Last Friday, Oribi completed its first investment round. I’m very (very very) pleased to update you that I’ve raised $5.4 million from an investor ‘dream team’: Haim Sadger from Sequoia Capital (the world’s leading venture capital fund, with whom I’ve already had the privilege of working with once), Rona Segev from TLV Partners and Zohar Gilon. I’m extremely grateful that this great team chose to believe in me and in the company’s product, and to take part in building the company.
It’s obviously exciting to start hiring and working on the company’s main product with more resources.
Each week, at least one more item is published in the press about a startup financing round, containing all the ‘usual’ details – how much money was raised, who the investors were, what does the company do, and who’s on the team. In this post, I chose to share the events behind the scenes – the investor presentation I used, why the product changed since the last time I wrote about it, what’s next, how I chose which investors to contact, why did I choose to work with several investors and how did the financing round go for me.
So, what are we developing? (now that we can tell)
A few months back, I talked about a product oriented at Facebook ads analytics. This has changed a lot since then, although in retrospect, I only went back to my roots. Advice I often give entrepreneurs making their first steps is that the most important thing is simply to start, rather than wait a year for the concept idea or the right partner; just start building a product, and so find the right direction. I’m glad that this advice was also helpful for me.
When I founded a new startup, it was clear to me that I wanted to address a field of B2B operations that still work in an outdated manner and create a simple product with unique technology which will completely change the way companies work. In the past, I mentioned being inspired by companies such as Zenpayroll, Zendesk, Stripe and Slack, which started out in an ostensibly saturated market, but managed to rapidly become billion-dollar market leaders by creating a simple product. The primary reason why they’ve been such a source of inspiration is that they’ve managed to make a solution accessible to the entire market, rather than only large, resource-rich companies. I think that the world of BI/analytics currently presents an amazing opportunity – think of the effort currently required to monitor basic data about product/website usage. There are currently dozens of successful, enterprise-oriented companies, with highly complex solutions requiring integrations and additions to the code. Simpler tools, such as MixPanel or Google Analytics require ongoing support from developers to add events and develop scenarios you would like to monitor. I’ve started working on Facebook analytics, rather than general analytics, because it was important for me to build a profitable company as quickly as possible, and I felt that the combination of a real need in this field and a major budget could make the company profitable fast. We launched a beta version in early February, and quickly reached a few hundred companies who used the product, and then several thousand. By working with customers, I came to understand that I’m capable of creating a tool that would change the way people work with data. I think I was also a bit scared to start big and the customers gave me the confidence to chase my major dream: a real industry game-changer. So, this is the product we’ve been developing:
- Our objective is to enable marketing and product managers to get all the important data without having to rely on programmers at all. Consider the possibilities of writing data into a DB or of tools such as MixPanel, but without requiring technical personnel at all.
- We are developing a technology that studies products and sites, in addition to a visual editor (yes, I understand that this doesn’t tell you too much. When the product is in a more advanced stage, I will say more about the technology). This technology will enable marketing and product personnel to independently set dashboards, track various product uses, build complex queries, get audience cross sections, analyze usage patterns and track the effect of content or design changes.
Once we have launched the product in the coming months, this will become much clearer.
An investor presentation
This is important – don’t take this presentation as an example of a good presentation. I managed to complete the funding round first and foremost because of my experience and the investors’ confidence in my ability to build a successful company. The presentation didn’t achieve this. On the other hand, I did ask several entrepreneur friends to share their fundraising presentation, which helped me to determine the order of presentation and the manner in which to present the problem. Note that I’ve actually shown this presentation to investors face to face, and if some slides aren’t very clear, it is only because I provided more details in person. In addition, this was also a very short presentation (about 10 slides) with more text which I could send via email. Here are few important notes:
- I believe that the most important part of a presentation is showcasing the product’s potential. It is easy to delve into solutions and technology, but it is considerably more important to clarify that there is a large market and a lucrative opportunity.
- I tried to remove all the redundant parts. For example, the reasons companies need access to data and analytics is obvious, and I saw no reason to belabor the point by telling people about this again.
- Before meeting with investors, I made a number of dry runs with other entrepreneurs and former investors, which was instrumental in making my message clearer and dropping unnecessary parts.
The entire presentation is attached. The only slides I’ve removed include the financial forecast and details about the technology. Although I usually focus extensively on design, in this presentation I chose to stick to a clean design, since I felt that an over-designed presentation would overshadow critical information, and that ‘beautifying’ the content was unnecessary.
What were my considerations in choosing investors?
I believe there to be three main types of investors. The first (which probably constitutes the smallest group) are added-value investors, the ones that help steer the company in the right direction and know how to push when things get a bit stuck. I think that their added value comes from their experience being involved with dozens of startups and their capability to provide proper guidance. I am not much of a believer in ‘opening doors’: this obviously helps, but also has constraints. The entrepreneurs themselves should open doors on a daily basis. Investors are instrumental in helping make inroads in the later stage of follow-on investments, acquisition or during crises, but not in gaining customers, hiring employees and routine operations.
The second group, which are probably the majority, are rather passive investors, which will not be too involved in the company. I also consider them worthy investors, since investors’ primary importance, in my opinion, lies in providing financial backing.
The third group consists of investors that could be detrimental to the company, from extremely dominant individuals who do not let the CEO make decisions alone, to investors who generate much work for the company and the CEO with various demands.
Another criterion that matters to me is working with nice people. I don’t know how much this will influence the company’s future, but working with investors who could become good friends was just as crucial for as me as hiring nice employees.
Haim and Rona bring much experience to the table but even before that, they made me feel that they believe in me and will have my back in any decision I make, even the less standard ones.
Why work with two funds?
The primary reason I chose to raise investments from two funds was the opportunity it provided to work with two investors I had the utmost respect for, and not wanting to miss either one. Haim and Rona are good friends and have made joint investments in two companies in the past, both resulting in great exits. If they didn’t have this prior relationship, I would have probably chosen one fund, with the aspiration being a simple and easily-manageable board of directors. Working with two funds also has another advantage: follow-on investments, which involve larger sums, where having two funds working with the company provides a significant advantage. In both startups I previously co-founded, our A round involved only one fund, which worked very well.
The emotional side of funding
This is a topic only rarely discussed. The only glimpses of a long funding process one gains is from optimistic articles in newspapers such as Calcalist, The Marker and Geektime, showing smiling employees and entrepreneurs. For most entrepreneurs, financing is the most emotionally difficult part of building a company. In my case, Oribi was the third company I’ve founded. The funding process was, relatively speaking, not that long (about a month and a half) and I was in contact with only few funds (five overall); however this was still not an easy process. Many investors are amazing people, but there are also enough of them who will shake your confidence and create highly unpleasant interactions. What kept me going during this process was my belief in the product and the confidence that, even if I fail to raise the target investment, I will still succeed in developing a good product. I kept reminding myself that raising funds is not the end but only the means to building a great product, and that there are many ways of reaching this objective.
What’s now?
I have many roles and missions as the CEO of a startup, but in the past year I’ve really only considered two things to be crucial, burning issues – building a great product and an amazing team. Building a technically complex product that would still have a simple interface, building something that just works, that suits many users and mainly an addictive product, which users would rush to open in the morning.
Recruiting a great team is the company’s heart. The people I hire now will shape the company’s product, technology and marketing, but mainly its spirit. I believe that the first dozen employees will define the way the company looks when the team grows to a hundred. When it comes to employees, I constantly try to think about both sides of the coin – how they will be good for the company and at the same time how the company will be good for them. Or, more accurately, how joining me rather than another successful startup, will help them better realize themselves.
I believe that the company’s culture will further develop in the coming months, but these will be the key principles within Oribi:
- Personal development – for me, entering the startup world was primarily an amazing journey of self-change. Even before career and money came into the picture, startups were where I could overcome low self-esteem problems, learn much in different fields, meet fascinating people, start giving talks and write. I want to provide other people with a similar experience. One of the most important aspects of Oribi will be personal development – help all employees to conquer their summits – building the right track that will enable people to give talks, learn programming if you have a less technical job, learn product and UX aspects if you are doing a technical job, study finance and more. Every person will of course learn what they are interested in.
- Sane working hours – a startup has to move quickly and make significant progress from quarter to quarter. This does not mean that you must be stressed out all the time and that any person leaving the office before 8 pm should get stared at. One of the principles I consider vital is to keep a calm working environment, while taking into account that my employees also have a life outside of the office.
- Transparency and sharing – I firmly believe in full transparency within the company, and in all employees being involved in the product. I do not know if this is feasible in bigger companies, but one of the nicest things about early startup stages is that you can share everything and hear what the people who know the company best think. I believe that there is no reason to hide anything in a startup – business, financial, company- and product-related decision. Even if mistakes or failures happen (and they will happen), there is no point in hiding them, this is an inseparable part of building a company. One of the main reasons many people choose to join startups in their early stages is to learn how to found their own startups later on. Many startups do not give employees access to this information. In Oribi, we believe it is important that everyone learn and participate in the process.
We are currently starting to hire employees. Right now, we are looking for programmers and an UI/UX designer. If you are interested in other positions (marketing, customer success, product and more), you are more than welcome to leave your details and we will contact you once a relevant job becomes available. See more details below.
