 Thank you. We'll each give you a little bit of a brief introduction We'll talk a little bit about the history of super metrics as a bootstrap company and then the decision to raise venture capital You heard pretty much what you needed to know about me. I'll just calibrate on two things So you understand the perspective I'm bringing in the last 12 years I've funded about 80 companies as a seed investor on now a series A and B investor for NEA NEA is about a 20 billion dollar fund one of the largest in the world About a thousand portfolio companies about 225 of which have gotten public the companies that I invested in I helped raise their series A and That process has really helped me to understand sort of what can and cannot help a company that's considering raising venture capital Quick introduction from you. Yes. So nine years ago I used to work at a gaming company here in Finland called Sulake At the marketing department and I was struggling with getting all this marketing data together I was spending a large part of my time actually copy-pasting numbers into Excel and then I saw this guy a Google guy saying that the first guy to automate that gets this t-shirt and I figured that I'm not a developer But that can't be too difficult. So I automated that process that they're at that company and it was Turned out really well at that company. So I figured there's gotta be a business opportunity With the same idea. So I left the company and I founded a business based on that idea and now we are one of the fastest growing startups here in Finland with a global client base of over 10,000 companies Excellent and Mikael and I met because an entrepreneur I had funded now works for him. It seems like an excellent place to work So just two quick questions to understand a little bit. Could people please tell me by raise of hands how many founders are in the room? Great. I'm also one and people that are investors Okay, dominantly Founders so secondly, how many people here believe they know the reality of venture economics? That's a very small number. So I'm gonna spend a moment on that because I think it's very important to understanding the decision You make when you consider fundraising The way venture capital works in its most simplest form is that investors LPs give us money to go out and invest in companies When we invest in those companies, we are compensated if we return more money than the investors gave us So any a currently the current fund is three point three billion dollars as soon as we've delivered back 3.3 billion dollars to our LPs The next dollar we get to take part in the profits of and that's important to understand because until you return that fund You're not making any material amount of personal wealth for yourself and your partners So when you look at venture capital and you think about whether you might be a fit for them understand that any business They invest in Has to have the opportunity to be material to that fund if you're at a smaller fund call it a $500 million fund. It's likely that a top partner will want to believe that any company They invest in could return the entire fund if it works out And if you think about that math a venture capitalist will own typically 20 to 30 percent of a company So if you have as an example a $500 million outcome, which is certainly a material outcome The venture capital firm would receive a hundred million dollars And if they have five hundred million dollars to return to their partners as a question whether or not that is material yet So the number one thing I'd encourage you to think about The size of fund and the goals they have have to be aligned with your own goals and desires as an entrepreneur And we'll we'll talk about that a bit later So you spent a bunch of time bootstrapping you then decided to raise around Why don't you sort of take us through the experience of bootstrapping and then talk a little bit about why you made the decision to raise Capital right so when I first started the company. I had I had no experience in Running a business or starting a business and I had actually no idea how to how to run a business I was not active in a startup circles So I actually thought that to run a business you need to make a profit to keep the business afloat and Only later did I learn that actually? Most startups don't operate that way But they constantly make a loss and then they try to find funding to cover that loss And that's also when I learned the term bootstrapping and that I was doing that And when I learned that that I figured that actually it's it's pretty good Good approach to do this bootstrapping because then you can focus fully on what's most important building a great product and Ensuring that you can monetize that product because you need to get the money to keep the company running You don't have external funding to rely on There are many startups. I think they are Spending a lot of time trying to secure this in investments and that is a distraction from the most important thing Which is building the great product? So you bootstrapped for how long before you decide to raise capital? originally since I started this as a site project in 2010 I Run this as a side project for three years and after that From 2013 to last year so four years as a real company I bootstrapped and last year then we raised that 3.5 million round from open ocean capital And when you raise that round and I'll also sort of along the way sort of maybe give you the inside Mind of how I would have thought about things at different stages because you know It gives her a perspective how venture might think what did the company look like when you went out to raise and sort of both How did that appeal and why did it convince you that that extra capital venture could bring was important? So right so I was Committed to this bootstrapping. I was not gonna raise money. I was sure I'm not gonna raise raise money But two years ago. I participated in the pitching competition here just to gain some visibility for the company to help in our recruitment Our marketing guy said that would be a good idea And after that pitching competition a lot of investors started contacting us and said that they would like to invest and You know I had meetings with them and some of them convinced me that there is value that they can add to us Like even though we have a profitable company that we didn't really need the investment for financial reasons There are other reasons to take an investment and they That they can help us grow the company much faster than than we could own our own At the time we had a Small team. I think when we started the discussions with the VCs we had just seven people in the team Quite an inexperienced team myself. I'm of course a first-time founder So I think we really needed some Strong advisors on the background to help us help us grow to the next level Yeah, just comment on a couple of things you said in terms of how on the venture capital side I Would think about the opportunity and also things that entrepreneurs might want to consider you know the most The strongest possible situation you can be in as a founder is to not have to raise But to be able to get advantage from doing so, you know the sort of most competitive rounds tend to be the ones where The venture capitalist is selling the value they can create and the entrepreneur has their choice and in a perfect world They don't need the money except to accelerate The reality of venture is that because you need these sort of outsized returns It's often easier to invest post-momentum, you know once the company is sort of off the ground and running towards towards the sky And so you tend to look for a couple things, you know venture loves velocity It loves speed of growth and it really dislikes friction So maybe just talk about it took you a little longer than some because you bootstrapped You know oftentimes people equate the longer it takes to reach a certain milestone The harder it becomes to raise capital What were sort of some of the key metrics revenue-wise or otherwise when you went out to raise? so at the time we were growing at around 100% year-on-year so healthy growth rate, but not super high But I think what made us really interesting to the VCs was that we also had a 60% profit margin So it was really profitable business and we already had a huge client base across the world with companies like uber and alibaba and Dyson and like really big companies that we had gotten without a sales team So just with inbound leads so clearly we had a very good product and with these big companies Being clients of us at a very low price point I think any investor can see that there is a lot of room to grow these clients into some something much higher So it was not just about the numbers, but I think The opportunity with the client base we already had and how clear it was that the product Has a big market So it's also something that's always fascinating that I've looked at a lot And I think entrepreneurs sort of see from the outside as they'll they'll see companies getting funded and they'll they'll either be surprised or considered obvious I've seen rounds get funded at all types of revenue it almost always though and has embedded in at a relatively aggressive growth rate you know the Growth of the company and sort of the exiting ARR is usually critically important Because if it's a particularly for a later-stage round you're raising an S and sort of a small series a You know when you go into sort of a series B It's sort of the model of fuel on the fire You know this is where you've figured out the market You know how you're going to sell it and that extra money when it gets applied is going to be sort of repeating what you've already Done there's different types of rounds There's if you think about this every round is about the next round the seed round that one raises and Speak up if you feel differently here. The seed round allows you to prove a thesis It doesn't allow you to build a business whether you're bootstrapping or raising seed capital You're proving that what you want to offer the world is valuable to the world and that they want to buy that When you prove that thesis adequately That's what's going to allow you to raise a series a and a series a is going to allow you to really start to build That business you take that thesis that was in the lab you take it into the real world and you start repeating it a Series B is now almost exclusively fuel on the fire It's working you grow the sales force and you just multiply the numbers out So what stage you are in as a company is very important to sort of the size and the purpose of the capital? But you're not just getting capital in a perfect world while I will never pretend that that the venture capitalist is as important As the entrepreneur I was an entrepreneur for 25 years I use I used to be quizzical about how anybody that was an entrepreneur could become a VC and I've learned that people that Weren't entrepreneurs can be very very good VCs. They can add an enormous sort of value But 99. Some percentage of the time the entrepreneurs doing all the work So the venture capitalist wants to show value beyond capital and they talked to you about that a lot Maybe talk a bit about what value beyond the capital has your venture firm brought to you And what has the capital allowed you to do either differently or in as an accelerant that's been material And whether that was a positive all in Yes, so there like I said, we had a rather inexperienced team when we raised the money And I think all the advice that open ocean has been able to give us has been really really helpful for us to grow the business And we have since raising these investment managed to grow the team Much more much faster pace and we've also gotten the revenue growth rates at a much much higher trajectory So there's the advice there's the help in recruitment. So they have helped us in a several key recruitments bringing our CTO for example to the team are really really important hire and Also, I think just raising the investment It gives you some credibility I think that you have managed to raise the investment so even if you have a very profitable company It's just having some like open ocean backing it up. I think that helps in both sales and recruitment and Especially here in Finland. I guess it's the same in Silicon Valley If you want to get some media visibility you kind of have to raise funding because you know if you if a startup makes a million in profit That's that's not interesting. But if you raise, you know, 200k investment, that's a big news So I think that's just how it works somehow. So when we raise the investment That was the first time we act the media actually noticed that we are we exist Yeah, there's I've and by the way, please feel free to send in questions This topic is somewhat broad and we're talking about the lens of one person's experience But you know, you could argue there's many different versions of that. So happy to address them for either of us. We've got two One of the things I've noticed pretty consistently We funded a company at NEA here in Europe called go euro and I was in Berlin before I came to this event And somebody came up to me and said I want you know The reason I took that job was because you funded the company not I personally but any a and he said that gave even though The company was doing quite well. We funded I think believe in the series B Seeing that they had brought in tier one venture capital gave them a new level of confidence So assumedly you can you said this a bit and maybe we can speak to it a bit more but raising institutional capital can give you another level of certainly media exposure and Credibility every place is different. You know my understanding is Finland has a slightly more conservative view of sort of why I get paid in Two years are you gonna be there for me? When I was running my startup that I took public in New York It was the same thing you had to recruit people that most of them were most of my engineers were Russian living in New York Outside of New York and they wanted to make sure they had a job long term Having that capital is a great Endorsement have you found it being material? I mean it I hear great things about you as a place to work But does it become easier to hire because of the funding? Yeah, definitely. So there's both the direct help they give it through their networks finding good people for us And then the indirect help we get through the media exposure and having that credibility of having having them as backers That's another important thing. I think venture firms at least the United States Have started to really focus a lot of additional resources into what are often called portfolio services So as an example at NEA we have multiple people that help with recruiting, you know Their job is to go out constantly. In fact, they're gone so much I almost never see them because they're constantly looking for top talent that they can introduce to our entrepreneurs I've got a PR team that helps in that way You know our entrepreneurs will sometimes call and ask to spend time with the legal team There's been a lot of movement towards trying to create more value one of the things I've found interesting is that You know an entrepreneur can spend six nine months sometimes 12 months getting to the right person in the right organization So one of the things I've spent a lot of time on that NEA does quite a bit of is to find the right people inside a large Organization so we can help you get to that person right away They may or may not buy your product But you get that access that saves you an enormous amount of time and the currency of being a venture capitalist is an interesting one Because you can get pretty interesting meetings. Have you found that the connections on to potential partners? Customers has been valuable from your VCs. Yes, definitely. So we have Got a good sales meetings through them To big media agencies advertising agencies that's been really helpful and also a bit partner companies such as Microsoft Facebook Google they have been a they have white networks and they can really help so when we When I decided that I'm gonna Go raise our investment. I I decided to go with a Finnish VC because they are close by and we can work really closely with them Because I mostly raised for the advice that they can give to us But I also wanted someone that has white networks outside Finland And I think open ocean was pretty perfect for that because they are very well networked in Both Europe and the US Okay, we've got half a dozen questions The first one is if you have a one and a half million dollar contract I assume that means the annual volume with a 50% in ARR and the rest in on our read you bootstrap or focus on Operations and raise your a-round. There's a bunch of little things. I'm gonna bake into this answer And I'll answer some very specifically. I'll throw you some as well NRE is a relatively dangerous thing for venture-backed startups in that there are very few exceptions of where Venture capitalists will fund what I would turn my body shop where in order for you to grow You have to just add headcount over and over and over again you know the optimal situation is when you see repeatable revenue very high margins and Not having to do NRE to get to it now in fairness often you have to do NRE early on But the quicker you can get to productizing the business the better if you are growing a consulting shop Wouldn't occur to me that's a venture viable business Palantir is probably the one exception I can think of and there's an exception to disprove every rule The second point thing I'd point out is this million and a half dollar Revenue run rate in this case it might be a single contract if it's a single contract you have absolute concentration risk I've had a company. I took out to help raise. I thought they were doing phenomenally well Their growth was great. I took it to a VC when I was a seed investor and he said it's all great They have two clients. I can't do that. I have to wait till they've broadened it So you know you have to get you Anybody can get one phenomenal contract could be your brother could be luck Showing that it's repeatable and showing you get a variety of types of customers is pretty important The other point I'll make is that it used to be if you go back sort of three or four years ago If you were in a at least in the United States in a SaaS business and you could get to about a million dollars of revenue Run rate in a year you'd have a lot of people pay attention and fund that series a today I would argue that number has gone up significantly Three is better five is better than that so the bar and again I'm talking about US venture capital that might be different here is getting higher and higher and higher There is no amount that's too much But the exit velocity is also important if you took three years to get to four million dollars in revenue That's very different than if you took 18 months All right, you get to get a question. Did you get the t-shirt and do you still have it? I Hope I still have the I'm not sure I may have thrown in a way excellent. It's a valuable souvenir I started a public company on a napkin and I just realized the other day I don't think I have that napkin which makes me sort of sad The company is having a critical castle issue VCs willing to help but ask for veto rights as they believe they know What's best will you accept the offer? That is a hard one So the company I took public never raised venture capital If I had raised venture capital, I would have been fired and our company would have gone bankrupt Instead I was able to take it private and it was a great outcome for myself and everybody else involved But only because I had control and was willing Not to do what they asked me to do my board my board were not professional venture capitalists or investors and therefore they were More challenging to work with professional investors are pretty straightforward. They have specific expertise from their background You know, you you want to think about where you're getting advice from are you getting it from somebody's experience? That's highly valuable. Are you getting it from their opinion? That's highly questionable. Are you getting it from some hearsay? That's dangerous to you But the point here on veto rights I've never seen a US venture around done at series A or beyond where you didn't have veto rights in terms of a sale of the company or a future fundraising and the reason for this and This is sort of super critical. I'm gonna tell one really quick story I met two women who had started a fascinating business that I liked a lot I didn't think it was venture scale and I suggested that they consider not raising venture capital about six months later I ran into them and they said they had actually gotten a term sheet for eight million dollars and What did I think my response was I think you should talk to the VC and find out what they believe success would be Because I thought that business would get bought and I told them this that they would probably have the opportunity to sell That business for twenty million dollars sometimes in the next two to three years because it was particularly interesting at that moment in time There are a lot of buyers They took the money eight million dollars and two years later I was working out with the guy that funded them and I asked how it had gone and he said it was a disaster It was a disaster because they had been offered twenty million dollars for the company They wanted to take it and he had absolutely no interest in doing that and his response to them was what do you think? I'm in this for and So he had two choices at that point He could fire the entrepreneur these were his words I could fire the entrepreneur replace them with somebody that could build me a bigger business or I could just let it go He chose to let it go in the following way. He said to the entrepreneur I will let you sell I will support you if you get the following we get paid first a hundred percent cash No holdbacks no escrow and no warrants or representations and how many people here have done M&A deals None of those things are normal The price that was bid went from 20 to 10 Eight went to the venture capitalist two went to the seed investors. The entrepreneurs made nothing and they got jobs What was success to those entrepreneurs was that 20 million dollar offer until they took that venture money? That entrepreneur Needed something different than the VC needed and they didn't make that clear in the beginning and that VC did have veto rights Which are quite standard So I think the question is less about or the answer is less about you let them have veto rights and more about Is your investor no matter what type of investor you have aligned with what you need to be there's something inside you that you need to be That's what you care for If you come to me and you say I want to be you know a multi-billion dollar public company And we spend the next seven to ten years working on that and one day you show up and say but instead I've changed my mind I want to sell for a hundred million dollars That's not gonna work out. Well, but we should both be very clear with each other in the beginning what that means So I think that's actually probably the most important thing. Anybody here should remember. We're down to 20 seconds So unless you differ with that and you want to say the world's different. I agree with that So thank you everybody for coming and feel free to find me I wear these plaid pants So it would be easy if you want to ask more or if you want to pitch me your business because that's what I'm here to hear about Thank you