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Neil Patel

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Dor Abuhasira has already raised over $70M for his tech startup, and it’s soaring in more than one way. His startup, Percepto has raised more than $73 million from top-tier investors like State of Mind Ventures, Delek Group, Arkin Holdings, and Koch Disruptive Technologies.

In this episode, you will learn:

  • How Percepto is helping big businesses
  • The challenges of selling to enterprise customers
  • Metrics in the fundraising process

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    About Dor Abuhasira:

    Dor is a technology innovator and industry expert committed to creating autonomous solutions that contribute to Industry 4.0. Prior to co-founding Percepto, Dor worked with NetOptics, a Silicon Valley network visibility company acquired by IXIA. Previously, Dor led the development of ECI Telelcom’s Gigabit Passive Optical Networks (GPON). Dor holds a B.Sc in Electrical Engineering from Ben Gurion University, where he graduated with honors.

    Connect with Dor Abuhasira:

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    FULL TRANSCRIPTION OF THE INTERVIEW:

    Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a super-exciting founder, a founder from Israel. I think that we’re going to be learning a lot in building, scaling, you name it. And as you know, Israel, the Startup Nation. It doesn’t get better than speaking with founders from Israel. So, without further ado, let’s welcome our guest today. Dor Abuhasira, welcome to the show.

    Dor Abuhasira: Thanks, Alejandro. It’s great to be here.

    Alejandro: So, born and raised in Israel and growing up in Kibbutz. How was life growing up?

    Dor Abuhasira: Great, actually. I think you know that today, I am a father. We’re so concerned about what happens to a kid, each stage, and each year is so critical. When I was growing up in Kibbutz, it was a system where when you are a kid, zero to six, your parents will let you sleep – not in the house. In one place, we have one person guarding all the kids, which, today, sounds crazy, but I remember it as a great experience. So, to all the parents out there, don’t be so hard on yourself. Whatever you do, it can go okay afterward.

    Alejandro: How was that because, probably, the people that are listening are not that familiar with the whole concept of Kibbutz. It’s like communism inside of a community. How is that? Can you explain to us what that is exactly and how that was for you as an experience?

    Dor Abuhasira: Generally, in Israel, was founded in 1948. There were groups of people settling in different parts of Israel. When they were building their communities, they chose to do it in an equal way. You have a community where everybody works, and they share whatever they make, and they share the load of work. That also includes taking care of the kids and doing whatever our community may have to do. Originally, when there was nothing in Israel, and everything was harsh, it was actually very effective. But the rest of the country was not sharing everything. It was more capitalist and a more western environment. I think over time, they saw it getting better outside of Kibbutz, and inside Kibbutz, there were not enough people to do the hard work. Originally, most of the community survived. But as a kid, it was a great environment. You are very close to your age group. There’s a lot of outdoors. I remember it as a great experience, and overall, I think I had a great childhood in Israel.

    Alejandro: Let’s talk about computers because you were exposed to computers early on and to the whole world of innovation and technology. How was that first exposure or that love at first sight that you started to develop for this tech environment?

    Dor Abuhasira: I think that for me, it wasn’t more exposed than anybody else. I had a computer because my dad gave me one, and I always liked them. I liked to program them. I played the old games that people born in the ‘80s and playing in the ‘90s know. In school, I was in computer classes and doing my work around computers, but unlike many Israelis who are building companies after dealing with computers and building products, actually, in the Army Intelligence Units, for me, my army service, which is mandatory in Israel, in Infantry, not related to tech, and I went back to Tech University. For me, I went into tech much later than most people do when founding a company when they’re 22. I was about 28 in Israel after doing Army service and a very long trip around the world, around South America, for about a year. So, it wasn’t that I got into tech very early. If anything, very late compared to some entrepreneurs.

    Alejandro: But pretty much the same situation as other people there in Israel because everyone needs to do the Army. In your case, you did Infantry, so not a special unit for technology and whatever. So, for you, how was that journey of going through the Army and some of the good stuff that you got out of it and anything that you can share with us?

    Dor Abuhasira: For me, the Army is a big part of building my character and put me in a situation where I will be happy, where we have to constantly solve problems, to lead people in difficult situations, to prove to myself that I am able to lead, and I’m able to solve hard challenges. For me, it was building character more than anything else. I think for entrepreneurs, in general, it’s probably the most important thing you can ask for. Again, I was always frustrated that people who are building projects in the Army, when they finish the Army, they are ready to go. For me, it was another process going to university and working in tech companies for a while before I felt that I was ready to build my own product and do my own thing. But I’m not regretting either of those steps along the way.

    Alejandro: Absolutely. When you finish the Army, you decide that it’s time to pick up the studies and do electrical engineering. Why, out of all things, electrical engineering?

    Dor Abuhasira: It’s actually a good question because I knew that I wanted to study basically engineering, and I knew I wanted to be in the highest level that there is. Over the ‘90s, in Israel, the semiconductor was very big. Electrical engineering was kind of owning the semiconductor, and they had the strongest department in universities. When I asked people who were older than me, “What’s the best kind of engineering that I can go to?” They said, “Go to electrical engineering, and you can go to a different, easier one if you want to. That’s what led me to electrical engineering. I really loved it a lot, understanding the lower level of how products work. But as I think in many cases, it was more random than I loved transistors. I think that today, it’s actually changing. Today if you’re thinking about where most of the focus is, it’s probably more software engineering, and I was in transition between those trends.

    Alejandro: Also, there’s an interesting transition that happened in your career because rather than doing the whole movement of Startup Nation there in Israel, you decide to do corporate. So, tell us about that journey from corporate to startups.

    Dor Abuhasira: I think that for me, it’s not that I really knew I was going to build a company as soon as I started. I know I wanted to be involved in something like that, but I didn’t know if I was going to build it because I didn’t know how I would stand. When I graduated, for me, the logical next step was to go to work somewhere and to see what I could do. I think that’s an important step. If you go to work for a corporate, especially for a good R&D team, then you get proficient very fast in how you build products, which is not what you do when you are in the university. In my story, that was a very good next step to build for myself the understanding of how R&D and high-tech in general works, and what I can do, and what my worth is in building products, which, for me, was very important. Some people can do without. I don’t think that there’s one lane that you have to go through. But, for me, I think when I was working with corporates, I learned two things. First, I can do product, and second, I don’t want to work in a corporate the rest of my life [laughter], and made that transition working in a corporate, knowing more startups, more people building products, and thinking about this stuff with my friends, and realizing what we can do as we ended up doing, building Percepto.

    Alejandro: And, obviously, 2013 was a really interesting year. That was definitely the segue and the moment where you stumble across drones. So, how was that moment?

    Dor Abuhasira: I have a very good friend, Raviv Raz. He’s a childhood friend, and we used to build stuff together in our garage next to our house. One of the things we used to build in 2013 was drones. It was very easy – go online. Over a weekend, we could build a product that we realized could do a lot of amazing things. You can send a drone a mile away, get an image from a mile away, get it back, all this autonomously after a week of work in 2013. Reviv is my co-founder and friend. He was working in Israel Aerospace Industries at that time. It’s the largest drone manufacturer in Israel. He thought in his work, this was considered a very high capability, and we could build this over a weekend. We figured out we could maybe do something around drones.

    Alejandro: Got it. When you have this exposure to figuring out that there’s something you could do around them, what are the next steps or what happens in that journey from really being exposed to something that you’re excited about to deciding that you wanted to dedicate your life to it?

    Dor Abuhasira: I think it’s steps. You’re thinking that maybe this can work. It starts as let’s test the waters and start speaking with people. At first, we were two, and then we added Sagi Blonder. I was getting my Master’s in computer vision at Ben Gurion University at the time with him. I added him because, in Israel, we all feel that if you have the best technology product, then everything else is solved. We learned that’s not the case over the years, but when we founded the company, we added Sagi, and we had a core technical team. We started working around Tel Aviv with a drone. So many VCs would just meet us because they thought it was cool. “If you get a meeting with us, you’re going to see a drone. It’s going to fly. You’re going to get computer vision. It’s going to be like a celebration. No one wrote a check. [Laughter] But everybody wanted to listen – you kind of get to feeling that what I’m doing is interesting. There is interest, and I had to figure that out. For us, the way for us to do that was one of the accelerators in Israel. We joined an accelerator called Elevator Fund, and I think that helped us a lot. You know, small dollars make a big difference when you have zero. From zero to $100, it’s like a huge difference for an early-stage company. We also have some people in just eight years and realize where we’re taking this. We end up having a direction. We end up pivoting that direction, but we were later able to raise our first seed round with that process.

    Alejandro: What was the before and after of joining this accelerator because probably there are going to be a lot of people now that are listening to us, and they’re thinking about whether or not it makes sense for them to do an accelerator or an incubator program. So, what was the before and after for your business?

    Dor Abuhasira: First of all, we started thinking about it. I don’t think I have the answer like that, but I do think that if they are feeling that they are clueless and they don’t know how to proceed, it’s a great way to move forward. I would definitely advise them to do that because, for us, we were three technical guys trying to build a company, and we were not experienced in fundraising, not in business development. When you don’t know what to do, you end up doing what you know to do, so we were building the product all the time, and that was not the best use of our time when we founded the company. For us, being in that accelerator got us to the right group of people to network and pushed us to defend our idea with different discussions. For three tech guys who were doing that for the first time, it was a great push. If you’re considering it, I would say, yes, you should understand what your value is, but if you don’t know what you’re doing, and you’re doing it for the first time, then take a leap. Do whatever you can to get more people involved and good people involved, even though it might take some equity or something small, it’s not an issue in the long run.

    Alejandro: There’s something really interesting here, and I don’t think a lot of people touch on it. When you’re building a business, especially in you guys’ case, you and your co-founders are very technical. I find that the shift from technical to business is challenging. Why was it so challenging or why was it challenging for you, and then, how were you able to address that to create a proper business, not just a product?

    Dor Abuhasira: It’s extremely challenging. In Israel, even though you’re doing it so far from the market, it’s even more challenging. For us, it was so challenging because we were building a new – I can’t say a new market, but yes, it was a new market. There was no market for drones or drone services. It was all in the beginning, and we were far away in Israel. What we ended up doing was adding the fourth co-founder because after we spent the first year building a product, it was basically a computer vision add-on for drones, trying to sell that drone company to help them make drones more traverse. The market felt so hot. If you read about a market only online, you feel like it’s a huge market. If you go and meet the clients and meet the companies, you’re going to realize it’s hype, and you’re going to realize that you’re really selling to a handful of companies that are not selling drones. For us, the big step forward as a company was realizing that we were missing the key capability, and none of the founding team was it. We ended up, after a year, adding the fourth co-founder, Ariel Avitan. He was joining us as Chief Commercial Officer. He was doing that route with a different company, going from the employees from 120. He left the company after they did their B round with Sequoia and joined three guys in a basement in Tel Aviv. He joined as a co-founder, and I think that was a pivotal stage of the company because then we were also realizing that we don’t have a real product yet for a market and changed the company to an end-to-end solution that ended up building the company forward.

    Alejandro: Very nice.

    Dor Abuhasira: For us, I think my greatest journey was to understand that I don’t have the capability and have that coming into the company.

    Alejandro: That’s interesting because typically, you don’t know what you don’t know. What was that point where you realized, “We need some help here”?

    Dor Abuhasira: First of all, I think it’s, for me, I usually – I know what I don’t know, and I know that this doesn’t make sense, and I need some help. I think that actually the accelerator – we were up with that. Raviv said, “You’re great. It’s amazing what you’re building, but we don’t understand what you’re saying, and we need to get somebody helping you refine that.” They actually made a connection to that fourth co-founder. I think the key point for me is, you have to know how to get help, but you can’t get help from anybody. Before adding that co-founder, I met two others. I think Elevator Accelerator introduced them to me as options to be co-founders.

    Alejandro: Right.

    Dor Abuhasira: With both of them, after five minutes, I knew I didn’t want to continue. And with the guy to be my co-founder, after five minutes, I was pitching. I knew that was the guy.

    Alejandro: Right.

    Read More: Steve Fambro On Raising $50 Million To Create The First Mass Produced Solar Powered Car

    Dor Abuhasira: Many people are not allowing themselves to get help, and it’s a key and a quality to keep building as you’re building the company. Definitely get help in the areas where you’re weak because you’re definitely weak in some areas if you are two guys starting.

    Alejandro: Absolutely. What ended up being the business model of Percepto so that the people listening understand it?

    Dor Abuhasira: Like I said, we originally tried to sell technology for drones, and we didn’t have that many drone companies, definitely not that many big drone companies at that time. Our only customer was Defense. We actually had some traction in Defense, but it was not a good market, and I can talk a bit more about it, but it was not a good market. We realized that industrial companies are very excited about technology drones. They have a huge impact on their industry, but industrial companies are at a stage where they are figuring out what exactly are they going to do with drones? How would the solution look? Who is going to be the service? Who is going to get the data? Where is it going to go? They were not ready to buy that technology piece that makes the end drones autonomous. They have to figure out so much stuff on the way. So we decided that we were going to sell them an end-to-end solution [20:38] autonomous drones. We had an autonomous drone. We had a drone in a box. The key part of it was that you didn’t need an operator to operate it. So you usually have a box somewhere in the world, and from a Cloud interface, you could get data and send that drone to build team missions of security inspection monitoring whatever that may be. When we were making sense in terms of, “This is our offering,” finally, clients were able to say, “Yeah, okay. We want that. That’s what we need a drone to do,” and we could start iterating and building the business.

    Alejandro: Very nice. How much capital have you guys raised to date, Dor?

    Dor Abuhasira: $73 million. Our last round was $45 million, so $45 million is roughly fairly fresh, but $73 million to date.

    Alejandro: Got it. I know that you haven’t had the metrics all the time to be able to have that leverage on financing rounds and getting stuff happening right away, so what have you learned, especially during fundraising and capital raising efforts where the metrics are not where maybe you would like them to be?

    Dor Abuhasira: That’s definitely a good question. I think nobody has metrics. [Laughter] You hear what metrics should be, but if somebody has the metrics, then he’s probably jumping around and doing the next round in too high a valuation.

    Alejandro: Yeah.

    Dor Abuhasira: In our last round, when we were in a much more mature commercial stage – again, it’s a $45 million round, the B Round. Our A Round, a very good Silicon Valley-based VC, was $14.5 million. So, no small area. Before that, we had two seeds, a $6 million and a $5 million. We ended up raising a lot of money before we had the metrics. I’ll do the metrics because I think it’s something that people say, but many investments are not based in those metrics, especially early-stage. One of the things that we had to figure out is how do we prove or explain, first to ourselves and then to investors, why this makes sense? I think, for us, we ended up understanding that we are going to sell to energy, oil and gas, and mining companies. On one hand, you have a company that many of their facilities generate hundreds of millions or a billion-dollar facility, and you can provide a lot of value per facility for addressing downtime. Even a day is huge ROI. On the other hand, it’s not the fastest company – not selling to Google or even Oracle. It’s a different sales process, and not many benchmarks of unicorns selling to these industries software as you have in other industries like IT and fintech, and cyber. We had to understand how scale would look. How is this becoming a billion-dollar business in one? We had to show that trajectory is happening, and I think my best analogy is if you think about companies selling to the automotive. Automotive people understand that, yes, it’s off-metrics. You look at all the specs in this area, and it’s off-metrics completely even in the public market today. But there are very good examples of companies that got in, and when they became part of the car, they were doing a lot of money and becoming very profitable, and I think that would help them, again, do IPO outside of metrics. For us, we also realized the same kind of trajectory in very heavy industry procurement processes and how they are building their technology future. You have to understand long-sell cycles. You have to understand the company that is buying one system for you is basically doing the POC, even if they already bought the system because if you have a company like Florida Power & Lights or the companies that we work with, if you are deploying in [25:20] they have many others, and they are trying to see if they have a better way to do something. Then they’re going to want to deploy. The hard part is to get to that point because it may take them two quarters, it may take them a year or two if it’s an autonomous drone that has some risks associated to it to make the decision that this is working well enough for them to now more heavily deploy. But I think one of the good things with them is that they’re going to explain it to you if you are willing to listen as you go, and their ultimate goal is to heavily deploy in a very strong way. I heard a lecture by ExxonMobil’s CTO, and she said that her problem with startups is that usually, when they are ready to deploy, the startup is not ready to scale in terms of manufacturing deployment capabilities because when they are deploying, deploying is very big. When we did those rounds, we didn’t have the trajectory that people knew from IT and fintech and all the [26:35] that you would like to see, but we had tens of multi-billion-dollar companies already have their toes in, already have POC of one deployment and already articulating how the next steps would look over a few years. Of course, there was risk thinking about 2019 when we did our A Round. Of course, there was risk around their trajectory to doing that, but ultimately, I think there was also a huge opportunity against so many of those major clients indicating, “This is super interesting for us. This is our future. And, yes, it may take us a year or two, but we’re going to get there.” Now, we’ve fueled them. It’s going very significantly. At $200K in 2019 is now $2 million, and the ones that are doing that are very lucrative.

    Alejandro: Absolutely. Let me ask you this. What’s in store for Percepto? Let’s say that if you were to go to bed tonight and you wake up five years later. You haven’t slept like this in your whole life, and you wake up in a world where the vision of Percepto is fully realized. What does that world look like?

    Dor Abuhasira: The news is autonomous inspection monitoring. You’re going to have a lot of autonomous robots being used for inspection and monitoring across the world in industrial facilities and infrastructure. I’ll give you one great example that we have for our power grid. I was living in California until a few months ago. I don’t know if you know, but PG&E, California’s biggest utility, was bankrupt. Two years ago, they admitted that they were at fault in the fires that took the lives of 85 people due to faulty equipment. When you think about it, PG&E is a great company, and I’m sure they did the best practices in this market. It basically means that they inspect their power grid once a year. Someone, sometime this year, will inspect that area of the power grid. But the best practices in this market are like all across the U.S., and Israel, and everywhere. The industry was built this way because there was no other economical choice. You can’t have somebody every day doing that, and it will cost too much. Now, we are working with Florida Power & Light. I think it’s public already on the East Coast, about a solution where we’re going to inspect the power grid with autonomous drones at roughly the same cost, basically once a week or once a day – it depends on the customer because the inspection part will be completely automated. Then, not only are you going to do it more frequently, you’re actually doing it in a much more repetitive way, the same time every day, and you’re going to be in a much better position to have AI tools to indicate where there are anomalies. Where is there change? Where do I see a problem happening? And it started being more effective in how you manage your professionals and maintenance operators, and this all. What’s important to understand about Percepto is that our key understanding about our market is that we have to provide an end-to-end solution for our clients to be able to do that. With Percepto, four years ago, when I started with an autonomous drones company, two years ago, we decided we also are going to build an entire software stack of how you manage this data, how you manage these robots, and how to end up using this data to do analytics and AI too. Ultimately, what we sell to our customers is their report that indicates what they have to do about their network, in case, can be a pipeline or other assets in other examples. For you, personally, it’s going to mean a world where basic infrastructure like gas, electricity, and other products would be safer, cheaper, and for the companies managing that, they’re going to be having more efficient, less downtime, better response, and again, ultimately, safer because in most of those industries, people are dying every year, and we are taking a lot of that dangerous work that they’re doing and automating that, as well.

    Alejandro: There’s a question that I typically ask the guests that come on the show, and that is, let’s say I put you into this time machine and we’re able to bring you back in time, and you have the opportunity of speaking with that younger Dor, with your younger self, and essentially, you have that chance of giving yourself one piece of business advice before launching your business. What would that be and why, given what you know now?

    Dor Abuhasira: For me, personally, it’s a mistake I feel I made. I would urge myself to focus on the market in the business earlier because I was very focused on the tech, and I’m still in love with the product and the tech. I must admit, I love what we do, but I think as you build the company, you’ve got to focus on the biggest uncertainty for your business, and you have to focus on how you’re building your business. So, for me, I needed to do it a bit earlier. What’s the best advice before founding Percepto? I would say, what are you waiting for?

    Alejandro: I love it – very profound, Dor. For the folks that are listening, what is the best way for them to reach out and say hi?

    Dor Abuhasira: LinkedIn is the option. It’s a bit crowded. I end up getting there better than Facebook, because I’m much slower at Facebook. Probably LinkedIn is the best. I apologize it will take me a week or two to get back to you, but I will do that eventually. I must say that anybody who is frustrated about his having a hard component in his business, he’s got a long sales cycle and commercial markets, those are things where I spend a lot of time, so big problems around, and maybe I can help thinking about some topic. I do think it’s one of the hardest things that you guys can do if you are entrepreneurs, and we should help each other, and if there are people who are not entrepreneurs and are corporates, then I think it helps everybody if we help these entities and startups, so I’m happy to help, and I hope people will do the same.

    Alejandro: Amazing. Well, Dor, thank you so much for being on the DealMakers show today.

    Dor Abuhasira: Thank you for having me. I had a great time.

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