The story behind Eurora’s $40m Series A
By Camille Felappi
“It was a very intense period. A lot of people from our company were involved, I really appreciate everybody’s support. Everyone was very open and cooperative.” Anneli Aljas, CFO at Eurora.
Eurora closed a $40 million A round of funding, one of the largest to come out of Estonia. It is a huge leap forward that will help Eurora expand faster in the booming eCommerce industry and offer revolutionary cross-border compliance solutions to global players.
The Series A round is the first significant round of venture capital financing for a company. It is used to secure a company’s continuing growth. It is, therefore, a critical stage for the funding of new companies.
Closing a Series A round is a milestone that requires a unique product, team, and vision. To share our story behind this achievement, there is no better way than telling it from an insider’s view. We spoke with Anneli Aljas, Chief Financial Officer at Eurora, who participated in the entire process. From the investor briefing to the final signature of the contract, she gave exciting insights on the funding steps and challenges the team went through. She also shared tips to successfully close a round of funding.
How did Eurora’s Series A round adventure start?
Over the past decade and especially with the Covid pandemic, the eCommerce market boomed. In 2021, retail eCommerce sales reached around 4.9 trillion U.S. dollars worldwide. This growth is expected to accelerate as experts forecast a 50% increase over the next four years. While eCommerce is blooming, cross-border regulations are constantly changing. It impacts an increasing number of global players together with their clients. In 2021 only, new EU trade rules abolished VAT exemption for imports worth under €22, and post-Brexit rules came into force.
The number of different declarations, codes, reports, records, and tax calculations required in the international shipping business is ever-increasing.
Marko Lastik, Eurora’s founder and CEO
This regulatory puzzle left many global eCommerce sellers confused. In the compliance world, confusion leads to delays, fines, increasing costs, and loss of customers. This is where Eurora’s proprietary AI/ML-based platform comes into play. Together with scientists from the world’s top 1% universities, Eurora developed the most advanced machine learning technology. It manages cross-border taxes, goods descriptions, and electronic declarations. Eurora provides end-to-end solutions that securely take care of all aspects of cross-border trade. You won’t need any extra tools to ensure your cross-border compliance.
In that context, it was crystal clear to Eurora’s management that the company needed a bigger booster. To expand into promising new markets and develop its products. This is how the A round journey began.
We are ready to launch in new countries and show the world what the product is about – so we need extra power, extra money to expand faster.
Anneli Aljas, Eurora`s CFO
How does the A round process look like from the inside?
To get started with Series A funding, you need to craft an investor briefing. It is a critical document that gives a first introduction of your company to potential investors. Thus, it needs to create interest among them. “During this time, management had about 50 different calls with investors,” says Anneli Aljas.
With this first step, the management can also determine which investors can be a good match. As Anneli explained, it is important to find investors that have an investment portfolio similar to what your business offers. Then, only when you have a smaller number of potential investors, more in-depth interviews can begin.
Eurora’s management decided to continue with the Amsterdam-based firm Connected Capital. According to Anneli, the human aspect is also important to take into consideration: “It also very much depends on how you get along with the people. We really had good trust in Connected Capital.” During the process, the management also tried to figure out how it would be to work side-by-side with Connected Capital in the future.
When the choice is made, due diligence can start. At this moment, everything sped up very fast, and many people in Eurora team were involved. “It was a very intense period, we had about six workshops that lasted from two to six hours each.”, recalls Anneli. The team had legal and tax due diligence for which they had more than a hundred and fifty questions to answer. But also, technical and financial diligence. As Anneli explained, these procedures are to be expected. It is from such processes that investors get trust and understand the product. It also makes the cooperation smoother afterward. Besides, Connected Capital’s purpose is to support Eurora in achieving its goals:
For them, it was important to understand our product. They are not the kind of financial investor who just puts money in, but they really want to support us to grow.
Anneli Aljas, Eurora`s CFO
When the due diligence is over, the contract negotiation starts. It certainly isn’t an easy ride, as Anneli shared. “We had some very long days to go through the contracts. During this journey, we also had ups and downs. It was interesting to see how the compromise was found.”
What lessons can we learn from closing a funding round?
Anneli said it rightly, running an A round of funding is a real journey. In all journeys, unexpected events and challenges can come along the way. You need to be agile and react quickly. Eurora’s A round was no exception. According to Anneli, one of the biggest challenges was the short time that the process took compared to the usual Series A. “We squeezed the diligence process into a pretty short period of time. Everybody admits that these 2 Months are very short for this kind of process. It was difficult to get over the process that is like a full-time job but also keep up on the usual things.”
Anneli also mentioned that finding compromises during the contract negotiation can be challenging. She recalls cheerfully how the contract was finally signed. “We had been negotiating for so long that the morning of signing I said nobody goes to sleep before we sign.” Everybody thought they would have enough time as it was in the morning, but at 03.00 am, negotiations were still ongoing. The investors, therefore, offered to postpone it to the next day. But Anneli and Marko replied: “Tomorrow is a new day, new things, new tasks, we won’t go to sleep before signing.” And they signed the contract at 04.05 am. This teaches us that successful A rounds can happen only if the team is determined.
The founder and the full management team have impressed us with their quality, domain expertise, and vision for the company.
Shaffy Röell, Investment Manager at Connected Capital
But rest assured, a Series A round is not only about hard work. Anneli gave precious advice to other startups that would like to take the leap. “Don’t be too stressed. Of course, it is difficult, but you must be proud of yourself and celebrate the small wins too. It is not only hard work during that time. You must also share some fun.”
Anneli also highlighted an aspect that startups need to consider: the chemistry between the company and the investors. It is important to find investors that have similar values and ways of working, as she points out. “All this really matters because it is going to be a long-term relationship. Do not think they will just give you the money and let you go. They will be part of your everyday life. That’s why if you do not have good chemistry, it is difficult.”
What next steps does A round closure bring?
Once you close Series A, the journey is far from over. It is just starting. You have the resources to implement your goals, so it is time for your team to pick up the pace toward success. Anneli shared the major goals Eurora will achieve with this funding. “We are going to use it to increase the team, improve the product, launch new products, develop in new countries, and expand faster through mergers and acquisitions.”
Eurora plans to expand in rapidly growing and high revenue markets like the UK, the US, and the Middle East. The team will also develop new products to offer end-to-end intelligent solutions for all types of businesses. Besides, the management will work on potential add-on acquisitions. Shaffy Röell from Connected Capital expressed his enthusiasm. “We believe that Eurora has built a truly unique AI/ML-based platform, significantly improving compliance while reducing package delays and lowering costs for e-commerce parcels shipped into Europe.”
To reach its ambitious targets, Eurora is looking for new talents ready to join a fast-paced startup with a unique AI-based platform. As frontrunners in the digital transformation of trade compliance, we have unique job opportunities in software engineering that will take your professional career to the next level. Developing new products and expanding in new markets also opens the way for product, sale, and support professionals to join a fast-growing company with sky-high goals.
Do you feel inspired by our journey and want to be part of the next Estonian startup success story? Check out our open positions!