Founders learnings on raising Venture Capital from Series Seed to Series B


Founders learnings on raising Venture Capital from Series Seed to Series B

Sharing our lessons learned the hard way

At Peak, we deeply care about sharing knowledge. As a Saas, Marketplace and Platform investors, we have experienced firsthand what it is like to learn your lessons the hard way. And while failure is inevitable – when building innovative companies – there are a series of mistakes that others have made so that you don’t have to.

Thus, we will host a series of Founder Learning sessions around a number of topics that will help you learn from our mistakes. We will put our founders, of which we have had the privilege of backing over the past years, on the spot to open up their books. We’ll talk about the good, the bad and the ugly. Hopefully, these stories will help you do an even better job at building your startup. Starting with a first session dedicated to “Raising capital from Series Seed to Series B”.

You can listen to the full episode here: Raising Capital from series Seed to Series B with Whale and Studocu

Or read through the key learnings and snippets down below

TL;DR 5 key learnings

  • 🤝 Start early in building your relationships with investors. Investors invest in lines not in dots.
  • ⚖️ You either raise funding, or you build your business. Divide your roles within your founding team. Prioritize your business first, but keep enough focus on closing the round. As Gary Vanbutsele CEO of Whale mentioned “Keep 70% of your time focusing on the business and keep 30% focus on the fundraising.
  • 💡Early-stage, it’s really about the team and the thesis (the problem, solution and the market you’re in). At a later stage, it’s more about the traction (revenue, growth, retention, unit economics) and showing that your market is large enough to build a Unicorn.
  • 🐥 Don’t be fooled by the “we look for experienced entrepreneurs”. You can be very successful in raising capital as a first-time founder. As long as you put in the work, build conviction around your thesis and show the right numbers.
  • 🔛 Give yourself a choice. Talk to multiple investors and VC’s, do your own due diligence (DD) and get multiple offers before making a decision.

Fundraising learnings: from Seed to Series B

In this very first episode, Thijs Dijkman (Early-stage investor at Peak) discusses the fundraising learnings of Gary Vanbutsele, (CEO of Whale) and Marnix Broer (Co-Founder of Studocu). Both founders raised venture capital successfully, and where Whale just closed their first-round Studocu has raised capital from Seed to the latest Series B round of $50M. In the first part of the conversation, Gary discussed his preparation to fundraise as well as his learnings raising a first (seed) round of funding for Whale.

Raising capital in the early stages of your business

Raising capital for the first time can be very really difficult. Your impression and pitch has to be perfect – as there are no substantial proof of your business yet. You have to build relations with VC’s which takes quite some time. And this whilst you’re trying to build your business from scratch. Founders often come to realize too late that fundraising can take a lot of time. That is why VC’s will often say that you either fundraise or you build your business. The bad news is: in the early stages, as a founder, you have to do both. So what can we learn from Gary?

How to prepare for raising capital from VC’s?

Thijs: “What did you do in order to prepare for raising capital?”

Gary: ”I think that our story is a bit atypical as we went from our first conversations to closing our seed round in 3 about months. I think that one of the benefits we experienced is that we had already had a lot of context, contacts with VCs and business angels and different partners, way before we were even thinking about raising money. So we already had that network built out there were touchpoints, over a course of more than I think, 12 or 14 months. And so when we were ready to start having serious conversations, it was not like we still needed to introduce ourselves, people were and companies like, full time, were already aware of what we were doing, they were already following us following our journey. And that saved us a lot of time. That actually helped us accelerate the entire process.”

Gary went on to explain that to him, having the right partners was extremely important. Feeling like he had the right partners and was having the right conversation. That is what truly helped Whale move forward and split his time between the operational stuff and getting the seed round close as efficiently as possible. He mentioned spending 30% of his time on fundraising for the seed rounds, while 70% was still spent on operational tasks. He went on to stress the importance of being involved in the day to day and not lose sight of the fact that fundraising isn’t a goal in itself, only a means to an end. The most important goal is to build a successful, fast-growing company.

How to choose your venture capital fund?

Thijs: “Once you’ve chosen the right partners, how did you do your investor due diligence?”

Gary: “So we talked with portfolio companies. We did obviously our own research, we talked to other VCs or business angels to ask what their experience was with the companies. There’s always some bad stuff coming out. There are always some small alarm bells and just be critical. Look at what matters for you. Overall everything was very positive obviously, when we looked at both these VCs, but look at the process that the angel and the VC is going through with you And do the same for them. There’s no reason that you shouldn’t be as critical as they are about getting them into your business. Because in the end, they aren’t going to own a part of your business.”

Always ask for the valuation that the VC or Angel has in mind, Don’t show your cards if you don’t need to.” – Gary Vanbutsele, CEO of Whale

Gary then explained that if you can show traction at an early stage, definitely do, but for Saas startups it’s oftentimes relatively small. He says “I think double digits, when it comes to MRR, is probably going to be looked at as less important than some of the other factors such as your teamwork, and potential of your product.” He believes that even though they had a great product, it was way more important to emphasize on the bigger problem they’re trying to solve, and why they are the right team to do so. Demonstrate why you have the capacity and the skill set to build a successful business in your market. Because although VC’s will look at where you are today, they are mostly interested in where you can be tomorrow. So focus on the future and on how you’re going to get there.

Thijs re-emphasized this by explaining that for Peak, in the early stages, it’s really about the team and their thesis. The product might still be at the MVP stage and the solution far from where you envision it to be, but, as long as you explain the relevance of your solution, and show why your team is the right one to make it happen, VC’s will get excited about your business. Ultimately your story and conviction are key, as VCs are most interested in your passion for the problem you’re trying to solve.

What are the differences between raising seed capital and raising your Series B?

In this second part of the conversation, Thijs discusses with Marnix Broer (Co-Founder of Studocu) the big differences between early-stage and later-stage startups. They will touch upon the complexities of scaling a fast-growing team, and dive into what has been different in Studocu’s fundraising experience between Seed to Series B.

Thijs: “What are your key learnings in raising capital from VC?”

Marnix: “Every raise was completely different. For any stage, you’re raising you have to be prepared for different questions and different deliverables. In the seed round, it’s a lot about the combination of the story and the team plus some of the results you’ve booked. In the later stage, it’s becoming more and more professional. There it’s much more about the facts, your results, growth rates, acquisition costs, margins, and the potential of the market. Where I thought the seed round took quite some time, the latest round was by far the most time-consuming one.”

How to raise capital as a first-time entrepreneur?

Thijs: “What I like about your story is a lot of VC’s say we like experienced founders and you need a warm introduction. But you’ve proved both statements: Can you tell us how you convinced your investors?”

Marnix: We didn’t like these network events and indeed we didn’t have any experience in running the business. So we had to bluff ourselves through those stages. At some point, we realized that we needed some money, or at least we thought it would be helpful for the growth of the business. Therefore we decided to just start cold emailing investors. And it worked quite well. In the end, there are not too many investors in the Amsterdam region. So it was kind of easy to find, find the “right” VCs to reach out to, send them an email, send them a short pitch, and then hope you get invited. Yeah, that worked out for us.”

“At an early stage, I would say the biggest problem is that you haven’t proven yourself enough.” – Marnix Broer, Co-Founder of Studocu

Marnix: “And finally to add, I think what also helped is that we already proved our product-market fit. We had quite some data about how our model worked at one university and therefore could provide a very solid case on how to grow”

When to raise your next round of funding?

Thijs: “You’ve raised some capital in 2019, and then you had quite some money in the bank. The Business was growing well, you even reached profitability, so what was your main consideration to go and raise the next round of funding?”

Manix: “The round with Partech, came a little bit out of the blue as we didn’t need it. However, the more and more you grow, then you are considered as one of the, let’s say, “leaders” in that space. And then you also see a lot more of the competition, and you start deep diving into them. Sometimes you see them raise, or you hear stories about how much they are making. And then you feel like, wait, we perhaps came to a point where things are going to change dramatically.

It’s a bit like if you are around the poker table. After a few good hands, yes, you’ve definitely increased your chipset. But if you then look at your opponent on the other side of the table, and suddenly you see a mountain full of chips, you feel like, okay, this guy can “all in” me all the time. And that is becoming too risky. So in that case it’s definitely smart to be building that war chest.

So we thought, why not raise funding now? And then we’re actually able to go much faster than we would if we would only re-investing with the profits we’re making. So it’s both speeding up, but also showing that we’re one of the “big” guys at the table. And well, and let’s start playing.”

Should you hire an external advisor for raising capital?

Thijs: “Most VCs would advise founders to raise money themselves as they want to see the founders being able to raise capital (especially in the early stages). How did that perspective change for you as Studocu grew? Why attract a corporate finance advisor for your Series B?”

Marnix: “So once your competition is a bit further, and you want to attract senior talent in your management team, for example, most likely you will hire a headhunter to find this talent for you. Because at that level, it’s really hard to find and very time-consuming as well. So you happily pay for it.”

Marnix went on to explain that at a certain stage there are certain skills and expertise that you don’t have in-house and that simply would not be cost-effective to have. At that point, you are happy to invest some money to hire highly skilled individuals who know their craft. These people come with a large network and will make you save some precious time and money while raising a bigger round.

Finally, Thijs added some contrast to the traditional VC perspective: Although some introductions and support might be helpful the real conversation is between founders and investors. In the end, they will be the most important factor driving the company. Whereas at the later stage, given the time-consuming process it might be helpful to hire experts (e.g. financial advisors) who can manage the process for you to keep all parties involved.


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