In this new Episode of The SaaS Revolution Show Alex Theuma speaks with Kristian Valk, CEO and Founder of HotelChamp, a SaaS platform for Hotels to increase direct bookings. Hotelchamp is just 15 months old and raised a seed round of €1.75 Million this summer. Kristian gives Alex Theuma the insights into why he built the company, how they’ve done and how they raised their seed round. You’ll also find a link to their pitch deck at the bottom of the transcript.
Alex Theuma: Welcome to the SaaS Revolution Show, I’m your host, Alex Theuma.
I’m super excited to be joined today by a SaaS founder based out of one of the coolest cities in the world, in my opinion anyway, that’s Amsterdam, who has only this year officially launched his SaaS for hotel bookings and recently raised a great seed round of €1.75 million just a couple of weeks ago. Welcome to the show, Kristian Valk, CEO of HotelChamp.
Kristian Valk: Thank you, Alex, for inviting us to be in the show. Very lovely to share some of our experience over the last period with you and your listeners.
Let’s find out a little bit about you first of all. Who is Kristian Valk?
Kristian Valk: Well, before I started this company, I built up some eCommerce companies. I built them up from scratch and sold them 1 ½ years ago. They were mainly in the online sales of stuff like gifts and some business services to companies. And maybe good also to share with you that my co-founder Kasper Middelkoop is having a background also in the online industry having founded and also exited online marketing agency.
Alex Theuma: The eCommerce businesses that you founded and that you sold were they successful exits?
Kristian Valk: I built them up from scratch and we managed to become a market leader in our segment and that’s why, at the end, a strategic partner wanted to buy us and to gain this market share. So, yeah.
And the great thing of course is probably what your listeners want to know what we do with HotelChamp too but you will see that our background is very relevant for our current venture because we gained a lot of online experience which is very useful within our current startup.
Alex Theuma: Let’s talk about HotelChamp then. This is your new startup. You decided not to retire but do another startup. When did you launch the company? What is HotelChamp? Give us a bit more of an overview of the company?
Kristian Valk: I can do that. So why not retiring? Well, first of all because there is a great opportunity we’re working on. And it’s something actually from the fact that the HotelChamp is helping hotels to boost direct bookings and we do that by smart technology which enables hoteliers to attract and especially trigger website visitors to do direct bookings via their own channels.
We started that because we saw that in the current market there is a big dependency of hotels on third parties which generates currently most of the online bookings. And where hoteliers see that this dependency leads to less probability that they pay high commissions and way lower customer engagement since the bookings they get via third party channels are done by guests who feel less involved with the hotel but more with the brand of the platform they book through.
Like I said before, we’re coming from the ebusiness and we know that there is a lot of elements involved. It could be in the customer journey and in a transaction before the customer really goes to his final decision. And we use our knowledge and elements to build great software to help, in this specific case, hoteliers to drive their direct bookings.
Alex Theuma: Is it right that you officially launched in June of this year?
Kristian Valk: Actually, we launched in March. So last year, 1 ½ years ago we founded the company. We started to build empathy. And then we used pretty much from June 2015 to the beginning of this year as a beta phase where we worked with a closed user group to find out if we had a product/market fit, to find out what the real needs are for hoteliers to work with a solution like ours and also to gather data in order to see what works best. And at the same time, we used these experiences and the joint knowledge at beta to sort of develop our product and making a broader product test.
Then I would say beginning of the second quarter of this year, we started to do our first sales. That’s pretty much the company roadmap looking back over the last almost 1 ½ years.
Alex Theuma: It’s good to know you had this period of being in beta for almost a year. Once you launched the sales plan, how did you get the initial traction and secure your first customers? Can you provide some insights there?
Kristian Valk: Although our background is quite online, we’ve always been in all our life quite close to the hotel industry. And then we used our own network to get our first pilot hotel. And those hotels were so excited about the solution we were offering that they referred us like almost immediately to other potential customers or, in the beginning, pilot customers. So yeah. Definitely the first customers came from our own network and via referrals through these first customers.
And maybe it’s good for you to know and the listeners too that if you’re looking at the market where we’re in, there’s so much friction and there’s such a huge problem. Our solution is very innovative and maybe therefore although really spot-on where it comes to the solution for the hoteliers to get back in the driver seat and to create more online sales. So the only question is are we able to bring the knowledge at the right time to the market in order to get this innovative solution into the minds of our potential customers.
Alex Theuma: Would you say you’ve found product/market fit since you officially launched?
Kristian Valk: Yeah, I think definitely yes. I see proof from two perspectives. First of all, the business development perspective. We’re connecting more hotels every day. At the same time, we see that also from a product point of view where our customers are everyday generating more direct bookings and becoming happy customers with that of course. So definitely.
Alex Theuma: And I mentioned at the intro that just a couple of weeks ago you raised I think it’s €1.75 million seed round. Why did you choose to go down the VC route rather than perhaps bootstrapping this business?
Kristian Valk: Good question. I think it has to do with first of all the fact that we have great ambitions. So in order to keep those ambitions, we need funding. As founders, we’re investing a lot in this but, like you said, we also attracted investors from outside.
And the second reason is also our ambitions because we see a lot of momentum in the market and that just a bootstrap approach wouldn’t help us to both achieve our own goals as well as to use this momentum, which there is right now. Those are two reasons why we choose to go down the venture capital route.
Alex Theuma: Makes sense. And how long did the fundraise take? Was this a long process or a short process? Did you already know these initial investors?
Kristian Valk: Well, it depends a little bit how you look at it. I mean, our company is 1 ½ years old and, as founders, we brought in the first investments already at the start to start building empathy. But quite soon, the first angel investor joined us and at the same time you can see that that’s maybe more interesting is that it didn’t take us many efforts to generate our funding. We experienced a strong belief within the investment world for our proposition.
We used our time in this phase of building the empathy and knowing good product/market fit and at the same time realising our funding. But fortunately, we didn’t have to put that much effort in getting the funding itself.
Alex Theuma: Can you share any more about the story of the fundraising journey? I was told or I understand that it was not perhaps your most typical fundraising process. If that’s correct, can you share any insights into that?
Kristian Valk: I think what we did is we really handpicked our angel investor. Until now, there’s not a real like professional venture capitalist on board. It’s all done by business angels.
And the reason why we choose that route or why we were so almost picky about those angels is that we strongly believe that it can help us not only with just money but especially with knowledge and/or creating extra leverage through utilising their network. And since we are with our business proposition on the angle of or on the edge between technology and of course develop the industry, we selected our investors from both industries.
I’m very proud actually to say that on both parts, we really found outstanding industry leaders who strongly believe in our team and proposition. So for example we have the founder of WeTransfer as one of our investors which is, to my belief, somebody who is able to make this very complex product make it look very easy and simple. Those knowledge is of course very valuable for us.
Alex Theuma: What did you learn from this particular fundraise? What did you learn from the process?
Kristian Valk: One thing I’ve learned is that raising high numbers of capital it’s not only about selling your dream or good idea but of course it’s also based on real numbers or data. And being a big fan of the lean startup method, we were able to show what we showed already in the early stage to investors. Of course that really helped us to prove that our solution is not just a great solution on paper or in theory but that actually in real life so far it’s really helping getting more direct bookings for hotels.
I think what I learned and I think what we did very well is that from the very beginning we started to work closely with a group of pilot customers. They brought us so much knowledge and soon all the relevant data to improve our proposition and product and it’s that knowledge and that data which gave of course a lot of comfort to investors to invest in us and in the proposition.
Alex Theuma: You had obviously great traction, good metrics, great knowledge in data that you could show to the investors which just gave them obviously great confidence and made it an easier decision for them to part with their cash or, perhaps a better way to say it, invest in this business.
Did you make any mistakes in the fundraising process or could you advise others listening of things to perhaps avoid when fundraising?
Kristian Valk: So one thing I’ve learned or experienced over the experience that soon we got actually quite some good traction between the venture capitalist like the more professional ones with big funds and they were very enthusiastic about our proposition, about the team and they wanted to meet us and take a share in the company. And actually, we chose, like I said earlier during our conversation, that we stuck to handpicked business angels via our investors in this phase. Because we strongly believe that in the phase of the product/market fit and building your project and getting your first customers and creating all these learnings which you need that it is good that you don’t have too much distraction and that you don’t go in longer funding processes and rather focus on the business.
I think we came at the right time to the conclusion to focus more on the business rather than to the funding and that we didn’t get too much distracted by the possible longer funding cycles with professional VCs rather than with business angels which, like I said, enabled us to build the right fundaments of business.
Alex Theuma: Now, you’ve raised this money. You’ve got that in the bank. What are the next steps for HotelChamp? What’s the plan for the next 6-12 months?
Kristian Valk: I see a great future for our functionality which helps hotels to boost their direct bookings and where we just started with some simple tools and the form of A/B testing. We currently offer an extended toolset of 12 powerful tools. We recently added advanced methods of targeting which enables us to create more relevancy for users on the platform. And we have now multiple ways of spicing up the results by different forms of testing.
Then having built up this launching in just 1 ½ years I think for the next period more data will even create more value for our current and huge customers which results in higher business results for the individual hotels.
At the end of the day it’s a data game and having enough money secured will give us time to through that expand our client base and to create more data everyday in order to make the solution even more powerful.
Check out HotelChamps Pitch Deck that secured the $1.75 Million Seed round hc_deck_teaser