Building a Capital-Efficient Niche SaaS Startup from The Netherlands: Hatch CEO Joris Kroese (Part 3)

Sramana Mitra: Business model is SaaS?

Joris Kroese: It’s SaaS. Our clients are the brands where we basically add these e-commerce capabilities on a fixed fee per month per country.

Sramana Mitra: It sounds like your primary channel was tagging along with the sales team of this content syndication company. Was that the only channel?

Joris Kroese: Initially yes.

Sramana Mitra: What revenue level did you reach through that?

Joris Kroese: We grew from $100,000 to $500,000.

Sramana Mitra: What’s the next strategic move in your marketing and sales from that point? We’re talking 2012 timeframe?

Joris Kroese: Yes.

Sramana Mitra: What are the other key strategic inflection points where your business went to the next level?

Joris Kroese: Initially, it was just me with the help of friends and family.

Sramana Mitra: You were the only one doing this.

Joris Kroese: We had one engineer. We had very little seed capital – around $200,000. We had to buy servers before AWS came. Our growth allowed for the development of the platform and the expansion of the business. During our 10-year period, we grew to $10 million in ARR. We took not more than $2 million in funding.

Sramana Mitra: Who were your investors?

Joris Kroese: The same partner that I spoke about. They chose to invest in us. There was another investor who wanted to invest in us who was present in that presentation in Belgium. He took that role because he didn’t want to dilute shares, so he’d rather come up with the money himself. The investors who wanted to invest stayed in touch with us. They tried to still invest as we grew during the years that followed. In 2015, we did a more serious round of $2 million.

Sramana Mitra: What were the metrics of the business when you raised this round?

Joris Kroese: We had about 70,000 MRR.

Sramana Mitra: That money came in 2011?

Joris Kroese: 2015. In retrospect, we would have gone a lot faster. When the investor came on board, we were hiring and spending for sales and marketing. That helped grow the business a lot faster. At the same time, we created a non-existent vertical.

Sramana Mitra: You found a niche. It’s a relatively small niche, but it’s not an insignificant niche. The beauty of small niches is that you can create very nice capital-efficient businesses.

Joris Kroese: Exactly, yes. I don’t believe that we would have gone faster if we’d deployed more capital.

Sramana Mitra: I don’t think so too. This is not a capital-infusion game.

Joris Kroese: The market also has to be ready. We needed to evangelize what we were doing as we were solving a problem that brands weren’t aware they had. We also had some competition at some point who was co-evangelizing what we do. Our competition also helped create awareness.

Sramana Mitra: Talk to me a little bit about expanding beyond just doing this solo. In 2015, you had more capital and started hiring. What did you hire? Where did you get to? It sounds like you’ve maintained a capital-efficient team.

Joris Kroese: We employ over a hundred people, but, still, we are profitable. We had one year where we were not profitable in our 10-year history. That was by choice.

Sramana Mitra: The bulk of that hiring came after you raised money?

Joris Kroese: Right. If I were to do it again, I might have done it faster. But the investor, aside from money, brought us to a higher level in terms of professionalism. They made us report on SaaS metrics, customer acquisition cost, retention, and CLTV.

This segment is part 3 in the series : Building a Capital-Efficient Niche SaaS Startup from The Netherlands: Hatch CEO Joris Kroese
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