Three months ago, we announced our $14mn Series A round with nearly a triple-digit, Million Dollar valuation. Thrilled!!!
However, the process of getting there wasn't filled with rainbows and sunshine. In fact, while I was preparing to raise funds, I found that there was a dearth of online decks/references that could help me.
A week after we raised the round, 48 SaaS founders wanted to get on a quick call to understand how we did it - a clear indication that the SaaS community needs such a deck. So here I am, sharing the exact details of my journey to Series A funding.
The first step - Start with Why
Till 18 months back, we were profitably bootstrapped, growing by using Value SaaS principles (or in other words, growing capital efficiently). The big question then was: “Do we really need funding?”
We decided to go for it.
Why? Three reasons:
- iMocha had reached $1mn ARR. We now had a clear path to reach bigger, ambitious goals.
- We needed to create a category and be a leader, fast.
- We realized we had the potential to create a big, impactful organization.
Once this ‘Why’ was clear we started warming up for the round.
As a lead-up to Series A, we raised an Angel round
We didn’t shoot for Series A directly. We decided to raise an Angel round before that, as we wanted to get strategic Angels on board who would later help us raise a ‘big’ Series A. Our Angel round was $600K and although we didn’t need the money, we needed our Angels.
Two tips on the process of Angel Round
- Make a list:
A year ago, I jotted down what help I would need to raise a Series A. Since we were transitioning from SMB to Enterprise SaaS, we needed help here. We also needed access to ‘good’ Series A investors who would be on our side. So I made a list of Angels that we would want on our team.
2. Get your 'First Believer' first:
Before approaching other angels, I convinced Prabakaran Murugaiah, my Virginia-based friend and HR Tech entrepreneur to lead the round. I sent him a pitch deck that I’d quickly put together from an online template (not sharing it here as it wasn’t great).
Here’s the email I sent to Praba, and the other angels thereafter:
CLICK TO EXPAND: Email to Praba and other angels
Sending you the Interview Mocha pitch as an attachment of this email. PFA. Please let me know your availability for a call and I will run you through this presentation.
Also a brief for your quick perusal as below:
Why are we raising this investment?
- Currently we are at $<xxx>k ARR and planning to grow 2.5X in the next 1 year with US enterprise customers.
- We're raising $<xxx>k for this growth.
- The money will be used for Sales and Marketing.
- We need help with US marketing support, warm introductions to enterprises, enterprise channel partners, and functional advisors. We are handpicking the right strategic angels in this round.
Timelines we thought:
- Round closure by <date>
- Money in account by <date>, so that we can start executing from <date> onwards.
- <My friends name> with 100k investment.
- <my friend> is <city in USA> based HR tech entrepreneur and an angel investor in numerous companies.
- With our current revenue, logos we have, profitability and 2.4x last 12-month growth - we got feedback from several angels about our valuation. It is 10x to 12x of our existing ARR. i.e. between $<xx>m to $<xx>m.
- Because our primary goal is to get you as a supporter, we are discounting it and proposing a pre-money valuation of $<xx>m.
- $<xx>k commitment from your side. If you would like to suggest any other amount, please let me know.
- If you have any queries, I am happy to share the details required or get on a call to answer your queries and concerns.
- Or, I will send you the simple term sheet that is agreed upon by <my friend> for you to sign. And further needful details.
Looking forward to growing even faster with your support!
Lessons learnt from Angel pitch
In retrospect, I feel I made two mistakes:
- We could have put a higher valuation for iMocha
- We offered a discount, even when no one asked for it
Of the 11 angels that finally came on board, I needed to pitch to only 4-5; for the rest, an email sufficed. With every commitment received, I was updating the remaining investors and that made my job easier.
We closed the Angel round in two weeks, with leaders who happily participated in iMocha’s growth.
For Enterprise SaaS, we had leaders like Yamini Bhat from Vymo, Khadim Batti from Whatfix, and Ashwin Bharath from Revature come onboard. As a bridge to Series A investors, we got Better Labs, Upekkha, and one of India’s top angels Anand Chandrashkharan, on our team. Next, we got on the biggest name from India SaaS, Girish Mathrubootham of Freshworks. We also got Krish Subramanian (Chargebee), Pallav Nadhani (FusionCharts), Vinod Muthukrishnan(CloudCherry) and Suresh Sambandam(Kissflow) as our Angels.
Leveraging the power of Angels
After raising the round, two things happened.
Firstly, I started getting help from the Angels on WhatsApp, phone or Zoom. Three angels in particular helped me immensely over the next year in shaping the iMocha growth story.
Secondly, I looked for first or second-degree connections to these angels in my personal network and got intros.
Next: An aspirational PR for future Series A
I must tell you that this particular visualization exercise helped me in setting up my North Star, so guys go ahead and do it.
I wrote an ‘Aspirational Press Release’ for our Series A that I thought would be raised 12-18 months later. I shared this PR only with my Co-founder Sujit, and Upekkha Partner Prasanna Krishnamoorthy. Here’s the thing - Everything that I wrote in this aspirational PR actually came true!
Expand to Read iMocha Series A aspirational PR
<18 months future date>, Palo Alto, California:
Mocha is in the business of Digital Skills Assessment for companies thriving in this changing $kill economy. Originally hailing from Pune, India but now headquartered in Palo Alto, California, the company develops and offers the complete suite of skill assessment - ranging from 3,000+ ready skill assessments, AI powered simulations, omnichannel assessments and strong API/integration capabilities.
Today, Mocha announced that it received a commitment of $
The deal values Mocha at $<~mid 100> million, post-money, up 700 percent from the $
”Mocha did not disclose additional information about its revenue. However, last year, CEO Amit D Mishra disclosed that the company had achieved an annual run rate of $
YourStory reported that Mocha typically makes up the cost of acquiring a new customer after about 6 months of use, and that the average customer uses Mocha software for five years. The publication also reports that the company earns about half of its revenue from mid-market and enterprise customers, with the remainder coming from strategic platforms.
In the meantime, though, the company is intent on expanding its footprint in the U.S. and other global markets. Mocha currently has over 100 employees in offices, including in the USA and India.
In the above Press Release, the date, location, size of the skill library, big features, valuation, round size, investors, publication names, employee numbers, xx enterprise customers – all were aspirational. Today, everything seems to accurately match what I wrote back then, barring a few minor exceptions.
Initiate Series A
After a year and 2X+ growth, we were ready for Series A.
But here again, we met Mr. Dilemma.
We were growing… we were profitable.
Did we really need a Series A?
I went back to my why’s, battled the demons in my head, and decided to proceed for our Series A.
So again, after a year and one month (a month of dilemma) we decided to proceed with our Series A.
Practicing Pitch for Series A
“Fortune favors the Prepared Mind.”
Prasanna (Upekkha) suggested that I get some net practice before pitching to investors on our wish list. So I reached out to 32 big and small investors who had connected with me during our Angel round (mostly from the US, UK, India and Japan). I tried getting feedback from each one of them for why they wanted to invest or what was stopping them. When asked for feedback, almost 70% of them gave me feedback on why they wanted to invest, were skeptical, or would not invest.
This process lasted almost 45 days.
Remember to get feedback from Investors; their valuable insights help you immensely in shaping your pitch!
The calls made one thing very clear: we needed a bigger market and a clear differentiator. In our field of tech-recruiting assessment, there were a few VC-funded startups and yet no unicorns or big stories from the space. VCs look to go big with you and you need to respect their thesis.
I knew I had to answer this question. But instead of answering it for the same use case, I answered it in the context of another bigger market with a bigger use case where we had a clear differentiator. Fortunately for us, we have enough traction from the new use case/market which is big, and where we are already emerging as winners. Our investor Aditya Systla articulates this brilliantly.
This process helped us get our positioning right and now I was ready to talk to the wishlisted investors.
The Series A deck
The most crucial part! Here’s the iMocha pitch deck we got funding on:
Slide 1: iMocha legal structure – US HQ with Indian subsidiary. This is not a stopper though; many US investors only talk to US startups. Structurally, they are only allowed to invest in a US-registered company.
Slide 2,3: White space in the market/ context/ the problem that arose due to a change in the world.
Slide 4,5,6: Solution, offering, product.
Slide 7: The most powerful one in our case. Product-market fit for global enterprises.
Slide 8: Strong support to slide 7.
Slide 9: Overall financial metrics in one slide - including SMB and all revenue, expenses, cash flow, raise.
Slide 10: Traction channels. Some working, some future truth.
Slide 11: Blessings from our supporters & Guides in the journey
Slide 12: iMocha - I is for innovation here. Boasting about it here. Feels good.
Slide 13: Pause
Slide 14: Team building capabilities and Team iMocha love.
Slide 15: Plans and projections - some data, some emotions (calculated though).
Slide 16: Product roadmap. Nobody cared about this in our case at least.
Slide 17: Vision.
Typical pitch timeline: 30-min call
Slide 1 to 6: 5 minutes.
Slide 7,8 and 9: 20 minutes with participation from investors. I believe answering questions here is why we got funded.
Slide 10 to 17: 5 minutes, if time permits.
Appropriately multiplied if the duration is 1 hour.
I chose to pitch to 6-8 investors who had the reputation of being founder-friendly, had success in Enterprise SaaS in the US market and believed in our company’s vision and team (overall Good vibes 😊). All investors were known to me or through one of our angels. It took me one month to get a final commitment from a few of them.
Why did we choose Eight Roads?
- The folks at Eight Roads are thoughtful SaaS investors with a strong portfolio
- Aditya Systla and team put in a lot of effort in understanding iMocha, the problem we are solving, our vision, and the market
- We got a strong reference for Eight Roads from successful Enterprise SaaS founders
- Our team liked the Eight Roads team
- These guys are good people :)
Due diligence took almost two months and here Sujit, my Co-founder and CTO took the lead with support from senior team members from accounts, sales and account marketing, among whom Piyush Bhambre was key. Special thanks to Lalit Valecha and his team.
Traction Trumps Everything
I believe the most important reason for our Series A is the traction we have from homogenous customers with predictable repeatability and growth.
And of course, a big market, Traction Trumps Everything!
I would like to thank all mentioned above for contributing to iMocha’s journey and a special mention to Upekkha & SaaSBoomi for providing a great platform for learning and sharing Indian SaaS.
This is it. This was our journey through Series A, shared in the spirit of transparency for the SaaS community, a community that we have learned so much from!
If you got some insights from our journey, I’d be really happy. Share this with anyone else who might need this.