By Nathan Beckord
Sometimes an organization comes together with an concept that seems so obvious in hindsight (Oh, in fact—that is smart!) that it’s almost surprising to learn its product hasn’t been the industry standard for years. Product management platform Productboard is considered one of those corporations.
After raising greater than $260 million with a complete valuation of $1.725 billion, it’s clear that investors see Productboard’s value. But that wasn’t at all times the case. Cofounder Hubert Palan tells me that early on, he made the error of pitching investors who just didn’t “get it.”
He spent quite a little bit of time trying to influence VCs with no product background that there was a marketplace for a platform just like Jira or Salesforce designed specifically for product managers. Platforms like Jira are essential to the duty management technique of developing apps and web features, like coding, testing, and other facets of engineering delivery.
“But product management isn’t project management,” says Hubert. “It is about understanding who the shoppers are and the pain points they’ve.”
Before Productboard, there was no end-to-end platform for all the product management lifecycle. Product teams often relied on a patchwork of spreadsheets and workarounds to include things like customer, design, and manager feedback into their processes. A greater product management system assures that startups can “de-risk the entire delivery process,” Hubert adds. “And find yourself constructing the proper things … not waste years of our lives constructing stuff that no one needs.”
Rest assured, that’s not Productboard. Here Hubert shares his top suggestions for raising capital, whether or not you’re the following startup unicorn.
Find out how to raise capital to your startup
1. When raising capital, know what you really want
Productboard wasn’t an overnight success. Hubert and his cofounder, Daniel Hejl, founded the corporate in 2014, but didn’t debut the platform until TechCrunch’s Disrupt Startup Battlefield in September 2016.
And the road to unicorn status is paved with quite just a few rounds of fundraising. Most founders I speak to haven’t gotten quite so far as a Series D—or raised $260 million. “It’s a giant number,” says Hubert. “But for me, absolutely the number is nearly irrelevant, since it’s like, What’s the chance?”
The chance, in fact, is huge. The product management space is broad and Productboard is quickly becoming essential to corporations large and small, especially those with distributed teams. That’s why Silicon Valley was very interested once Hubert and Daniel found VCs who understood Productboard’s value: Dragoneer Investment Group and Tiger Global led the Series D, while previous rounds included funding from Bessemer Enterprise Partners, Sequoia Capital, Kleiner Perkins, Index Ventures, and Credo Ventures.
Hubert says that whether you’re raising a Series A or D, the essential concepts of fundraising are the identical. You must ask yourself questions on what you really want: Mostly money? An incredible board member with experience in a selected market or a selected skill set? Someone who can enable you to attract the very best talent to construct out your team?
“Optimize to your goals,” he says. “Clearly spell it out.”
By the point Hubert and Daniel raised the Series D last 12 months, Productboard needed capital that might allow the corporate to scale. It had already grown to about 400 employees (there are 500+ today) serving greater than 6,000 customers, including household names like Disney and Volkswagen, big startups like Zoom, legacy institutions like JPMorgan Chase and “many, many small customers.”
2. #IYKYK: Find investors who understand your value
Before Productboard became the most popular tech startup in Silicon Valley (in addition to the Czech Republic, where Hubert and Daniel built their initial engineering team), it found a champion in Ilya Fushman, a former partner at Index Ventures and former head of product at Dropbox.
Ilya was considered one of the primary VCs who, because he shared a background as a product manager, “understood the pain point,” Hubert recalls. “I did not have to elucidate to him what product management was about. Zero time spent on that—it was rather more about like, How are you going to unravel it? What proof points do you might have?”
With Ilya’s support, Index Ventures co-led Productboard’s $1.3 million 2016 seed round (with Credo Ventures and participation from Spread Capital).
Lesson learned? Don’t waste time trying to coach investors who don’t understand the issue your startup solves. “There are individuals who spend money on the space who understand the issue. Find those people,” Hubert says. “You ought to go the simplest route, the fastest route.”
That’s why it’s critical to research and discover your ideal investors. Hubert took a “segmentation” approach to this step, making a spreadsheet that listed the characteristics of every firm, its partners, its popularity, and even its logo. He noted whether a firm or VC had previously invested in the same space. But he cautions founders to watch out for anyone who might need invested in a competitor. Reputable investors will quickly exclude themselves from making a deal that represents a conflict of interest.
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3. Gather momentum amongst enterprise capital investors
When raising later rounds, Hubert asked his investor, senior advisors and mentors to review that spreadsheet with him. He asked them to rank those firms, so to talk, based on how well they knew them, whether or not they had partnered with them before, and the way good of a fit they were for Productboard.
“In a while, I had some inbound interest because we were known already,” Hubert says. But before he began getting approached, Hubert asked his network—professors on the University of California, Berkeley, where he earned his MBA, and friends within the industry—for introductions. He often wouldn’t provide any digital information prior to initial conversations with investors: “I’d just show up and check with them about what we do, with none deck . . . just paint the vision.” That allowed him to gauge interest and compatibility without spending time on a proper pitch.
Each round became easier and easier. After Kleiner Perkins led Productboard’s Series A investment in 2018, the startup became a known entity within the VC community. Sequoia and Bessemer agreed to share its Series B round after fundraising became what Hubert tactfully calls a “very competitive situation.” Representatives from a team of interested investors “showed up in our hallway and said, ‘We’re not leaving until you sign our term sheet.’ They literally did leave for the night, but they were there back again at 6 a.m. the following day.”
(Readers: In case you walked into the offices of a enterprise fund and told them you wouldn’t leave until you bought a term sheet, you’d probably get arrested. But I suppose it’s cute when VCs do it.)
4. Construct a dream team—and keep away from the jerks
A startup is barely as strong as its team, and Hubert emphasizes the importance of hiring great people.
“Take time to back channel people and study who they’re,” he says. He recommends asking investors to introduce you to potential team members along with fellow VCs. They may provide an intro to someone who has “been through a rough patch” that proved their mettle, and even people from an organization that went bankrupt—“investments that did not work out,” Hubert adds. “The very best investors will happily introduce you.”
They may even be a CEO who was fired by the investor, he notes.
“But was it for the proper reasons? Was the investor reasonable and empathetic in regards to the situation? The job of the investors is to guard the investments and do the very best thing for the corporate, which is perhaps to fireplace the CEO or founder . . . But should you’re being militant, unfriendly, an ignorant, no-empathy sort of person . . . that tells you something,” he says.
“And I did find people like that even amongst the highest firms, I did dig out stories and was like, ‘Well, I actually don’t desire to work with that person,” he adds.
Principally, investors are people too, with interpersonal disagreements and opinions you would possibly disagree with. “Your ability to sort out these differences and opinions is critical,” says Hubert, who advises founders to decide on their partners properly—and work to nurture those relationships.
“Sometimes people raise the cash after which they see the investors once throughout the board meetings,” he says.
Hubert recommends as an alternative, “Get to a texting basis. Involve them even in things [even if] you do not actually need the input . . . just bringing them there with the intention to construct the connection. Especially now on this crazy, ‘distributed’ world—how much time are you truly spending together? It’s worthwhile to engineer it. Nevertheless it pays off. Because then when things get tough, when you really want deep advice . . . you recognize them and you may depend on them. It’s all a matter of trust.”
Article is predicated on an interview between Nathan Beckord and Hubert Palan on an episode of the How I Raised It podcast.
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