This month Queensland-founded startup SafetyCulture closed one of the biggest high-growth venture investment rounds of the year, with $30 million in the bank from a prominent group of global VCs including Index Ventures.
On closing the series B round, SafetyCutlure founder Luke Anear says the startup hadn’t initially been trying to raise capital.
“We never even had a pitch deck,” Anear tells StartupSmart.
In fact, it all started when a new US connection got so excited by the startup that he opened a floodgate for investment opportunities.
“Once he got involved, everything changed,” says Anear.
“He was kind of like this rainmaker. All of a sudden we had US VCs flying to the door.”
It was a pivotal moment for SafetyCulture.
“That forced us to really consider whether or not it would be wise to take funding,” he says.
Always ask: do you really need it?
Without jumping straight in for quick money, Anear says the SatefyCulture team took a mature and carefully considered approach to ensure the startup continues in the right direction.
“No matter what, we’ve stayed focused on building something that can change the world and investors want to be a part of that,” he says.
Knowing the business could benefit greatly by building up capabilities in product development and making some key hires in strategy and authorisation to transition SafetyCulture from startup phase to a more formalised company, Anear decided to take on new investment.
Be weary of investors rushing to close
Anear says it’s critical to get to know investors and their intentions before signing them up.
“You need to be weary of investors that are pushing to close,” he says.
“It’s like a marriage that you can’t get out of. Look to a range of different investors and consider other options to increase revenue before considering investment.”
With investors like Atlassian co-founder Scott Farquhar, Anear says SafetyCulture has gained incredible support, in addition to capital.
“He’s consistently providing a lot of direction and support for myself and the team,” says Anear.
“It’s great to find VCs that either are or have been operators because their advice is so much more relevant.”
Instead of rushing into a deal with their newest investment partners Index Ventures, Anear says the startup spent a good eight months really getting to know them.
“The best ones will help you even if there’s not guarantee of an investment happening,” he says.
“We gravitate towards people we respect and admire. We live and die by the core user experience of our app, we needed a partner that understood that.”
Keep it simple
When bringing on new investors, Anear says it’s important to keep the terms simple.
“Each time you taken on funding you’re resetting the expectations of new investors,” he says.
“Keep terms simple. Advocate for terms to be very vanilla and not complex at all so any future rounds can remain simple as well.”