Behind the Seed: How Catalog (HX23) raised $3 million from a top-tier VC

‍Catalog is the multichannel sales tool for B2B sellers that drives engagement of their customer base and reduces sales admin. Founded by Julien Bellemare and Maxime Poitevineau-Millin, they are part of our 2023 startup batch.

When did you start the fundraising journey? Why at this time?

JB: First off, I'd like to start by clarifying that I'm not an expert. Yes, Catalog did raise money in a tough climate for startups, but every fundraising story is unique. If my experience can help other founders out there, that's fantastic! However, it’s important to keep in mind that the story of Catalog was specific to our time and market.

To address your question, we decided to launch our fundraising because we reached a point where the market feedback we received validated our insights and early product development. We felt the time had come to double down. We spent a few weeks preparing before our first discussions with VCs. After being in the trenches for a year, we needed a moment to step back and articulate our vision. We did this with great support from the Hexa team.

Tell us about the process of creating the pitch - how did you craft the story? How is the story you told VCs different to the one you tell customers/press?

JB: Unlike with clients, where the focus is on selling the product as it is, pitching to VCs involves presenting not only the existing state of the product but also, and crucially, the vision for what it will become.

It’s important to not go into every single detail. The temptation is incredibly high, especially after a year of learning so much, to share every detail of what you do and why. However, this is definitely not the best way to tell your story! VCs highly value a founder's ability to convey a rich narrative in just a few simple words, which is quite understandable.  For example, I initially made the mistake of explaining our Ideal Customer Profile (ICP) in every single little detail. I quickly realized that investors didn’t need to know the 10 bullet points of our ICP, but the top 3 did matter, so I focused on those.

Also, get a coach! Many people say that seed investors invest as much in the founders as in the companies they're building. But making sure your true self is coming across to investors can be hard! Getting a coach really helped me to enhance my presence without losing my authenticity.

How did you pick the VCs you talked to?

JB: It is quite a methodical process! I had to speak to many potential investors to create momentum while still focusing on those who showed genuine interest in our story. It's essential to cast a wide net initially, but equally important to hone in on the ones who resonate with our vision and have the potential to become strong supporters. We set a goal to contact between 10 to 15 funds each week.

Ultimately, you want to work with people who are passionate about your industry, eager to contribute, and whom you can see yourself partnering with for a significant part of the journey.

What kind of questions did investors ask? What were the questions that kept coming up?

JB: “What’s your flywheel?” came up a lot, which means “which elements of your business feed off of each other to accelerate growth? What are the underlying mechanics that will propel you to self-sustaining growth?”

This concept is crucial for VCs. Building an outlier company, a decacorn, without a clear flywheel effect is virtually impossible.

An example often cited is Calendly, where each use of their scheduling link, marked "sent with Calendly," acts as a promotional tool. With just one sale, you could potentially attract 150 new prospects to your doorstep.

Another critical question revolved around our unique insight—what we had understood about our market that others had not. This question goes to the depth of our market understanding and our ability to identify and capitalize on opportunities missed by others.

Investors also probed for potential challenges, asking us to anticipate the significant obstacles we might face. Specifically, they wanted to know why, if at all, Catalog might not succeed in the next three years.

Any techniques you used to relax during this stressful time?

JB: At the very beginning of the fundraising process, you’re still in control, you’re the one who decides when to talk to VCs. But things start to get stressful when you start getting your first “no’s”, especially without having secured any commitments yet. For instance, one day, we received a rejection at 10:50am from a VC I really liked. And at 11:00am I had to jump on a first call with another and show how positive and ambitious we are.

To handle these rejections, I found two things crucial. First, realizing that most of these objections were tied to interesting business issues that would help us clarify our priorities for the coming months. Second, not confusing our vision with the way we presented it to investors; often it's the way the vision was pitched that wasn’t ideal, and it’s easier to tweak the way it’s presented than to change the vision itself.

Also, talking with angel investors (BAs) alongside traditional VCs provided a big morale boost. Conversations with angels were short, often ending in a straightforward yes or no decision after just a quick discussion. These interactions served as small but motivating successes. Even if an angel investor's commitment didn't guarantee a lead investor would follow, each positive response increased our confidence. Celebrating these small victories was crucial for maintaining optimism throughout the fundraising journey - trust me, you’ll need them!

What surprised you the most about the fundraising process?

JB: Two things:

1. The immense learning opportunity it presented. Engaging in discussions with a wide range of individuals, who all bring a fresh, objective perspective to your project, was incredibly enlightening. The ability to pick their brains and learn from their insights and feedback was a pleasant surprise.
2. The emotional intensity of the process was another surprising element. Each fundraising round is exhausting, but for different reasons. The seed round is particularly draining because it's so personally focused. At this stage, investors are not just investing in the idea or the business but in you as an individual. For more mature companies, I guess the focus shifts more toward the numbers and away from the personal stuff, but the pressure remains high. I had to find coping mechanisms to stay resilient fast (see above).

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Find out more about Catalog on their website.

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