#4: Startup Corner: Q&A with Leila Oliveira
Insights into the startup ecosystem and acing the fundraising process with Leila Oliveira
Welcome to another edition of Startup Corner, where I excitedly caught up with Leila Oliveira to get her pulse on the startup ecosystem, in the process getting fundraising nuggets that startup founders can adopt into their own fundraising journeys.
Leila has dedicated the better part of the past four years to helping companies build business strategies that generate sustainable momentum and raise capital effectively.
I have been religiously following her contributions towards the startup ecosystem on LinkedIn for quite some time now (go check out her writings!), and am glad that I could pick her brain on everything fundraising.
Whether you are an early-stage founder dabbling with your business idea, or even far along in your fundraising journey, this is an interview you don’t want to flip over!
Here we go!
What is your investment thesis - how do you select the startups you invest in or collaborate with?
We look at a number of criteria before bringing a company on board but the main ones are:
- Sector
- Founding team
- Use of funds/what’s the upside of investing in this opportunity
- Milestones achieved so far
And my favourite:
Why do your customers like your brand?
How do you anticipate the startup environment evolving in 2024 given the current global funding climate?
Looking at the market, we’re seeing ASX down 80% total capital raised in FY23, IPOs numbers aren’t promising and VC reports showed that we had the slowest quarter since 2019. Yet, how this translates to investors is that offers are at a more reasonable valuation, and companies are preparing more for the raise and showing better traction.
Additionally, in 2022 we saw record levels of Dry powder globally ($290B reported in the US only).
So to sum up, there’s money in the ecosystem and some surveys reported that investors they’re in lookup for good opportunities again, now that their portfolio companies are better positioned. I’m positive that good companies will still get funded!
What are the top three factors for you to conclude that a startup has scalability and growth potential?
Nail one market first before moving on to the next
Most companies based in Australia have plans to expand to the UK and the US - which absolutely makes sense. But if you don't have a good market share in one country yet, try and scale before can just dilute your resources without actually gaining market share and growing the brand
Have an engaged community/customer base
This is a must for companies that we work with. It's a massive green flag for investors to see companies with a loyal customer base. It's essentially having a bunch of brand ambassadors telling their friends and family about your brand, buying constantly from you and sharing positive feedback.
Has a pathway to profitability
It's ok if you're business isn't profitable yet - in fact, most startups aren't. But what's your plan to become profitable? Does your business model support growth just by acquiring users (or even better, retaining them) or will you need new injections of capital every year?
In one of your posts, you advise founders to analyse data pertaining to the fundraise. What would be the ideal approach for founders to do so?
Good question!
So, Australian companies that raise capital with us at Birchal, have access to all of that data during their campaign. They can see how many investors are expressing interest in their company, what’s the average investment size and how engaged each investor is. This helps to identify key investors and have different strategies depending on their level of engagement.
For private raises, platforms such as FounderSuit, Ansarada and DocuSend also have this function.
What are the top traits that founders showcase during fundraising that instill confidence in their entrepreneurial abilities?
Stress management/emotional intelligence
We always talk internally that when we see founders that can manage the stress of a fundraising, still being able to perform and being kind - are founders worth investing in.
Market insights
I also personally believe that it’s an awesome opportunity to learn about how the market is perceiving your company, collect feedback and make better decisions. You learn a lot about investor behaviour that applies for your clients and vice-versa.
Storytelling
Following the same train of thought from my last point, during the process you change the narrative or your pitch quite a lot, and find out what ultimately works for you. I think it’s a great idea to go to your friend and family and explain to them what you’re doing in simple terms, observing which parts of your story makes them excited.
Should founders over-emphasize on any specific aspect of fundraising, something that is often overlooked?
More and more I realise how important storytelling is. Yes, your traction is super relevant, but the way you present the opportunity can get people’s attention or not. And if we lose them in the beginning, there’s no time to chat about your traction or goals.
Any success stories come to mind, of a startup you came across, that had all the right ingredients for success?
The best part of my job is that I work with really good opportunities that I personally believe and see potential in.
We just closed a raise for NakedLife (3M AUD) last week, AUS #1 Non-Alc Cocktail Brand & AFR Fastest Growing Company.
Pleasant State raised 1.2M a few weeks ago leveraging their personal brand and using storytelling as its finest.
Recycle Smart has an awesome team and I love the concept “Recycling as easy as ordering a pizza”, including soft plastics! They raised over 1M with us, and because of the raise, now they’re expanding to Melbourne and potentially other cities in the next few months. It’s a good example of a company that is doing good for the world while also working towards profitability.
How do you view the debate between "growth at all costs" and the focus on sustainable unit economics?
The beauty of the business world is that nothing is set in stone, and what works for one company won't necessarily work for another. Definitely “growth at all costs” is an unsustainable trend that only a small percentage of businesses can afford - the truly revolutionary ones, backed by big VCs with deep pockets. We’ve seen that since last year investors have been looking out for businesses with a pathway to profitability.
I hope you gained valuable insights from this episode with Leila. Looking forward to your questions for Leila in the chat below!
See you in the next edition of The Startup Corner!