Bootstrapping Using Services from Helsinki: Juha Lehtonen, CEO of FA Solutions (Part 3)

Sramana Mitra: All your early customers were in Finland?

Juha Lehtonen: Yes, the early customers were local. Once we were up and running, it took us about a year and a half to launch the product. We did it very gradually. Around 2008, we heard that there was a couple of Swedish guys in sales who were setting up their company in Sweden.

Their goal was to find two or three software products that they wanted to represent. We were able to get started with them. We were among those three software that they represented in Sweden. That was the beginning of a little bit of the international market.

Sramana Mitra: The 30 clients in Finland that you had sold to, how did you price the product?

Juha Lehtonen: Ever since the beginning, we provided the software as a service. Each client had their own instance. It’s not a multi-tenant SaaS model, but we provided it as a service. We charged a monthly fee. It depended on the size of the company and the functionality. The MRR was somewhere $2,000 and $5,000.

Sramana Mitra: What happens next?

Juha Lehtonen: First of all, the realization was very similar as we had in Finland. There wasn’t that much competition. The competition wasn’t there because the bigger banks were using much more expensive international systems. The smallest ones were doing things with Excel. There was this middle market that needed a system. They had local requirements. We were able to get a good reputation.

We started to build up the market in Sweden. We never really got to dominate Sweden, but we got close to 10 clients. This same group was able to get clients from Norway. The Nordic is, sort of, a local market. That helped us get a more international presence. It was all direct sales at that time. The potential number of clients wasn’t that huge. We’re talking maybe less than a hundred in Finland and less than 200 in Sweden.

Sramana Mitra: When you were doing these deals, what were the contract sizes? Were they 12-month contracts?

Juha Lehtonen: It’s a continuous model. We had a six to twelve-month termination period.

Sramana Mitra: They paid in advance?

Juha Lehtonen: On a monthly basis. We didn’t really secure the money beforehand. At the same time if we get a client to use our system, they don’t switch very easily because they build their business on it. The system stays there. It was quite a reliable source of money for us.

Sramana Mitra: You got about 50 customers in the Nordics and you have now a substantial cash flow. Are you breakeven?

Juha Lehtonen: Yes, we had to be all the time. Even though we had the initial capital, that was already spent.

Sramana Mitra: The services is stopped at this point?

Juha Lehtonen: It took about three to four years before the total revenue level was pretty stable. At the same time, the license revenue went up and services went down. Then it started to accelerate when we were able to get more clients. They were bigger deal sizes as well.

Sramana Mitra: Still in the Nordics?

Juha Lehtonen: Yes. While we were building this up, we also started doing more and more online marketing. We were more active on our website. We started to get some inbound. That helped us to get one or two clients outside of the Nordics. We actually got clients not only from Europe but from other areas as well. We started up our UK operations a few years ago. Still, the internationalization came mainly from inbound leads that we got through our website.

This segment is part 3 in the series : Bootstrapping Using Services from Helsinki: Juha Lehtonen, CEO of FA Solutions
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