Saturday, February 6, 2016

Erik Huddleston on Funding Trendkite

TrendKite was founded in 2012 by two young sales executives of a company called Meltwater Group in Philadelphia. AJ Bruno and Matt Allison were aware of the innovation in software for sales and marketing that were taking place but thought that something of a similar caliber was lacking in the PR sector. Motivated to serve the PR market, the two entered the accelerator DreamIt with an idea and emerged with TrendKite: a computer software company that provides analytics to help PR professionals succeed.

With the help of seed funding from DreamIt Ventures, TrendKite was relocated to Austin, TX.  Here, an initial investor, Silverton. was secured. TrendKite then acquired a valuable connection to future CEO, Huddleston, who helped the company takeoff by acquiring a stronger customer base and a $3.4M investment from Mercury Fund.

TrendKite has raised $20.1M in four rounds with more than 75% of that acquired after the placement of Erik Huddleston as CEO. Huddleston has past experience with software startups, as he founded BetweenMarkets in 2000 and paired with Chris Porch in order to raise 6.2M. Erik Huddleston shares insight about his success in fundraising for TrendKite.

The Mercury Fund investment of $3.4 M allowed TrendKite to quickly build a strategic business plan and test their channels into the market. With the successful channels in place and a notable 250% growth in 2014, TrendKite was prepared for another round of fundraising. With momentum around the idea of keeping it an inside round, the initial two investors (Silverton and Mercury) were ready to double down. In addition, TrendKite partnered with Battery Ventures, another Austin based venture capital and private equity company.

“It was the fastest fundraise of my career, weighing in at about 3 weeks.”  The total raised for this round was $5.5M.

With a price similar to existing analytical platforms, TrendKite’s growth was accredited to the technology - the company was offering more technology than competitors for a price that was commonplace in their sector. To continue to differentiate, the 5.5M from Series A was going to be used to strengthen sales and marketing as well as reinvest in the technology of the product.

In October of 2015, Huddleston hit the west coast for a Series B round. This time, Huddleston approached only those he had relationships with or those who had suggested interest. The offers came quickly in this round because of Huddleston’s primary strategy: keep the potential investor’s informed. The Series B raise ended with 10.7M primarily from a partnership with Noro-Moseley.

Huddleston approaches potential investors in the earliest phases. A relationship begins built on a transfer of information about the state of the startup. At this point, there is no intention of acquiring an investment. Instead, Huddleston is keeping the contacts aware of the milestones the company is accomplishing. When the time comes for a real round of fundraising, the investors are familiar with the company and less likely to be dissuaded by the gaps in information that are common with
new businesses. He suggests to get on the radar of the people you would like to partner with by divulging what you’re up to, where you’re at, and how you believe your future plans are going to unfold.

“You can spread out the pain of fundraising and increase the chance of conversion by approaching folks early.”

Specifically, Huddleston makes a phone call to his top tier investors every two to three months. Generally these calls are made to seek help from Venture Capitalists in non-financial forms such as introductions or advice. Providing the advice gives the capitalist insight in the company and a sense of “buy-in.” Essentially, Huddleston is building relationships that are useful to him and altruistically gratifying to the capitalists. For instance, Eric Huddleston has maintained a business relationship with Silverton and Mercury for over 10 years of communication and value exchange.

“If they’re helpful to me when they have no reason to be helpful to me, I suspect they are going to be even more helpful when it effects the return of their funds.”

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