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How to raise a $112M Series B after a record Series A, starting from SEE

November 24, 2021
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Only seven months after closing its $20m Series A round, this week Payhawk, an Eleven fintech portfolio company, announced its $112m Series B round, led by the San Francisco-based investor Greenoaks who previously invested in high-growth companies like Gorillas, Robinhood, Kavak and Brex.

The new round values the payments and expenses solution Payhawk at $570m and will allow the company to accelerate its product roadmap, continue its expansion by opening offices in the U.S., the Netherlands, Australia and Singapore and grow the marketing and sales team in the key markets of the UK, Germany, Spain and Benelux.

Eleven has been on the Payhawk journey since 2018 as the first institutional investor and we’ve known Hristo (Payhawk’s CEO and Co-founder) from the Telerik years where he and our partner Vassil Terziev, worked together.

In our continuous efforts to systemize and share company-building knowledge among founders, we sat down for a conversation with Hristo to understand and summarize some of his top tips on the process of fundraising.

Here is some of his advice which stands out.

Have the right mindset

“Start fundraising with the mindset that it is okay not to finish the fundraising process.” 

Founders have to enter the conversation with investors with the mindset that if they succeed – that’s great, if not – move on. Hristo further elaborates that if you are fundraising with the attitude of doing this because you need the money and it’s a life or death situation, investors fairly quickly sense the desperation. 

When closing their Series A round back in the beginning of 2021, Payhawk did have the option not to fundraise for another 8-9 months – whether they will receive an investment or not wasn’t so crucial at the moment when they began their fundraising. This helps you to make the right decisions and not feel pressed.

Your pitch deck - emphasize on the right slides

“Your pitch deck should put the focus on your vision.”

Hristo elaborates that founders need to be confident about where they want to take the company and support this vision by data and a clear plan on how they are going to achieve it. If the founder is not certain about the vision, the execution will be weak and the business plan will not make sense. The lack of clarity on this aspect is very quickly sensed by the VCs.

According to Hristo, there are four parts of your pitch deck that might make or break the deal with investors:

    1. The team section;

    2. The product demo (in the case of Payhawk they were making it live);

    3. Unit economics – showing that you have the right partners in place and the right set up, in which you can actually make money;

    4. Pricing model and pricing strategy.

And because we know you are now curious how Payhawk’s most recent pitch deck looked like, you can check it out below.

Payhawk’s Pitch Deck (PDF) 

Your data room

Besides the pitch deck, to better support their points, Payhawk’s team also put together a data room in Google Drive, which included:

  • A detailed business plan (in terms of financials)
  • A forecast of how they see the business evolving in the next 3 years;
  • A basic cohort analysis, and a churn analysis to show why customers were leaving (if they were leaving).

According to Hristo, trying to be too clever and cautious on how you share your deck is not useful. Anything can be written on a 10-page PDF but the question is who can execute that. You should not even be concerned to talk to your competitors and tell them their strategy because it is all about the execution. It is all about putting together the right formula.

“If a pre-seed round is all about the founding team, a seed round is about the product and the team, and a Series A is all about the team and the numbers.”
Hristo Borisov
Co-founder and CEO

Organize your process and prioritize

Hristo shares that he has a Trello board where he keeps all the VCs he has contacted from day 1 – he has talked to over 80 VCs in the last 2 and a half years since Payhawk’s seed round. They are ordered by priority based on how well the conversation went, how well they understand the space, how good of a track record they have, summary of references and referrals of people that have worked with those VCs.

Approaching investors

On the topic of approaching investors Hristo shares that all of the meaningful conversations he has had with VCs were through an introduction from another VC, an angel investor, a founder in their portfolio or just a person close to the VC. So, his advice to founders is to try and find somebody who can make a warm introduction for you.

To confirm the other side of the story while looking back from our perspective – most of the companies that we as Eleven have invested in so far came to us via warm connections and recommendations. Either through some of our existing founders, our network of friends, mentors, partners and other VCs. The fastest way of getting on the VC’s rader is through warm intros.

Is the VC “hunting” or “fishing”?

When it comes to the actual conversations with investors, Hristo advises that you should be really good at understanding when a VC is “hunting” or “fishing”. Hunting means they are looking for a deal, while fishing means they are doing market research or market intelligence for another competitor, most likely a portfolio company of theirs.

“This is quite easily understood by the questions they are asking – if the investors are hunting they are going to be a lot more relaxed and open, while if they are fishing they are going to be uncomfortable, especially if the founders are asking them too many questions.”, says Hristo.

Naturally, you have to be cautious when you sense a “fishing” attitude and carefully pick and choose the amount and type of information which you share.

Konstantin Djengozov, CFO (left), Hristo Borisov, CEO (center), Boyko Karadzhov, CTO (right).

Batch your meetings and choose wisely

When fundraising you should also think about how much time you spend talking to VCs and is it worth it having for instance 9 meetings with the same investor. Hristo had a specific “batching” strategy with Payhawk’s seed round in 2020 when he had to talk to numerous VCs. He pushed all meetings with investors in one specific week, from Monday morning to Friday night. He organized these “VC hours” one week after a board meeting because he had already invested time with his team in preparation for the board, making it easier to reuse some of the materials during the VC week. 

This gives him confidence and makes him concentrate on the fundraising and all the conversations he has.

“Try to be confident on what you are going to do with the money and be prepared that there are going to be many “no’s” and this is normal. You should expect 1 out of 20 VCs to be positive and not to be discouraged by the tens or hundreds of rejections.”
Hristo Borisov
Co-founder and CEO

Build a relationship by being a specialist

According to Hristo, there is one thing, which really helps to build a relationship with a VC. And this one thing is being a specialist in a specific area (be it building products, building teams, being a top salesperson) or having a good understanding of the market. This is because the investor might ask for an opinion or advice – they might be in the process of looking at a deal and ask about your take on it, or about your view on a certain industry they are not aware of. This is why having a good expertise on something is always added value for them. 

Building on what Hristo has in mind here, whenever we are looking at a company to invest in, part of our due diligence process is to talk to a mix of other founders about their take on the industry, market, product and team. The feedback we get from them is a key pillar of our investment decision making.

Be aware of the VC back channel

Founders also need to be strategic about their conversations with investors. One thing which they can take advantage of is how much VCs talk on the back channel. If a startup has one or two really good conversations with VCs, five more know about it right away. There is a lot of information being shared between venture capital funds, especially if they are specialized in a certain area (like fintech). This is also why founders have to be really respectful to VCs. Even if there is a disagreement on something, you should never get too emotional and affected. This could quickly damage your reputation and decrease your VC pipeline very quickly.

Those were the 9 tips from Payhawk’s CEO and Co-founder Hristo Borisov.

To conclude the article we will finish up with a summary of Hristo’s advice to other founders, which he gave us while wrapping up our conversation on which we based this blog post.

“Set a big valuation, but do justify it. Don’t be concerned if you get rejected many times. Keep your fundraising strategy simple – focus on the team, vision, and execution.”

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