How we raised our Series A without a pitch deck

Francis Plaza

Two weeks ago, we announced that PayMongo raised a $12 million Series A financing led by Stripe. Today, I’d like to share our journey how we raised our A, taking an unusual approach of not having any formal pitch deck.

We decided to tell our story to investors in prose through an investment memo.

The Covid-19 pandemic made face-to-face meetings impossible, which a pitch deck would require. More importantly, we felt that pitch decks—though a great forcing function for brevity—could not justify putting PayMongo’s story, our progress and our vision of the future at the centerpiece of our fundraising. We found that sending an investment memo allowed us to focus on the important details during several Zoom calls with potential investors.

Typically, fundraising materials are confidential. Some folks in the team wondered if we’d be sharing too much if we wrote about it. But we’re proud of our growth, and we hope that by sharing our Series A journey, we’d be able to help other founders who are thinking of having, or are already in the process, of fundraising.

Ultimately, your success in fundraising is driven by what you’re building and the problem you’re trying to solve. Your pitch deck or investment memo, although relevant in getting your story across, is secondary to the actual progress, the team and the vision you have for your company.

If you were to ask us a year ago when we planned to do our Series A, the answer would have been sometime within the first or second quarter of 2021. Last year, we raised a $2.7 million seed round that allowed us to aggressively invest in our team, our product and our growth early on. Since then, we stayed lean and kept our heads down—focused on building the critical foundations of the product. The last few months proved that the key decisions we made early on were crucial to support the massive growth we experienced, primarily accelerated by the Covid-19 pandemic.

We looked at this as a silver lining in an otherwise grim global situation. Big and small Filipino businesses were urgently shifting online. This prompted us to take an even more aggressive approach to our roadmap.

Here are some of the lessons we learned raising our Series A:

1. Build relationships early on

It’s naturally hard to decide if an investor will make a great partner after a 30-minute Zoom call. That’s why it is important to spend a significant amount of time getting to know your potential backer. After we closed our seed, I kept in touch with investors and connected with new ones on a regular basis. My monthly calendar normally gets filled with dozens of VC chats—many of those calls were quick conversations about some interesting things going on, picking their brains on ideas and just sharing little updates about the company.

When we first met the Stripe team last year, the intention was to simply exchange notes about the product we were building. We didn’t plan on having any specific conversations about fundraising. But Stripe ended up investing on our seed. From then on, we’d regularly hop on calls with different teams at Stripe to chat about the product, talk about our customers and, sometimes, the problems and challenges we face.

This regular interaction, though seemingly mundane, gave investors a lot of context on how we work as a company, how our platform works and how we are growing. In the same vein, we got to know them deeply. Establishing relationships early on also lets you get to know which among these various investors align with your vision.

There is no easy way to build a company: you need investors that you can trust and will help you get back up when the going gets tough.

2. There is no such thing as starting a fundraising

Fundraising is always an ongoing process. Justin Mateen, one of our angel investors, gave me a great piece of advice: a good founder never does fundraising but keeps fundraising at the same time. In other words, founders must always be in semi-fundraising mode. There’s no switch you turn on that says: “Time to fundraise and talk to investors.”

The benefit of building relationships early with investors is that conversations ultimately lead to interests. Since investors already have context about your company’s progress and vision, it becomes more natural to transition towards a serious conversation about a fundraise.

For PayMongo, our occasional meetings led to a term sheet being offered just four days after we expressed our interest to start considering a fundraise. After sharing our investment memo, the entire round was filled in less than two weeks. So, instead of pitching on a general offer, the centerpiece of our conversation was our progress, our roadmap and our vision of the future.

3. Never hesitate to ask for help

If you haven’t noticed it yet, the key takeaway is that fundraising should be part of your daily routine. This means that a lot of the important parts happen when you are not raising the actual money. The best way to build a relationship with an investor, even if they are informal, is to talk candidly about the challenges you face as a founder and as a company. Great investors help even when they are not invested in your company.

Before taking on Bedrock as an investor, we had several calls with Spencer Peterson. In the couple of months that we spoke, Spencer gave us useful pieces of feedback. These insights allowed us to think deeply about our strategies. While he wasn’t an investor in the company yet, Spencer was thoughtful in our calls and asked a lot of key questions. Our conversations helped me think about our business better and, in turn, become better as a founder. The team and I couldn’t be more thrilled to finally partner with Bedrock.

4. To some, the market is never big enough

Not everyone will say yes to you. I think saying this brings no surprise. Looking back, failing to convince some VCs to invest in PayMongo was never as bad as it seemed. After doing hundreds of investor chats myself, moving on to the next one has become easier. It is important to know that many investors will pass, either because it’s too early or the market isn’t big enough. While these ultimately may not be the only reasons, you’ll usually hear them because they are the easiest to explain. And that’s OK.

We heard exactly these when we were first raising our seed last year. Some local investors passed because the product was too early and other foreign investors felt that the market was not big enough. Innovations always never come as obvious at the early stage. Part of building a relationship with investors is knowing who are the ones that believe in you as a founder and your vision in creating an insanely successful company.

5. Fundraising is a means not an end

When you close a round, the problems get harder and the stakes are higher. When you take someone else’s money, you become responsible for returning it ten-fold. Ultimately, your goal is to build a sustainable business. Venture money allows you to grow fast, but never confuse raising money with building a great company. This means that the most important thing you’ll ever do is to build products that people want.

As conversations about a fundraise for a Series A became more serious, it was my job to focus on the investment and other due diligence work. Meanwhile, my co-founders and the rest of the team continued to focus on their tasks that would make the company grow even faster and make our customers happy.

At PayMongo, we celebrated our Series A for a day, then we all went back to do the real work.

Published date:
April 20, 2021
Sign up for freeRequest for a demo