How we raised a $2.75 million seed round: Olivier Pailhes, CEO of Aircall

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I met over 100 VCs.  One of the VCs got no’s, then 30 more no’s, and then again.  And the thing is Silicon Valley it’s like unlimited resource.  There’s unlimited number of VCs.  Just keep on expanding and then of course time goes by so you’ve got maybe better numbers or you reach a level where you’ve got some interest.  But it was really a numbers game which was really about making more than 100 meetings finally get interest from a few VCs.


Aircall are part of a wave of exciting SaaS companies coming out of Europe and out of Paris in particular.  Their CEO and Co-Founder Olivier Pailhes recently took his senior team to San Francisco for an intense few months last year as part of one of the global leading accelerator programs that is 500 Startups.  Then Aircall started off 2016 with a bang announcing a raise of $2.75 million in a second seed round led by Balderton Capital.

Olivier joined me on The SaaS Revolution show to share insights on the ‘Why’ and the ‘How’. You can listen to the podcast episode or read the transcript below and you can also subscribe on iTunes and never miss an episode.



Alex Theuma:

Olivier, i’m really pleased to have you on the show today.  One of the objectives of today is really just to get some insight into your recent decision  to go to and experience at 500 Startups.  And also about the news that you announced in January, the large second seed round that you raised led by Balderton.

Before we go into that can you provide our listeners an intro as to who Aircall is and what you do?


Olivier Pailhès:  What we do is we build what we think is the best phone system for sales and support teams.  We provide a software that businesses use to talk to their customers, that deploys instantly, entirely updates online and that connects all call information to any other software you’re using, from Slack, Salesforce, Zendesk or any other software.


AT:  How old is Aircall as a company?


OP:  Well, the company was incorporated 2014, so almost two years ago in the U.S. and we’ve gone live in June last year.


AT:  Within that time, since 2014, you’ve been part of eFounders studio and last year you made the decision to take your team to San Francisco to 500 Startups.  Why did you make that decision?  Why did you join 500 Startups?


OP:  Well, the first thing is that we’re a French team.  You probably can hear that.  We started up in Europe with eFounders in Paris.  And when we got our product kind of ready in like Q2 2015, then I thought we can then launch it.  So how can we make sure that we do that right?

And second is we don’t want to go for a European play.  So what we’re going to build is a worldwide player and we need to spend some time in the U.S. and more specifically in Silicon Valley to just get on the right feet, get the ambition and learn from 500 Startups.

That’s the reason why we chose 500 Startups.  We actually got accepted in a few accelerators and we chose this one because it was in the location we wanted and because we wanted to learn from the growth mentor, and the last thing is that I really wanted to bond the team together.

We were only four at the time and I wanted to live 4 months all together in the same house working 24/7 because I felt this would be the base for the future growth.  So create let’s say a rock-solid team during that experience.  And that actually happened.


AT:  How was the overall experience?  You mentioned that the team bonded there overall.  Was it pretty intense?  How was it physically?  Emotionally?


OP:  Well, essentially, the first 2 months were extremely intense.  We just got out the plane, and I remember that, and in the airport we just like looked at each other saying, okay, it’s now or never.

So we kid ourselves.  No.  We have to kill our product and make it awesome or we just never do it.

And so the first 2 months were really non-stop work.  So like really 24/7.  So waking up about 7:30 in the morning and opening the computer and starting to work until, whatever, midnight, with quick breaks to run together, but It was only this

And then after 2 months then we get burnt out.  So then we’re sort of saying we just need one weekend.  We need to do something else.  And so the last 2 months at 500 Startups we got, let’s say, more serious and we got back to saying, hey, working really lots but spending some time to just relax and just live the experience as well as a team outside of just coding and selling.


AT: Towards the end of every accelerator, and certainly in the case of 500 Startups, you have demo day where you’re pitching to a number of investors.  How was that experience and how has being part of 500 Startups helped in your fundraising process?


OP:  Of course it helps a lot to rehearse everyday during a month.  You get better and better at delivery.

Now honestly we didn’t raise during demo day and demo day did not bring any significant investor, but it helps you be crisper, sharper on your ideas.  Now, I would say that 500 Startups have a very clear stand on fundraising which is, “You do it, we don’t.”  We give you advice, we help you.

But I was really, I think, I was kind of disappointed because I thought, hey, out of 500 Startups fundraising is going to be a walk in the park.  Just gonna meet a few VCs and that’s it.  It was actually a very quantitative exercise.

I met over 100 VCs.  One of the VCs got no’s, then 30 more no’s, and then again.  And the thing is Silicon Valley it’s like unlimited resource.  There’s unlimited number of VCs.  Just keep on expanding and then of course time goes by so you’ve got maybe better numbers or you reach a level where you’ve got some interest.  But it was really a numbers game which was really about making more than 100 meetings finally get interest from a few VCs.


AT:  You answered the next question there.  Obviously you’ve met with over 100 investors.  In fact, I was going to ask you if it is a numbers game.  And your advice to other founders is that don’t just pitch to 10 VCs but aim for 50 or 100 or more?


OP:  Absolutely.  I think, honestly, one mistake we made was saying, “Hey, we’re going to target the top VCs we want.”  And we went actually quite far with two of them and I really thought like, hey, we’re going to make it.  And then finally it was two no’s in a sense that too early.

Honestly, let’s say I should have expected that because these were really big firms and I have put all my bets on those two and then I had lost a lot of time.  So I think it helps a lot saying, hey, I know I’m going to go into 100 meetings.  Maybe you’re lucky and after 10 you close but be prepared to that.  Don’t put all your eggs on 2, 3 VCs that have the good fit or where relationship starts well.  Just keep on meeting people and building your pipe.  It’s like a customer pipeline.  It’s the same thing.  You have to have lots to get one finally.


AT:  With all that experience pitching to over 100 VCs rather than just getting no’s, did you get good feedback from each and everyone as to the decision as to perhaps why they weren’t investing?  Like you said, maybe it’s too early but also did it help you from pitch to pitch improve any of this feedback that you got?


OP:  I think of course it helps.  I think in our case, two main reasons why VCs would turn us down is you’re too early stage, and there’s little you can do about this.  It’s as well, it’s a way to say no but I think it reflects some kind of reality, and the second thing is your market is like shitty.  You’re in the voice market.  It’s a shitty market and you get a lot of competition.  I mean, why?

And especially on this question, I learned a lot from receiving no’s.  And essentially when it came to meeting the VCs that we finally dealt with, I had the proper answers there.  So I think it does help.

But again, it’s a numbers game.  So you don’t get better after each VC meeting.  When you do 10, 15, 20 then you start thinking, hey, maybe I don’t have the answers to these broad questions or maybe my pitch is probably not convincing enough.  Because it’s not one guy that said no, but it’s actually 5 or 10 guys.

So you have to question yourself and it took me quite a lot of meetings to actually boil down, analyze and think, okay, this question needs a very sharp answer and I don’t have it.  So what is the sharp answer?  And then you spend some time building up the sharp answer that you will use for the next meetings.


AT:  You got a very good seed round or second seed round in January.  This was $2.75 million dollars and was led by Balderton Capital who are one of the leading technology VC firms in Europe, and they’re lead investor of that.  It’s a great VC, although I’m not going to pronounce his name correctly.  I think Bernard Liautaud?  There we go.

Did you pick Balderton?   Or did Balderton pick you?


OP:  I’ve been in contact with Balderton for a very long time.  I think even end of 2014 I was already starting to engage with them.  Not with Bernard Liautaud but with more junior let’s say principals or associates.  I mean, at least from my perspective as being in France, Balderton is really a top investor.

Now, I think in the way we structure our approach to fundraising, we want it let’s say U.S. or U.K. investors.  Essentially we already had an agreement with a U.S. investor called FundersClub based in San Francisco.  So we had like access to here somehow luckily.  And Balderton was a great fit in the SaaS.  They have big knowledge here.  They’re extremely recognized and I wanted VC… I know it might sound a bit idealistic but I want a VC that could help me.  I know many people who say they help you with money, that’s it.

I think actually I was expecting more and, so far, after a few board meetings they have been extremely helpful.  I had them on my radar and they had me.  But I could say I picked them more than they picked me and really pushed and came back and came back.  Luckily we had a nice growth so like 30% monthly growth month after month.  So after some months, when you do that for a year, people start to think, “Wow, still,  There’s something maybe going on here.”

Between early 2015 and then when we actually engaged end of last year, I pushed and pushed and then we had the numbers to raise their interest.


AT:  How important then is it to have the right VC in your corner?  Because you’re seeing that after 4, 5 sort of meetings with Balderton that they’re adding more than just the investment to you.  But just in a generalization, how important is it to you to have that right VC in the corner?


OP:  Well, I think it can help in many aspects, but in our case being a European company with a worldwide ambition actually to expand in the U.S. and build a very solid team, I mean that’s one single thing where they’ve added more value than anything else I can think of.  And I’m talking here about Balderton but as well about FundersClub, which really both have fantastic networks.  Typically, they just make life much easier.

We’re actually now looking for offices in New York.  We just found one yesterday through Balderton, through a network and now we’re set and we started the hiring faster than we thought.

I think of course you can live without having great VCs.  Before this round we had like angels and smaller funds that were helpful but not at that level, and you can live without that, without having a really very helpful VC.  But it does help you.  We’ve got so many problems anyway in the day-to-day life so when you get some good news, good customer intro whatever VIP account or solutions to your offices or hiring, that really pushes you further and say hey cool, and not pushing the boats or whatever.  How do you say that?


AT:  What were the key reasons given for investing in Aircall by Balderton and FundersClub?  I mean, you mentioned impressive 30% month-on-month growth.  Were there any top reasons that they gave to say, this is why we’re betting on you guys?


OP: I think it started with the numbers.  Not the numbers as such but the fact that they felt that there was a team to reach that number.  This team was able to go from whatever, 10k revenue to 100k in 8 months.  They probably have some resources or at least some ambition.

I think beyond the numbers, they trusted me.  When I say me it’s me plus the three top founders we have, Jonathan, Xavier and PB.  So they can sell.  Of course I was making, I mean, I was leading the fundraising so I was really the big figure that they would see.

But I remember that getting out of a partner meeting at Balderton they felt, okay, now we do trust that you want to execute strategically well and you have a vision, and I think, as I said, the negative point in our market is like it’s an old market commoditized.  And I think I was able to convince them that we’re not going to be commoditized because we’ve got such a disruptive approach.  And in the vision we have, we think we can add a lot of value to simple call minutes.  That’s I think what made them realize that, hey, of course the market is right for disruption but on top of that, these guys come with the idea of adding a lot of value to a commodity market and we believe in that.

These were the two reasons, I would say: people and the vision strategy.


AT:  You’ve got $2.75 million in January.  What will these funds be used for?  What is Aircall going to spend this money on?  Or invest that money on perhaps?


OPs:  First investment item I would say are the people and the team.  And essentially we have a strategy saying we just go all in.  I mean, the start of Aircall was kind of complicated, now we have that money and we know the market is ripe and our product is ready so we’ll really go all-in like poker style.

We went from 6 people end of last year with 22 now going to be, so like 3 months after that.  And we’re going to be 35 in the next couple of months.  That is actually spread between the tech team.  So at 500 Startups we had only two developers, basically the 2 co-founders.  Now we have 9.  And we’re in a business that’s future-driven.  There’s a big value in investing on the tech side.

And then on the sales side, essentially the cost of the investment will be in the U.S.  Building the U.S. sales team.  And if anyone is listening to this podcast, if you’re interested to join us, we’re hiring in New York.  This will be the main cost item.

Then on top of that, we’ll do some marketing but essentially… I mean, the way we see the growth will be a lot of let’s say B2B direct contact, building the partnerships with Salesforce, Zendesk.  And this doesn’t need that much marketing.  We have a fantastic, integrated product so that people can just use us inside Slack or Zendesk, Salesforce in a radically new way.  And that’s how we get customers essentially.  We don’t get customers paying us or these kind of things.  So mostly people, to answer your question.


AT:     How big do you plan for Aircall to be?  And how much money will you expect to raise to get there?  This is kind of a crystal ball question but what are your thoughts around that?


OP:  Those are actually two different questions. On the first one, we actually started Aircall because we felt it’s something absolutely huge to build.  Of course the market is huge and we can meet the needs of millions of companies, but most important is you could not build Aircall a few years ago.  And we’re at the point where, as I said, the technology is available, the infrastructure is available, and the users and the companies start to behave differently.  People will work from anywhere and the data is connected.  So you want to connect all your call information to any other softwares.  And we feel that’s exactly the right moment to come in.

And to come at that moment, not even two years from now, not two years ago.  That moment.  Then it can really be something really big.  It’s a new way that companies handle phone calls that is just a much simpler way, a much better way.

That’s why we created the company in the U.S. at first saying, hey, we don’t want to go for a European play.  We’re going for a worldwide play and we want to make this really big and so we have to be a U.S. company and have a U.S. office as soon as possible.  These kind of things.

Now, how much money will we need to get there?  It’s hard to say, honestly.  Of course, this is a first… so we call it a seed round, the last round.  It gives us some runway but If we want to be able to sell a product, market a product worldwide in all the key markets we probably need a new round next year or early next year, I would say.  I would say it’s probably 10 to 20 additional million dollars that we will need.

And then beyond that, now this would really be crystal ball.  But I would say that the next step I have inside, if you can get there with the right momentum, momentum we want, then we’ll be fine to build something big.


AT:  Awesome.  Well, Olivier, you’ve given some super insightful answers there and insights into your decisions as to going to 500 Startups and being part of an accelerator, how they impacted the company and also as to this recent seed round that you raised and your journey pitching to VCs and partnering with Balderton.  So I think that’s awesome.

I just have to say thanks for being on the show today.  I’ve really enjoyed having you as a guest.  We’ll be keeping a keen eye on Aircall and also looking forward to all the different future integrations that you’ll be bringing out as well as a keen user.  So thanks for being on the show.


OP:  Thank you, Alex.  Thank you so much.

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