Series B – Challenging markets conditions can derail any fundraising process
In early 2016, it was time for the company to raise its next round of financing.
I have always believed it takes a village to build a great company and, now on the board, was keen to introduce Contentful to other investors I knew from my time in the Bay Area.
Though the team was in Berlin, the ground-up sales model meant that over 75% of revenue was already coming from the US and so we connected Sascha with a number of excellent US investors. By this point the company had stronger metrics and, I remember Christoph Janz and I swapping emails, confident we would raise this round straightforwardly.
Unfortunately, it was not to be so. It turned out that this period coincided with a drop in global SaaS multiples on the stock market and investors went cold, nervous of a bigger crash. The top tier investors chose to wait and see and so we existing shareholders decided to bridge the company with a convertible loan.
This was a hard time for the company, as Sascha recalls: “The sentiment of external markets had a huge influence on fundraising success. We were showing really good progress, but it was hard to build excitement. But our strong belief that we were building a better way to manage content kept us going. It was also really important that we had shareholders who understood this. As you know, Balderton and Point Nine stepped up and were able to do a convertible at this point, extending our runway. This took away the pressure and gave us time to close further big deals.”
This ended up working out well — as the market improved, a number of the people we had met reached out again and Eric at Benchmark moved quickly to win over the team to lead the Series B in mid-2016.
As always, when markets are rocky and visibility uncertain, it is really important to have a team, and investors, that are driven by long-term conviction.
