Max Atanassov of KANDO tells us how they make fundraising easier and more accessible.
First of all, how are you and your family doing in these COVID-19 times?
Max Atanassov: I was just vaccinated against COVID yesterday, and while my left shoulder is slightly stiff, I haven’t grown a second head or hair on my feet. Last year was difficult, but it also brought my family together, as my two daughters, who live abroad, came from Sweden and France to our home in the countryside just before the lockdown. With our busy lives, despite our worries and uncertainties, I never expected that we would have such a long period of quality family time again when we would walk in the forest, bake bread together or share stories around the fireplace in the evening. It is so easy to imagine how 19th-century life went on in England. It is also striking to see how fragile our common notion of normalcy is. And thank God, there is the Internet.
Tell us about you, your career, how you founded KANDO.
Max Atanassov: I have been a venture capital investor for many years and a startup founder and have firsthand experienced the problems that startups are dealing with. Having worked on large projects related to venture capital and private equity investment data, I saw early how data can improve the segmented and informationally inefficient world of venture capital.
Then, I came across a shocking statistic by VentureRock that during the first three years of their startup, founders spend 60% of their time fundraising instead of building a product or acquiring customers. That’s over 21 months or 657 days. And out of this time, about 80% is spent on discovering investors (e.g., searching for and compiling lists), validating them (checking whether they are still active, whether their investment criteria are a match for my startup), and then finding who is the right person within the company and how to approach them.
Moreover, access to investors is often based on going through various gatekeepers and personal introductions, resulting in inefficiencies and various negative biases against such groups as female founders or minority entrepreneurs. For example, in 2020, only 2.3% of venture capital funding has gone to companies with all-female founders, although, based on a Boston Consulting Group study of the MassChallenge program, on average female founders generated $0.78 of revenue per dollar of investment versus $0.31 for men-led companies. In 2020, Only 3% of the investment had gone to blackentrepreneurs. Many venture capital firms that officially proclaim openness to be approached by underrepresented entrepreneurs do not even display contact details of partners on their websites.
In early 2019 I decided to do something about it. I already had a database of venture investors developed during my investment banker years, so I convinced my 3 colleagues to launch an investor discovery platform that would use reputation, transactional data, and AI to find the most appropriate investors for startups.
How does KANDO innovate?
Max Atanassov: My company, KANDO Technologies, makes startup fundraising easier and more accessible. We have developed an online platform (data.kando.tech) that uses machine learning to discover the most appropriate investors for your startup in the most simple and convenient way. You create a company profile, and our AI automatically creates a pipeline of investors for you. This is done using information from a large and rapidly growing proprietary dataset, which currently comprises profiles of 200k companies, 120k investment rounds, declared investment preferences, actual investment decisions, interests and social graph proximity, social media listening, as well as actual user behavior on our platform.
The main innovation for startups comes from the fact that Alice (our AI) finds the investors for them and posts the leads straight to the integrated project management module. On day one, startup founders see which investors to approach, with their contact detail, preferences, portfolio analytics. They don’t have to figure out which investors to approach, what are the best search criteria. This is the laziest, most convenient approach to investor discovery out there.
We have worked hard over the last year, and a week ago have opened our platform to the public. Right now, the most important thing for us is customer feedback which comes from interactions with our early users.
How does the coronavirus pandemic affect your business finances?
We are a distributed team. Two of our founders are based in California, and the other two in Switzerland and the UK. When we started working together two years ago, “distributed” teams were a novelty. Many of our developers are based in other countries. While being located both in the Silicon Valley and two of Europe’s largest financial centers is advantageous for access to their startup ecosystems, we were concerned about how potential investors would react to us all being in separate locations and conferring over Zoom. How fast the perception of what is normal changes. Now even some of the largest global corporations have transitioned to a large permanent remote working component, and no one has ever asked us whether being a remote team could be an issue.
The pandemic hit right about the time we were ready to fundraise last year, and all investment decisions were put on hold for 6 months. Investors, rightfully so, focused exclusively on helping their portfolio companies. We decided to put our fundraising on hold and take the time to work on the product. It was very difficult to bootstrap, but we did it! Our MVP launched in February this year (2021).
Did you have to make difficult choices regarding human resources, and what are the lessons learned?
Max Atanassov: We have to maintain a lean operation, but no staff reductions have taken place. In fact, operating during a crisis has brought us closer together and strengthened our team. Each of the four founders brings a unique perspective and expertise, as well as a different personality, which evokes a healthy degree of argument and leads to very interesting discussions. Our CTO, Moe, ex-Microsoft, is a top expert in his field but prefers his multiple achievements to speak for themselves. Delia, our Head of Partnerships and BizDev, is a hedge fund manager with a track record of data-driven investment, which has a methodical approach that somehow always outruns everybody in the long term. Michal, an acknowledged blockchain economist, and our COO brings a lot of energy and passion to our discussions about the future of financial technologies, platforms, portable reputation, and AI.
Having a lean business DNA would be beneficial for our startup. Many successful businesses (AirBnB, Uber, Slack) were formed during the aftermath of the 2008 financial crisis. I hope that one day, KANDO will be remembered one day as one of the hugely successful businesses that originated and grew from the depth of the 2020 COVID crisis.
How did your customer relationship management evolve? Do you use any specific tools to be efficient?
Max Atanassov: The 2020 pandemic changed everything for everyone, including how we manage customer relationships. Before March, our main focus was on startup meetups, events, conferences, and co-working spaces. After March, the entire startup ecosystem moved online (Zoom, Slack, etc.). A good example was the Berkeley SkyDeck program (we were part of the spring 2020 cohort). We were able to fully participate in online meetings with advisers from London, San Diego, and Zurich that we would not have had a chance to experience otherwise unless we were physically there.
There are signs that this transition from in-person to videoconferencing meetings also leads to more rational investor decisions, with more emphasis on data instead of gut feeling, so hopefully, this will generate more traction for KANDO.
One specific change we made on the platform to manage our customer relationships better was the decision to open it up to everyone, with no vetting or pre-screening process (as we’ve done previously). Right now, everyone can create an account for free, create a profile for their startups and immediately generate investors with a click of a button. Instead of focusing on verifying and pre-approving users, we put much more emphasis on content moderation and creation using artificial and (a little bit of) our own natural intelligence.
We use Jira, Confluence, and Bitbucket to manage our engineering and also business projects and initiatives. Confluence is very helpful with keeping everyone in sync about more general, less defined ideas and concepts. Jira is great at keeping track of very specific things that need to be taken care of. We are in the fortunate position to use KANDO, our own product, to find investors, discover business customers and manage both pipelines using the integrated CRM module.
Did you benefit from any government grants, and did that help keep your business afloat?
Max Atanassov: We did not apply for or receive any government grants.
Your final thoughts?
Max Atanassov: I believe that in the future when many important business decisions will be assisted by artificial intelligence, reputation will play an extremely important role in the discovery of business partners – much more important than search engine optimization plays today. I believe that more and more investment decisions will be driven by data, which would make investments more diverse, rational, with a lesser bias, and eventually much more profitable. We are on a mission to bring this future closer.