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I haven't seen or heard the South African accent of one Daniel Chalef in a very long time. Now I know why. Fittingly enough, the last time we chatted was in downtown Raleigh for the Innovate Raleigh kickoff back in January. Yesterday, his Glenwood South-based KnowledgeTree announced the closing of a $4.75 million Series B round, featuring local VCs River Cities Capital and Hatteras Venture Partners, along with DC-based Core Capital Partners and Series A lead Hasso Plattner Ventures Africa.

So all is forgiven.

KnowledgeTree does SaaS document management for mid-to-enterprise level companies with a social twist. Born in South Africa, the company migrated to the US two years ago, and overcame enormous obstacles with persistence, precision planning, and a long runway.

I caught up with Daniel, the CEO, yesterday over the phone (beers are on me in person at the next ExitEvent Startup Social on August 6th). We talked about Raleigh's growing startup spark, the importance of solid relationships in the startup world and, mostly, the distinct challenges KnowledgeTree faced during this raise.

You know, just stuff you won't read anywhere else.

Challenge #1: Not in Silicon Valley? How About Not in the US?

The first and largest hurdle was moving the company from South Africa to the United States. Once in Raleigh, Daniel and his team had to learn how businesses run and grow in the States, and also how VC works in the States. Plus there was the whole visa issue, no big deal.

Fortunately, they found a wealth of helpful advisors, ironically enough in the Bay Area, and had the buy-in of a supportive lead investor in Hasso Plattner, who believed in the company's vision whole-heartedly.

They spent the next two years setting up the US office and building the product and cracking the market. And they overcame Challenge #1 by overshooting expectations on that front, landing 200+ customers, most of whom were a much bigger size than they had originally anticipated.

Challenge #2: OK, You're Established in the US. Guess What? You're Still in Raleigh.

Obviously, Daniel says, it's more difficult to sell to VCs from Raleigh, especially when you're relatively unknown, than it is from the Bay Area. Not news to anyone, but this is something Daniel and his team considered up front, so they gave themselves plenty of runway for the Series B round.

This helped them build relationships, especially important with the VCs, but they also aggressively and assertively built a network from nothing in the space of about a year. Silicon Valley Bank made a number of introductions, for example, and as their network grew in breadth and depth, their introductions multiplied.

This paid off in spades. Since the caliber of the management team is such an important factor in the investment decision, the longer and deeper the relationship with the potential investor, the more an unknown becomes known, thus overcoming Challenge #2.

Raleigh, as a home base, is working out just fine for KnowledgeTree, by the way, and Daniel sees the early stages of a cohesive community coming together. There are great companies in Raleigh, he says, including downtown Raleigh, and what Raleigh lacks in a concentrated and vibrant early stage scene, it makes up for with a number of more mature companies in close proximity.

The gravity of Red Hat.

Challenge #3: Selling the Funding Approach to the Board

As with every add-on round, KnowledgeTree spent time and focus making sure the board was sold into the funding approach being right for the business. This of course, requires more than space allows, suffice to say not every startup actually thinks about Challenge #3, let alone puts time and energy into it.

The round actually closed several weeks ago, but careful planning dictates that you just don't spit news like that out. Furthermore, Daniel says, this is only a start, several different challenges now lie ahead. But, looking back on the challenges he's already faced, he says:

"If you have a compelling business and you show some traction, and if you demonstrate you're addressing a unique marketing opportunity, the funding is there."

I think he's got the right idea.

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