How ScriptRock caught Peter Thiel

After weeks in Silicon Valley with nothing to show for it, ScriptRock's founders never thought that they'd raise AU$1.2 million from a consortium led by Facebook investor and PayPal founder Peter Thiel, but suddenly everything fell into place.

Start-ups in the second ever intake of the three-month Startmate accelerator program travelled to Silicon Valley in April, in what could be dubbed the Aussie entrepreneurs' investment pitch world cup.

Round one for ScriptRock founders Michael Baukes, Alan Sharp-Paul and Leo Venegas took place at venture capital firm 500 Startups, which validated the Startmate program last year when founder Dave McClure invested in Grabble (which was later acquired by Walmart). The meeting facilitated an encounter with Valar Ventures principals James Fitzgerald and Bryce Steeg — the right-hand men of renowned Silicon Valley investor Peter Thiel, who founded the New Zealand-based venture capital firm, which will expand to Australian shores later this year.

Valar invited Baukes, Sharp-Paul and Venegas for a meeting.

"[Our chat] really focused on the business, and, looking back on it, was focused on our personalities," Baukes said. "We told them what we were doing, totally explained to them it was very early days and we gave them the vision."

The result, in soccer terms, was a nil-all draw, as early enthusiasm and opportunities didn't convert to investment dollars as the team progressed through rounds of discussion. They were in a rough patch — a trough — so they extended their visit by three weeks, resolving to stay until they could secure investment.

It wasn't long after this that they received a call from Valar Ventures' Fitzgerald, which changed their fortunes.

"We were kind of expecting some bad news ... we were right in the middle of the trough, so it was just like, 'oh, OK, we'll go out to meet him, he's a good guy anyway'," Baukes explained.

"He said, 'Yep, Peter's in; it's all on'."

ScriptRock's founders couldn't believe it.

"Are you serious?" Baukes asked at the time.

"Yep," Fitzgerald replied.

"Do you wanna have a drink?"

"Yeah."

"Great, thanks mate."

Peter Thiel became the drawcard that brought other investors on-board, and delivered ScriptRock a $1.2 million investment windfall.

"From that moment, it just went 'whoa!' and fell into place."

Fitzgerald explained to Baukes why Thiel had been interested.

"[Peter] sought businesses that are globally important, with great people running them, and people that actually have a vision. He said 'we're keen on you guys, we like it, like what you guys are doing, we like the passion'."

Thiel's interest seemed a distant possibility when they were deep in what Baukes called "the trough" — where the mind is vulnerable to negative thoughts.

"Another guy we were talking to and worried about, he was super keen all the way through but had just gone quiet for a week. We were like, 'what's going on?'

"He'd gone on holidays," Baukes laughed.

"That's what happens when you're in the trough. We were over there, about two weeks in and having great meetings with everyone, but it's hard to [convert]."

People would often express interest, but would then say that ScriptRock was either at too early or too late a stage for investment.

Baukes said that he respected companies that had to go through the process without an accelerator like Startmate, which he likened to a degree in business.

"I don't know how to explain it, it's a PhD in start-up. Coming out of that, you're so well prepared for so many things; you have the best advice you can get; people that have been there and done that; you learn from all the pitfalls they've experienced; you can make your own decisions."

He is glad that the company stayed past the planned three-week tenure.

"If we hadn't stayed, it would've been an order of magnitude harder to pull it off ... everything up until that point [the three-week mark] was great conversations, we were meeting lots of people, we had one or two definite, but at the same time there was a week where a couple investors went on holidays. It was like 'oh, no, we don't want to leave before we get firm commitments'.

"The last three weeks it fell all into place."