M8 Ventures raising first $10M fund
|Christopher DeLuca||Feb 21, 2019|
gif by Benjy Brooke
PD Reporter aims to be the go-to place where early-stage startups go to kick off their capital raise process. Founders can announce some of the high-level details of what they're looking for to a growing audience of early-stage investors, making the process slightly easier for founders and investors. Post capital raise, founders can draw interest from investors for their next round.
Was this forwarded to you? Please sign up here.
Future Funding Rounds 🔮
M8 Ventures, an Australia-based pre-seed stage product team-focused venture fund, is about halfway through raising a $10M (AUD) fund, Alan Jones, Partner at M8, said. M8 Ventures will wait until it’s finished raising the fund before it begins to deploy capital. Jones has heard that it can take up to two years for a fund to finish raising in Australia. For both Jones and the firm’s other partner, Emily Rich, this is their first fund. Jones has angel invested for over a decade.
As an angel I’ve been accountable to no-one (other than my spouse!) for my investment decisions. Starting a fund meant I had to turn all my own implicit, intuitive investment judgements into a clear and communicable investment hypothesis to investors.
M8 offers a fixed annual capital call to its LPs to make it easier for a ‘medium-net-worth’ member of its community to participate, and for those who are active angels, the firm plans to run an open deal room and encourage them to invest alongside the fund on deals they like. The fund will be the first money in at pre-seed, lead a post-accelerator round or seed round, and participate in Series A with some of the best performers. The fund will have enough reserves to participate at Series A only. This first fund will write $50K (USD) cheques through to $3M (USD) cheques, with larger cheques reserved for previous investments. In the first 3-5 years, M8 Ventures plans to make about 20 pre-seed and 10-15 seed investments from this first fund.
Redeam, a Boulder, Colorado-based electronic ticketing platform connecting tourist attractions to resellers, has begun to evaluate the possibility of a Series B round and anticipates that existing investors will participate, Melanie Ryan Meador, CEO, said. While it’s still early, the company expects that the round would be equity-based. Capital raised would be used to continue to invest in the technology that helps Redeam maintain its leadership role in this industry, as well as for investment in growth and reach of the sales team. The tours & activities sector is the third largest in travel, and is currently valued at $150bn. To date, Redeam has raised a total of $7.7M.
Opportunity Hub (OHUB), an Atlanta-based collaborative work ecosystem, is raising a $2M round, according to Rodney Sampson, Chairman and CEO.
Recent Startup Funding Announcements 💰
Import.io took 2 months to raise its recent $15.5M Series B round. The company had initially begun to look for investment around mid-2018, but current investors offered a bridge round. Import.io spoke with about 20-25 prospective investors for the round. After receiving a term sheet from Talis Capital, the deal came together quickly and Import.io didn’t solicit any other firms.
Evati took a “significant” amount of time to raise its recent $500K seed round. The company spoke with approximately 20 VC firms and the same number of angel groups and other early-stage investors. Evati is preparing to ramp up for its next round of discussions. The company, which has raised a total of $1.28M to date, knew the lead investor for 5 months prior to the closing of the round. Competitors include Acorns, Stash, and Qapital.
Verbit raised its recent $23M Series A round in a few weeks and received multiple term sheets. The company knew the lead investor, Viola Ventures, for 2 years prior to closing the round. Following the round, the company added Ronen Nir, GP at Viola, to its Board of Directors. Verbit’s main competitors are 3Play Media and Rev.
Jeitto spoke with 50 prospective investors and received 5 term sheets for its recent round of funding. The company raised $5M (previously undisclosed) from investors in a pre-Series A round.
Outlaw took 4-6 months to raise its recent $2M seed round. The company had 20-30 first VC meetings for the round.
Import.io (Gary Read, CEO)
Import.io, a Los Gatos, California-based web data integration solution provider, closed a $15.5M Series B round back in December, and earlier this, the company acquired Connotate, a New Jersey-based provider of web data extraction solutions for corporate enterprises, for an undisclosed sum.
Recommended productivity hack: For me, detail matters. Because drilling down on a seemingly small situation can often reveal a much larger systemic issue. Imagine there is a particular lead that doesn’t get followed up on in sales. I will often ask “why” – not because it’s about that one lead, but when you find out the reasons then it’s often a much larger issue and the lead is just the symptom.
The other thing we try and live by is “when you see a snake, kill it”. Meaning don’t let issues linger, deal with them, solve them and move on. Don’t let the same issue come back multiple times.
Recommended book: Honestly the best book I’ve read that reflects on the reality of start up life is The Hard Thing About Hard Things. Too many books are hypothetical in my opinion, they rewrite history to make the founders/leaders look incredible – but the reality is that there’s also a lot of luck involved and a lot of tenacity. I’d actually love to document the Import.io experience “as we go” and then turn it into a book at the end. We forget the details about the decisions that we are making every day.
Thoughts on work-life balance: Well, I feel I’m one of the luckiest people in the world because I love my job and I love what I do. I’ve had great exits and so I don’t have to work, I choose to work and I do so because the satisfaction of building something is immense for me personally – the team, the customers – I love it.
I have 3 kids and spend lots of time with them all, find plenty of time to visit my family in England and love to travel with my wife. So yes, I feel I have great balance but....balance is a personal judgement call – for others they may think I work too much.
How long did the round take to close: We started to look for Series B mid-year but then our current investors wanted to offer us a bridge to let us raise later in the year. So we shut it down and started again in September time. We closed in November.
What capital will be used for: Growth. Mainly in go to market. Expanding sales and some marketing. Continue to grow engineering.
Comment of valuation after the round: Cannot reveal but suffice it to say that it was inline with top quality SaaS company valuations.
Number of investor conversations and terms sheets: We spoke to about 20-25. When we received the term sheet from Talis Capital they were very proactive about agreeing to it fast, so we didn’t solicit others. I love investors that want to move fast – shows the DNA. Talis spoke to us on the phone first (they are in UK), they made a trip to the Bay Area to visit us the following week and had a term sheet to us by the end of that week. Some negotiations around terms and then signed within a week of that.
Seems as though the process of raising money isn’t efficient. Your thoughts: Yeah. It’s painful. I enjoy it, don’t get me wrong, but I’d rather be talking to customers or our engineering team or something else with the company. Investors can be very insightful but you also tend to have to speak to many until you find the exact right partner. Yes I would love it to be more efficient - not sure how though.
Length of relationship with lead investor: From the initial contact above - they were referred by a trusted advisor.
Total amount raised to date: $38M.
Competitive landscape: It’s all about replacing internal projects with a SaaS product. Companies don’t realize this is possible yet, but that’s our job to educate them. More than 95% of the F500 use web data as a critical part of their business but over 80% of the spend is done on internal teams.
For instance, think back to the Business Intelligence market before any Business Intelligence products existed. Internal teams of engineers were writing SQL to get data and suddenly BI tools made it easy.
E.g. a recent customer of ours had 17 engineers writing their internal solution. They are already down to less than half that number and will eventually be down to zero.
Macro trends: 1. Digital Transformation means businesses have to become data driven or die
2. It’s not enough to rely on internal datasets. You have to get external data as well of which the web is the largest data source ever created.
3. But, existing methods to achieve this (web scraping) rely on expensive engineering, are slow to deliver and produce poor quality and unreliable data. Vendors deliver low end solutions.
4. Import.io is delivering a Web Data Integration solution to enable customers to get high quality data, with no specialized skills, rapidly and integrated into an overall business process. It has to be a complete solution.
Opimas estimate ~$5bn will be spent this year on web data. We are taking that spend and delivering it with a SaaS product and service rather than teams of internal engineers.
This is a huge need that delivers huge value. And we are the only company able to deliver on the needs of the largest businesses in the world.
Which is why Talis Capital, when they understood what we were doing, wanted to get the deal closed quickly.
Evati (Pete Clemson, CEO)
Evati, Inc., an Evanston, Illinois-based personal-finance app provider, raised $550K in a seed round back in January.
Recommended productivity hack: For me the number one productivity hack is "ruthlessly prioritize and apply relentless focus." I believe there is real churn waste on an endless list of issues that don't actually matter. I always try to focus on and finish the issues that do, and I'm amazed at how the little things that aren't important often disappear. As an example, in my prior experience at large corporations there was a tendency to "cc" everyone on all emails "just in case." This type of behavior creates tons of small "Time Vampires" that drain away everyone's productivity because they get too many people focused on the same little details. In those prior roles, I would often try to remind my teams not to "Major on the Minors".
Recommended book: I love the book "Nudge: Improving Decisions About Health, Wealth, and Happiness " by Richard Thaler. We've actually based a lot of our design principles at Evati on Choice Architecture and how to simplify the decision making process to help people focus on the choices that truly matter.
Thoughts on work-life balance: I think balance is very important and what you choose for a career has a dramatic impact on that balance. As example, if you find your job to be incredibly draining or boring it becomes personally draining. If you love what you do as a career, your days actually become more invigorating. I work very long hours and usually am working 7 days a week to help continue building the momentum we have created at Evati, but I still find time and energy to spend with my spouse and two teenagers. We are also very focused on spending the right time together. As a family, we eat dinner together most nights and have a strict rule about no phone calls, texting, email or social media use at the table. Those small but important habits can have a huge impact.
How long did the round take to close: I have devoted a significant amount of time to raising our capital. Some early good advice I received was that you need to pick your business partners very carefully. You end up spending a tremendous amount of time with them and the right ones are incredible (and the wrong ones can be highly destructive).
What capital will be used for: We are now focused on ramping our marketing and also on developing other major elements of our long term offering.
Number of investor conversations and terms sheets: I have spoken with approximately 20 VC firms and also met with a similar number of Angel Investors and Entrepreneurial Focused Home Offices and Investment Management groups. The VC firms have all felt that we were at too earlier of a stage in our prior discussions. We are about to ramp up our next round of discussions now that we are actively marketing and on-boarding customers. For the Angel/Home Office/Investment Management/Individual investor groups we have presented approximately 20 term sheets with a high rate of success in actual investments once we have reached that stage.
Seems as though the process of raising money isn’t efficient. Your thoughts: I wish there was a way to make the process more efficient. I have felt this especially keenly since we are based in Evanston, Illinois. The large pools of capital on the coasts tend to focus more locally. It's a real lost opportunity because there is an enormous pool of talented, honest, hard working individuals in the Midwest that are often overlooked. Having said that, I actually think the process works as well as could be expected. So much of the investment process is focused on the people. Getting to know and trust people takes real time.
Length of relationship with lead investor: 5 Months.
Total amount raised to date: 1,285,000
Competitive landscape: I believe that we have entered our market at exactly the right time. Awareness of the fact that there is a better way to manage, save, and invest one's money is growing (it's basically the same phenomenon as when people started to move away from travel agents). Our competitors are Acorns, Stash, and Qapital (it's actually a pretty limited group). Given their recent funding, they are helping by creating broader awareness of a better solution to offering personal finance solutions.
Macro trends: I believe we will see an increasing shift away from paper cash and from traffic to bricks and mortar banks. As we move away, people will realize they are paying far too much for old line financial services companies and will be looking for the most efficient, elegant, innovative solutions possible (in other words: Evati!)
Verbit (Tom Livne, CEO)
Verbit, a Tel Aviv, Israel-based transcription and captioning solution, closed a $23M Series A round last month.
Recommended productivity hack: Calendar management – I set in advance how much time I want to dedicate to the stuff I am working on. For example: 15% of my time to talk with my board members and other exciting and future investors. 35% of my time working with my direct report. 20% of my time – hiring and interviewing new people. 30% of my time on strategy.
I am marking my calendar with different colors based on the allocation I mentioned and my PA helping to set my time accordingly in order to make sure I am prioritizing accordingly.
Recommended book: The Hard Thing About Hard Things. This book really resonates with me, and offers a new perspective on management advice. The way that Ben Horowitz, one of Silicon Valley’s most respected entrepreneurs, discusses the real problems and issues entrepreneurs face in the context of his own experiences is really compelling. His brutal honesty around his own adversities when it came to being a founder and family member serves as a great guide for navigating the tough problems business schools don't cover. This is definitely a must read for those looking to run their own business and overcome any challenge that comes their way.
Thoughts on work-life balance: No balance, unfortunately. I work 17 hours a day.
How long did the round take to close: A few weeks.
What capital will be used for: Because we have a very high demand from academia and law, we plan on using this funding round to help support these sectors on a larger scale. However, we are looking to expand to new verticals as well. We will also use the latest investment to support our global growth initiatives, including scaling our sales, marketing, and product teams, driving solution development, and accelerating our U.S. expansion.
Number of investor conversations and terms sheets: We received multiple TS.
Seems as though the process of raising money isn’t efficient. Your thoughts:
Length of relationship with lead investor: 2 years.
Total amount raised to date: $34M.
Competitive landscape: Our main competitors are 3Play Media and Rev.
Jeitto (Fernando Silva, founder)
Jeitto, a São Paulo, Brazil-based neobank, closed a round of funding earlier this month.
Recommended productivity hack/rule to live by: Jeitto focuses a lot on UX. Everything we do for our customers must be easy to use, easy to understand and transparent in pricing.
Recommended book: Innovation and its Enemy by Calestous Juma. The book debates, using historical perspective, people’s resistance to new technology and proposes an agenda to create a better environment with technology.
How long did the round take to close: Fund raising demands a lot of time from founders. In our case was at least 80% of one of the founder’s total time. Even when you do not need funding you should be meeting VCs to report business progress. I am used to saying that we are always fundraising. This is never ending activities and you get better in doing that as time goes.
How many firms did you speak with:
What capital will be used for: All lending businesses like ours are capital intensive. We need part of our equity to be leveraged for debt in order to finance our portfolio. We plan 70% of the new equity will be used to support the funding strategy for the loan portfolio and the remaining 30% to be invested in technology and carry the business to break even. As the business expands, new rounds of equity will be needed to support the funding strategy for portfolio financing.
Comment of valuation after the round:
Number of investor conversations and terms sheets: We have talked to over 50 investors meetings resulting in five term sheets. Before meeting the investors, It is crucial to understand the alignment of your business with the VC investment mandate or theses. You have a much higher chance to progress with discussion with funds that have previously invested in the same business type in other geographies, the same market segment and country.
Seems as though the process of raising money isn’t efficient. Your thoughts: The discussions and interactions with venture capital funds always take time since the potential investors need to understand in details the business and, more important, know the people behind it. VCs needs to build trustful relationship with the founders before they commit their capital. There is no short cut. There are as lot meetings, questions, documents, analysis to be made.
However, the founders can be more effective by preparing a detailed info deck before fund raising. That will save some time and quickly provide info to the VC analysis.
Total amount raised to date: In total, the current shareholders have invested about $5M as pre-Series A.
Competitive landscape: Jeitto is the only digital wallet with a credit line that helps the emerging middle class in Brazil to manage the monthly cash flow needs. There are few digital wallets in the market but they are all using the pre-payment model. They could become our competitor if they start providing credit.
Macro trends: Time savings and convenience has become more valuable to emerging middle class in Brazil. We believe that will be more possibilities of digital payment and services available for holders of digital wallet. We also see an increase in possibilities of paying with digital wallet in physical point of sales. To a certain extent, the digital wallet can work as a bank account for the emerging middle class with the option of pre-paying in additional to the credit line. The expertise that Jeitto has developed in artificial intelligence based on alternative data allows the Fintech to predict, in a disruptive way, the payment behavior of its customers and consequently provide a credit limit with risk under control. New players will have to develop the same expertise.
Outlaw (Evan Schneyer, Co-founder and CEO)
Outlaw, a Brooklyn, NY-based modern contract platform, closed a $2M seed round earlier this month.
Recommended productivity hack/rule to live by: Quit email! Unfortunately I haven’t yet been able to quit wholesale the way I want to because right now there is so much important external, inbound communication from investors, partners, customers, press, etc. Even so, I get SO MUCH more done when I just close my email for a day. The “break” between Christmas and New Years was the most productive week I’ve had in six months. And internally in terms of team communication, email is just the wrong tool for the job. Between Slack, Trello, Google Drive/Docs, and, uh, talking to each other, we’ve got everything we need to stay in sync and keep moving lightning fast without email.
Recommended book: I know this is controversial, and people love to judge me for it (frequently without even having read it themselves), but I’m going to say Atlas Shrugged by Ayn Rand. I don’t view it as the politically-charged argument people make it out to be today; it just resonates with me as an incredibly accurate portrayal (especially as it was written over 60 years ago!) of the epic struggle between creators and freeloaders, or somewhat equivalently in 2019, between technologists and politicians. I’ve proudly identified as the former in both groups for my whole life, and I expect most entrepreneurs would feel the same.
Thoughts on work-life balance: Balance is extremely important, yes, but I think of it more in terms of sustainability. “Balance” implies two competing forces (“work” and “life”), but I’m very intentional about integrating the two, so I don’t begrudge it when an aspect of one creeps into the other; in fact I encourage it. Dan (my co-founder) and I talk about this all the time, and we’re very conscious about creating a sustainable culture.
How long did the round take to close: All-told I think it took about 4-6 months.
What capital will be used for: Go-to-market activities, which goes hand in hand with growing the team. We’ve already hired a great BD Manager and we’re closing in on a Marketing Manager too, which are our two key hires on the go-to-market side. So it’s funding the two of them to help them be successful (advertising, events, conferences, etc), and then growing our dev team by 2-4 full-stack engineers.
Number of investor conversations and terms sheets: I can’t share number of term sheets but suffice it to say we had other options and chose Bowery because frankly we liked them the best.
We had around 20-30 first VC meetings, which wasn’t too bad. Nearly all of them were very impressed by our vision and execution but for about half we were simply too early, so we’d stop the discussion after that first conversation. I really appreciated that transparency -- one positive 45-minute chat followed a few days later by an email saying “We love it but you’re too early” is a worthwhile investment; that’s someone I’ll call back in 6-12 months after we’ve hit more milestones or whenever we’re raising the next round.
It’s the folks who ask for 3, 4, even 5 meetings only to come to that same “too early” conclusion who are responsible for making fundraising a full-time job for founders. On top of the enormous time-suck, the bigger problem is the resulting rollercoaster it creates for the startup. Great founders will find a way forward no matter what, but planning a future around having $2M in the bank is extremely different from the scrappy bootstrap route -- and jumping between those different potential futures on a daily basis is an enormous mental and emotional tax that no one really talks about.
Seems as though the process of raising money isn’t efficient. Your thoughts: Gosh I wish I had an answer for this one (as does every founder). I’ve heard that once you’ve had a mega-exit, as in 9+ figures, you can just call up your prior investors and they’ll write a $10M check right off the bat. That makes sense, but it’s not exactly instructive.
Length of relationship with lead investor: Funny story here -- Loren Straub, who is our main partner and Board member from Bowery, was actually a cold inbound lead via Intercom of all places! She just popped open the chat window and wrote in, “Hi- I'm an investor, interested in chatting with the team at Outlaw.” From that point it was almost exactly a month to have a few more discussions and get to a signed term sheet, and then another month until full docs and closing. I had also previously crossed paths with Bowery’s Managing Partner Mike Brown 7-8 years ago from my first startup, so I think that helped in terms of credibility, and both Mike and Loren have been truly fantastic ever since the transaction. But really this was a new relationship with Bowery, and we’ve just really seen eye-to-eye from the very start about this space and how to break in.
Total amount raised to date: $2.5M -- we did a $500K “pre-seed” round in late 2017 with friends, family and former investors from Wanderfly (my first startup, acquired by TripAdvisor in 2012).
Macro trends: Yes, I see two concurrent trends. First, there is a ton of money flowing in the legal tech space right now. The DocuSign IPO last year, their acquisition of SpringCM a few months later, and Dropbox’s acquisition of HelloSign just a few weeks ago, to name a few. There’s no doubt that the space is super hot right now, and a rising tide lifts all boats.
Second -- and relatedly -- I think there’s a growing sense of the imminent death of the billable hour, at least when it comes to commercial law. No one knows how long it will take for norms to change, but law firms are eventually going to have to evolve how they do business.
Both of these trends work very much in Outlaw’s favor. On the money side, it means we’ve got new VCs approaching me on a daily basis and I think there may be pressure to raise a Series A sooner than we’d expected – a good problem to have.
As far as law firms go, Outlaw and other contract management platforms are a big part of that pressure to evolve. While we have a few smaller, forward thinking firms on board, most of our customers are in-house legal and operations teams, because there, incentives are perfectly aligned. General Counsels are perpetually overworked; they don’t want to be the bottleneck, but they also want to ensure that proper controls are present in their organizations’ contract processes. Anything that allows them to systematize these processes to move faster while simultaneously reducing risk is a huge win for them -- and that’s exactly what Outlaw does.