In this post, I have summarized my Boise Startup Week 2020 interview with Alex Ferrara, the partner at Bessemer Venture Partners who led Social Tables’ Series A. Talk about turning the table 😁
Part I
I asked Alex how Bessemer finds the great companies they back. Here’s what he said:
Half the time, Bessemer takes a roadmap approach, identifying areas of interest and forming a point of view on where they would like to concentrate. With that roadmap in mind, the company’s team of analysts reach out to relevant businesses.
Other investments are more opportunistic: Partners are introduced to a great founder or learn about a business in an area they hadn’t considered before.
Social Tables fell into the former category. Alex and his colleague Tony Campbell were looking at companies in the event management space that were trying to fix the industry’s broken workflow. They gravitated toward Social Tables because our product mapped event seating, spacing, and configuration, and they thought it could be an interesting way to get a beachhead into improving the process of searching for, identifying, and booking event space. That led to our Series A in 2014.
Does a startup’s location affect its ability to get funding?
Alex shared that most of Bessemer’s 16 partners are focused on California, but he tries to cover other areas (for example, I started Social Tables in DC, and Shopify—whose Series A Alex also led—is based in Ottawa, Canada). Alex said, “I think we’re seeing great teams emerge all over the world, and actually, post-COVID, it’s going to happen even more frequently. People don’t necessarily have to be in New York or San Francisco anymore; they can start wherever they want to build a company.”
Plus, there is a lot more capital out there today than there was five years ago, meaning VCs are looking for great startups everywhere.
So, what’s your best course of action if you’re trying to secure funding?
While there’s not much you can do about a VC’s preexisting roadmap, you can make meaningful connections—getting out of your comfort zone and in front of decision-makers in the space.
Part II
One of the benefits of having a relationship with someone like Alex is getting to hear a different perspective at all stages of the process, from what’s happening in the VC world at large to the right next step as a founder.
What are some things you can do to improve your chances of securing funding in the first place?
First, Alex said “You’ve got to identify the funders you want to meet with, and start having conversations with them before you plan to raise. The goal is to form a relationship with them—especially in the early stages,”
Another key element? Demonstrating some progress. “I think you get the best valuations when investors are able to see an arc over some period of time, whether it’s a month, three months, or six months,” he said.
What about once a VC is on board?
If tensions arise, a common occurrence since investors and founders have different perspectives, it’s important to bring any issues to the surface. Only then can you understand points up for debate and develop a process to get to the right decision.
Part III
I asked him something founders might be afraid to broach with their investor: what my strengths and weaknesses were as Social Tables’ CEO. He broke it down for me, starting with my strengths:
One of my greatest strengths, Alex said, was relationship building—particularly the connections I developed with customers and employees. “I remember the first time we went to Social Tables’ office, and there were a lot of these little touches that showed you cared about the employees and the customers. You created this really strong culture, which is not as common as you think,” he said.
He added that he could tell our customers were buying our product not only because they liked it, but also because of the high level of customer service we provided—another strength of mine.
What about weaknesses?
He mentioned my tendency to make decisions independently, without running them by the board first. One was signing the lease on Social Tables’ large new office space, something he explained would be a liability when we sold (in fact, it was—we received a deduction because of it).
To connect with Alex, follow him on Twitter here.
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