StrictlyVC: August 18, 2017

Hi, happy Friday, all! We’re publishing a little earlier today, as it’s a morning of planes, trains and automobiles for us.

Much thanks again to Semil Shah for offering to help here and there with StrictlyVC while we’ve been catching up with family and friends on the East Coast and Midwest. For today’s edition, he talks with Zach Supalla, the founder and CEO of Particle, a self-described “prototype-to-production platform for developing an Internet of Things product,” about what Supalla learned while raising the company’s Series A round. Hope you enjoy it.:)

Top News in the A.M.

Travis Kalanick has hit back at Benchmark in a court filing. You can read it here.

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How I Raised It: Particle’s Zach Supalla on Landing a Series A

By Semil Shah

Zach Supalla is CEO and co-founder of Particle, a venture-backed start-up that’s making it easier to build internet-connected hardware. The company has so far raised roughly $35 million over six rounds, including from Spark Capital, O’Reilly AlphaTech Ventures, Qualcomm Ventures, Rincon Venture Partners, and Root Ventures. We talked with him recently about how he got the ball rolling.

As a founder, how do you define what a Series A means?

I would define a Series A as the first raise where you’re raising off of traction, not just a concept or vision. It can be tough to define seed versus Series A versus Series B financially, because a large seed round can be larger than a small Series A. But the way I see it, a founder typically needs to raise anywhere from a few hundred grand to a couple million dollars to get their product to market, at which point they can start collecting data about customer interest, and that’s the point at which they’re raising a Series A.

How many months did it take to raise the A, and how many meetings did it take?

It took me about six months to raise our Series A. I met with roughly fifty funds. Our Series A ended up being a bit complex; we brought in a total of $10 million, but it was a mix of two smaller equity rounds — $4 million plus $3 million plus another $3 million in venture debt. We were originally trying to raise between $10 million and $15 million in equity.

Looking back now, what were the biggest mistakes you made in raising  Series A and why? What are the most important lessons you learned in that process?

My pitch deck for the Series A felt like a seed deck – it was more focused on vision and less on traction and metrics. It took me a while to figure out what was most compelling to investors at this stage, especially because it can be challenging to extract real honest feedback from investors, so I had already burned half of my potential investors before I refactored the deck to make it more metrics-based.

I was also pretty cagey about sharing our financial model, based on some feedback I had gotten from other founders. The concept was that every Series A fund will put an associate on the deal who will be responsible for reviewing the financial model and poking holes in it. The less information you give them, the fewer holes they will be able to poke, so don’t share unless necessary.

The problem with that strategy is it slowed the process down a lot and created a perception of a lack of momentum. VC partners are influenced by their associates, but honestly, they’re more influenced by the social pressure around a raise that feels “hot,” so it’s better to optimize for speed than around managing the associate.

For our Series B raise, I was very aggressive with our data room; I filled it with a ton of information and data and gave it to investors before people even asked. It sped up the process significantly, and many investors told me that they really appreciated our transparency.

How about one last piece of advice for aspiring-seed-stage CEOs who are out there trying to raise a Series A round?

Remember you’re not in R&D anymore; you’re building a business. It should feel that way. You should be tracking metrics that are key to your business, and they should be improving month-over-month or quarter-over-quarter. If those things aren’t true, you’re not ready. Get your business in a good position so that you can raise from a position of strength and get good terms.

New Fundings

Boatsetter, a four-year-old, Miami, Fl.-based boat rental community connecting boat owners and capitals with prospective clients (it’s an Airbnb for boats), has added $4.75 million in funding to its December 2016 Series A round. The company has now raised $17.75 million altogether, including from Great Oaks Venture CapitalNordic Eye Venture CapitalAMP Brickyard Ventures and numerous others. Notably, it’s is using some of its new funding to acquire a competitor, Boatbound, for undisclosed terms. TechCrunch has more here.

CareAcademy, a four-year-old, Boston-based startup that provides specialized online training for senior home care professionals, has raised $1.675 million in seed funding, including from Rethink EducationLumina Foundation, and Techstars Venture Capital FundMore here.

FilmTrack, a 10-year-old, Studio City, Ca.-based end-to-end rights management platform that helps media and entertainment companies manage and monetize their intellectual property, has raised $5.5 million in Series C Funding from Insight Venture Partners. The company has now raised $40 million altogether. CityBizList has more here.

Huochebang, a six-year-old, China-based truck logistics start-up that helps drivers find commodities to transport, facilitates truck sales, as well as provides other services to China’s trucking industry, has raised $56 million in “Series B-3” funding led by All-Stars Investment. The company has now raised $327 million, including a $156 million round involving Baidu that closed just three months ago. China Money Network has more here.

Immersv, a two-year-old, Bay Area-based mobile 360 VR ad network, has raised $10.5 million Series A led by Rogers Venture Partners, with participation from Foundation CapitalThe Venture Reality FundInitial CapitalEast VenturesHTC ViveMCJ Co., GREEi-mobileMetaps, and Gigi Levy. TechCrunch has more here.

LiftIgniter, a four-year-old, San Francisco-based startup that uses data science to help publishers and retailers optimize their websites and mobile apps in real-time, is raising $6.4 million in a round led by Storm Ventures. TechCrunch has more here.

Outdoor Voices, a five-year-old, New York-based recreational apparel — or “athleisure wear” — company, is raising $9 million in new funding and has collected at least $6.5 million toward that end, shows a new SEC filing. Outdoor Voices had raised $13 million in Series B funding just last year. Its investors include General Catalyst PartnersForerunner VenturesCollaborative Fund, and 14WMore here.

ThoughtSpot, a five-year-old, Palo Alto, Ca.-based startup whose business intelligence-powered tool, dubbed SpotIQ, suggests content to people based on past searches and likes, has raised $60 million in Series C funding led by Lightspeed Venture PartnersCapital One Growth Ventures also joined the round, along with earlier investors General Catalyst PartnersGeodesic Capital and Khosla Ventures. The company has now raised $160 million altogether. The WSJ has more here.

Unity Biotechnology, a year-old, Brisbane, Ca.-based biotechnology company that’s aiming to create therapeutics that prevent, halt, or reverse numerous diseases of aging, has raised an additional $35 million in Series B financing that brings the round — previously closed roughly a year go  — to $151 million. Its new Series B investors include INVUS OpportunitiesThree Lakes PartnersCycad GroupCOM Investments, and Pivotal Alpha Limited. They joined the company’s earlier Series B investors, including ARCH Venture PartnersBaillie GiffordFidelity Management and Research CompanyPartner Fund Management, and VenrockMore here.

New Funds

Gobi Partners, a China-based venture capital firm, has held a first close of its Southeast Asia-focused fund with $50 million in capital commitments, including from Malaysia Venture Capital Management, the Korean home shopping company GS Shop, and the Indonesian investment firm CKM. China Money Network has more here.

Leap Global Partners, a Palo Alto, Ca.-based cross-border venture capital firm that  looks to fund technologies created by entrepreneurs in Mexico and the U.S., has held a first close for its debut fund with $15 million in capital commitments. The firm, founded Goldman Sachs alums Roman Leal and Pablo Perez, invests in seed and Series A rounds and has backed four startups already, including Insikt, a fintech lending-as-a-service startup; and Listo, a consumer-facing company that offers financial services to underserved Latinos in the US. More here.

People

Mic.com, the millennial news site, laid off 25 staffers yesterday in what is part of a larger pivot to video that it will begin later this month.

Facebook COO Sheryl Sandberg just transferred 590,000 shares of Facebook stock, worth just under $100 million, to a special fund she uses for charitable donations, according to a document filed yesterday with the SEC.

Three and a half years after his return, Chris Wanstrath says he will step down as CEO of the popular developer platform GitHub after leading the search to find his own replacement. Wanstrath reportedly made the announcement as the company passes $200 million in revenue.

Jobs

Aflac, the Fortune 500 insurance company known for its duck mascot, is hiring a venture capital associate. The right candidate can work from Charlotte, N.C.; Atlanta; or the Bay Area.

Essential Reads

Can Silicon Valley disrupt its neo-Nazi problem? (Relatedly, check out this illuminating report.)

Scientists at Johns Hopkins say they’ve developed a test that spots tiny amounts of cancer-specific DNA in blood and have used it to accurately identify more than half of 138 people with relatively early-stage colorectal, breast, lung and ovarian cancers. More here.

The Essential phone is now available.

Detours

A revealing look at CEO travel habits.

How to get through a workday on no sleep.

Retail Therapy

skateboard by Hermès (priced around where you would guess).

Rare Apple shoes, yellowing from wear and age, and on track to sell for more than than $10,000 to one very hard-core Apple fan.


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