Danish Growblocks has raised € 6 million as seed capital in an otherwise hard investment environment. Selected customers got on board early, while others waited in line to be allowed to help provide input on the product, which is particularly relevant for companies on their way to do an IPO.
Growblocks is a B2B software-as-a-service company (SaaS), has been running for a year and a half and has now raised a second round of capital. The company was founded by three experienced people from the scaleup environment, where they have been involved in, among other things, Falcon.io, Planday, Templafy, Adform and Raffle.ai.
The product is a solution to optimize and create transparency in sales and marketing in B2B SaaS companies (see more below), and it is now ready to be sold to an (im)patiently waiting queue of clients.
6 fresh million
The new capital round of € 6 million (approx. DKK 44.6 million) is led by the German venture fund Project A, which has not invested in Growblocks before. Growblocks solves a huge challenge that all investors in B2B SaaS companies know, which is why several investors knocked on the door.
“We chose Project A among the many who wanted to be involved, because they have sufficient experience in scaling B2B SaaS scaleups. Therefore, they are good to have on the journey now, as we need to scale our business, now that the product is ready to meet the market. The investment ensures that we can build a fantastic product at the same time as we can increase sales.”says Toni Holbein, CEO and founder of Growblocks
Toni was the Chief Revenue Officer of both Falcon.io and Planday.
“Both Falcon.io and Planday, which I have been involved in, were sold before reaching EUR 100 million in Annual Recurring Revenue. That is not my goal. I want to be on the whole journey and want to keep a stake, almost no matter how big we get.”says Toni Holbein
Valuable customers in the development process
In the development phase, Growblocks had a dozen customers with a turnover from 10 to 1,000 million DKK, and they were carefully selected to be able to provide input for the completion of the product. The unfinished solution was delivered in the form of manual consulting work based on insights from a calculation engine, which was the first Growblocks developed.
The customers use Growblock’s solution to optimize their sales and marketing, but the customers’ activity is also a laboratory where Growblocks can optimize and further develop the product. That is still far more important to Growblocks than the turnover that the customers put in.
“Growblocks hits an absolutely huge, unsolved need, which is obvious once you see it. The founders’ background in a number of prominent scaleups, where they have solved precisely this problem with great success, made it easy for us to invest.”says Sam Cash, partner at Project A
Growblocks’ value for customers
In addition to being able to optimize your sales process, the problem and the solution have great significance for the valuation of a company. “Predictable sales”, i.e. that you live up to your sales budgets is decisive for the share price, both on the stock exchange and when a company is traded or receives an investment. Therefore, Growblocks especially expects that companies considering an IPO can see the value in the product.
“You can regularly see in the news what it means to lack such an overview. A number of rounds of layoffs could perhaps have been avoided with more predictability about what creates the turnover.”says Toni Holbein
Previous investors join in
In addition to Project A, which comes with the majority of the investment, the lead investor from the first investment, the venture fund Headline, has also contributed, so that the total amount invested so far is approximately DKK 60 million.
The investors in the company count over 20 business angels, including Toni’s, Olafur’s and Andrew’s former boss, Ulrik Bo Larsen, who founded Falcon.io in his time.
Understanding Growblocks: “Budgeting” for B2B SaaS Sales
Growblocks makes a solution that helps especially B2B software-as-a-service companies to get structure and transparency in generating revenue ie. the effect of sales and marketing. The sales and marketing process in this type of company is well described and many have experience in running it, but there was no tool that provided an overview. That’s what Growblocks does, and the idea stems from the founders’ own experiences from, among other things, Falcon.io and Planday.
“Everyone knows what a budget is. It keeps track of costs, like wages and rent and lunch, but the top line — revenue — is typically just one line in the budget. We turn the budget upside down and specify everything that has an impact on revenue, e.g. customer segments, sub-processes in sales, marketing and sales work. We monitor this in real time and compare it with the company’s expected development. When an element does not perform, you can quickly put in there“.says Toni Holbein
Typically, the company has a target for sales for each month and quarter, and with Growblock’s solution you no longer have to wait for a result on the top line in the monthly accounts.
At the same time, you can simulate different scenarios, e.g. what happens to sales if you hire five salespeople in January? This allows for far more qualified decisions regarding sales.
According to the founders, there are no other similar products on the market today.