How To Attract The Perfect Investor To Your SaaS Business
Episode Stats
Summary
In this episode of the Startup Life podcast, we're joined by Anne Bergstrand, CEO and Founder of MyGenation, a startup building a virtual workplace for remote and hybrid teams. We talk about how Anne and her team are building a metaverse for work that helps teams manage and grow in a hybrid environment. We also talk about the challenges of scaling a startup from an agency to a SaaS company, and how to get the most out of your startup.
Transcript
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Startups are like the whole time it's you're fighting against a headwind, right?
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I'm doing great. Thank you. And thanks for having me. I'm delighted to have this opportunity.
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Yes. Well, I'm excited. Why don't we start off with you sharing what your startup is and then
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the story. But if we just think about what's the product called, who do you serve and how does it
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work? How would you answer that? Yes. So we're building MyGenation, which is a metaverse for
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work to help remote and hybrid teams to drive and to help their managers manage with empathy,
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So Metaverse for Work, is this kind of like a virtual workspace?
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Correct, indeed. A digital office. We start off 2D, we'll build it out to 3D with specific rooms where
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they can co-create collaborate chill out play together so basically everything we've been
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building for years in the agency but all wrapped into a digital office space well tell me how you
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came up with the idea uh well actually it's a long time bro brewing so we we had the agency
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we had a lot of work done through the gamification agency and yeah the pandemic fastened up our
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process to um build a sas and basically from being a remote manager myself i saw a problem
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where you don't know who's doing what when where and how are they performing do they need support
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do they not need support so to give a bit more help to all those managers that are struggling
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in a hybrid environment that we're all living in now uh and to sort of say hey here we have
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a solution for you we've worked it ourselves this way uh for years and now we've put it into
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a package as a sauce i love it so this is super cool so uh definitely trend like working on trends
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in the market your experience domain experience consulting um and where are you connecting from
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just so that everybody gets a sense of your accent and where you're building the business
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actually stockholm sweden and the company is both in london and in stockholm so
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we have two offices international sas um how can i help well actually um we've been building
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alongside the agency so one of the things that is always a challenge is managing the double hats
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and we're raising investment because we want to really get into the metaverse and be seen as a
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player alongside some of the others so raising investments while running so many hats as a
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founder i find really challenging so is to yeah which hat am i wearing how can i attract investors
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who know me from the agency space i don't have a track record in sas and i still want to convince
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them to go on the journey with me so there's probably three questions in one is there's an
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element of managing my responsibilities as a founder attracting investors and selling the sas
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we do want to shut down the agency operation altogether. So that's very clear for me. It's
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just, yeah, for the short term, whilst we're building, we need the income all the same.
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So there's two parts to this. There's the transitioning of the services into the SaaS,
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and then there's the narrative of the services to the SaaS for investors, right?
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right? So let's break these apart into separate problems we're trying to solve.
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On the agency to the SaaS, obviously somebody writes you a check for $2 million tomorrow,
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problem solved, right? But let's say that doesn't happen. The process typically that I recommend to
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people is figure out what that amount is. What is the amount of revenue that is going to be
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required for you guys and your core team to support itself because like there's always the
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option to wind down and wind up right and sometimes team members from the services side and it's a
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framework i teach called services to sas sometimes the team members may not be the right team members
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and the mistake people make is to try to bring people with them that are not the right fit for
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the sas they could be great for consulting great for services not great for startup world as you
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imagine those are sometimes two different personalities so what i would say is yeah
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totally so figure out what it is that the team needs to look like and then figure out what the
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revenue needs to look like and try to keep your most profitable customers get rid of the noisy
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ones and and try to get them on maintenance mode so you can focus on this and then obviously if
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the funding comes in it's a non-point that's just like a high level the way i think of like
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transitioning from services to SaaS. I've done this myself. I had a consulting company called
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Sphere. We did a couple million dollars a year in services and then slowly transitioned into more
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product-led sales process. And the way I did it when it comes to just even thinking through
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like where do I focus my time, I use theme days. And I do this today. I actually run,
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I'm the CEO of two companies today. One of them is called SaaS Academy. The other one's called
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high-speed ventures right so sas academy is for coaching largest coaching group in the world for
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b2b sas founders and then high speed is essentially my family office where i deploy my own money to
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buy software companies and take all the things that i've learned scaling them as myself and as
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a coach yeah so it's but i i they're separate teams like literally i have a complete separate
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you know co-founder partner matt on the high speed side totally different team operational
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executives on this side and i run both but the way i do it is i use theme days so monday tuesdays
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and fri monday tuesdays and wednesdays are one company and wednesdays and fridays are a separate
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company and that way when like opportunities come into my world i know where to put them my assistant
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knows how to schedule them i know where to put my block time for projects yeah so like and then what
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you can do is just start with like two days on the startup three days on the services and then
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slowly migrate your way over and this is good for anybody trying to start a side hustle it's like
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can you give up fridays to your side hustle and then can you give up maybe fridays and tuesdays
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and then eventually maybe fridays and thursdays and and tuesdays and then eventually it's like
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i'm only doing one day a week on the old stuff i'm doing most of my time on the new stuff
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so that's that's that's uh just a for me the way my brain works where i'm like a very much
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a block time kind of guy. I want to block it out. I want to just have clarity in where I spend time.
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That's what works for me. Some people can manage multiple things. My brain doesn't work that way.
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And then I would say on the investor side, here's the best way for me to answer this,
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because I've had to think through this a dozen times. I've helped probably 300 friends, clients
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migrate a funding round while they were the CEO of a service company and move over.
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and what I'll share with you is there's a perfect narrative, okay? So I'm going to give you the
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perfect narrative, and then to the degree that you can fit your story to that narrative arc
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is the degree that you can like easily raise, or, and I always say to people, it's not like,
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can you, you can, everybody can raise money, right? But do you raise quickly from high-quality
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investors, or do you raise slowly from low-quality investors? Low-quality investors are like,
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So we see there was this like things that we noticed.
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they started asking us to build them this thing.
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And then we went and we like talked to a lot of people.
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And as we were talking to them, they all agreed,
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we saw this thing that told us we should try to figure out
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if there's a they're there, if the dog, you know, what is it, right?
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And now with this thing, we're showing it to people
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And that's the reason why we're raising capital.
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See, that's what, as an investor, investors want to be sold, right?
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Like, you know, I tell this to people often, it's like,
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They just don't want to take risks with things that can be mitigated, like product market fit,
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like the team, like, you know, but they want the story. They want to feel like they found the deal.
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They found this thing in the market that was like not a lot of people knew about and this person.
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So it's always like, is this the right team to do this? Meaning what's their background? They're
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doing the main experience in pedigree. A service company is actually like the best, right? Shopify,
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Shopify, FreshBooks, Basecamp, they all came from consulting and building tools for themselves.
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Like pretty much, yeah, most people don't know this.
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I would say if I had to guess, 60 to 70% of SaaS companies were built and pulled out
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That's why when people say you can't pre-sell enterprise every day, I'm making this number
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but it's probably like 50 billion dollars a year of custom softwares built custom software is
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pre-selling right when when procter and gamble hired tata consulting to build a custom erp solution
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that does this unique thing that they can't find in the market that's pre-selling because if you
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were any company that had a product that was going to do what tata said they would do or got paid to
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spec out and your product did that for a fraction of what this consulting company is going to charge
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you could have got the contract so to me yeah it's actually a really great story to say
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we know how to do this we've been doing this and we're going to go build this and we already have
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an audience in a market and all that stuff so and and i think yeah i don't think there's any
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negative to it like i think there's a undertone of the question that says well does our investors
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wanting to fund a services company that's got this sas and 100 like i would love that because i know
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that like i was looking at a deal recently and the founder got paid i think it was like 400 grand
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in the last year to do the the custom the script that he built to manage infrastructure as a dev
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devops SaaS company, he got paid 80 grand a client
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they can pay me a thousand bucks a month to do the thing.
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Like he just proved that there's a market there
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So that's where I think investors will 100% support that.
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but we're nowhere close to what we require to, yeah,
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Yeah, yeah, no, it's been super fun seeing you show up
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Yes, it's been a journey and a half, I have to say.
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Like that's the entrepreneurial journey, right?
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I think finding customers that have the pain that are willing to pay a premium to have early access to something, that's the most beautiful form of funding you can find, right?
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You know, and that's the way I've always done it.
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Because it's why I always tell entrepreneurs, if you want to start a business, the best business to start is an events business.
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And the reason why is it costs nothing to get started.
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all the lessons you'll learn to build an event so i have a friend chris who's producing this
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web3 event and i'm involved like i mean i try to say i'm not involved but like we went for a hike
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i was like somebody should create this chris you're not busy right now because you exited your
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company you should do it and i'll recruit the speakers yeah so like i'm not involved but i
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am but chris runs it anyways the the event itself will expose you to every aspect of um
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of building a company. Yeah. Like you literally, like, I got to convince a stranger to speak at
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my event. I need to manage logistics. I need to negotiate contracts. I need to sell. I need to
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promote. I need, so it's just, it's just, but there's no commitment long-term. So it's this
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beautiful little world of, so like, the more I say this and like, you could even consider it for
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your stuff. If you created this one-day virtual event for the buyer, and I actually have a
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framework called the Virtual Summit Creator, which is the same concept. So, if you knew who your
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buyer was in the enterprise and you organize an event, you can use the event to attract them
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to build the list of... Yeah, like if I was selling a Web3 retail finance tool,
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I literally am going to have 150 people attend this event that I could then at the end or in
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the middle at lunch, get on the stage and go like, here's a problem that you're probably
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experiencing. I've built this tool that helps you solve that. If you guys are interested in learning
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more about that tool, I'll be at the back of the room. Come talk to me. We're looking for early
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adopters and the room would flood to me and I would pre-sell my product. So yeah, it's just
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another strategy there's a yeah and and that is something that i could do because yeah i have a
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history in speaking so i definitely think that's that's a really fantastic opportunity and hosted
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on the platform we're building maybe yeah i mean this is like you know like every business decision
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there's there's risk right so it's like you could do that but like how how many people are not going
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to be able to join how many people got technical difficulties and which is great it's just like
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do you want to put the risk of the sales process in front of the risk of the product technology
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risks right um right yeah yeah i mean there's always like in everything in startup world
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there's always a bit of magic right like yes nobody wants to talk about it but i will tell you
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i mean some of the stories i i've done my own what i'm really proud of but like some of my
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favorite is like one this guy terry matthews out of canada he uh back in the day he was trying to
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sell to like this big company and when i say magic it's a little like hand waving like it's
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you know it's perception right like right if you have a photo on your website with a logo
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your logo on the side of a building even though you don't have an office but people's perception
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is that that's your building you know sometimes in the early days i always say in the early days
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you got to do stuff that doesn't scale and and honestly sometimes it's not legal like you can't
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follow every letter of the law like just hr laws like and you know this like it's like i'm not
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saying break the law everybody should do what they want to do but i'm just saying like we got to do
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we got to create magic sometimes so so terry matthews needs to to sell this like enterprise
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customer and he convinces a dentist to lend him his office change the sign on the outdoor plaque
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like the little slip thing to the company name and then put the logo in the waiting room and
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then made sure that they like it was his friend that was a dentist and then the people came they
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did it on a saturday because he said like i'm traveling i can't meet with you but i'll i'll
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go to the office on saturday if your executives could fly in they flew in waiting room sat down
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came into the boardroom had the meeting and ushered them out i think that the dentist opened off uh
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opened at like 10 a.m and they had to get everything like turned back over and i just
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love i know i love that kind of stuff you know like hey this doesn't make sense but we're gonna
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do what we need to do to give ourselves even a fighting chance of succeeding because the truth
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this is startups are like the whole time it's you're fighting against a headwind right like
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you're not supposed to win i mean unfortunately that's just the truth the odds are against us
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you really think so yeah i mean i have to say the last two years have been um basically an exercise
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in resilience and pivoting from yes this works no we don't get traction next part we don't get
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attraction so it's it's part of learning when to spot the signs that something's good enough
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and with this one we finally have a lot of interest probably also because it's a metaverse
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which is totally topical right now but it's actually what we've been building all along
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it's just yeah packaged differently so that we're hitting the team manager rather than the hr person
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which was great advice you gave me when we met in Canada. So yeah, that may be the person with
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the purse is not HR. Turns out that's not HR. So totally good advice. So the lower hanging fruit
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is actually the team lead. But you made a good point. As we wrap up, I want everybody to hear
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this is people need to understand that it's the entrepreneur's decision on how we package something
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right yeah and sometimes people take too long to do this and they they just feel because it's hard
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i'm supposed to do it it's hard there's also this concept of like being pulled into a market
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like you know and this is why i've always loved about living in san francisco for five years was
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on a daily basis i would get to practice my perfect intro you know my buddy clay taught and
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i teach all you guys uh or or just your elevator pitch like dozens of time and because you have
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dozens of time to practice by the second and third week it's pretty good because you're tweaking
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you're saying we do this for this it's like oh that didn't work we do this for this oh okay that
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makes sense and then how does that work well it works like this didn't understand it uh it works
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like this it's kind of like that and then and i feel like that's a part where i see sometimes
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founders struggling with traction in their market right they're just i've been at this for two years
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and it should be going yeah and i just i tell them it's like the the the core idea might be
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great but the way you're positioning it and packaging it is the challenge because a product
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needs product market fit it needs to resonate with the gap like i always say like who has your
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biggest unmet need and if you feel like you're pushing then that should be feedback for the
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entrepreneur now it but you got to be honest like how many conversations did you have did you have
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two conversations that's not enough right but if you had 20 yes if you do 20 and only one out of
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20 was mildly interested there's something wrong iterate iterate iterate and it sounds like that's
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the journey you've gone through and now there's finally a thing that the market is now saying,
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oh, we're talking about this in our meeting, so can you please come into our world and help us
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with this? And I think that's something that every entrepreneur needs to understand is a decision
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about the business. I hope they understand that it's a strategic business decision that they
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should be considering it doesn't mean because i used to call it pivot or persevere do we keep
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doing this and persevere or do we pivot and that was a meeting we had every second friday when i
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was building clarity and it was just yeah simple idea i think it was it was a call you had with us
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at the beginning we're in the middle of the pandemic in the growth accelerator which was
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exactly that what you just said and that really helped and stuck with me that sometimes you have
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to give up on some of your babies and that's okay you know and you just pivot and move away and i
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think that's what we've been doing yeah for the past two years the idea of having the meeting
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yeah the meeting idea is so that nobody thinks that you're uncertain it's this this beautiful
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like hey every two weeks we're going to reassess and if we all agree we're going to keep going
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but we're not going to do it blindly because we said we would and i think that's that's the
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entrepreneurial art that sometimes people have a hard time with that i try to give these little
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mechanics to help people think through but and based on everything i've shared what's what's
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the one thing you're going to commit to moving forward um from our conversation actually i'm
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taking the narrative and pushing it straight away into our decks towards investors so it's taking
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that yeah agency narrative combining it because i often forget where we've come from i've sort of
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feel well that's done and you know need to move forward so taking that putting in our deck and
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yeah the next investors will be hit with it so it will be a straightaway impact i love to hear that
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well it's been fun really appreciate time and i hope you have an amazing rest of the day
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likewise and thank you so much for having me on this call all right talk soon cheers thank you