Building a Global ERP Company from Estonia: Katana CEO Kristjan Vilosius (Part 7)

Sramana Mitra: Do the accounting firms identify themselves as being focused on manufacturing companies, retail companies, or physical oriented companies?

Kristjan Vilosius: No.

Sramana Mitra: Okay. So, how did you find them in building your channel partnership? Did you have to qualify everybody then?

Kristjan Vilosius: I mean, accounting firms have a similar situation as QuickBooks Online themselves, 10%-20% of their customers have inventory. So, we are relevant for every fifth customer that they have, which is a big enough segment. In the early days when we were focused only on manufacturing, the manufacturing is a further subset, right? Then we were too irrelevant because an accounting firm might only have one out of twenty customers in manufacturing.

As soon as we started expanding towards retail and distribution wholesale, that turned into every fifth customer being relevant for Katana. It helped us to establish that or strengthen that partnership because we became more relevant for them as we expanded our offering. So there was a lot of value in being laser focused in the early days.

But now, to get the attention of those lead generators and channel partnerships, we had to expand our offering to make sure that we are relevant for a larger part of their customers.

Sramana Mitra: Great. So, now what happens on the revenue side with all these shifts in the business?

Kristjan Vilosius: Post our Series A, we started working on what the channel and tech partnerships. On the demand capture side, we started adding demand generation with social media ads and paid marketing on a slightly larger scale because of our Series A funding. So, the go-to-market diversified in that sense.  

Sramana Mitra: What about Social media advertising on LinkedIn?

Kristjan Vilosius: We did LinkedIn also, retargeting on Facebook, and a bit on YouTube and so on and so forth. Then from there on, we now fast forward to the end of 2022. The market was already turbulent. I mean, it already shifted in the beginning of 2022. We have made solid progress. Our MRR was back then about $400K.

Sramana Mitra: Okay.

Kristjan Vilosius: We had the opportunity to raise a Series B, and we decided to raise a rather large series B in order to secure for ourselves a bit of a longer runway in those turbulent times. Our Series B for $35 million was led by North Zone, one of the leading VCs in Europe in B2B SaaS.

Our total financing was now roughly $50 million. With that funding, we were able to take the next step in terms of our hiring and bring in world class talent to take our go-to-market to the next level in terms of how we do tech and partnerships, how we do inbound and marketing in both demand capture as well as in demand generation, find the efficiencies and use their creativity to scale this to the next level.

2023 was a year of building. We also had to build more product to move further up market as we now wanted to set our eyes on what we define as the mid market, $50-$250 million in revenue.

In 2023, we invested a lot in product. So a big part of the funding that we raised went straight into product development to build the features and workflows and security features required to attract those larger customers. We further strengthened our go-to-market motion on these fronts, primarily QuickBooks Online and Shopify ecosystem or e-commerce and accounting ecosystems.

As we started moving more towards larger customers, we increased the pricing point. We have now reached a stage where half of that funding or a bit more is still on our bank account. So we still have a safe runway for the next 24 months to come.

But we have also crossed the $10 million ARR threshold now and are firmly in the growth and scale up stage of a tech company.  

Sramana Mitra: Can you elaborate a bit on the team? Is your entire team in Estonia?

Kristjan Vilosius: Not at all. When businesses or tech companies are launched from Estonia, the problem is that there’s no internal demand. It’s a very small market. So you have to go global from day one. We set our eyes on North America basically back in 2018. Shopify is the strongest in North America, so that was kind of a natural fit.

We also had to start hiring to match our geographical aspirations and ambitions. So, now we are 150 people and the entire product organization, including engineering and design, which is almost 100, is based here in Estonia or in the neighboring countries. But most of our commercial team is based in North America. Some of it is in Australia, New Zealand, UK, and the other English-speaking markets that we sell to.

So, customer support, success, onboarding, sales, partnerships teams are in North America. But we have customers today from eighty different countries. We’re getting traction around the world, but primarily from English speaking markets and North America specifically.

Sramana Mitra: Well, congratulations. It sounds like a fabulous story. You’ve done a great job navigating very precisely. What I love about your story is its very precise navigation, very strategic, very structured, very repeatable sales process wise. That’s what creates high growth, scalable companies. So, well done.

This segment is part 7 in the series : Building a Global ERP Company from Estonia: Katana CEO Kristjan Vilosius
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