Snapask Founder Timothy Yu Just Closed A US$35 Million Series B. So Why Isn’t He Popping Open The Champagne?
Timothy Yu launched ed-tech startup Snapask right out of university. Last week, five years later, he announced that Snapask had closed a US$35 million Series B fundraising round, adding to over US$50M raised to date. The funds will be used to expand into new markets, including Vietnam, as well as opening a regional headquarters in Singapore.
Dubbed “Uber for tutoring”, the app connects students with tutors for one-on-one consultations, serving more than three million students in eight Asian markets.
Unlike most businesses in the region, Yu has seen an uptick in numbers since the outbreak of Covid-19. With schools shutting across Asia, more and more students—or, more likely, their concerned parents—are looking for opportunities to learn at home. Snapask has registered 1.3 million new users on the platform in the last year, with over 30 percent of them coming in the last two months.
While the recent increase in users is doubtless cause to celebrate, the fundraising round is not, says Yu. After his successful Series B, we ask Yu to offer insight on the process, his key learnings, and why he views fundraising rounds as a “necessary evil”. Here’s what he had to say.
See also: Time With: Timothy Yu
Entrepreneurs give too much weight to fundraising rounds
A lot of the media attention around startups is focused on fundraising rounds and valuations, pointing to them as core achievements. For Yu, that couldn’t be further from the truth. “Fundraising is not a milestone; it's not an achievement. It's just a necessary evil,” he says.
“Finding talent and keeping them, designing a product that users want to interact with—that’s what’s important. Entrepreneurs should think about fundraising from their users instead of only equity investors. If your business is funded by users, that's the best business to be in.”
Valuations mean nothing
“It's just numbers. It means nothing to the business. I focus on the resources that we have right now to invest in areas that we want to invest in.”
“Valuation is a contest with no relevance to the business. I try not to have that over my head, because it can lead to pursuing objectives that are very much irrelevant.”
Know why you’re raising
Don’t fundraise just because you need a longer runway—go into the fundraising round knowing exactly how the money you’re trying to raise will grow your business, says Tim. “Try to try to understand why you need the capital more profoundly, instead of just raising because you want to raise and increase the valuation.”
“Most companies raise capital for hypergrowth, so they can hire more people, expand to new markets, launch new products and such. But often not for a reason that is actually healthy and beneficial for the business.”
Fundraising is not a milestone; it's not an achievement. It's just a necessary evil
— Timothy Yu
Pitching is storytelling
What’s the secret to a successful pitch? According to Yu, it’s about telling the right story. “Tell genuine stories—things that actually happened to you will resonate the most. When pitching, don't just tell investors your idea, tell them your story.”
“For Snapask, it could be about me or a story about a user or tutor—the problems they are facing and how our business is trying to solve those problems. These stories are the most powerful for people trying to understand what you're doing.”
Don’t tell investors what you think they want to hear
In the heat of a high-stakes pitch, it can be tempting to tell the investor what you think they want to hear—but this rarely ends well. A case in point: common wisdom is that if you want VC money, you need to break into China as so many funds are focused on that market. But that’s not always the case.
“When the topic of investment comes up, people often ask me if we’re going to launch in China,” says Yu. “Some of the best advice we got from investors was to not do it just for the sake of it.”
“They told me to think very carefully about trying to launch in China. You have to focus on markets where you believe there are opportunities and not just follow the trend because people are investing in China. The markets we have expanded to, like Indonesia and Malaysia, we have done so because the metrics demonstrated that we can be successful there.”
Remember that you are vetting them too
Pitches aren’t just about an investor picking you; it’s important to vet the people you want backing your business. Because once they are on board, it’s a long-term relationship. And like all relationships, honesty is the best policy
“I have different ways of interacting with investors, depending on who they are. But the one common thing across all would be that we share not just good news, but bad news as well. From day one we make sure our investors are able to take bad news, because a business is not always going up. There are down times there are times that it's very difficult, and we need people who can work with us as a team member—investors included.”
See honourees from the Education category of the Gen.T List 2019.