Swedish startup Kodiak Rating on the challenges of bootstrapping
Kodiak Rating, headquartered in Stockholm, Sweden, has been up and running since 2014, offering cloud-based services and apps to enhance the way companies manage sustainable relationships with suppliers globally. Today, they boast customers within the Nordics such as Perstorp, Bravida and Höganäs – aiding global procurement teams to enhance supplier relationship management and responsible sourcing through a digital platform. They share some insights on the process of growing a startup through bootstrapping.
By Sam Jenks
“We’re at an awesome crossroads between tech, digitalization of supply chain management and sustainability. Through tech, we’re able to scale sustainability like never before, and at the same time drive performance.”- Malin Schmidt, CEO and Co-Founder, Kodiak Rating. “There is a willingness and openness – residing in the DNA – of Nordic businesses to applying new methods and technology. That includes the technology developed and brought to market by startups and growth ventures.”
But, like many startups and growth ventures in the Nordics, or the world for that matter, it hasn’t always been smooth sailing.
Close relationships with early customers
Kodiak Rating’s route to building the product it is today was contingent on the shared value, competencies and development costs of the pilot production.
“We were already bringing these competencies to customers within consultancy. Then we realized, the true sustainable value we could add to our customer’s organizations was by taking these competencies and making them into a digital tool,” Schmidt explained.
“That first year of Kodiak Rating’s development was crucial to our current positioning. Without those initial customers we wouldn’t be where we are today. I think it was partially because of the potential a digital platform would bring to these companies, and partially a sense of putting trust in a vision. Not to get too existential, but Nordic business culture has a way to break down the traditional silos of business. We were all sitting around the same table at that point.”
Luckily for Kodiak Rating, there is an undeniable inclination among the Nordic business community to continuously improve and adapt their modes of operation. While this acceptance of new innovation is very positive, it doesn’t pay development costs.
Bootstrapping in the innovative Swedish market – which is saturated by startups receiving big time investment to build their platform and brand – isn’t the path most traveled. For this reason, bootstrapped companies often take the back seat within media coverage, in comparison, to startups that are funded externally and profiled in publications such as Breakit and DI digitigal.
“It may seem like a daunting application process, but with grants from government agencies such as Vinnova, and loans from players like Almi Företagpartner, a startup can come a long way in Sweden without having to dilute ownership or give up control,” remarked Schmidt.
Regardless of the glitz and glam of the big headlines, big funding can bring about, Schmidt feels as if the choice to bootstrap and seek alternative funding was the right choice. “By bootstrapping we were able to engage our customers more, and have built incredible LTV (Lifetime Value) in return. Of course, we were initially forced to spend our money more cautiously, but it’s all about trial and error until you find a scalable model; regardless if you bootstrap or not.”
Balancing expansion with consolidation
That scalable model Schmidt spoke of is the same model any, and every, SaaS or startup venture is trying to seize. Along the way, there is a plethora of wins and losses, but in the end, a whole lot of lessons learned.
When asked about what Schmidt’s main pain points are today, and what she’s learned from bootstrapping a startup, she was decisive in her answer:
“Balancing expansion with consolidation. To be successful (as a startup in the Nordics) we are continuously balancing growth, with the capability to grow. Every customer who steps through the door gets a bottom-up experience, and that’s the way we intend on keeping it, no matter how much we expand. When you work in this context, taking the chance we did by bootstrapping, it leaves little room for error. Customer retention, hiring talent, and product development were all crucial elements.
As a founder, it’s easy to expect success and hard work, but building a team that shares your passion is tough. It takes an extraordinary team, to work under such circumstances. It doesn’t take a big team, just extraordinary.”
