Melbourne-based people analytics startup Culture Amp has secured $26.4 million ($US20 million) in a Series C funding round led by Silicon Valley giant Sapphire Ventures.
Principal at Sapphire Ventures Kevin Diestel will also be joining Culture Amp’s board of directors.
Since launching in 2009, Culture Amp has grown into an international success story, with more than 120 staff across four offices globally, including one in London and one in San Francisco.
Culture Amp co-founder and chief executive Didier Elzinga tells StartupSmart the company’s growth “has been significant” in the past 12 months, with a doubling of its engineering and go-to-market teams in the last year. More than 1,000 customers now use the platform.
The startup has had a huge three years for fundraising. Since raising its first $8 million in Series A funding in 2015, Culture Amp has gone on to raise a further $US10 million in 2016 and has now topped that off with the most recent $US20 million raise.
So what’s the secret to the startup’s rate of funding success?
Elzinga advises that fundraising is a “balancing act” between building a great business and maintaining relationships with investors.
“The challenge is that fundraising is time consuming. If you don’t watch your time you end up telling everyone what you’re doing and you don’t have time for your business,” he says.
Elzinga advises “batching” emails and organising catch ups every six months to maintain relationships.
“You don’t have to talk to people all the time,” he says.
“Keep in touch with people and be transparent — let those relationships mature.”
Elzinga also notes that raising subsequent rounds of investment presented different challenges compared with the first time the startup raised capital.
“Each raise is different than the last. You need to show progress against a different number of problems,” he says.
Culture Amp’s size and revenue played a major role in their Series C raise: the startup was already boasting annual turnover of $10 million, and had to prove its rapid growth was scaleable in the market.
“We were already at a hefty valuation — we had to show the market was big enough and that there was a big enough opportunity,” Elzinga says.
Maintaining relationships with previous investors from their Series A and B funding rounds also helped to secure funding in this recent round.
Previous investors Index Ventures, Felicis Venture and Blackbird Ventures participated in the Series C round, with Elzinga noting it “wasn’t as scary as the first time” because most of the investors involved were those “we had spoken to for several years.”
“They come in early and believe in you and come with you all way through,” Elzinga says.
Support from Australian investors Blackbird Ventures was particularly important for Elzinga, who appreciated their local ties in the industry.
“It was important for us to have an Australian investor — it’s been great to develop and see that industry grow,” he says.
What’s next for Culture Amp? Elzinga has big plans for the company following their huge raise, including doubling the number of employees.
After that, he has his sights “locked on [reaching] 10,000 customers in the next three or four years.”