Company is left with $300,000 in the bank, burning $80,000 per month, $3m ARR
CEO Juha Berghäll says firing hard-earned Finnish development talent wouldn’t produce immediate savings due to inflexible Finnish employment laws
New funding talks “didn’t die off” yet, CEO reassures
Juha Berghäll, the CEO, explains ONEiO as a “business integration hub” that connects business service providers to business service buyers. IT, customer service and facilities management are among key areas where supply chain management software can produce immense value. The selling point is that suppliers can simply “subscribe” to the service, without the need for technical tweaking.
Nathan Latka doug deeper with CEO Juha Berghall in this interview from February 2020:
When it comes to service provider management, there is no standard, Berghäll says. ERP and EDI standards aren’t widely used among service providers, and most of the information exchange is “human driven,” ONEiO CEO explains. “Also, the trend has been for a while that companies are buying “best of breed” services—which means that they have multiple different providers, working together to provide the same service,” Berghäll adds.
ONEiO has two typical customer profiles: one is an enterprise who outsource their IT and the other is a management/business services provider whose clients are enterprises. Adidas, one of ONEiO’s customers, uses the platform to integrate Salesforce with their customer service requests. They also use the software to connect their suppliers into a holistic supply chain management system.
ONEiO Serves 65 Customers Paying $45,000 per Year
Before ONEiO, Berghäll co-ran a consulting company, gaining insight into the inefficiencies companies deal with in their service supply chains. ONEiO started out in 2011 as a bootstrapped R&D project to see if the product-market fit was really out there. “We’ve been [running ONEiO] as a day job since 2015,” the CEO added.
The last time Nathan spoke to the company’s founder (December 2018) their average customer value was around $50,000 per year. Today (end of March 2020,) the CEO estimates the average account brings in $45,000 per year.
ONEiO to Pass $3M Revenue Mark if They Survive Covid-19
Founded in 2011, the company relied on “traditional direct enterprise sales channels,” as the CEO put it. As of 2019, the company has switched to something Berghäll calls a “productive growth model.” While he didn’t go into detail, he alluded to digital marketing techniques, targeting key individuals in enterprises.
Once they do get on board, the customers pay a (flat?) subscription fee and then an additional fee for each integration they want to use.
As of March 2020, ONEiO serves 65 customers, which puts them at around $250,000 in monthly recurring revenue. “Last December it was $230,000,” the CEO confirms. The company is still getting to the $3 million annual revenue mark.
Low number of enterprise customers usually spells an expansion revenue machine. Once an enterprise is subscribed, Berghäll confirms, they’ll usually bring around 5-10 suppliers to use the platform as well.
The CEO attributes ONEiO’s “0% churn” to their unique market position: their customers don’t go bankrupt, their price isn’t high enough for any of the enterprises to ditch and once they are subscribed, there’s not much to go back to—besides email and lots of phone calls.
At the end of 2018, ONEiO had 15 people on the team. By the end of March 2020, the employee count grew to 32, 20 of whom are engineers. The company has 6 quota-carrying sales representatives.
ONEiO Burning Through $2.1M in Funding, New Money Talks “Didn’t Die Off” after Coronavirus Hit
ONEiO has raised $1.4 million in capital to date. “We’re actually in the middle of Series A discussion,” Berghäll adds. “We also got this friend in the EU—an innovation fund—which is really nice, 1.1 million Euros in total, as a grant. That helped us to boost up a bit.”
How has coronavirus affected Berghäll’s plans to raise capital? VC’s already have the money, the CEO says, which they have to figure out what to do with. Even if the stock market collapses, the investors will need to find the means to invest. Berghäll points to the 2008 recession when the VC investments “didn’t die off.” ONEiO’s Series A talks are still ongoing, and so far “nobody has said we’re going to postpone, or something like that.”
Berghäll is looking to raise around $6 million, which, the CEO estimates, would amount to around a fifth of the company’s pre-coronavirus valuation. With the pandemic, however, the entrepreneur says it’s “hard to say” how much the company is worth.
What if the virus doesn’t go away anytime soon, and ONEiO’s money talks halt? The CEO mentions trade shows – an instrumental lead generation method for the company last year, which is now “cut off” due to travel restrictions.
Last year Berghäll talked about how difficult it is to find developers fit for the job in Finland. Should the startup burn through their available cash and have to lay off people, they’ll have to deal with Finland’s less-than-flexible employment contracts. “It’s going to take weeks, months, to start generating any savings from employee layoffs,” Berghäll explains.
As a last resort, the CEO entertains the idea of asking for the help of their current investor, a Finnish VC firm.
ONEiO Burning $80,000 Per Month, 5 Months of Runway
In 2019, ONEiO’s burn rate was “about $80,000” per month, which remains consistent in 2020. This gives the CEO 5 months of runway with $300,000 in the bank. Given the current economic uncertainty, Berghäll says the company is monitoring their cash flow “on a daily basis.”
ONEiO’s net monthly churn was -2.5% in 2019, while the logo churn was about 5%. Berghäll estimates that it costs the company around $60,000 to $70,000 to land a new customer, which pays off in 14-15 months.
Nathan Latka’s 5 Questions with ONEiO CEO Juha Berghäll
- Favorite business book? “Product-Led Growth by Bush Ves.”
- Favorite CEO? “None.”
- Favorite online business tool? “Hubspot.”
- How many hours of sleep does Juha get? Married? Kids? Age? “Still 7 hours of sleep. Still married, 2 kids. I’m turning 44.”
- What does Juha wish his 20 y/o self knew? “Shit will hit the fan at some point. Keep some money in the bank.”
2017: $50k (grant, 1)
2018: +1.1M (Series A, 1)
2019: +1M (grant, 2.1M total, 1)
2017: $1.2M (mentioned in previous interview YoY MRR grew by 80%)
2018: $2.1M (previous interview)
2019: $2.925M (interview)
2018: 40 (previous interview)
2019: 65 (paying $45,000 per year, interview)