Peter Reinhardt’s startup has now raised $300 million to manage your data and analytics better. That doesn’t mean the journey was easy. It took failing forward, a lot of perseverance, flexibility, and learning. Find out how he did it…
Peter recently joined me for a special episode of the DealMakers Podcast. He shared how he got started in tech and startups, the search for product-market fit, the missing piece of the puzzle, and his tips for fundraising, scaling and recruiting at a high level.
Peter Reinhardt got his first experience with fundraising in high school. Instead of just delivering newspapers like other kids, he created his own publication. He even talked to his teachers into funding it and their printing costs with a few hundred dollars a month. It was a hit.
At MIT, in 2011, he co-founded a startup with his roommates and got a place on Y Combinator’s startup program. The idea was to improve classroom engagement by developing an analytics tool that could show college professors when students didn’t fully understand a concept in real-time.
When Peter and his co-founders came out of Y Combinator’s Demo Day, they walked away with around $600k to pursue their first venture and product. It didn’t work out. Though they had built so much trust and credibility with the investors in this new network, the classroom analytics product was a flop – it had no product-market fit, as students were opening their laptops and going straight to Facebook.
The investors told Peter to keep the money and find something new to work on. After much deliberation, the co-founders settled on their next idea – a powerful data analytics tool – but this, again, completely failed to take off in such a crowded market.
At this point, they’d been working on the project for a year and a half and had spent $500k of their investors’ money, with nothing to show for it. That’s when they returned to their older ideas and found a small piece of code that grew into their current product – something with a true product-market fit, that solved a deep-seated problem for businesses everywhere.
When it came to this most recent product, they raised an additional $2M Seed extension round from Kleiner Perkins, based on their traction.
The next year they had $1M in revenues and real growth. They raised $15M from Accel in their Series A round. Their $175M Series D was led by Accel, GV, and Meritech Capital in April 2019, valuing the company at over $1.5B.
Storytelling is everything which is something that Peter was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below
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Peter’s top advice for fundraising is to take the time to get to know your investors six to nine months in advance. This is better for you and being able to read these potential investors. It is also smarter for investors.
Instead of having to make a hasty yes or no decision on the spot, on someone they don’t know, in a market they don’t fully understand, with a strategy and business model they haven’t had time to fully vet, it gives them time to complete their due diligence on the side. This can definitely work in your favor.
Then funding you is the obvious thing to do. It’s just a matter of how much and the terms.
Near-Death Business Experiences
The startup journey can be full of near-death experiences. It can be a constant battle to survive and thrive.
This isn’t just something entrepreneurs experience at the beginning in trying to find product-market fit and funding. Once it overcame its early challenges, Peter’s startup was doing well. Segment leaped from zero to $2.5M in revenues the first year. Then to $10M in revenue in year two. Then to $20M.
In the first half of the next year, Peter realized the company’s revenues had only grown by an additional $2.5M. He smelled a problem.
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