Mikey Tom May 19, 2016
These days, there’s no shortage of venture capitalists sharing their opinions on the current startup investment market. As uncertainty swirls and valuations fall, more and more posts pop up forecasting the future, analyzing the past and calling for change in the present. What's often missing is perspective, notably from the other major player in this industry: the founder.
We recently had the opportunity to sit down with Matt Oppenheimer, whose remittance startup Remitly just raised a $38.5 million Series C round and revealed a new brand and logo. We were able get his thoughts on the current fundraising environment, as well as other topics such as qualities he looked for in a Series C investor, how his company thinks about branding and what makes Seattle unique as a startup community.
What are some ways you’ve noticed the fundraising process change over the past four years?
While it’s a tougher time now to raise money, companies with great performance are still getting funded. Additionally, the way that a company approached fundraising in the past can have impact on securing follow-on rounds of investment. I found Bill Gurley’s recent post really insightful and thought it was long overdue. There is an obsession in the industry right now singularly around valuation. And while it makes sense as a top-line number, there’s a lot more to a deal and a company than just top-line valuation. Companies that raised on “dirty terms,” like Bill talks about, or companies that over-optimized on valuation are going to have a tougher time raising follow-on financing.
Would you say it’s more difficult raising at an early stage or late stage? Or is it hard to compare?
As we’ve progressed as a company, investors look at different things when evaluating the company and team. When we were in Techstars, it was very much focused on our vision. Did we have a very clear vision that addressed a very big market? Investors want to be convinced you have a clear vision, a large market, and a team that could execute against this strategy.
During our recent Series C, all of those things are still required. Additionally, however, solid growth and unit economics are needed to back that vision up. In today’s fundraising environment, these metrics are more important than ever and I’m pleased that Remitly has focused on these core metrics since day one.
What are some things you looked for in investors for the Series C, as opposed to your previous rounds?
Given the stage and growth of our business, we wanted an investor/firm that had experience helping companies scale up their team, customer base, brand, and business. Stripes Group has an awesome track record of building global companies and brands. We’re building a global consumer brand that customers need to trust. Looking at Stripes’ portfolio, they’ve backed everyone from Blue Apron to GoFundMe to Udemy—all great, global consumer businesses which Stripes invested in at a stage that is similar to where our company is at.
Thankfully we’ve had a lot of interest in each round that we’ve raised so we’ve been able to have a two-way discussion around if we wanted to work with each other. As with other investors we’ve selected, we were impressed with (Stripes Group partner Ron Shah's) ability to understand our business. Ron asked very thoughtful questions from day one and therefore quickly understood the fundamentals of our business. I found myself quickly thinking, “I want to work with Ron because I want him asking those questions and pushing us in those ways.” The process of having Stripes Group vet us was really valuable as it gave me the opportunity to learn a lot from them.
You also want to really trust the person and firm. You’re getting into a long-term relationship and you have to feel like they have high integrity, they’re direct and that they have the best interest of the company in mind.
Along with your Series C investment, you announced a new logo and slogan. Can you give us the thought process behind how you came to “Promises delivered”?
It’s important to understand our customer and how they use our service to understand how we came up with “Promises delivered” as our slogan. Customers see sending money home as a sense of duty or obligation that they’ve made to their loved ones back home. For example, in the Philippines, 10% of the GDP comes from Overseas Filipino Workers (OFWs). It is an honor to be an OFW and with that honor comes an obligation and sense of duty to send money home.
By focusing, we’ve uniquely positioned ourselves to deliver on our promises to customers so they can deliver on their promises to their loved ones back home. And while most remittance companies try to do that, we do it in a fundamentally better way. That was the idea behind our new slogan, “Promises delivered.”
How have you and do you think about scaling this business?
We started off only sending money from the U.S. to the Philippines. From there we launched India as our second "receive" country, and we just launched Canada as our second "send" country—which took a lot of product and infrastructure investment—and we launched Mexico as our third "receive" country. When building all of those portals, we were sure to build them in very scalable way, so now we’re in the process of rapidly setting up a global footprint.
What are some things that make Seattle unique?
The ecosystem of tech companies, investors and talent is phenomenal, with organizations like Techstars supporting it. As a fast-growing startup, we can recruit and retain world-class talent easier than in the Bay Area. Not only do you have great college programs at places like UW, but you have local technology giants—like Amazon and Microsoft—that attract engineers. Seeing the number of Bay Area companies opening Seattle outposts is a testament to the quality of talent that we have.
Another unique quality is the capital. While there may not be as much capital here as the Bay Area, there’s enough. Interestingly, excess of capital is almost inversely correlated to talent. With so much capital available in the Bay Area and so many startups there, it can be a little over the top, raising the cost of living, salaries and making retention harder. So I consider the amount of capital available as a blessing and a curse.
What is one thing you think Seattle could be better at, as far as a startup ecosystem goes?
There obviously isn’t as much capital in Seattle than the Bay Area. There is a good angel network in Seattle, but increasing the availability of additional early-stage institutional capital would help scale more startups. There are some great early-stage VCs in town, but the fact that you can count them on one hand shows a very different environment than the Bay Area. Getting a more robust Series A or Series B institutional investor network in Seattle would be great.
Secondly, it’s not something that I would necessarily change, but it’s a difference I’ve noticed: Seattle has a certain humility to it. In the Bay Area there is an audaciousness that’s palatable. We might benefit from a bit more of that here in Seattle. In the Bay Area there are more startups with grandiose visions. While not all startups execute well to backup that vision, I think bold ideas are necessary to transform and disrupt industries.
Is there anybody you really admire in the Seattle startup community?
I have a lot of respect for Spencer Rascoff, CEO of Zillow. From the limited time I’ve been able to spend with him, he seems like a guy who has a bold vision but also has an approachability to him, a lack of arrogance. I think that when people look at Seattle and what Seattle stands for as an entrepreneurial community, he very much embodies that. He’s down to earth but exceptionally effective, while also caring a lot about culture and his team.