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Bootstrapped: How Planhat built a 100+ employee business without VC

Planhat, a Stockholm-based startup, has grown to 100 employees and 300 customers — without a penny of external funding. This is how and why.

By Mimi Billing

The media usually focuses on startups funded by venture capital. The investment is often seen as a stamp of approval and aggressive, fast-growing companies are eager to have their round covered.

But it is possible to grow fast and have global ambitions without VC money. Just ask Planhat, a Stockholm-based startup, which has grown to 100 employees and 300 customers — without a penny of external funding.

This is how they did it

Planhat was founded by Kaveh Rostampor and Niklas Skog in 2015 to build a new kind of customer relationship management (CRM) system. Both had extensive experience in the CRM field; Rostampor on the business side and Skog on the technical side.

They had their first paying customer after six months — early traction that caught investors’ eyes.

“We’ve had investors reaching out since very early on. We thought we were working under the radar but it’s crazy how they find companies at such an early stage. We didn’t even reply to those requests until Erik [Holm], our CFO, started to answer those a year or so ago. It’s not that we don’t like investors, it just wasn’t our focus. We wanted to focus on our product,” says Rostampor.

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Another reason for staying bootstrapped; Rostampor and Skog wanted to remain in control of how they built the product.

Planhat got its first paying customer six months after the launch. The need to make each customer deployment profitable in order to keep the business going without outside investment forced Planhat to be very disciplined, the founders say.

“When you don’t have a big bag of cash, everything you do needs to create real value, and real value is what a customer pays for. Or else you die. But with a big bag of money available at your fingertip, it’s much easier not to create that value,” says Rostampor.

Giving employees equity

Instead of selling equity to investors, Planhat opted to give equity to employees, who now own about 15% of the company. The Planhat founders believed that to build a great company they needed great people, and great people want to be compensated, either by great wages or by fair equity deals.

“At the beginning, we rather saw the equity transferred to our employees who would be here for a long period of time than to investors,” he says.

Interestingly enough, although Planhat didn’t take any VC funding it did attract a lot of people from the VC world. Holm is a former investment manager at Nordic Capital and the chief people officer, Sanna Westman, recently quit her job as an investment manager at Creandum.

Growing ambition

Planhat has been profitable since day one, according to Rostampor, and is growing by around 100-200% year-on-year. It doesn’t need to raise external capital, but now, seven years after it was founded, the founders are considering it in order to grow even faster.

“I think we have become more ambitious and we haven’t really spent any money on commercial activities previously. This is something that we will have to do and then we will need more money to continue our growth going forward.”

Mimi Billing is Sifted’s Nordic correspondent. She tweets from @MimiBilling

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