When Zeller CEO and cofounder Ben Pfisterer raised $100 million in a Series B that valued the then two-year fintech at $1 billion, he was talking to his US investor from behind a $19 IKEA desk.
Pfisterer has spent his career in payments, including six years building Square in Australia for Jack Dorsey, and has a very simple rule for startup success.
“‘Every dollar we raise, we treat like our last,” Pfisterer stated at Startup Daily and AWS Startups’ recent Unicorn Day in Melbourne, sharing his journey and insights on building a successful startup.
Saniel VC and former Aconex founder Leigh Jasper and AWS Startups’ Lauren Capelin at Unicorn Day. Image: Startup Daily.
The conversation spanned his early naivety around raising capital – despite going on to raise more than $180 million in less than two years, meeting expectations to attract investors, and also dealing with knockbacks.
It was one of the highlights of the first-ever Unicorn Day event, where founders learned the secrets of building and scaling a billion-dollar business from industry heavyweights like Pfisterer, ex-Aconex founder Leigh Jasper and Canva Head of Design Andrew Green. The October 24 event lineup showcased the best of the Victorian tech scene and the AWS Startups ecosystem – including Zeller.
The backstory
Zeller has transformed business banking, taking away a major pain point in setting up payment terminals for merchants. The fintech’s rise was even more remarkable given that it took half the time of fellow Melbourne superstar Airwallex, which reached a $1 billion valuation – unicorn status – in just under four years.
Zeller was the country’s most valuable pre-launch startup in 2021 after a $50 million extension on its series A. The following years a $100 million Series B turned Zeller into a billion-dollar baby, after just 10 months of operation.
Pfisterer’s time with Dorsey blooded him for the startup experience as he disrupted incumbent financial giants.
“I got a not-too-cryptic headhunter call from San Francisco saying: ‘There’s this guy who I can’t tell you who it is, but he owns a social media platform, and a payments business, and he’d like to chat’,” he recalls.
It was the beginning of a six-year adventure.
“I learnt a lot about resilience and how to keep pushing through despite facing ridiculous odds,” Pfisterer said.
But as the business grew, he realised he loved that early-stage part of building a company most. Square was now in a new phase, so he resigned, spending time in “golden handcuffs”, but six months of gardening leave wasn’t what he’d hoped.
“I thought, great. I’m gonna go on a holiday and hang out with my friends, but it turns out that everyone has jobs and doesn’t wanna go away,” he recounted, confessing that he’s a little impatient when it comes to “wanting to get stuff done”, and a week later, he was working through the ideas in his head.
“The four big banks in Australia were doing very generic offerings and weren’t really innovating in the business side,” Pfisterer said.
“I didn’t think they were serving Australian business as well.”
Naive about VCs
Zeller’s four cofounders came together in 2020, and despite his vast experience in payments, Pfisterer admits to a fair bit of naivety when it came to the capital needed to succeed.
“I thought with those fast-diminishing golden handcuffs that I was going to self-fund. I don’t know what I was thinking,” he said.
The breakthrough came when Mike Starkey, from Athena Home Loans, who lives next door to his brother, suggested he speak to the VC fund Square Peg.
“I went into their office, and I didn’t bring a pitch deck, and I wasn’t pitching,” Pfisterer said.
“I know: how stupid am I? Thinking that I’m going to a VC office to do anything other than pitching, but I just went in there to have a chat.”
He met with founder Paul Bassett. It went well.
“I wasn’t trying to force it. I wasn’t trying to say the TAM, or this or that. I was just talking about what I wanted to get done and what the problem with the industry was, why I thought I was the right person to do it, and why I could bring the right team together.”
Bassat agreed. Zeller’s build got underway in 2020 with $6.3 million in Seed funding led by Square Peg Capital, alongside Apex Capital.
Within a year it was the country’s most valuable pre-launch startup after raising $81 million, including a $50 million Series A extension.
Zeller cofounders Dominic Yap and Ben Pfisterer.
The pandemic lockdowns played in their favour at the time.
“We worked to keep ourselves sane. We worked ridiculous hours, so we did a lot,” Pfisterer said.
“In terms of the fundraising process, in each round we did, we only took on one new investor. So we’re very lucky to do that.”
But with money comes expectations. Pfisterer was clear about what needed to be done, but recognises he was also lucky in an overheated investment market.
“They saw we were executing. They saw we were meeting the objectives that we set ourselves out after each round” he said.
“So it was a bit more of an organic process. But there’s no doubt in the middle of the hubris of the time we were the beneficiaries of that. But we had to execute, and we didn’t hide anything. They saw what we’re doing, and they liked what we’re doing.
“I think if you’re true and you’re not hiding anything and you’re genuine and you’re not like a bit of a salesy person, I think that a genuine nature comes through, hopefully, and, we had good things to show them.”
After just 10 months since launching a business banking solution on May 4, 2021, that resulted in more than 1500 Australian businesses signing up in the first month, Zeller became a billion-dollar baby in 2022 thanks to a $100 million Series B led by US VC Headline, supported by local industry super fund Hostplus and Square Peg once more.
“It was just a crazy time: stuck in a lockdown and raising a $100 million sitting, working, behind a $19 IKEA desk. It was very weird, but it went well,” Pfisterer recalls.
Bold Australian VCs
He looked to the US, knowing that market understood it was a more mature VC market that’s “very familiar with a high-growth, fast-moving, environment”, but remains a huge fan of Australia’s investment community and its appetite for risk.
“Some of our best investors are obviously Australian: Apex, and Square Peg. So they’ve been amazing,” he said.
“They took a massive leap at the start, when we had nothing. So the idea that Australian investors are conservative or can’t take the leap is absolutely incorrect. They can be really bold, and can invest at the very, very early stage, which is encouraging to anyone.
“We were just lucky – the good thing about the whole Zoom explosion is that literally you’d get pinged in the morning on LinkedIn by some VC in the US and 15 minutes later, you want to chat with them. And then, hours later, they’re talking about investing.
“Ordinarily, pre-COVID, it would have been: ‘We’re gonna get on a plane, we’re gonna come out, or we’re gonna fly you out and do presentations.”
Having that much money suggests a world of infinite possibilities, but Pfisterer said that in this moment, that’s when discipline is essential.
There was a lot of money washing around for startups, and the temptation was to use it on fun things and wild ideas. Not the Zeller team.
“The growth-at-all-cost thing is a really interesting one because, again, probably due to my naivety, but I never assumed it meant actually at all costs – as in spend your money on anything,” he said.
“We’ve been very privileged and lucky to raise a lot of capital – but every dollar we raise, we treat like our last.
“We never got stuck in the crazy times of hubris and spending money on wasteful things. It was always, like, every dollar. This is gonna run out at some point if we don’t spend it well, and every dollar we spend has to get a return on it. We have to spend it effectively.
“We took it very, very seriously, and we took the responsibility and the trust we got from our investors very seriously. So we never got swept up in that.”
Focusing on product
The Zeller CEO said he’d do things ”totally differently” if there was less funding, but the team worked with “the cards we have been dealt”, and his advice is to focus on the product.
“Because we had so much money upfront, we wanted to build products. So before we invested in growth in terms of marketing, people, sales, it was about building the right product set,” he said.
“I know firsthand that if you don’t build the hardest things first, they become harder because you get bogged down in the minutiae of changes. Do we do a new product? Do we fix the current product? Do we adapt it? Do we go to new markets?
“So I thought we’ll raise a lot of capital early and build the full product set as quickly as we can. We built 12 products in the first two years or something like that. We built the whole product set. So we got that out of the way first.”
Next he turned their attention to the marketing spend.
“Don’t just throw it into the wind and hope for it, and make sure you spend it carefully. Make sure your channels are working well, so don’t just keep throwing dumb money at something if it’s not working,” he said.
“Don’t listen to everyone when they say do sales, do direct, do online – make sure you’re doing right what’s for your business and your market. So, we were very careful.”
Despite Zeller’s success in raising capital, Ben Pfisterer has sympathy for the investor side, and knows how it feels to be turned away, explaining the pressure they’re under as they look at pitches.
“VCs have a job to do. They’re not a community service. They’re private companies that have LPs [limited partners] screaming at them for returns,” he said.
“It’s an incredibly competitive space, so they’re under their own pressure, have to make their own decisions to survive and make the right calls.”
And that makes finding the right fit between founder and investor is hard.
“Unfortunately, sometimes, they just don’t see the vision that we see as founders, and that’s fine. One very big investor in Australia said no to us at the start, and they came back multiple times to say yes, and we said no,” Pfisterer said.
“It’s not that they don’t always see your vision, and that’s a hard thing to learn as a founder. Just just take it for what it is. There’s no point trying to change their mind if you’ve done your best and they don’t believe it, they don’t like the sector, they don’t like the stage [of your startup], they don’t like me or they don’t like whatever. That’s fine.
“Move on. There are lots and lots of investors around the world. Don’t limit yourself to Australia. As I said, you can get on LinkedIn and ping someone. Just make sure your message is right. You can ask for an intro. You can do a lot of things.”
If your passion is not translating into funding, Pfisterer says there are two possibilities when it comes to what’s going wrong.
“Either you’ve got to learn how to pitch better, and as founders, we have to be open to feedback on that to make sure we are pitching what they want to hear,” he said.
“Or just get on with your business. But if it’s a capital-intensive business, you need funds, that is going to be a problem. I get it. But find different ways. Be scrappy. Get started. Get Seed investment. Find those people.”
This article is brought to you by Startup Daily, supported by AWS Startups. AWS Startups provides free tools, resources, and content designed to simplify every step of the startup journey. Find out more here.
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