Raising Venture Capital for startups in a volatile economy has become increasingly difficult for hyper-growth tech teams. Only a third of tech companies that receive seed funding make it to a Series A, while other startups succeed, returning their investors’ money many times over.

To pick one historical example, Sequoia Capital reaped forty times the funds they’d committed to YouTube when Google bought it, and fifty times the funds they committed to WhatsApp when it sold to Facebook.

But what changes when investments come later? As we’ll see, for late-stage tech startups, the rigor gets dialed up right along with the stakes. As one VC firm noted, “to get a Series A, you need a product; to get a Series B, you need traction; to get a Series C, you need a business.”

In this guide, FiSearch combines forces with Chris Bourdeu, one of Europe’s most in-demand CFOs on the tech scene, to offer fellow CFOs advice on raising venture capital for Series C Funding.

About our expert

Chris Bourdeu, Group CFO at byrd, has more than a decade of consultancy experience, specialising in hyper-growth companies, M&A and Financial Due Diligence.

With his in-depth knowledge of corporate development, it was a matter of time before Europe’s fastest-growing Tech companies would approach Chris for his finance and venture capital expertise.

In 2016 Chris kick-started his tech startup reputation when he joined LaFourchette in Paris as Head of Finance, Planning and Analysis. LaFourchette, now known as TheFork, a TripAdvisor Company, is headquartered in Paris, and now operates across 20 countries, delivering bookings from more than 80,000 restaurants. LaFourchette was Chris’ introduction to high-tech which led him to continue his trend of fundraising and venture capital for fast-scaling tech companies.

A few years later, Bourdeu embarked on his next hyper-growth project and by 2019, with the help of his team at Meero, they set a record for the largest tech fundraising round in France, raising $230M in June 2019.

In May this year, byrd, an E-commerce fulfillment startup and Chris’ latest undertaking, raised a Series C round of $56m led by sector specialists Cambridge Capital and other existing shareholders.

Matt Smalley, a Principal at Cambridge Capital, explains:

“byrd is one of the fastest-growing companies we have seen, at what we think are the strongest unit economics in the industry. We were convinced by their tech-driven approach and proprietary warehouse management software, which enables byrd to run an asset-light fulfillment network.”

From Corporate to startup

When your career’s fundamentals are shaped by working for a consultancy, it gives you exposure to how differently companies think about the finance function, explains Chris. Experience in Financial Advisory services is a great asset to bring to the corporate world: It provides you with the highest standards of quality and you get accustomed to high workload volumes. Chris adds that exposure to a wide range of industries, company sizes, and maturity levels, each with its own set of special situations or requirements, provides the broadest experience one can wish for.

Chris goes on to explain that if a company is in a low-growth phase, it will most likely focus its KPIs around profitability or even turn-around. As an advisor, you can support a CFO in creating a team structure that addresses those needs. Hyper-growth companies on the other hand, will focus their finance department on structuring scalable processes and measurement frameworks while keeping in mind a clear path to future profitability.

Consultancy does not bring first-hand experience managing a company’s financial department and understanding the stakes of non-finance departments. As a consultant, your only stakeholder is your client – in 99% of the cases, a finance department.

Startups versus corporates

Chris’ most significant word of advice for finance professionals or CFOs that are transitioning from corporate to a startup is to have the right mindset. As a startup CFO, your mentality is everything. See it as your superpower against a mostly Adhoc, often chaotic environment. Managing uncertainty in such a fluid environment can challenge CFOs with a corporate background. For Chris, the trick is combining the high standards from your corporate background with the flexibility of a startup.

The main difference between an early-stage startup and a more ‘mature scale-up’ for a CFO, is that a scale-up will have a proven business- and operating model, while a young startup will often be in trial and error phase, undergoing regular pivots, re-questioning, sometimes with an element of destructiveness.

Now that we’ve covered the building blocks of Chris’ formative years, let’s dive into his advice on fundraising for tech scaleups.

Pre-Venture Capital: Preparing for Fundraising

Ensure you have the right Resources

When Chris joined the byrd team in September 2021, he focussed his efforts on fundraising straight away. He goes on to explain how he was fortunate to have a Head of Finance that could take care of all operational matters: managing cash flows, supplier payments, customer invoicing, etc. Chris’ advice to CFOs is to get the right resources in place which free you up from the operational day-to-day.

Other than making sure your team has the right resources, you should also consider hiring additional expertise that can work exclusively on fundraising at first, and move on to operational functions after closing a round. For Chris, the benefit of hiring someone like an FP&A Professional is that you have someone that can support you with the business analysis, financial modelling, due diligence during their onboarding phase, and shift towards KPI implementation, budgeting, forecasting and analysing after the round is closed.

An in-house legal counsel is also a good hire to consider during fundraising: preparing a legal data room is the best way for them to get a 360 view of the company’s legal stakes and risks. Post-series C, with more at stake both for the company and the investors, a fully-onboarded and operational legal department is usually a must.

Series C Due Diligence

If you’re approaching a Series C, then you’ve already done a lot of the hard work leading a successful, fast-growing company. In this next phase of fundraising, consider the factors that will make the round a success, and enable your continued growth. These factors will prove especially important during challenging economic times when investors will want to know how your company weathers a less favourable business climate and finds opportunities amidst the risks.

What to keep in mind at this stage of the process:

Data, set, go!

This is where you need to have your books in order. It’s important to take a realistic look at your numbers and pre-empt any holes investors could poke in them, says Chris. Ensure that your financial data across the business is correctly prepped and ready for analysis. Remember that investors will review you in extreme detail, so what you know about each department in your organisation will come into play frequently. Know your teams’ KPIs by heart and delve into what your data means to your businesses, while always considering how it could be interpreted by an external party.

Especially in later funding rounds, investors will expect much more visibility around your data to measure product-market fit. It will be especially important to be able to show that you have sufficient tracking in place and that you also have historic data to instil confidence in investors.

Prepare for scrutiny

Chris suggests preparing your C-level team for what a Due Diligence process entails. It’s important that your leadership team have an expert understanding of how your business functions across the board. If there are any challenges or potential reasons for concern in their department, strategies should be prepared to fix those issues. As much as your financials are under scrutiny, your C-level team will also be.

Post-Venture Capital: You’ve got the funding, now what?

To share or not to share?

Oftentimes, when it comes to sharing information about funding, some startup or scaleup investors prefer not to share details of funding rounds publically. For Chris, sharing funding news once your team has been informed, should be seen as an opportunity!

Sharing funding news publicly puts you on your customer’s radar and builds trust with existing and future customers. For those prospects who are still on the fence about partnering with you, learning about the addition of your knowledgeable investors will instil confidence that combined, you’ll provide an even better service.

In a volatile venture capital landscape, being awarded funding puts you ahead of the pack. It’s important to understand that being labelled as ‘Series C’ means people now categorise you in a different league. At this stage, it’s assumed that you are hiring and growing your team with expansion underway.

Maintaining and nurturing relationships

The secret to a healthy investor relationship is the same as for any great relationship: Frequent and open communication. One of Chris’ focus areas post-funding is updating, nurturing, and maintaining investor relationships. Sharing regular updates about what’s happening with your company after a funding round keeps investors engaged and interested.

Regular updates that go beyond the usual financial results are a great way to keep investors engaged. Shooting over a thoughtful and quick news mention or a cool new feature release is an excellent way to keep investors excited about your business.

What to share with your investors post-funding?

While many investors are financially driven, it’s important to communicate to them all the hard work and thought that goes into building features, products or business-lines, or processes, which do not bear immediate financial returns but are critical for future growth and/or profitability of the business they have invested in.

Must-shares post-funding

New product or feature releases
Updates on Key hires
Geographic expansion
Key customer wins
Departmental restructurings
Results of internal engagement surveys

When it comes to maintaining a healthy relationship with your shareholders, communicating anything the company is working on to increase the value of their investment is worth communicating to them.

Gearing up for a Series C?

With the help of our guide, you should have a few fundamental tools to prepare your team for what comes before and after funding. Beyond reporting responsibilities, CFOs should drive and excel business strategy in order to determine the best way to spend your newly raised funding for optimal growth.

Enjoyed the read? Check out our list of Europe’s CFO’s to watch.