Productboard Co-Founder Hubert Palan Offers His Top VC Fundraising Advice

By Nathan Beckord

Typically an organization comes together with an concept that appears so apparent in hindsight (Oh, in fact—that is sensible!) that it’s nearly stunning to be taught its product hasn’t been the business commonplace for years. Product administration platform Productboard is a type of corporations.

After elevating greater than $260 million with a complete valuation of $1.725 billion, it’s clear that traders see Productboard’s worth. However that wasn’t all the time the case. Cofounder Hubert Palan tells me that early on, he made the error of pitching traders who simply didn’t “get it.”

He spent fairly a little bit of time attempting to steer VCs with no product background that there was a marketplace for a platform just like Jira or Salesforce designed particularly for product managers. Platforms like Jira are important to the duty administration strategy of growing apps and internet options, like coding, testing, and different points of engineering supply.

“However product administration will not be mission administration,” says Hubert. “It is about understanding who the shoppers are and the ache factors they’ve.”

Earlier than Productboard, there was no end-to-end platform for your complete product administration lifecycle. Product groups typically relied on a patchwork of spreadsheets and workarounds to include issues like buyer, design, and supervisor suggestions into their processes. A greater product administration system assures that startups can “de-risk the entire supply course of,” Hubert provides. “And find yourself constructing the precise issues … not waste years of our lives constructing stuff that no one wants.”

Relaxation assured, that’s not Productboard. Right here Hubert shares his high suggestions for elevating capital, whether or not or not you’re the subsequent startup unicorn.

How you can elevate capital on your startup

1. When elevating capital, know what you actually need

Productboard wasn’t an in a single day success. Hubert and his cofounder, Daniel Hejl, based the corporate in 2014, however didn’t debut the platform till TechCrunch’s Disrupt Startup Battlefield in September 2016.

And the street to unicorn standing is paved with fairly a couple of rounds of fundraising. Most founders I communicate to haven’t gotten fairly so far as a Sequence D—or raised $260 million. “It’s a massive quantity,” says Hubert. “However for me, absolutely the quantity is nearly irrelevant, as a result of it is like, What’s the alternative?”

The chance, in fact, is huge. The product administration house is broad and Productboard is shortly turning into important to corporations giant and small, particularly these with distributed groups. That’s why Silicon Valley was very as soon as Hubert and Daniel discovered VCs who understood Productboard’s worth: Dragoneer Funding Group and Tiger International led the Sequence D, whereas earlier rounds included funding from Bessemer Enterprise Companions, Sequoia Capital, Kleiner Perkins, Index Ventures, and Credo Ventures.

Hubert says that whether or not you’re elevating a Sequence A or D, the fundamental ideas of fundraising are the identical. You must ask your self questions on what you actually need: Principally money? An incredible board member with expertise in a selected market or a selected ability set? Somebody who may also help you entice the most effective expertise to construct out your crew?

“Optimize on your targets,” he says. “Clearly spell it out.”

By the point Hubert and Daniel raised the Sequence D final yr, Productboard wanted capital that will permit the corporate to scale. It had already grown to about 400 staff (there are 500+ at present) serving greater than 6,000 clients, together with family names like Disney and Volkswagen, massive startups like Zoom, legacy establishments like JPMorgan Chase and “many, many small clients.”

2. #IYKYK: Discover traders who perceive your worth

Earlier than Productboard grew to become the most popular tech startup in Silicon Valley (in addition to the Czech Republic, the place Hubert and Daniel constructed their preliminary engineering crew), it discovered a champion in Ilya Fushman, a former companion at Index Ventures and former head of product at Dropbox.

Ilya was one of many first VCs who, as a result of he shared a background as a product supervisor, “understood the ache level,” Hubert recollects. “I did not have to clarify to him what product administration was about. Zero time spent on that—it was far more about like, How are you going to resolve it? What proof factors do you’ve got?”

With Ilya’s assist, Index Ventures co-led Productboard’s $1.3 million 2016 seed spherical (with Credo Ventures and participation from Unfold Capital).

Lesson discovered? Do not waste time attempting to coach traders who don’t perceive the issue your startup solves. “There are individuals who spend money on the house who perceive the issue. Discover these individuals,” Hubert says. “You need to go the best route, the quickest route.”

That’s why it’s essential to analysis and determine your very best traders. Hubert took a “segmentation” method to this step, making a spreadsheet that listed the traits of every agency, its companions, its fame, and even its emblem. He famous whether or not a agency or VC had beforehand invested in an analogous house. However he cautions founders to watch out for anybody who might need invested in a competitor. Respected traders will shortly exclude themselves from making a deal that represents a battle of curiosity.

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3. Collect momentum amongst enterprise capital traders

When elevating later rounds, Hubert requested his investor, senior advisors and mentors to evaluation that spreadsheet with him. He requested them to rank these companies, so to talk, based mostly on how properly they knew them, whether or not they had partnered with them earlier than, and the way good of a match they had been for Productboard.

“Afterward, I had some inbound curiosity as a result of we had been identified already,” Hubert says. However earlier than he began getting approached, Hubert requested his community—professors on the College of California, Berkeley, the place he earned his MBA, and associates within the business—for introductions. He typically wouldn’t present any digital data previous to preliminary conversations with traders: “I might simply present up and speak to them about what we do, with none deck . . . simply paint the imaginative and prescient.” That allowed him to gauge curiosity and compatibility with out spending time on a proper pitch.

Every spherical grew to become simpler and simpler. After Kleiner Perkins led Productboard’s Sequence A funding in 2018, the startup grew to become a identified entity within the VC neighborhood. Sequoia and Bessemer agreed to share its Sequence B spherical after fundraising grew to become what Hubert tactfully calls a “very aggressive scenario.” Representatives from a crew of traders “confirmed up in our hallway and stated, ‘We’re not leaving till you signal our time period sheet.’ They actually did go away for the night time, however they had been there again once more at 6 a.m. the subsequent day.”

(Readers: In case you walked into the workplaces of a enterprise fund and instructed them you wouldn’t go away till you bought a time period sheet, you’d in all probability get arrested. However I suppose it is cute when VCs do it.)

4. Construct a dream crew—and keep away from the jerks

A startup is simply as sturdy as its crew, and Hubert emphasizes the significance of hiring nice individuals.

“Take time to again channel individuals and find out about who they’re,” he says. He recommends asking traders to introduce you to potential crew members along with fellow VCs. They may present an intro to somebody who has “been by means of a tough patch” that proved their mettle, and even individuals from an organization that went bankrupt—“investments that did not work out,” Hubert provides. “The very best traders will fortunately introduce you.”

They may even be a CEO who was fired by the investor, he notes.

“However was it for the precise causes? Was the investor affordable and empathetic in regards to the scenario? The job of the traders is to guard the investments and do the most effective factor for the corporate, which could be to fireplace the CEO or founder . . . However if you happen to’re being militant, unfriendly, an ignorant, no-empathy sort of individual . . . that tells you one thing,” he says.

“And I did discover individuals like that even amongst the highest companies, I did dig out tales and was like, ‘Properly, I actually do not need to work with that individual,” he provides.

Mainly, traders are individuals too, with interpersonal disagreements and opinions you would possibly disagree with. “Your capacity to type out these variations and opinions is essential,” says Hubert, who advises founders to decide on their companions properly—and work to nurture these relationships.

“Typically individuals elevate the cash after which they see the traders as soon as throughout the board conferences,” he says.

Hubert recommends as an alternative, “Get to a texting foundation. Contain them even in issues [even if] you do not actually need the enter . . . simply bringing them there with the intention to construct the connection. Particularly now on this loopy, ‘distributed’ world—how a lot time are you truly spending collectively? It’s essential engineer it. But it surely pays off. As a result of then when issues get robust, when you actually need deep recommendation . . . them and you’ll depend on them. It’s all a matter of belief.”

Article is predicated on an interview between Nathan Beckord and Hubert Palan on an episode of the How I Raised It podcast.

In regards to the Writer

Nathan Beckord is the CEO of Foundersuite.com, which makes software program for elevating capital. Foundersuite has helped entrepreneurs elevate over $9.7 billion in seed and enterprise capital since 2016.