Three secrets to how Sydney start-up Canva raised $3 million
For our start-up Canva, raising funds was like being a hitchhiker on the side of the road; knowing where we wanted to go and being prepared to jump in any vehicle that would take us in the right direction.
It meant learning to kite surf in the freezing cold San Francisco Bay area, preparing a speech for a roomful of the most influential people we had ever met in just a few hours, and sleeping on the floor of my brother’s San Francisco apartment for three months while I networked with every investor and tech person I could find.
Every founder will have their own journey and story to tell, but one thing is for sure – you need to be ready for the adventure and be prepared to seize every opportunity. Here are my top three tips.
1. Build momentum
As a start-up founder, your job is to be the continuous advocate, visionary and, ultimately, company storyteller.
You need to capture the excitement or energy surrounding what you’re doing and amplify it. Investors don’t want to miss out on something that could be big.
Lots of people will say they like your idea but far fewer will sign on the dotted line.
Your job is to convince investors there is a huge problem that needs to be fixed, and that you have the best solution with a team to deliver it.
For us, the MaiTai kiteboarding and entrepreneur conference provided a wonderful opportunity to introduce our idea to a roomful of influential investors, media, and entrepreneurs.
You need to generate buzz about what you’re doing so that investors want to get in on the opportunity. Within a period of three months, we went from an unfunded and unknown start-up to one of the hottest start-ups in Silicon Valley, trending number one on AngelList.
The hardest part was closing the deal. My co-founder, Cliff Obrecht, and I spent three whole months with phones in one hand and a giant spreadsheet in front of us.
We kept track of every investor we met, whether they were interested, what they liked about us and what their hesitations were.
When we did get an investor on-board, we got them to help generate further momentum for us. One of the best things we did was ask all our investors to post a recommendation for Canva on AngelList.
It created a sense of social proof for other potential investors, and helped us create enough buzz to become the number one trending start-up in July 2012.
We pulled some really long days during this time and were absolutely unrelenting in our efforts.
2. Continuously revise your pitch
Our pitch deck (the presentation given to potential investors) constantly evolved. Following each pitch, we took note of every question an investor asked and worked out solid answers.
Sometimes it was just a matter of articulating the strategy we had already developed, other times it required days of brainstorming.
Each time we pitched we were able to communicate our vision more clearly and the tough questions started to dwindle.
When we first started trying to raise money our pitch deck was a five page document, and took 10 minutes to present.
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At the end of each pitch we were bombarded with questions from investors, and for many of them we didn’t have compelling answers.
However, each time we got a tough question from an investor we would incorporate the question back into our pitch deck.
In fact, we ended up revising our pitch deck more than 100 times. We went from a five page pitch deck which took 10 minutes to present, to a 25 page pitch which took 40 minutes.
By the end, investors had very few questions as we had given solid answers to all their questions before we even got to the end of our deck.
In the early days, our pitch deck was more of a utility, following a standard pitch structure: the vision, the problem, our solution, the size of our market, the strength of our team and so on.
However, when we described our product and vision to people without our pitch deck, we were able to successfully communicate our passion, the innovation of our product and our team’s excitement and competence.
Whenever we were pitching an investor with our actual slide deck, it felt like we were selling a generic product. We lost the excitement and communicated our product vision poorly.
After a while we were able to capture the vision, the excitement and the problems into a cohesive story and were able to capture this story in our pitch deck.
A mentor told us it was important to capture the emotion of the story; not just what you say, but also how you say it. Inevitably, investors all want to know the same things.
They’ll ask: ‘How big is the opportunity? How talented is the team? Why are you the right people to solve this problem?’
Making sure we satisfied their questions was so important, and this is something you can only improve with practice and continuous revision.
3. Build strong relationships with potential investors and business partners
When we first started pitching to investors, we would pull out our pitch deck as soon as we got into a meeting.
We soon realised this was quite a naive approach. It is so important to build rapport and credibility before you start talking through your pitch.
Start building relationships with investors as early on as possible. Communicate your goals and your wins as you go.
It’s your job to convince people to work with you, to invest in your company. Most potential investors will want to spend time getting to know you and the way you work prior to committing.
We met Bill Tai, who introduced us to many of our other investors, more than two years ago. Yet we only recently closed our round.
Raising money takes a long, long time. My first trip to San Francisco was only supposed to be for a two week holiday. I’d planned two meetings; one with Bill Tai and the other with Facebook’s Lars Rasmussen.
I very quickly realised I needed to spend more time on the ground getting to know the technology scene and building my network.
My two week holiday ended up turning into a three month trip. I barely slept, and when I did it was on my brother’s apartment floor. I went to an event every single night of the week, trying to meet engineers and find people who could give me an open door to the start-up scene.
During this time, we met and spoke with many other investors who we kept in the loop with our efforts.
If you’re raising money, you need to build strong relationships with potential investors and advisors. We did this by communicating with them regularly.
We never could have predicted the adventures we’d have or the people we’d meet along the way. We’re lucky to now have the team in place, our product ready to launch and a burning passion for what we’re doing. And so the next chapter begins.
Melanie Perkins is co-founder of Canva, along with Cliff Obrecht. The Sydney-based business provides an online collaborative design platform, allowing users to create professional quality designs regardless of their skill set.