A French founder’s perception of the Bay Area’s startup culture
As shared by Mehdi E. Hafed Pocard (co-founder of Touch Sensity)
Created in December 2019 by Anna Pugach and Mehdi E. Hafed Pocard, Touch Sensity offers a revolutionary technology that makes objects and materials sensitive to physical interactions without using sensors, which are always difficult to integrate. The entire surface, whether solid, flexible or even liquid, is used as the measuring instrument. Coupled with artificial intelligence, the system locates and models in real time all the physical interactions carried out on the material: pressure, deformation or extension! It is then possible to associate the data obtained with the environment, to transform the material into a sensitive surface or to control external systems thanks to these same interactions. The startup wants to rapidly expand in France and internationally to become the reference solution for data capture and analysis for the aerospace and transportation industries.
Mehdi traveled to San Francisco for the first time for TechCrunch.
In a correspondance with Newfund, he shares about his experiences as a self-described “French regional nugget” in the “startup capital”.
Newfund: Hi Mehdi. Can you tell us about your experience traveling to San Francisco to attend TechCrunch?
Mehdi: Traveling to San Francisco is quite a visceral experience for a French regional startup. You are no longer considered a potential deeptech unicorn. The city breathes startups, bleeds fundraising and gives birth to hundreds, if not thousands of entrepreneurs every year. Visiting Silicon Valley for the first time is therefore a humbling experience for anyone who wishes to follow the footsteps of Elon Musk or any other American entrepreneur.
My first impression was that startups are omnipresent in the life of San Francisco. If you listen carefully, you will hear people talking about fundraising, entrepreneurship, strategy, founders… words that sound like a sweet melody to your ears. It is the best place to be at if you want to learn how to grow as an entrepreneur.
Newfund: How was your experience at TechCrunch?
Mehdi: TechCrunch started two days after my arrival. I expected to talk to dozens of investors and was sure that they would show great interest in our technology. However, I was proven wrong the moment that the first serious investor cut me off in the middle of my pitch to wish me “good luck”. Even when things went better, I didn’t see the same sparkle in investors’ eyes like I was used to in France when talking about Touch Sensity.
This taught me a valuable lesson about pitching:
- In France, you emphasize the innovative aspect of your technology when talking to investors. In the U.S., this is not the case. While the technology matters as a deeptech, it is secondary and often discussed privately during a meeting.
- Similarly, instead of focusing on HOW you do things, what matters is WHY you do them. This is something I learned by listening to several pitches and through my exchanges with startups and other attendants of TechCrunch. This is because American investors primarily care about the market traction you can gain and how you will make money for your clients. You need to convince them that you already have traction and that not investing in you would be a major mistake.
- American investors also don’t care about how you generate traction in France. They don’t know your clients either. I therefore had to focus heavily on a customer that would have name recognition in the U.S., namely Airbus.
- I also had to pitch Touch Sensity as a solution and not as a technology. The nuance is important because a solution answers a problem, while a technology isn’t of market value in itself.
In fact, at least 9 startups that I interviewed during TechCrunch failed because U.S. funds do not invest in European companies without a strategy to access the U.S. market. Investors also want to see traction elements corresponding to the ones of U.S. companies at your stage of development.
Newfund: What are your lessons and key takeaways from TechCrunch?
Mehdi: I’d say that I learned a lot about fundraising in the U.S. It took a lot of asking to get there though. I would ask as many questions as I could. I would talk to people at my booth, European start-ups around me, more advanced American start-ups, or simply to PJ and Henri from Newfund's San Francisco office.
Based on my interactions, I quickly realized that fundraising is not only a step in the development of a startup. It is also about understanding the expectations from the part of investors based on each stage of the investment. The Pre-Seed and Seed stages appear to be the same as in France in terms of expectations, amount, or value. However, I noticed a real acceleration in series A. The amounts are bigger, the investments are more important in the U.S. This showed me that Touch Sensity is still in its early stages. Even though we have signed many POCs and several medium-term contracts, we are a Seed because we do not have a strong contractual commitment yet, such as a small-scale deployment or an ARR.
To make it short, I learned that a new market basically means starting from scratch with more experience. To convince a fund, you need a strategy that has been thought through. Some funds will invest in the capital from the beginning of the application of this strategy (I call these funds “France-friendly”), others only later.
Newfund: How did the Newfund team help you during your time in San Francisco?
Mehdi: On top of assisting me with the many questions I had, PJ and Henri spoiled me with 8 meetings the week after TechCrunch, each one as interesting as the other. I met people from all over the world: French people working in U.S. funds, Americans from NY, and Asians looking to invest. All confirmed their interest in Touch Sensity. Some France-friendly funds expressed interest in investing, but wouldn’t take the lead. The other ones stated that they preferred to wait for the series A. They also wanted us to apply a real U.S. market strategy first before investing.
Even though we are not yet a Series A, during my time in San Francisco, my experiences at TechCrunch and with the Newfund team enabled me to better know our value and stage of development. This allows me to justify and think about our strategy with my co-founder Anna. In our case, the lesson is that we needed American customers. 2-3 POCs would be enough if we have validated our market in Europe.
Our next round of funding will be used to build our U.S. strategy and development on the US market in order to get to Series A. Our objective is to build our strategy over the next 18-24 months with a pre-seed funding in order to sign contracts, map our industrial network, and establish Touch Sensity’s presence on the U.S. market. We will open an office in the USA while continuing the development in Europe. And we will do the same with the Asian market.
Newfund: How are you planning to go about Touch Sensity’s U.S. expansion logistically?
Mehdi: In terms of logistics there are several things that come to mind. A big one is of course centered on the location of Anna and I. I’m sure that the presence of the founders is essential, but I am not convinced we need to be in the U.S. full time. I'd rather estimate it at a 55/45 ratio. After all, our European development is also important. I’m therefore currently playing with the idea of having an experienced sales manager as a sort of right-hand man/woman, possibly part-time, to help us with events and strategy mapping in the beginning. Again, launching a business in the US is like starting a new startup from scratch with just more experience. It is not to be taken lightly and requires you to think about a real strategy that you anticipate and prepare in advance.
Another logistical aspect would be to find an American fund for the pre-seed stage that would put in a small ticket. This would allow us to use their network as part of our strategy. Alternatively, it’ll need to be the old-fashioned way of participating in trade events and prospecting on repeat. My co-founder Anna and I are prepared to define our U.S. strategy. We will update our documents (such as our data and pitch deck) and do a Seed fundraising. This will cover the development of our company, allow us to reach our goals and control the acceleration.