The incredible story behind how Carted raised one of Australia’s largest seed rounds

Holly and Mike from Carted ran the most effective fundraising campaign to gather support of world-class VCs with a record AU$13m Seed round. These headlines and deals don’t just happen, there is a process behind them.

Read on for a teardown of their fundraising strategy.

As a disclosure, we are pre-Seed investors in Carted through TEN13.

We backed the founders, Holly Cardew and Mike Angell when they set out to change the face of social commerce originally via their product, Vop. This progressed into a bolder ambition with Carted, our investment notes are here if you want more background on how they shifted their focus to building a universal commerce API infrastructure platform and how they plan to change the way commerce is transacted for the future.

A question many will ask is how Holly and Mike managed to convince some of Australia’s (and the world’s) top investors to support them to the tune of AU$13m at their early stage.

Prior to their fundraising, we sat down with Holly and Mike on a monthly basis to catch up and strategise on the future plans for the business, the team shared their vision for Carted on building a Universal Commerce API infrastructure platform that could change commerce.

Fair to say we were excited, this problem is massive and their proposed solution is potentially category-creating. However, this sits firmly in the venture investment category, it is high risk, requires serious capital & resourcing to build, and thus they needed a strategy and playbook to raise the capital required to deliver on their plan.

The team had an offer of investment for ~10% of the business from very reputable angels in their sector around January 2021. We sat down and agreed, if you are going to raise capital then let’s run the right process, get in front of solid investors, prepare the pitch and due diligence materials, and optimise for the outcome that they want and capital required to execute on their bold vision.

So we set out to pursue a US$5m fundraise and planned the process as outlined below.

Fast forward 3.5 months, the metrics as follows:

How did they do this?

Effectively the capital raising came down to a few core areas:

• Prepare in the areas that matter
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• Get connected and meet as many relevant investors
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• Generate interest and create FOMO

PART 1: Prepare in the areas that matter

The founders and team worked on a few areas that were really helpful in their preparation.

Create a pitch deck that tells the story effectively

• Holly and Mike pulled together their pitch deck and then stress-tested this with friendlies including their existing investor base such as us (TEN13), Matt Allen, David Wurtz (Google Drive and Google Fonts co-founder)
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• The pitch deck will never be perfect, but getting honest feedback helps refine the pitch and messaging. Stress test and do some practice runs as if you were pitching to an investor.
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• There are lots of examples of good deck structure. You can check out the deck Clipchamp used to raise their Series A we released in the acquisition article last week. see Sequoia’s here, and a great one from Pikochart here. Decks are a good entry point and lever to open the conversation.

Prep the dataroom

• Everyone has seen the dataroom lists of what’s required – we’ve open-sourced our own list of what to put in the dataroom. Definitely do this step, get a clean version set up in Dropbox / Google Drive and include all the core material such as legal documents, company structuring, contracts, org charts, financials etc.
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• The more interesting part was the way that the team shared their views on the future of eCommerce (their sector) and how they thought about different aspects of their business. They dived into the core commercial areas that needed coverage and then wrote long-form responses (2-5 page documents) on how they plan to monetise, go-to-market strategy, competition etc.
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• Think of it as an investor FAQ, if you can prep the expected questions and responses quickly then your responses are already at hand when they come in from investors. It makes the investor <> founder process as streamlined as possible.
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• As a founder, what you are looking to do is ramp each investor’s knowledge of your business and share your view of the world as quickly as possible. You want to achieve knowledge parity.

Agree who will be the point-person for capital raising:

• Agree on who will manage and run this for your business – ie: who is the point person that you’ll have to sacrifice a lot of their time to run the fundraising. Understanding that they will likely be focussed on investor discussions, meetings, preparing material, and more. Effectively, you need to allocate a project lead who is usually one of the founders, often the CEO. Fundraising is value-destructive by nature as founders are defocussed from spending time on their business, but the outcome of a successful raise is what they go through the pain of fundraising and repeating the story in order to raise the capital to build their company.
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• Holly ran lead for Carted and would manage all the admin & logistics, dataroom, etc.

Investor research

• Start an investor tracker sheet and source the top investors that suit your stage and your industry. You need to be targeted, even to the level of who is the best person at said venture firm to connect with given the past deals they’ve done or thought leadership about your sector etc. The more targeted, the better.
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• Once you have a good list as a base, go to your existing network (might be existing investors, other founders, advisors) and share the list. Be specific with your ask for two actions being 1) review the list and add whether they have a connection with the firms or partners and 2) get them to add in their own contacts and potential investors.
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• The hitlist will form quickly, but try to get prompt action from your investors to get started on building out a target of 30-50 investment firms or angels.

Investor target list

Here is the template that we shared and used with Carted, it’s not rocket science but it helps hugely when shared in a collaborative space (ie: Google Sheets) to keep yourselves and your stakeholders updated on progress. Should be kept up-to-date like a CRM for future investors.

You can view the google sheet here! Make a copy!

Live by this document

This will become your master document, including every meeting, response, contact info, status of each discussion. Trust me, when you have 4-5 meetings per day for a month – you will forget what happened in each conversation and next steps plus who is in or out.

PART 2: Get connected and meet as many investors as possible

Now the time has come to start engaging with investors, often a good strategy is to outline that you’re not officially “raising capital” and will be going to market soon. Helps to start building a relationship without a requirement to make an investment decision quickly, before opening up to a fundraising process.

We generally counsel with our portfolio of companies that you should set a target timeframe to progress through the fundraising process, typically a good raising process will be complete within 3 months.

Carted kicked off its fundraising in mid-January 2021, had term sheets in Feb, and closed the capital end of April 2021 (often legals and structuring can take a month or so). 3.5 months to raise one of the largest seed rounds in Australian history!

We started by introducing them to investors via as warm an intro as possible. Some were through existing investors like us – I believe in the end, we had introduced Holly & Mike to over 30 VCs from around the world to complement their process. My outbox looked something like this:

As a founder, you should share a blurb to gather interest and make it easy for your contacts to make their intros:

Template for opt-in intros

Intro notes from investors or advisors to other investors looks like this, you want it to be punchy, include enough info to get to the next step which is an intro with the founders. Things that are important, why it’s a fit for an investor (maybe aligned to their prior investments, content, stage), why they should take a meeting (create interest) and call-to-action:

A couple of simple formatting tips

1. Personal Booster. Why are you reaching out to this person.
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2. What’s in it for me. Why would they be interested in your company.
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3. Build trust early. Why would they invest in you?
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4. Have a single call to action. It’s not about getting investment, it’s about getting to the next email / meeting on first reply.

Holly lead the charge on managing the process and getting doors opened to the right investors, in the end, they were connected to 115 investors and pitched to 85+ firms or angels. The recommendation here is to consolidate these into as condensed timing as possible, suggest 2-3 weeks for intros and first discussions. It’s not always possible to keep it tight and on track with your timeline, but try to engineer this as best you can to keep the process moving along.

Some Key Learnings

• If you let this stretch out over an extended period ie: 5-6 weeks, what you will find is that some investors are well progressed and on their 3rd meeting plus and deep into the process (dataroom access, DD, taking to their investment committees) and others will be entering into first intro meetings. This creates a discrepancy in moving investors along towards a similar timeframe and making decisions and is harder to navigate.
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• This creates a discrepancy in moving investors along towards a similar timeframe and making decisions and is harder to navigate.
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• Try opting for a warm intro (after an opt-in) over going direct or via social. Social will work well for the back-end of the process once you have good momentum.
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• Over the raising process, take as many intros as you can get, refine the pitch, understand the recurring questions and how best to answer them.
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• What you will find in a major process like this is that you’ll know pretty quick which investors ‘get it’ and which investors don’t and might not be the right fit. Optimise to spend your time and efforts on the ones that are aligned with your vision and space. There is enough capital out there, you will be able to find the right investors and supporters for you.
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• There is enough capital out there, you will be able to find the right investors and supporters for you. Fundraising is a match-making process, don’t get caught up with the ‘no’s’ as they usually come before any YES’. Take any learnings and move onto the next call. There are investors that will resonate with your vision of the future, find the ones with the most alignment and excitement related to your version of the future, and over-index on getting them across the line.

PART 3: Generate interest and create FOMO

How do you get investors excited about your business further than the traditional meet & greet?

Things that Carted did really well was to generate buzz about their raising, it was known that they had ambitious plans and were gathering interest in the investor market. This happened because investors talk and share deals (way more than you think), the more you meet then likely the more doors that will keep opening for intro calls and interest in you.

On top of this, they were doing one of my favourite tactics of Building in Public. This can be seen by founders as giving up proprietary info, over-sharing on the direction of your business, giving up proprietary insights, etc. In our view, this strategy shows the traits that investors want to see in founders – ambition (and willingness to share it publicly), moving fast, being held accountable, having conviction in their views.

My all-time favourite from Mike, they are not aiming small:

And more here:

Plus videos of their future product in action:

In addition, Holly is active on Twitter and was introducing some great tweets to drive further interest:

These Tweets generated more interest and actually brought investors to the table for initial chats. This type of content helps to drive interest (read: FOMO) and bring potential investors to the table.

Build in Public people

Find a lead

In a Seed financing round, the initial focus needs to be on finding a “Lead” investor. That’s a VC or investor that can set the terms including valuation and are inputting a solid cheque to show skin in the game.

For your fundraising process, make sure you understand where an investor sits in this type of process and whether they can or can’t lead a round.

Once you have a lead investor leading the charge, you will find that it’s much easier to close out additional investors behind them.

In Carted’s case – The team ended up with multiple lead terms sheets and interest from major investors in both Australia and the US & UK. This was a great point to lock in terms with a strong lead that’s well-placed to partner with them into the future.

That lead for Carted was Blackbird Ventures, an Australian VC that has notoriusly led investments in companies like Canva, Safety Culture, Culture Amp, Zoox, and others. They are one of Australia’s big three funds and showed great conviction in the process and emerged as the lead investor for Carted Seed round.

In Carted’s case, they had a lot of interest and ended up including the below as investors in their round:

• Blackbird Ventures – Lead investor
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• Grok Ventures – Family Office of Michael Cannon-Brookes (Atlassian)
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• Streamlined Ventures – SF based Seed fund
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• Tidal Ventures – Aus Seed fund
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• Strategic Angel Investors, including:
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• Ryan Hudson, a Co-Founder of Honey
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• Kamran Ansari, Fmr Corp Dev and Strategy of Pinterest
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• Gabby and Hezi Leibovich – Founders of the Catch Group

Where it ended up

One of the largest funding rounds of 2021 to date in Australia and certainly one of the largest Seed rounds that we have seen. It’s a credit to what Holly and Mike have set out to build and we’re lucky & excited to be supporting such an awesome team and their ambitious mission.

Read about the announcement on the Carted blog here.

Thanks to Chris Gillings from Cut through venture newsletter for these ecosystem stats. Another one of our portfolio companies Mr Yum is also featured on the list.

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• Stew Glynn is the managing partner at TEN13, leading the team at Australia’s largest syndicated investment platform with 300+ investors.
• Special thanks to Holly Cardew.