While Zapier Gets all the Press, Celigo Just Doubled Revenue to $95m, CEO Jan Arendtsz
15:54 Share

You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom.

If you'd like to subscribe, go to getlatka.com. We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com.

Then there's this dark horse out there, and I love dark horses. When I find one, I want to get him on stage, right? And so there's this other company that maybe you've heard of called Soligo, and it's run by a gentleman named Jan Arends, and what he's done is he's built a company that's well over $100 million of revenue, but hasn't had to go out and raise $400 million of revenue and directly competes with the likes of MuleSoft. We're going to dive into it all today. Please give Mr. Jan a warm round of applause. Welcome to the stage. Thank you.

We didn't go through that intro together, but it's pretty close, right? You got something wrong, but we'll talk about it. Okay. Do you know Work Auto's revenue? Kind of, but I'm not here to talk about that. Okay. But we're not quite at $100 million yet. Okay. It's a small correction. It's a fair statement to say, though, you are way more capital efficient than... Oh, for sure, right? I think we've raised a total of...

72 million in primary capital to get to roughly about 92 million in ARR right now. So that's the ratio that I looked. That's about 1.6, right, for every dollar of ARR.

How much have you invested in terms of raised capital? When I study your story, and not just what you say on interviews, but what you've actually done in Form D filings and multiples and how you've done it, you have way, way more discipline around valuation than everyone else I've seen in the space. Even Wade. I mean, everyone else I've interviewed in the space. So I'm really excited to dive into that. So here's the visual in terms of revenue growth. You guys all have it. Again,

four or five years to get to that first five million bucks of revenue, right? Early slog. Yeah, and that's an interesting story in of itself because we were bootstrapped from 2011 to end of 2015. By the way, we converted from a consulting company prior to that. I didn't know that. So hence why we were able to fund the company.

And we got to 2015, early 2015. At that time, I think we were about 4 million in ARR. And my CTO and I had a conversation and we knew the product that we had didn't really meet muster.

Because everything was changing. We connect these various apps together. The way companies acquired SaaS apps, the way they wanted to connect them together, all of that was changing rapidly. And the product that we had was archaic. It was not the right user experience.

So, unfunded, we decided we're going to go build a new product. So, in 2015, took a few engineers while still continuing business to go build a new product. Hence why we only showed the revenue starting in 2016. And that coincided with raising our Series A round last day of 2015. And we entered 2016 still without a product. We came out with it, I think, in March. But

But for practical purposes, the company was really founded in 2015. And that is what that shot looks like in 2016, right at Series A time. So you can see the product drop down to the top. Smart connectors, productivity apps, integrators. For those of you trying to get your bearings in terms of what world we're talking about right now, think of where this is the iPath space, right? Integration platform as a service. One of the leading players in the iPath space. We named some of the other people in the space earlier, but very hot space. It's effectively the tunneling of the internet, basically. Yeah.

Yeah, sometimes I use the term, it's the plumbing, right? In any given company, you've got all these applications, you've got data sources, you've got a data warehouse with the plumbing that connects these together, ingest data into a data warehouse, API management, connecting with your trading partners. We do all of that. It's an automation platform.

So what I want you guys to focus on here is that last number in the headline on this screenshot, because that multiple is one that is way lower than what others were raising in a space at the same time. And again, you have a discipline around here. I want you to elaborate on a second on that, but I want to establish the pattern more here first. So this was about 8.3 on about a 30 post, right? Right around that? Yeah.

That's correct. That's correct, yeah. So pushing that forward in 2016, you then did like an extension or something, right? In 2017, what was this? Yeah, in 2017, we just did an extension of the Series A round, another $4 million, correct. Also disciplined.

Held before X. Again, I'm going to ask Deeper about that here in a second. But pushing forward, we're now in 2017, 2018. I assume this new growth from $10 million to $16 million is the new product starting to get some traction. Correct. And look, when we came out with the product in 2016, it was pretty nascent. It was missing a fair bit of functionality for us to go compete with some of the other bigger players. We didn't have the biggest R&D team. We were still kind of in silent stealth mode building stuff.

the various features we needed because look in the end doing integration, connecting these apps, automating business processes, it's just a lot of work, right? There's so much functionality for us to go build. So we took small steps. We found little segments of the market that we could monetize at that time while we continue to build the platform.

So the next slide talks about this idea that anyone can, I mean, look, you can go raise a billion dollars. And if you, you know, the fastest way to make a hundred million bucks is to raise a billion and then, you know, burn 900 million on fire, right? And you're left with a hundred million. And there are people that are really good at that. So I know you don't want to talk about these and I built this deck, but we're going to talk about it anyway, because I want to give you credit.

I think maybe the most capital efficient and sort of the enterprise plumbing for the internet space, and you see the data to back that up here on the screen. When you look at the deal that Salesforce did to buy MuleSoft, at the time, one of the highest multiples paid 21x multiple. And so when I'm studying this data, pulling from my records from podcast interviews and getlacka.com preparing for this, I'm going, this is so wild because Jan's raising at a 4x and

And no joke, like a couple years later, and then you actually did a round right after this, we'll talk about it in a second, the 21x multiple at MuleSoft, but you did it at 4x. Question is why? You had a good growth story. You know, Workato seems to just be, you know, like light and just raising as much as they can. You see these headlines of a 5.7 billion valuation, but they only have got, you know, 150, 170 million bucks of ARR. So the multiple there also just feels like, how are they going to that valuation? Obviously Zapier bootstrapped different story.

Do you have a backstory? Were you a founder in the past that got burned on too high a valuation? Why do you have so much discipline here? Short answer is no. I'm a first-time founder. And, like, you look at what's in front of you, right? Where you are, where you're trying to head, why you're raising money, how much you want to raise at that particular time, and what is the right multiple at that time. I think the...

By the way, it was not a 4X, it was almost a 5X in our Series A round. At that time, we were unproven because we were building a new product, didn't have it in market yet. And it was a risk for our Series A investor to come in and invest in a company that still didn't have the future product of the company. So that's why in the end, we ended up at that multiples.

But in our Series B round, Series C round, there were other extenuating factors. I think every round was different. In this round, what was the extenuating factor? I imagine you had term sheets on the table for much higher than a 6.3x multiple, but you took this deal for a particular reason related to terms. Yeah, so this one's pretty simple. Look, we had multiple term sheets. I'd been speaking to maybe 25, 30 investors at the time.

Likely got term sheets from about five to 10. It really came down to the firm and the person who was going to sit on the board. Board dynamics is super important for me. And we went with the investor that we thought, you know, looking beyond the multiple, like who's going to partner with you over the next five, seven, 10 years?

to build a sustainable business? Do they have the same philosophy in terms of where you can take this business? Are they looking for a quick exit? So on and so forth, right? So when you take all of that and the multiples count as well, I think the Series B really came down to who we thought was the best firm to take us forward.

I mean, I don't know if you guys see this and think the same as I think, but you see the subtext in this header, right? These aren't like different years. This is the exact... You were doing this thinking and saying a good partner and a good board seat is way more valuable. And we can actually quantify that because MuleSoft just exited for 21X, right? So like you had that in your quiver to use in your negotiations if you wanted to anchor that. You didn't. You chose to take a much lower valuation. It really was just...

better person on the board and a better partnership? There were no economic secondary? Well, it's building a company. We always believe that this is a big space, massive TAM, and this company as a standalone entity could be worth a lot someday.

And so you really try to find the right partner to be able to take you there. I mean, it's really that simple. Yeah, valuation goes up obviously a little bit. You keep growing, Series C, 48, 540, and 2021. Product has expanded at this point, right? You can see that first column, a lot of business processes you call out, a couple of different verticals at this point, software and SaaS. You want to elaborate on those quickly? Yeah, so at this point in 2021, we went from being more of a,

a niche player maybe five years back, gradually building out the platform where we could say we are a true horizontal platform. You have any set of apps in the enterprise that has an API, flat files, database, what have you.

we can go and connect any of that irrespective of the vertical, irrespective of the apps that you have, irrespective of company size. And it took us a while to be able to build out the product to get there. So that was a big transformation.

from our Series B round to our Series C round, I would say, in terms of the product and the scope of what we could do. And at this point, 2021, I mean, you're 10 years into the business. I imagine you had some early employees that maybe had some options that were around, maybe some early angels. Had you created any sort of secondary liquidity options up to this point? Very little. And even though we had the opportunity for some key employees to really maybe get some secondary liquidity,

Everyone was pretty excited in terms of what we were doing, and we didn't really end up doing that. So there wasn't secondary as part of this? There was a little bit of secondary, but I think in the grand scheme of things, I would say fairly minute. The Form D filing shows about $7.9 million was allocated as sort of use of proceeds for internal purposes. Did that whole chunk end up going towards early employees, secondary? A combination. There was some other early...

debt providers and so on and so forth. Okay, tell me more about that. You had to pay off debt providers? It was a very small... I think we raised about a million and a half in debt, I think,

In what year? 2015, maybe. Oh, wow. So that, I was wrong. Your first outside capital was not that equity raise. It was debt. Yeah. And yeah, so there was a warrant there. Okay. Okay. But that was it. Yeah. Okay. So the business keeps growing. You're doing these great deals. You're creating some equity for the debt providers, maybe some other folks. Revenue continues to grow. This is where you're at today in 2024. What do you guys think you'll finish at the end of this year?

So the goal is to be roughly around 100 million by the end of 2020. And this is how you're positioning yourself today? Correct.

A lot has changed. We've really gone beyond being a co-iPaaS. I think most people think of an iPaaS as connecting various apps in the enterprise together, but we are a lot more than that. We've moved into adjacent spaces. We have full API management capabilities. If you want to build APIs and govern them with all the security and compliance, we do that together.

If you want to connect with your trading partners using some market technology called EDI, in case some of you are familiar with that, we've built an awesome new product on top of our platform to allow companies to be able to connect with their supply chain, with big box retailers, and be able to do business. And then we're fairly soon coming out with a new product for ingesting data into a data warehouse. So just imagine any...

Any of your operational SaaS systems, you want to be able to easily ingest it into your data warehouse of choice, such as a Snowflake, Redshift, so on and so forth. You can do that in a few clicks. So these are some of the innovations that we've really invested post-series C round. We used a fair bit of the money to funnel that into R&D so that we can really take it to the next level and go from being just a pure iPaaS system

to the automation platform of the enterprise. - I love that. Start off as a consulting company, really got going in 2011, little pivot, 2014, 2015, new product starts to take off. Remains conservative in valuations, which I love because it means he has full optionality today. He could take a $400 million, $500 million offer and everyone makes money 'cause he hasn't driven the value through. He's not gonna do that because he's very excited.

about what he's building. Yeah, just one thing on that Series C round, we had the option of raising at a much higher multiple with some structure. How high, like,

Without getting into numbers, right, we decided to take out all preferences and structure out in that Series C round. No liquidity. So there's a 1x preference, but in the end, ultimately it boils down to a common share is pretty much the same as a preferred share. And that was one of the smartest things that we did without being greedy and try to get into like...

Look, Ma, we raised that, this multiple, it sounds great, right? But then we knew things were going to come down. And I'm proud to say, right, that if you look at our employees' stock options, it's not underwater.

And it means something. They're all probably above water. Yeah. Yeah, guys, when I find stories like this through little clues, I want to celebrate them. I want to get them on stage. I can't get everything out of them in 10 minutes, so please find them. I mean, and the fact that you're able to do a series C at that level and have them basically be treated the same way as common shares is incredible and a huge testament to what you're doing for your employees, just managing the company for long-term sustainability. So, guys, give it up for Jan from Soligo. Thank you. You enjoy that? You have fun? Yes. All right. Thank you so much. Appreciate it.