Linko raises $2.6M in Seed funding, buys a company, and sets out to disrupt ‘the largest worldwide market where end users nearly universally hate the end product’
A Q&A with Linko co-founder and CEO Mikko Alasaarela. The San Francisco-based startup, which offers automated CRM that turns data from salespeoples’ preferred mobile apps into a searchable feed, announced the closing of a $2.6 million Seed funding round last week. The funding came from Angel investors that include Giuseppe Donagemma, Pekka Vartiainen, Pertti Melamies and Roberto Condulmari. At the same time, the team also announced the acquisition of Berlin-based CRM startup Localstream. Linko was founded in early-2013 by Alasaarela and Vesa Perälä.
SUB: Please describe Linko and your primary innovation.
Alasaarela: Linko is a bold and disruptive approach to mobile CRM. It ends the misery of manual reporting by gathering all sales activity data automatically from salespeoples’ favorite mobile apps, and by filtering the relevant business activity from it for the company into a searchable real-time feed. This essentially means a complete automation of CRM. We deliver activity summaries and sales forecasts automatically, making it incredibly easy to monitor and manage the ongoing business.
Our approach is bold and disruptive in multiple ways. Linko’s mobile address book application is owned and controlled by its end users, meaning that their sharing to the company is based on their voluntary choice. This bring-your-own-device, app and data approach finally enables true consumerization of the enterprise. There are multiple major cost and time benefits from this approach, including minimal time to get a new sales person up-to-speed.
SUB: Who are your target markets and users?
Alasaarela: The demand comes from companies of all sizes, industries and geographies. There seems to be a nearly universal pain in the marketplace, waiting for a painkiller. At this point, we have come to a conclusion that enterprise software must be the largest worldwide market where end users nearly universally hate the end product. We believe we are in a unique position to ease and remove this pain.
SUB: Who do you consider to be your competition, and what differentiates Linko from the competition?
Alasaarela: Sometimes we are mistakenly compared with old PC-based systems, though we are disrupting these Cloud SaaS [Software-as-a-Service] companies by leveraging the unique behavioral changes enabled by the current paradigm shift to mobile, post-PC computing. The closest to the Linko approach have been companies that have already raised impressive Series A rounds like RelateIQ, which launched last year backed by $29 million in funding, and Clari, backed by Sequoia.
On top of that, instead of defining fixed business processes that then get implemented and rolled out like most of the enterprise software companies currently do, we treat the sales people as innovators, let them work in their own way, and then emerge and share best practices.
SUB: You just announced that you’ve raised $2.6 million in Seed funding. Why was this a particularly good time to raise funding?
Alasaarela: For us, the time was right because we saw greater than a 90 percent conversion rate from customer meeting to a commitment to paid pilot. In January only, the number of pilot requests increased by five times and we have still yet to spend a penny to paid marketing or user acquisition.
SUB: How do you plan to use the funds?
Alasaarela: First, we strengthened our development team and technology by acquiring Localstream, a Berlin-based technology startup that was founded by Mark MacMahon and Jilles van Gurp, who previously led the development of some of the core services behind Nokia’s recently rebranded HERE technology platform; as well as started looking at establishing scalable user acquisition and growth strategy by inviting Olga Steidl, former VP of mobile ecosystem at Yandex, to join Linko’s executive team.
SUB: Why was Localstream an attractive acquisition for you at this point?
Alasaarela: For Linko, the acquisition of Localstream is a technology play, as well as team expansion with key executives that have already proven to be an excellent strategic and cultural fit. Localstream is a location-based search and content publishing platform, whose key innovation is the development of a location graph of the world that makes it easy to automatically tag and disambiguate web content with rich location information such as venues, streets, neighborhoods, and cities.
Alasaarela: When Vesa and I acquired the assets of Dealmachine, the maker of gamified CRM, we decided that there must be an even bigger opportunity in automating the whole thing by leveraging contextual data from mobile. The full concept evolved around that main premise, and we are surprised ourselves how little the core vision has changed so far. In fact, the signals from the marketplace seem to unequivocally validate our original vision.
SUB: What were the first steps you took in establishing the company?
Alasaarela: We started by putting together the first demo, then raising the first part of our Seed funding. We used that to build the first version of the actual product, with which we then proceeded to raise the bulk of our Seed round. With the larger team, we decided to establish our development headquarters in Berlin. When it comes to company structure, we founded Linko, Inc. as a Delaware corporation in late January, 2013, then acquired the assets of Finland-based Dealmachine Oy—now Linko Finland Oy—and later Berlin-based Localstream UG—now Linko GmbH.
SUB: How did you come up with the name? What is the story or meaning behind it?
Alasaarela: Linko in Finnish means ‘sling,’ a looped strap in which a stone is whirled and then let fly. Also it was a Wi-Fi router name in our first office in Helsinki and also contains the word ‘link,’ so I thought it is a perfect name for a company that wants to help sales people to close deals without friction, and manage effectively and effortlessly customer relationships.
SUB: Do you have plans to seek additional outside funding in the near future?
Alasaarela: To realize our bold vision, and to be able to deliver the existing demand for rapid revenue growth, we will be looking for strong Series A investor partners who not only believe in the same fundamental paradigm shift that we do, but are also committed to support our vision all the way.
SUB: What have the most significant challenges been so far to building the company?
Alasaarela: Due to the strong early demand for the paid product, we are currently 100 percent supply constrained. Our development team of eight engineers is too small and the product too early in its lifecycle to take in and support all the demand we have. With the current organic demand and sales conversion rates, we have a good opportunity to hire some of the best enterprise sales talent on commission basis, but we must be ready to provide our customers with top service and meet their expectations in terms of the product.
SUB: How do you generate revenue or plan to generate revenue?
Alasaarela: The application is always free for the end users and the companies pay for a data subscription from the participating team members. Thus, our business model is not SaaS or freemium, but a real-time data subscription business model.
SUB: What are your goals for Linko over the next year or so?
Alasaarela: After we open the Linko product to the public, our main goal is to reach profitability and support the demand from the market. We enter the era of automated mobile sales management, so in addition to organic growth we will continue growing our team with the help of the outside funding.