On Tuesday, Xena Intelligence founder Akhil Suresh Nair took part in a founders-only meetup at a brewery in Louisville.
The event was not publicized. It was meant strictly as a way for founders to talk to each other about the current landscape that they collectively face in the region's entrepreneurial ecosystem in the wake of a series of collapses of startup-centric banks.
While the group concluded that, yes, things are not as good as they were before the Silicon Valley Bank collapse in March — they are not as bad locally as the national narrative has been portraying, Nair said, especially for early-stage companies raising pre-seed to Series A rounds.
“Everyone has been yammering that ‘Oh, fundraising is impossible even if you have fantastic growth, there’s no way you’re going to get funding. You have to hunker down, lay off people, really cut to the bone,'" he said. “That’s turned out for me — and a lot of the other startups — not to be the case.
"I think as long as you’re providing good value to your customers, and you’re working with integrity, you have a great idea and you work hard towards it, I don't think fundraising or any growth factor should be an issue for you.”
One pack, no lead wolf
It certainly has not been for Nair’s company, which he founded in Boston before relocating to Louisville after being named one of the winners of the 2021 Render Competition.
Xena Intelligence, named one of our 2023 Startups to Watch, recently closed a $2 million pre-seed round. It serves as an artificial intelligence (AI)-powered e-commerce platform that helps grow brands through back-end optimization software that uses many data points and 20 key performance indicators (KPIs).
What is interesting to note of Xena’s fundraising efforts is that there was not one lead investor in the round. Instead a majority of the capital was five firms that contributed approximately $200,000 each.
“It was one step at a time,” Nair said.
The round’s first prominent investor was Austin, Texas-based Seaplane Ventures, a firm in its infancy that Nair met through his participation in Techstars NYC from December to February.
“They are new to the game, so we our one of their first investments — so that, I think, gave a lot of confidence to a lot of the investors,” Nair said.
The next four significant investments were from all local firms: Keyhorse Capital, Render Capital, Bluegrass Angels and Commonwealth Seed Capital — the first three of which had already invested a collective $325,000 in the company in its earliest round of funding.
Nair added that during his time with Techstars, he began to realize that many investors are much more open to investing in startups who are based in the middle of the country as a change of pace from focusing on the coasts.
“Midwest companies are more grounded, more realistic — and they really want to prove themselves, so that's what they’re kind of looking at,” Nair said of the general sentiment among those with whom he talked to during Techstars.
Still one to watch
When I first spoke with Nair in November, he reported that he had approximately $600,000 in annual recurring revenues since the company’s founding in 2021. He anticipates having a revenue in the vicinity of $1.5 million by the end of 2023.
Back then, Xena had 32 e-commerce clients. That number has ballooned to 55, including several Fortune 500 companies. Those clients have been able to gain a combined approximate $80 million in sales, up from $38 million back in November.
Out of those 55 clients, three of them are startups based in Louisville: Modica (mocktail mixers), Derby Fit (workout recovery protein) and Street Tennis Club (tennis apparel and equipment).
Amazon remains the key driver for Xena’s business, as Nair and his team have gone from managing $7 million for clients on the platform alone in November to approximately $17 million currently.
Xena also remains active on Shopify and Walmart.com — and recently began doing beta tasting on Etsy as well.
The company currently has about 25 employees, 20 of which are full-time. Nair remains the only one based in Louisville, but he hinted that could change.
“Soon, probably — not yet,” he said.
