RESEARCH TRIANGLE PARK – Three high-profile startup CEOs will speak at CED Venture Connect Summit next week in a session called “Growth Stories”. Each CEO will join the stage with one of their investment partners to discuss recent fundraising. But we have a sneak preview of the wisdom they’ve gained and the lessons they’ve learned.
Billy Marshall, CEO of ServiceTrade, will speak alongside Jason Caplain of Bull City Venture Partners (BCVP). ServiceTrade recently closed an $85 million growth investment.
Xiling Shen, CEO & Co-Founder of Xilis, Inc., will join the stage with Phil Grayeski of KdT Ventures. Xilis recently raised a $70 million Series A round.
Finally, Anna Rath, President & CEO of Vestaron, will speak with Chris Abbott of Conti Ventures. Vestaron is working on a raise of $101 million and, according to a February filing with the U.S. Securities and Exchange Commission, has made progress to the tune of at least $61M so far.
Marshall will tell CED attendees not to correlate fundraising with success
Marshall said that his message at CED will be a warning to startups.
“Do not measure your value by your ability to raise money, because those two things are not tightly correlated,” said Marshall.
ServiceTrade, a SaaS provider for commercial service contractors, is based in Durham. Their recent $85M growth round was led by JMI Equity, and BCVP, an early investor in ServiceTrade, also participated.
According to Marshall, who had also raised funds for a previous startup, he had trouble raising early funds for ServiceTrade.
“This one was impossible to raise funding early on,” said Marshall. “And now, it’s already a proven success.”
The company’s early funding included two separate funding events, the first of which was a friends-and-family round. According to Marshall, Caplain did not participate in the first round.
“I’ll tell you the joke on that,” said Marshall. “Jason got in at a buck-twenty. He had multiple opportunities to be in at 70 cents, and he declined, and he declined, and he declined.”
Shen will tell founders to look for investors who bring more than capital
Xilis, a precision health technology startup currently focused on oncology, closed its most recent round last summer. The round was led by Mubadala Capital and also attracted GV (formerly Google Ventures) and the Duke Angel Network. Prior investor KdT Ventures also participated.
Shen said that his message at Venture Connect will be about the role of investors.
“Funding is not just funding,” said Shen. “What do investors bring in on top of the funding?”
Shen said that Xilis can credit a lot of its success to its investors.
“That’s how we are here today, at Xilis,” said Shen, “because the investors both gave advice but also the network that really helped our company becoming at least what we have achieved so far.”
Shen said he plans to share examples of how Xilis investors have provided more than capital.
“The funding is the funding, but our company is here today it’s also because what the investors brought it outside, beyond the funding,” said Shen.
Rath will share creative fundraising strategies
Vestaron, an agtech startup focused on biological insecticide technology, moved its HQ to Raleigh-Durham in 2019. Rath said she plans to share the perspective of an agtech company looking for later-stage funding.
“While there is a lot of interest in agtech, there is not yet a wide array of really sophisticated investors in agtech,” said Rath. “So many of the funds are aimed at earlier-stage companies, are smaller in their scope.”
She said that she and Abbott plan to discuss how these challenges affected her strategy for their current raise.
“I think the theme that Chris and I are going to focus on is really around some of the specific challenges inherent in bringing together successful fundraising rounds in agtech,” said Rath.
Abbott is the Co-Head of Conti Ventures, the venture arm of Continental Grain Company (CGC). According to Rath, Abbott was helpful in speaking with other investors who may not have been as familiar with agtech.
“Getting to these mid and later stages of fundraising,” said Rath, “I think you need to, as an agtech company, look beyond that, kind of, traditional agtech cohort and get to some other pools of capital, whether that’s, in our case, life sciences or family offices that have a strong impact or ESG focus.”
Connections to the Triangle
Each company has a connection to Raleigh-Durham. Both Xilis and ServiceTrade were founded here.
Rath said that she picked Raleigh-Durham four years ago when deciding where to create the company headquarters. because of the agtech presence and the venture community.
“When I took over Vestaron four years ago,” said Rath, “what Vestaron was was really an R&D team based in Kalamazoo, Michigan, and while I didn’t want to do anything to disrupt the, sort of, cohesiveness and productivity of that team, Kalamazoo, Michigan was not going to be the best place to build out the ag executive team and the rest of the company that I needed to build. And so, I thought about all of the places you would do that in the United States.”
Rath said she felt Raleigh-Durham was the best because of the “presence of ag majors,” and other venture-backed agtech companies.
CED returning to in-person
CED’s Venture Connect Summit will run on April 6-7, returning as an in-person conference for the first time since 2019.
Marshall said he strongly supports the decision to return to in-person, referring to the capital that can be gained from in-person connections. He shared his own longstanding connections to Caplain, who he met when they both started at Red Hat over 20 years ago.
“We both joined Red Hat on the same day,” said Marshall. “Jason was sitting two cubes over from me.”
He said that in-person events and workspaces help to create “social utility”, and said that his history with Caplain was one illustration of that.
“There’s a perfect example, right?” said Marshall. “Jason I knew one another well, prior to being in the realm that we’re in today, and that facilitated their investment and return in us, and me getting them involved to help me. One-hundred percent.”