated in the Angel Challenge program Fall 2019, and was among the investors during Fundraising For Startups (formerly Growth Challenge) during spring 2019. Lerche says she joined Angel Challenge as an investor because she wanted to learn more about fundraising and investments.
I already have a lot of experience with fundraising, and I have worked with many investors. It’s always possible to learn more about these subjects, so that was also why I joined. I wanted to get a more structured perspective on investing, as I have more experience with being on the company side. Joining Angel Challenge, I wanted to learn more about what you as an investor should do to earn money. I needed to get some guidance to structuring the angel investment process, as they often are quite “personal” investments — and usually not managed by a big institution.
As part of Angel Challenge, Lerche also joined the Angel Challenge team travelling to several Norwegian cities. She says this gives her a greater insight into the ecosystem, and that she gets to use her competence and skills when guiding and teaching startups.
It is also interesting to see what kind of ideas and products startups from the different cities come up with. People have different ways of thinking, and also different ways of solving problems. So I could elaborate on my experiences from the US, as their way of thinking of course is quite different from the Norwegian way of thinking. And some startups might not have had anyone to ask for advice, so I’ve found great value in sharing my competence. The most important thing is to provide the startups with many different stories and input, which will give them insight on what they need, says Lerche.
And she has got a long experience in growing a company — and growing it well: During her tenure at Mercury Interactive, Lerche developed and built the FP&A (Financial Planning and Analysis) department, which was responsible for all the business/financial models used for investor guidance, strategic planning and budgeting, acquisitions and future growth. Mercury Interactive was one of the first companies to adopt and implement subscription software sales which changed all the metrics that drive a technology business. The company grew from $50M annual revenue to over $700M in the years that Lerche managed global FP&A. Subsequently Mercury Interactive was acquitted by HP for $5Billion in 2006.
Lerche says meeting the startups while she was travelling with Angel Challenge also gave her a greater opportunity to learn about each company’s innovation, products, and roadmap.
I got a greater insight on where the startups were “coming from”, and how much they had left. And you get to meet the startups at a more personal level. This is quite different from the average pitching event — which is a lot like “speed-dating”. I think there was a certain value to meeting the startups for a longer period of time, and talking to them about the practicalities of things.
But Angel Challenge does not only provide investors with a selection of startups they can invest in — there is of course an added benefit of an investor network as well.
It’s been very exciting, and I’ve gotten to know a great bunch of people who are interested in investing in startups — something that is relatively new in Norway. And learning about the structural side of investing has been very rewarding too. There are many details to remember, so learning about the process will save you a lot of time and energy. As an investor I also got to participate in the discussions between investors, and got insight on some other ways of thinking.
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The cultural differences: Mind the gap!
Prior to founding Carzetta, Lerche was the VP Finance & Administration at MAP Royalty overseeing investor relations. At Cendura Corporation (a NEA backed technology company) she was responsible for all aspects of the financial and administrative management until the company was acquired by Computer Associates.
Lerche is working with many startups and companies that are looking for funding and investments. And this was how she was inspired to start investing: She had saved up some money, and her first investments were in the companies she had worked with for a long time.
As for her own startup story, she explains it the same way: “Working alongside other companies” — she says, “you eventually get inspired on your own and start thinking about some ideas you’ve been nurturing for a while.”
Starting Escalon Services in the US also proved to her how well she navigated the waters of the startup world: She did, after all, have a lot of experience after working with startups in the very same situation. However, coming back to Norway after having established her career in the US, brought on some unexpected challenges — culturally.
I always explain this to the companies that are heading for the US: They will be confused by how things work “over there”, as all countries have their own routines. Once you’ve gotten to know one place or way of doing things, you realise that other rules apply to this other place, where they do other things. I, too, realised this when I came back to Norway: There is a steep learning curve when you are trying to learn the rules of the game while you are participating. So when you are trying to make it in a new place, you might struggle and experience both confusion and frustration — even if you know the language. Running a business is something different in the USA than in Norway, so you need to be mindful of the different rules and how they apply to your company.
When guiding startups and other companies on the road ahead, she credits her first-hand experience from working with finance, as well as the discipline she has developed for how to grow a company well.
I have accompanied my jobs on travels abroad, which in itself adds another level of competence to the work. I am familiar with seeing how many small enterprises have worked their way up, and what is necessary to succeed with early stage companies.
Bring in the diversity: A remedy against stagnation
One stark difference between the Norwegian and the Californian startup ecosystems is, of course, the scale of the ecosystems. The infamous saying “Everything is bigger in America” is definitely true in this case. If we are going to grow the innovative communities of Norway to a size that matches our most high-flying ambitions, we should be mindful of what the Norwegian ecosystem is, and who it attracts.
Lerche says the key to growing the Norwegian ecosystem is an even greater diversity than what is present today.
I’m not just talking about the diversity that comes with having team members of different nationalities and genders, but also people of different ages, backgrounds, lifestyles… A unique mix of people brings about more creativity than a mix consisting of people who resemble each other in every way.
Elaborating on why diversity is an advantage might seem like a banality ; is it really necessary to explain why diverse teams have a better performance rate, and do better overall? Apparently it is — as four percent of the Norwegian tech founders are women, and only one percent of the Norwegian tech investors are women. But not only does female founders and female investors pave the way for innovation male founders and male investors might not see as interesting enough to pursue — diversifying our innovative communities bring in a whole different set of ideas.
A company’s growth might go a little stagnant if you’re not focusing on diversity. A team consisting of people from the same backgrounds, and with the same political views, the same hobbies, the same family situations, is not diverse. After some time, they will often struggle with coming up with a varied set of ideas. I believe we have to think about diversity in many different ways — and this is important. You have to keep yourself alert and ready by asking questions — not with the intention of being negative, but for the sake of showing interest in the topic you’re working with, says Lerche.
As for how asking questions and staying curious matter to how well a startup ecosystem is performing, one could perhaps say it this way: We’re not creative until all of us are. Having confidence in your own ideas and abilities will have a great impact on not only the startup you create, but also the team you gather, and the minds you inspire. Asking the questions that bring about more creativity is vital for a future where innovation is going to help us through challenges, both on the big and small scale.
