It’s been a busy year for Danish SaaS next-generation customer service support platform Dixa. Co-Founder Mads Fosselius and his board recently tapped into their fresh Series C funding coffers to shell out $43m to acquire German conversational AI Solvemate and French AI-powered customer experience solution Miuros, a year after acquiring Australian user education and onboarding platform Elevio. Fosselius and Erik Pfannmöller, Co-Founder of Solvemate, recently sat down with the GetLatka team to discuss how the companies will be combining forces going forward.
Co-Founders Fosselius and Pfannmöller share their vision for the future: “the effortless trinity,” why Dixa is going the M&A route instead of organically building what they need, why Solvemate chose the acquisition route, how much funding they can access for M&A, and who the new Dixa is targeting next.
- Raised $105m Series C in 2021
- 1000+ customers
- $400m+ valuation
- $15m ARR after acquisitions
Dixa doubles ARR from $7m to $15m
Dixa launched in 2015 but got going in 2016. They started scaling and selling in 2017, breaking $1m in ARR in 2018. They hit 7m ARR two years later and then doubled to $15m in 2022. Dixa had already hit $11m in ARR at the time of the $105m Series C in 2021.
Dixa’s 1000+ B2B and consumer brands
According to Fosselius, Dixa provides next-generation customer service support to over 1000 consumer brands and B2B companies. Their customer base runs the gamut from SMBs to mid-market and some enterprise companies. The co-founder’s vision is to give customers the tools they need to build conversational customer friendships by strengthening their bonds across all channels, from email and live chat to Facebook Messaging and What’s App.
18-month search for M&A partners
Co-founder Fosselius explained that it took the Dixa team 18 months to develop and execute their strategy for finding the right M&A partners. Fosselius indicated that Dixa has solid partners in their ecosystem, citing several partners in the knowledge base and automated chatbot spaces as examples. So why not build your own tools, queried Latka. “We probably could build what we need. Maybe. It’s a lot of risk and investment of talent and leadership. We realized (that with an M&A strategy) we could shorten the time-to-market in this $300B industry. We must move fast to disrupt this industry,” explained Fosselius.
3 acquisitions help build the Effortless Trinity
Co-Founder Fosselius sees Dixa at the center of a customer experience platform that combines knowledge, automation, and intelligence. Their three recent acquisitions represent the sides of the triangle, with Elevio providing knowledge and data, Solvemate the automation, and Miuros the intelligence. Fosselius believes this combination can make customer service effortless, allowing representatives, agents, and administrators to build relationships that will create strong bonds to turn customers and consumers into advocates.
Funding M&As with $105m Series C
The $105m Series C investment led by General Atlantic and other existing investors and previous partners provided the funding needed to complete the $43m acquisition of Solvemate and Miuros. Fosselius revealed that his funding partners are looking for heavy hyper-organic growth plus M&As. When Latka queried Fosselius about the amount of funds available for additional acquisitions, the co-founder explained that the existing investors have indicated a willingness to allocate additional funds for projects and acquisitions as needed to achieve their strategic goals. He noted that they’re not explicitly looking to spend the rest of their funding, adding, “Every company tries to protect cash for organic growth and opportunities.”
Under 10% of Series C to Secondary
The co-founder confirmed that a small portion, less than 10% of the $105m, went as secondary for founders, early employees, and first business angels to help fund some of their personal goals.
Expanding the Trinity in 2023
While Fosselius was clear in saying that more M&As are likely on the horizon, he was not yet willing to reveal their targeted areas of interest. He noted that Dixa is always open and talking to integration and alliance partners and receiving proposals. “We’ve done enough in 2022. We can have another talk in late 2022 about 2023,” he coyly added.
ARR grows from $10 to $15m after acquisitions
The acquisitions of Solvemate and Miuros boosted Dixa’s ARR from $10 to $15m. Fosselius sees the next target as $15-20m ARR, which he believes they will soon hit. “We are growing rapidly, but we need to take the right amount of time for integration with people and products,” explained the co-founder. “We are backing off the hypergrowth for a couple of quarters because the integration process is so important for a product-led company,” he added.
Solvemate adds 35 to the Dixa team
Erik Pfannmöller, co-founder of Solvemate, noted that his team of 35 was added to Dixa in the acquisition, adding that half his staff are engineers. Pfannmöller believes he and Fosselius are a great fit, as the two share an ambitious vision for the company. “It’s an awesome tech fit. We fit together instantly as we use the same tools and are culturally aligned as well,” explained Pfannmöller, adding that the two had collaborated on joint marketing programs before the acquisition. Having already worked together in their product ecosystem, “They were really the ones we wanted to join forces with,” added Fosselius.
$30,000 ARPU enterprise clients
Solvemate’s current client base of under 100 is predominantly enterprise-level customers who spend an average of $30,000 per year on contract. “We can charge more for automation than the system the agent is working in because the value of conversation is so high,” noted Pfannmöller. Although the target audience is quite different than the average Dixa user, the two companies are currently doing work with parallel momentum, even in scenarios where Dixa isn’t the platform. Fosselius welcomes the opportunity to support different platforms to stay in the game. “While we are working in parallel, we are also integrating the technology deeply into the Dixa platform,” he explained. Doing so allows both DIxa and Solvemate to move forward without losing momentum.
Why Solvemate Chose Dixa vs. an 8-digit Series A round
When asked by Latka why he chose acquisition, Solvemate co-founder Pfannmöller explained that Solvemate had raised pre-series A funding of a few million in professional seed capital. If they had not been acquired, Solvemate would have needed an 8-digit Series A round to continue to grow organically. “We have an old German saying: the dove on the roof or the sparrow in the hand,” quipped Pfannmöller. He explained that he believes you need to consider the product and the company as a founder. He felt that they could accelerate growth with Dixa, especially because of the fit.
Acquisition terms for $43m partners
Co-founders Fosselius and Pfannmöller declined to share the exact terms of the deal for Solvemate and Miuros, only that they totaled $43m. They did disclose that it was a roughly 50/50 cash and stock deal, with some vesting terms, and that the co-founders of the acquired companies are now co-founders of Dixa. “We have a joint vision and motivation to build something awesome; this approach works if you’re aligned on the future vision,” noted Fosselius, adding that the deal likely wouldn’t have gotten done if the other founders weren’t on the same page, or just wanted to cash out. Fosselius credits his CRO, who has spent his career in M&A, as instrumental in structuring the deals and getting them done.
Plan to reach $100m ARR
Latka queried Fosselius about his plan to reach $100m ARR and if he was planning to take a similar route as Hopin, who, according to Latka, “bought his way to $100m ARR.” Fosselius responded emphatically “no,” stating instead that his focus is on people and product. Whether combined or as standalones, he sees ARR as the positive side effect of building the company. “We are acquiring companies for people, technology, IP, and product that serve our big goal and vision of creating our own category of value experience,” he concluded.
Famous Five
Dixa Co-Founder Mads Fosselius shared his favorite book, Play Bigger, by Al Ramadan. “It’s about category building. I’ve read it before; it was recently recommended to me by Notion Capital, so I’m reading it again,” gushed Mads. His favorite CEO is Microsoft legend Sataya Nadella. “The way he turned around Microsoft and implanted a growth mindset is impressive, whether you love or hate the brand,” explained Mads. Co-Founder of Solvemate and now Dixa, Erik Pfannmöller, chose Notion as his favorite tool, also calling out Slack as a potential “Category killer if used right.”
Mads answered the rest of Nathan’s questions, indicating that he has inched up his hours of sleep per night from 6 to 7 and aspires to hit 7.5. Mads is married with three boys, ages 5, 11, and 13. “Weekends are all about soccer and tennis,” noted the 42-year-old father. Mads wishes when he was 20 that he had known how long it would take to scale a start-up globally. “I would have started sooner,” he quipped.
