How Celigo Reached $92M ARR on $72M Raised While Staying Capital Efficient (Interview with CEO Jan Arendtsz)

Introduction and Capital Efficiency Overview

Nathan Latka

00:00Then like there's this dark horse out there, and I love dark horses. When I find one, I wanna get them 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 Arens. And what he's done is he's built a company that's well over a $100,000,000 of revenue, but hasn't had to go out and raise $400,000,000 of revenue and directly competes with the likes of

00:21MuleSoft. We're gonna dive into it all today. Please give mister Jan a warm round of applause. Welcome to the stage. Stage.

00:33We didn't we didn't go through that intro together, but I'm I'm pretty it's pretty close. Right?

Jan Arendtsz

00:38>> You you got something wrong, but we'll talk Okay. About

Nathan Latka

00:40But do you know Work Auto's revenue?

Jan Arendtsz

00:44>> $1.70. But I'm I'm not here to talk about that.

Nathan Latka

00:46Okay.

Jan Arendtsz

00:47>> But we're not quite at a 100,000,000 yet.

00:49Okay.

00:49>> You're That's that's a

00:50>> small question.

Nathan Latka

00:51It's it's a fair statement to say, though, you are way more capital efficient than

Total Funding and ARR Ratio

Jan Arendtsz

00:54>> Oh, for sure. Right? So I think we've raised a total of 72,000,000 in primary capital Mhmm. To get to roughly about 92,000,000 Yep. In ARR right now. So that's the ratio that I look. That's about 1.6. Right? For every dollar of ARR, how much have you invested in terms of raised capital?

Nathan Latka

01:16When 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

01:38or five years to get to that first $5,000,000 of revenue. Right? Early slog.

Revenue Growth Timeline and Early Slog

Jan Arendtsz

01:43>> Yeah. And that's an interesting story in of itself because we were bootstrapped from 2011 to end of two thousand fifteen. By the way, we converted from a consulting company prior to that.

Nathan Latka

01:56Oh, I didn't know that.

Jan Arendtsz

01:57>> Okay. So hence why we were able to fund the company. And we got to 2,015, early two thousand fifteen. At that time, I think we were about 4,000,000 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 we connect these various apps together. The way companies acquired SaaS apps, the way they wanted to connect them together, all of that was

02:28>> changing rapidly. And the product that we had was archaic. It was not the right user experience. So unfunded, we decided we're gonna 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 show the revenue starting in in 2016. And and that coincided with raising our series a round last day of 2015, and we entered 2016. Still without a product, we came

Product Rebuild Decision in 2015

Jan Arendtsz

03:02>> out with it, I think, in March. Mhmm. But but that's for our practical purposes, the company was really founded in 2015.

Nathan Latka

03:08And 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

Jan Arendtsz

03:18>> going on

Nathan Latka

03:19right now, think of where this is the iPass space. Right? Integration platform as a service. One of the leading players in the iPass space. We named some of the other people in the space earlier, but very hot space. It's effectively it's effectively the tunneling of the Internet, basically.

Jan Arendtsz

03:32>> So yeah. We 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. Yes. API management, connecting with your trading partners, we do all of that. It's an automation platform.

Nathan Latka

03:52So what I want you guys to focus on here is that that that last number in the headline on this screenshot because that multiple is one that is way lower than what others were raising in the 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 wanna establish the pattern more here first. So this was it was about 8.3 on about a

Series A Round and New Product Launch

Nathan Latka

04:1130 post. Right? Right around that?

Jan Arendtsz

04:13>> That's correct. Yep. That's correct. Yeah.

Nathan Latka

04:16So pushing that forward in 2016, you then did, an extension or something, right, in 2017?

Jan Arendtsz

04:20>> What was this? Yeah. In 2017, we just did an extension of the series a round, another 4,000,000.

Nathan Latka

04:26Correct. Also disciplined, held before x. Again, I wanna I'm gonna ask Deepa about that here in a second. But pushing forward, we're now in twenty seventeen, twenty eighteen. I assume this new growth from 10,000,000 to 16,000,000 is the new product starting to get some traction.

Jan Arendtsz

04:38>> Correct. And and look, the when we came out with the product in 2016, it was pretty nascent. It was missing a fabulous functionality for us to go compete with some of the other bigger players. We didn't have the biggest r and d team. We we we're still kind of in silent stealth mode building the the various features we needed because, look, in the end, doing integration, connecting these apps, automating business processes, it's just a lot of

05:07>> work. Right? There's there's so much functionality for us to go build. So we 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.

Nathan Latka

05:21So the next slide talks about this idea that anyone can I mean, look, can go raise a billion dollars, and if you know, the fastest way to make a $100,000,000 is to raise a billion and then, you know, burn 900,000,000 on fire? Right? And you're left with a 100,000,000. And there are people that are really good at that. So I know you don't wanna talk about these, and I built this deck, but we're gonna talk about

05:37it anyway because I wanna give you credit. I think maybe the most capital efficient and sort of the enterprise, you know, plumbing for the Internet space, and you see the data to back it up here on the screen. When you look at a deal that Salesforce did to buy MuleSoft at the time, one of the highest multiples paid 21 x multiple. And so when I'm studying this data, you know, pulling from my records from pockets interviews

05:59and getlacka.com preparing for this, I'm going, this is so wild because Jan's raising at a four x and no joke, like a couple years later and then you actually did a round right after this, we'll talk about in a second. The 21 x multiple at MuleSoft, but you did it at four x. Question is why? You had a good growth story. You know, Workato seems to just be, you know, like light just raising as much as

06:17they can. You see these headlines of a 5,700,000,000 valuation, but they only have got, you know, $150,170,000,000 bucks of ARR. So the multiple there also just feels like how they go into that valuation. Obviously, Zapier bootstrap different story. Do you have a backstory where you're founder in the past that got burned on too high evaluation? Why do have so much discipline here?

Valuation Discipline vs Competitors

Jan Arendtsz

06:37>> Short answer is no. I'm a first time founder. And, like, you 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 wanna raise at that particular time, and what is the right multiple at that time. I think the by the way, it was not a four x. It was almost a five x in our series a round. K. At that time, we were

07:09>> 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 the future product of the company. So so that's why in the end, we we ended up at at that multiple. Mhmm. But in our series b round, series c round, right, there were other extenuating factors. I think every round was different.

Series A Multiple and Investor Risk

Nathan Latka

07:38In this round, what was the extenuating factor? I imagine you had term sheets on the table for much higher than a 6.3 x multiple. You took this deal for a particular reason related to terms.

Jan Arendtsz

07:47>> Yeah. So this one's pretty simple. Look. I we had multiple term sheets. I'd been speaking to maybe 25, 30 investors at the time. Like, we got term sheets from about five to 10. It really came down to the firm and the person who was gonna sit on the board. Board dynamics are super important for me. And we went with the investor that we thought you know, looking beyond the multiple, like, who's gonna partner with you over

Series B Board Selection Philosophy

Jan Arendtsz

08:17>> the next five, seven, ten 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 and the multiples count as well, you I think the series b really came down to who we thought was the best firm to take us forward.

Nathan Latka

08:41Mhmm. I mean, I don't know if you guys see these and think the same as I think, but you see the subtext in this header. Right? This 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 had just exited for twenty one x. Right? So, like, you had that in your quiver

09:01to 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 a better person on the board and a better partnership. There were no economic secondary

Jan Arendtsz

09:13>> Well, it's building a company. We 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 and so you really try to find the right partner to be able to take you there. I mean, it's it's really that simple.

Series C Round and Platform Expansion

Nathan Latka

09:32Yep. Valuation goes up, obviously, a little bit. You keep growing. Series c forty eight five forty in 2021. Product has expanded at this point. Right? You can see that first com, a lot of business processes you call out, a couple of different verticals at this point, software and SaaS. You wanna elaborate on those quickly?

Jan Arendtsz

09:46>> Yeah. So so at this point, in 2021, we went from being more of 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

10:19>> took us a while to be able to build out the the product to get there. So 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.

Nathan Latka

10:32And at this point, 2021, mean, you're ten 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 that made you in this round?

Jan Arendtsz

10:43>> Very little. And even though we had the opportunity for some key employees to really maybe get some secondary, Everyone was pretty excited in terms of what we were doing, and we didn't really end up doing that.

Secondary Liquidity and Debt Payoff

Nathan Latka

10:57So there there wasn't secondary as part of this?

Jan Arendtsz

10:59>> There was there was a little bit of secondary, but I think in the grand scheme of things, I would say fairly minute. Mhmm.

Nathan Latka

11:08The form d filing shows about 7,900,000 was allocated as sort of use of proceeds for, like, internal purposes. Did that whole chunk end up going towards early employees, secondary?

Jan Arendtsz

11:19>> A combination. There were some other early

11:22>> debt providers and and so on and so forth.

Nathan Latka

11:25So Okay. Tell me more about that. You had to pay off debt providers?

Jan Arendtsz

11:28>> It was a very small I think we raised about a million and 0.5 in debt, I think.

Nathan Latka

11:36In what year?

Jan Arendtsz

11:37>> 2015, maybe.

Nathan Latka

11:39Oh, wow. So that I was wrong. Your first outside capital was not that equity raise. It was debt.

Jan Arendtsz

11:44>> Yeah. And yeah. So so there was a warrant there. Okay. Okay. But that was that was it. Yeah.

Current ARR and 2024 Revenue Goal

Nathan Latka

11:51Yeah. Okay. So the business keeps growing. You're doing these great deals. You're creating some liquidity for the debt providers, maybe some other folks. Revenue continues to grow. This is where you're at today in 2024. What do guys think you'll finish at end of this year?

Jan Arendtsz

12:02>> So the goal is to be roughly around a 100,000,000 by the end of

Nathan Latka

12:07And this is how you're positioning yourself today?

Jan Arendtsz

12:09>> Correct. A lot has changed. Right? So we've we've really gone beyond being a core iPass. I think most people think of an iPass as connecting various apps in the enterprise together, but we are a lot more than that. We moved into adjacent spaces. We have full API management capabilities. If you wanna build APIs and govern them with, all the security and compliance, we do that. If you wanna connect with your trading partners using some marquee technology

Product Expansion Beyond Core iPaaS

Jan Arendtsz

12:38>> called EDI, in case some of you are familiar with that, we we've built, an awesome, new product on top of our platform to allow the 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 of your operational SaaS systems you wanna be able to easily ingest

13:06>> it into your data warehouse of choice, such as a Snowflake, Redshift, so on and so forth. We can 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 and d so that we can really take it to the next level and go from being just a pure iPass to the automation platform

13:31>> of the enterprise.

Nathan Latka

13:32And I love that. Started off as a consulting company, really got going in 2011. Little pivot, you know, 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 $400,000,000, $500,000,000 offer, and everyone makes money because he hasn't, you know, driven the knife through roof. He's not gonna do that because he's very excited about what he's building.

Series C Structure and Employee Equity

Jan Arendtsz

13:53>> Yeah. Just one thing on that series c round. We had the option of raising at a much higher multiple with some structure.

Nathan Latka

14:01How high?

Jan Arendtsz

14:02>> Like Without getting any numbers right, we decided to take out all preferences and structure out in that series c round.

Nathan Latka

14:10No liquidity?

Jan Arendtsz

14:11>> So there's a there's a one x preference. But in in the end, ultimately, it boils down to a common share. It's pretty much the same as a as a preferred share. And that was one of the smartest things that we did without being greedy and and try to get into, look, Ma, we raised that this multiple. It it sounds great. Right? But then we knew things were gonna come down. And

14:40>> I'm proud to say, right, that if you look at our employees'stock options, it's not underwater. It means

14:47>> something above water. Yeah.

Nathan Latka

14:48Yeah. Guys, when I find stories like this through little clues, I wanna celebrate them. I wanna get them on stage. I can't get everything out of them in ten minutes, so please find them. I mean and the fact that you're able to seriously see 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

Closing Remarks

Nathan Latka

15:06the company for long term sustainability. So, guys, give it up for Jan from Solego.

Jan Arendtsz

15:10>> Thank you.

Nathan Latka

15:11You enjoy that? You have fun? Yes. Yes. Alright. Thank you so much. Appreciate it.