Steven Renwick, Co-Founder and CEO of Satago, shares his insights on starting the company.
He covers topics such as:
(1) Funding the business via crowdfunding and Angelist
(2) Finding a co-founder
(3) How Satago’s business mode works
(4) His corporate and marketing strategy.
If you enjoy it, please share the video with your friends.
Martin: Hi. Today we are at Satago, an interesting start-up, and next to me is Steven. Steven who are you and what do you do?
Steven: So, my name is Steven Renwick. I’m the founder of Satago and Satago is a platform that automates credit control for small businesses and freelancers to help them get paid faster.
Martin: Okay, and how did you come up with this idea?
Steven: Well, it’s an idea I had for years and my motivation for starting it is that I got a family business back home in Scotland in the construction sector and the construction sector is notorious for late payments. So it’s something I grew up with and I have always had this desire to try and build something to help small businesses like my family business get on top of their late payers.
Martin: Okay and what did you do before you started this Satago Company?
Steven: Well, my background is very eclectic. Immediately before Satago, I was working for Rocket Internet in London and Berlin, launching E-commerce companies around the world and before that, I did an MBA at Oxford University and before that, I was actually a research scientists. So I did a PHD in genetics many years ago and I worked in the pharmaceutical sector.
Martin: Interesting, okay. Briefly describe how the business model in Satago works.
Steven: Well it’s quite simple, it’s software-as-a-service (SaaS), so companies pay monthly to use Satago to automate their credit control. The price basically depends on the size of the company and because we integrate directly with the accounting software, it depends what type of accounting software they use. There’s a free level if you’re using that, a very low level and also we work with credit management agencies. Satago effectively becomes CRM for them and they use it with their own clients.
Martin: What is the current status of your company, are you already launched or are you, I don’t know making millions and trillions of dollars, instead?
Steven: No millions yet, we are very, very early stage and we basically announced our first kind of major round last week. The platform’s been open for a few months but really kind of launched it probably last week, for the first time.
Martin: Okay, great. Tell us more; what are your plans for customer acquisition? What are the target of customer of your platform and how do you plan to target them? Maybe what are the proposed or hypothesized most efficient marketing channels?
Steven: That’s tough, that’s something we’ve got to find out. In theory any company or freelancer is a potential user for Satago and now obviously that’s a pretty big market, we are only targeting UK to start off with.
Steven: And obviously that’s two million SME’s, plus two million freelancers, we kind of target those. Now because we act as this kind of CRM for credit managers, also for accountants to help them manage their own customer’s credit control, our proposed sales model is that we actually target the credit management agencies and the accountants, so we become a tool for them to help them work with their customers and that gives us a much smaller subset of people we can target and then each one of those can introduce us to dozens or hundreds of their own clients to Satago.
Martin: So you target the people and who are advising their clients?
Martin: Are you also targeting like software, like enterprise resource management systems like SAP for SME companies to make a plugin or something like that?
Steven: We are not only targeting SAP, people who use SAP because we are effectively a kind of SAP type product for the SME that don’t really use it and so in that respect, the more typical partner for us is the accounting companies. So the likes of FreeAgent or Sage or CashFlow, they all build their cloud accounting with API’s, so people like us can build third-party applications. They then have app stores where they promote these applications. So they are the sort of partners that are good for us, because they want to build their eco-systems as much as possible by having add-ons and we want to get access to their users, so if you go to Free Agent or Sage just now, you will see we’re in their app store and their teams will promote us. If one of their user says what do you have on credit control? They can say, well we’ve got this within Sage, but we’ve also got an easy integration with Satago, which is one of our partners.
Martin: Understood. Let’s talk briefly about corporate strategy. How do you perceive or what is your plan of attack to create a competitive advantage and who do you perceive your main competitors and why do you think you can out- compete with them?
Steven: Well, perhaps the main competitors are the accounting platforms themselves. They’ve always got a bit of basic credit control functionality built into them, but we’re essentially taking that to the next level, so for the accounting firms themselves it is a difficult enough task to build good accounting software and they concentrate on that. That obviously gave us the advantage. We can concentrate on just doing the credit control, and doing it better than they can do already. I mean long-term, I see the market. I see there is a gap in the market for a product like this, you’ve got what the accounting software can do already, you’ve got your ERP-level software, you don’t really have anything in the middle for SME’s. And I see Satago as being a bit like Zendesk for credit management. Zendesk came in when there wasn’t really good help desk software out there and they kind of owned that market, so now if you want to build help desk into your product, your first choice is probably going to be Zendesk and that’s what we use as well.
Martin: The difference from my perspective for Zendesk, you have standard alone product that you can integrate and let’s say credit control it’s more kind of like a feature or add-on functionality to a typical accounting software that I can also use, that’s why if you’re competing with a typical accounting software, what happens if they would add just similar plugin like that?
Steven: It’s – I wouldn’t say, no because you’re thinking about credit control maybe too simply, I mean credit control is about customer relation management, it’s not just a plug-in. So within the companies, you will have your accounting department but you will also have your credit control department.
Steven: And that’s a separate department. We are building for those people in those departments, that does make it something unique from the rest of the basic accounting tools.
Martin: Okay, that was good. You have a special story that you told me about you have this interest in sort of fundraising. Can you tell us a little more about that?
Steven: Yes, so I think we are very much the new model of fundraising. We were pretty much the first company in the UK to raise crowd equity funding and we did that through Seedrs, so that was late 2012, I raised 30,000 pounds from 60 investors, that took about 10 days, it was quite amazing. And I did that as a solo founder. I used that money to build the MVP for Satago just to kind of prove the concept, prove that we will get some interest and that did quite well. It got me into the final at Seed Camp…
Steven: And I was on my own there and everyone said we like the product, we like what you are doing, we like the market, etc. etc. But we are not going to invest in the solo non-technical founder.
Steven: I then spend the next 5 months solidly looking for a co-founder because it’s not easy finding a technical guy who would want to join you; it’s almost a cliché, business guys with an MBA looking for a technical guy to just build the product.
Steven: But I was very much looking for a partner, not someone to work for me, someone to work with me. And I was very lucky in the end, I found a guy call Adam who was at Palantir Technology, which is very well known kind of, or it is often describes as the biggest Silicon Valley company you wouldn’t have heard of. But if you have heard of it, you will know it is kind of at the same level as Google and LinkedIn and stuff like that.
So he joined me as co-founder, we got into Seed Camp final week again and this time we got into Seed Camp, so I have done the Seeds, I have found co-founder and now we are at Seed Camp, okay keep ticking the boxes. And what happened then was that we very quickly got some funding committed by BDMI which is a VC arm of Bertelsmann and that kind of gave us the cornerstone of the round. And I started to do the fundraising as normal, pitching as many people as I could and it did quite well, we were aiming for 400,000 pounds. We very quickly got over a quarter of that committed but then it kind of stalled a little bit until we got featured on Angelist. Angelist is a very popular angel investor network from the US just coming to Europe and we got featured on Angelist.
I woke up; I saw a tweet saying, “Oh, Satago is being featured on Angelist, okay that’s nice.” Looked to my email, had about 20 messages from investors, I then was getting phone calls from investors who didn’t want to miss out on their own and I had some very famous US firms from Silicon Valley emailing me and asking to get my pitch and within about 3 hours, I had an extra 200,000 pounds committed and it very quickly wrapped up after that. So we actually went from 400,000 to 600,000. 600,000 was the upper limit; I think in total commitments we probably had way over 700,000 possibly 900,000 but it was going silly, we didn’t need that much money, we’d just dilute ourselves too much.
So yeah, we done, we done Seedrs, we done Seed Camp and now we have been featured on Angelist, and had the full round, so it was definitely not easy but it was a very interesting experience.
Martin: Did you do something in order to be featured on Angelist or is it just by luck?
Steven: No, it’s not luck. I mean one of the guys that heads up Angelist in Europe, Philipp Moehring knew Satago very well because he was previously at Seed Camp, so he knew us, he knew the company well, he knew the stage we were at, it was kind of pretty much – maybe we were on the early side but we’d already got a quarter of the money committed, so we weren’t just a random an idea.
So we worked out with the timing and yeah, he decided to feature us, I didn’t actually see the email, until after months after it has been sent out. I thought we were just going to be one name on a list and a big email, actually it was an email entirely about Satago, which I think everybody on Angelist who’d said they were interested in FinTech in Europe, must have received this email.
Martin: Not bad.
Steven: Not bad.
Martin: One part that we do is we try to teach our readers about tips from leading entrepreneurs and you have two interests in your experience that you made, one of them was crowdfunding and the other one was finding a co-founder. And first I would like to understand how if you have an idea and would like to put it on crowdfunding; can you make sure you get like say 30, 50K?
Steven: Yeah, so I think you’ve got two ways of hitting your target, and all the platforms works in the same model, it’s like Kickstarter, if you don’t raise your target, everyone gets their money back. So you’ve got two options, either you’ve got your product which is already out there to some degree and therefore you have a crowd of people that are using it, they like it, you can say to a 1000 people, “hey, we are raising money” and they will kind of seed it for you.
Or you mange to find first the kind of the cornerstone money. You will find that you can speak privately to a few people who said, “Yeah, okay I like that,” 2,000 pounds, 1,000 pounds, 5,000 pounds, not massive amounts in terms of real angel investing but enough to make your listing standout. Because according to Seedrs, if you get above 30% funding, most of them will close. It’s about getting the early traction.
Steven: And you have to – it’s not just a case of listing on there and good things will happen, actually that’s what happened to me. I was lucky, I basically was on there at Seedrs launch, so it was a rising tide and I was on the ship, so I got the random crowd investing.
Some people I knew put money in, but not an awful lot, yeah that’s the two ways, you speak to people, you get them to commit the cornerstone money or you have the community which you think will probably invest.
Martin: Will you get a high ranking if you have let’s say 30% of minimum total investment?
Steven: Yeah, you will get more predominantly featured, because if you just – there is like a dozen or two dozen campaigns getting funded on there at any one time. I mean you go in there, you’re instantly drawn to the ones that, I think it sorts them by the most percentage funding, and you’re always drawn to the ones which are doing well, because you follow the crowd, it is herd mentality.
It was the same with our investment round, like I said, it plateau-d a little bit but once we got to 70 or 80% invested, I was turning investors away on the phone. It was the same with Seedrs, “I got obsessed with pressing refresh and you see someone put 10 pounds in this and I said wow. Some strange person just put 10 pounds into my company and then one time I refreshed it and someone put 5,000 pounds and I was like “Whoo”, somebody puts 5,000 pounds into my business.
It kind of hit that 30% and then kind of travelled steadily, steadily, steadily until about 70% and then everyone gets the fear of missing out and then boom! In like 6 hours it’s done.
Martin: Okay, was this kind of equity investment or was it a grant?
Steven: Yes, so we gave away 14% equity for 30,000 which on the face of it, it’s quite cheap but at the same time, Satago then was an idea in my head.
Steven: A Power Point and a video of me sitting in my kitchen floor describing what Satago is, so I didn’t have justification to have a valuation much higher than that.
Martin: True, the same time you find the co-founder, what advise can you give first time entrepreneurs who are maybe not technical, to find a technical co-founder.
Steven: So I’ve got a lot of people asking me that, because I have written a couple of blog posts about it which did quite well, so it’s worth looking at my blog, if you can find it. But I can only say what worked for me and you’ve got to have unfair advantages, and I had several things which made me stand out beyond the crowd. You could argue, some of them weren’t necessarily good things, but they worked. I had the MBA, I had worked for Rocket Internet and I had raised money on Seedrs, I had built a prototype and I had gotten to the final of Seed Camp. So the way I actually found Adam was on a start-up job board, WorkInStartups.com and my title on the job advertisement was Seed Camp finalists looking for technical co-founder.
So that’s an immediate filter, is that they can look at that and say well if it’s good enough for Seed Camp, to at least be a finalist, it’s not just some random business guy with his stupid idea for some social network thing. So you need to differentiate, you need to prove you can do things even when you’re on your own.
So even though I’m not a developer, I was able to build a prototype using prototyping wire framing software called HotGloo. Now HotGloo is made for building wire frames, if you bother investigating enough, you can actually make a pretty interactive wire frame and you can build your super MVP there.
Steven: Now if you can do those things and prove you’re more than just the guy who goes, “hey I’ve got an idea,” everything you can do, just takes you a step beyond. If you can do that, if you can raise a little bit of money on Seedrs, enough to kind of build MVP, even if it’s just like the designs, not even the actual working model and anything you can do to take you beyond the guy with the idea makes you more attractive and then after that, it’s just about using your networks as much as possible.
So when I was reaching out through LinkedIn, I was speaking to friends, I was going to any events I could, the problem is when you ask other technical people if they know anybody that would join a start-up, they would pretty much say to you, yeah you’re about the third person to ask me that this month.
So there is no getting around supply and demand. Good technical people who could be co-founder level are in short supply.
Martin: And the MVP that you built before you met your co-founder, was it only like wire frames or did you also had some back-end?
Steven: No, because the MVP that I built before I met Adam was fully functioning, because I’d raised the money on Seedrs already, I had been working on it about for 8 months already and the first design was done – the back-end worked, it was a different model because we pivoted a little bit but it worked properly, you can go in there and you can use it and thats…
Martin: Did you hire some coders?
Steven: Yeah, so I was very lucky and I basically used a contract developer – a contract development agency. Now, you hear a lot of horror stories about the business guy that uses an outsourced contract development agency. I was lucky that the guys that I picked had already built an e-commerce company website for a friend of mine which had been very successful. It’s one of the biggest online second-hand book-sellers in North America, so I trusted that they would be good and yeah, it sorted out very well.
Martin: Awesome, good. Thank you very much Steven for your time and maybe next time we can visit Satago.