Idelic CEO Hayden Cardiff approaches raising capital the same way he approaches building a product — with a lean startup methodology of build, measure and learn.
“You do quick experiments and then iterate quickly and fail fast,” he says.
Founders might talk to 50 or more venture capital firms or investors, and each and every time, they must take inventory on how the pitch went. What questions did they ask? How can a founder change the pitch to better answer those questions upfront?
“You have to iterate every single time to make sure that you’re doing the best that you can as far as personifying that big-picture vision, while focusing on your short-term execution and getting to the heart of what gets them excited,” Cardiff says.
Storytelling is key — being able to tell a compelling story of why potential investors should care about you, your company and what you’re doing.
In September, the startup Cardiff co-founded with two other Carnegie Mellon University alumni, Idelic, closed an $8 million Series A financing round. Chicago’s Origin Ventures led the round with participation from prior investors, TDF Ventures, Birchmere Ventures out of Pittsburgh, Bain Capital Ventures and SaaS Venture Capital.
Idelic has raised $11.5 million in total funding, through three seed rounds and the Series A round.
While the startup was founded in 2016, it has a longer history, Cardiff says. About 15 years ago, Pitt Ohio Express had an accident on the Pennsylvania Turnpike that had the trucking company wondering what it could do to better predict and prevent such accidents.
Word spread about the software it built in-house, and other companies came looking to buy it.
“Pitt Ohio realized that they are really good at being, and are very much, a trucking company,” he says. “Being a software sales company is much more difficult and not something that they wanted to take on at the time.”
But when Cardiff did consulting work at Pitt Ohio for CEO Chuck Hammel in 2015, as he worked on his MBA, he gravitated to the idea of commercializing the safety software product.
“That’s where I put together a plan to spin out, rebuild the product from the ground up, add a lot of different features and functionality to that, and run it as its own separate software company,” he says. “And that’s exactly what we did.”
Today, Idelic is on its second version of the software, a more scalable enterprise-type product. The software-as-a-service solution integrates fleet systems into a single data management platform, giving fleet managers visibility into driver behavior and safety operations. This can help prevent accidents, reduce turnover and lower insurance costs with its Driver Watch List, which utilizes machine learning to predict drivers who are at risk for accidents.
The company is adding different customer segments onto its platform — truckload, less than truckload, flatbed, tanker, intermodal, drayage, private fleets, etc.
Within the past year, Idelic has grown rapidly using the funds it raised in 2018, with plans to continue that after its latest funding round. Raising money is always hard, no matter what round of funding, Cardiff says. But their investors have been very helpful, including with warm leads to other investors.
“It has definitely been a learning experience at each and every round,” he says.
For example, Series A had a stronger focus on revenue, sales growth, sales team structure and the process around that.
“That was something that our board helped us really home in on and get a good grasp on,” Cardiff says. “And, obviously, now as we continue to ramp up for any future funding, it’s all about hitting those different milestones and signposts to make that as successful as possible as we move forward.”
Learn from experience
Idelic is Cardiff’s third startup. The first one didn’t succeed. The second is still going but is under different leadership. So, Cardiff is using lessons learned from his prior experience.
One of the biggest differences is taking more time to understand the customer, including nailing down the product market fit and value proposition, he says.
“It’s really understanding every single nuance within the customer’s journey and how they are influenced from a perspective of what they need to get accomplished — what’s going to be the biggest motivator for them — and then being able to build products that are based off of that,” Cardiff says.
Another focus is building a good culture, especially now that Idelic has 40 employees.
“Having smart, capable and talented people on your team is obviously important, having and creating a culture where they love to show up every day, love to innovate and love to come in and solve really difficult problems is key,” he says.
Cardiff expects to use that team to stay capital efficient and help the startup execute on its current plan, while determining where to expand next. This requires a balancing act of trying to be one or two steps ahead of an influx of new customers, with customer support, marketing and sales resources, and engineering and data science resources.
His biggest piece of advice to other entrepreneurs — strap in.
“You’re in for a lot of hard work, and it’s never going to be easy,” Cardiff says. “You’re swimming through a pool of crap all the time, and it’s all about getting really good people around you, who make it enjoyable and can solve hard problems and dive in.”