Aussie HR startup Enboarder has raised $11.6 million in Series A funding, as it gears up for another year of growth. But for founder and chief Brent Pearson, this raise was just as much about snagging ‘smart money’ as it was boosting the bank account.
The round was led by US venture capital firm Greycroft, which also participated in a previous $5 million raise, closed in November last year.
Two additional US firms, Next Coast Ventures and Stage 2 Capital, also participated in the Series A.
Founded in 2016, Enboarder is a platform designed to reduce friction for companies and new employees in the onboarding process.
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Now, it has more than 200 global companies as clients, including McDonald’s, EA Games, Qantas, Westpac and Eventbrite.
Over the past six months, Enboarder has been “starting to put the accelerator down and showing we can actually really start scaling quickly,” Pearson tells StartupSmart.
Pearson calls the process a “stress test” to make sure the startup is ready to ramp up its marketing and scale into new markets.
Most of the new funding will be focused on growing the business, primarily in the US and Europe, he says, adding that the business is gearing up for “a pretty-dramatic expansion”.
Now it has proven its sales and marketing model and onboarded some high-profile customers, “now is the time to really put the accelerator down and absolutely go hard for market share.”
Back in November last year, Enboarder was seeing revenue growth of 300% year-on-year.
“The bigger you get the harder it is to continue that,” Pearson says.
However, with the new investors, the team has been picking apart the plans and budgets, finding a better way to execute the expansion.
“Already they’re giving us real practical advice … we are literally rewiring our business plans now.”
So, in terms of revenue growth Enboarder expects to see in the next 12 months, “I don’t know where the final number is going to come out, but I think it’s going to be somewhere between double and triple”, he adds.
It’s easy to get dumb money
For Pearson, getting the right investors, with the right expertise and knowledge, on board in the Series A raise was, “to be honest, almost everything”, he says.
“There’s a ton of money out there, and I think it’s pretty easy to get dumb money,” he explains.
So, having the three investors on board is “a wonderfully validating feeling”.
Having participated in the seed funding round, Greycroft was keen to lead the series A, Pearson says. However, the founder had set up meetings with more than 20 investors.
While the team knew Greycroft was likely to at least participate, “we had to run a competitive process”, he adds.
“They had to compete on their own merit”
After just a week of “pretty intense” pitching and meetings, Enboarder had three term sheets, one of which was Greycroft’s.
The VC’s model is to put together investment syndicates, Pearson explains. And while initially he had concerns that this process would take a while, things actually happened remarkably quickly.
One of the benefits of choosing Greycroft was that they already knew the business.
“They didn’t have to do full due diligence,” the founder says.
Another is that they have “this amazing network”, he adds.
“All of a sudden we had a bunch of people putting their hands up and saying they would like to join the syndicate.”
The right fit
Ultimately, all three investment firms bring something very valuable to the table. Greycroft has some 145 active companies in its portfolio, providing a wealth of experience, Pearson explains.
“I’ve never grown a company like this at this stage of growth,” he says.
“They’re almost grabbing me by the shoulders and steering me around the potholes … They know what I’m likely to walk into, and they’re helping me avoid that based on their experience,” he adds.
“That’s what a great VC does.”
At Next Coast Ventures, all of the investors are entrepreneurs themselves, Pearson says.
“Culturally they’re an amazing fit,” he adds.
However, they’re also based in Austin, the location of Enboarder’s US headquarters.
“That will be great for helping us find talent to really grow … and also introducing us into the tech ecosystem in Austin.”
Finally, Stage 2 Capital is made up of investors who are either chief revenue or chief marketing officers.
The firm’s value proposition is around helping startups with their go-to-market execution, Pearson says.
Just a week after the series A round closed, Pearson had already had three calls with the Stage 2 team, he says.
“They are amazing … Their knowledge of how to build world-class sales and marketing organisations is second to none,” he adds.
Do a ton of due diligence
Pearson speaks to a lot of Aussie startup founders, he says, and finds some can be a little reluctant to raise funding.
Some have heard horror stories about sketchy investors, and others are just risk-averse when it comes to funding their venture.
“They see it as some sort of control thing … they’re giving up control or they’re giving up the company,” he explains.
“I try to view it through a different lens. If you really do want to grow the business, you can’t underestimate the advice that you get from a great investor.”
However, Pearson says choosing your investors carefully is “so important”, advising other founders not to rush into anything.
“They’re going to do a ton of due diligence on you. Make sure you do a ton of due diligence on them,” he advises.
“Make sure they have the experience, and that they’re also the right culture fit,” he adds.
Finally, Pearson advises founders to speak to other startups the investor has backed — those that are struggling as well as those that are doing well.
“Find out how their investor supports them in their tough times as well as their good times,” he says.