How Australia's biggest capital raising deal of the year was done in 90 minutes

SuppliedLuke Anear, founder and CEO of SafetyCulture.

  • SafetyCulture scored a $60 million Series C funding round led Tiger Global Management in May.
  • It is the largest raise in 2018 by an Australian company.
  • Founder and CEO Luke Anear was offered the deal after a 90-minute meeting.
  • He offers his advice for founders seeking investment from VCs.

SafetyCulture, a provider of workplace health and safety services, recently secured a $60 million Series C funding round led by New York investment firm Tiger Global Management.

It’s the largest raise by an Australian company this year.

It was also SafetyCulture’s biggest funding injection to date, bringing the total raised to $98 million.

The deal itself took just 90 minutes to complete after Tiger Global flew to San Francisco, met with Anear, made an offer and left.

Business Insider spoke with Anear, who said that apart from some market research and a couple of meetings with the investment firm’s local branch in 2015, the US meeting was the extent of their interaction before the VC handed over the cash.

And that’s the way it should be, he argues. Later-stage companies should have all their ducks in a row before entering funding discussions.

“It was one single conversation. They had done a lot of research already, they knew the market, they’d done research with our customers,” he said.

“The conversation was really just [Lee Fixel, partner at Tiger Global] hearing from me what exactly the vision was, and what we had achieved to date, and then talking about how we could work together.”

Anear said VCs will often pitch to founders what they can do and offer a company.

“It’s often in the form of they can help with recruitment, they can help you with sales and marketing, they can help you with introductions to great people,” he said.

“A lot of the time, that doesn’t amount to a whole lot. The difference with Tiger was that they said, ‘Look, you’ve got a very clear roadmap. We will get out of your way and let you get on with it’.

“And they didn’t take a board seat which is unusual for this sort of round. We didn’t want anyone to take a board seat… so they understood that we wanted vanilla terms, we wanted very simple terms and they were prepared to give us that.

“At the end Lee said he’d have a term sheet to us within 24 hours, and he did. There weren’t any binding conditions either, it was a reasonable offer.”

SafetyCulture had already done its homework by handing over its due diligence data a few weeks before the meeting.

Anear says that’s part of the discipline a growing company needs when it comes to fiscal management.

“That then allows investors to move faster because you’re more prepared, more organised, and mature as a business,” he said.

Anear said that when he met Fixel, he knew he was the type of person he could work with.

“He was direct, he was honest, and other people I spoke to verified that his integrity was very high, and I found that was something that would work well for us,” he said.

Anear also didn’t go into the meeting with a particular goal or objective. He keeps an open frame of mind and never expects to do a deal.

“You need to know your price in terms what you would accept, and you need to know what you value in a partner… but the rest of it is what needs to happen organically,” he said.

“You want to first of all see if you want to work with this person. Is this somebody who can help you progress to the next stage of the company? Is this somebody you could go to if you had a problem? They’re the kind of the things that are more important and you’re only going to understand whether you can work with someone well by chatting to them about different things.

“It could be important decisions they have made in their lives and how they handled those situations. What were the values that guided their decisions in difficult times? These kind of character traits tell me more about someone than a sale pitch or trying to get them to an outcome. Apart from figuring out what terms you would accept, and then its an open discussion and you’re got to be open to that.

“Everyone has different styles but for me it has to be a very organic relationship that you’re building, and if it’s forced you may miss red flags or fail to recognise limitations that later could become a big problem.”

Hemant Mishra/Mint via Getty ImagesFlipkart office in Bengaluru, India.

The significance of the deal with Tiger is reflected in the fact that some of its previous investments include Spotify, Ola, Flipkart and LinkedIn.

Just last month, Flipkart, which received $US1 billion over the years from Tiger for 20% of the company, sold a 77% stake to Walmart for $16 billion.

Tiger is thought to have made $US3 billion from the deal.

Business Insider asked Anear to share his advice for startups preparing for talks with VCs.

Here’s what he had to say.

Have traction

“Proving traction is really important,” says Anear.

“This means getting testimonials from customer, knowing your ROI metrics and engagement metrics which show adoption into the marketplace. When attracting a big VC like Tiger Global – results are the only thing that matters.”

Talk about what you’ve done, not what you’re going to do

“Find the best way to articulate your results and the benefits your product has for your users and potential users. Talk about what you have done, and less about what you are going to do… at least in the beginning. While there is a place for your hopes and vision, don’t make it hard for the investors. Don’t give them a chance to filter what you say – instead talk about reality first and build from there,” Anear said.

“That’s really important, and it’s often something that’s overlooked. Founders get excited about here’s what we’re going to do but it’s important that you etsblish a foundation early in the conversation about what you have been able to do and you build off that.”

He said doing that will “bypass the bullshit filter where the VC is guessing how much of what you are telling them you’re actually going to do” and establish credibility.

“They don’t need to filter anything when you say all I am talking about right now is what we’ve done.”

He said this applies to businesses looking for seed stage funding through to more mature companies.

Build solid relationships

“Take the time to meet with VC’s that other founders recommend and build up solid relationships,” he said.

“The growth rounds and later stage funds can move really fast if you have a good relationship with them coupled with your demonstrated ability to execute over time.”

Make sure your financial management is in order

“A cornerstone of attracting a big VC like Tiger is making sure your financial management is in order,” Anear said.

“Large investment decisions can only be made if you governance framework is in order. This is across all areas of the business – finance, legal and HR. So, make sure your contracts, privacy policies insurances and employee agreements are up to date and all in one place.”

Be original and be desirable

“Most importantly, you need to be building something amazing that lots of people are going to use. Investors want to be inspired by the long term impact their portfolio companies can have.”

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