Welcome to the Negotiator channel. My name is Sami Miettinen. I'm a Partner of Translink Corporate Finance in Finland and we arranged a very successful Nordic Tech Stars event at Savoy Helsinki and it was attended by premier Finnish high growth technology companies ranging from relatively young but super fast growing Inven to the established mega stars such as
Supermetrics. The event was also attended by Marc Irisson, the head of TMT from Paris at Translink Corporate Finance and Elie Hodara from Infra Via Partners an exciting uh growth investor in the SAS space also from Paris. We had super interesting companies and u some of
them were interviewed here. uh Petri Hollmen, our former client, a Vaaka portfolio company, CEO of Lyyti. We had Vastuu Group a very exciting business on the social responsibility company and ESG Pekka Vanne. We also discussed with Harry Brade from M&A Growth Partners. He has had amazing successes
with such mega stars from Finland such as Alpha Sense and Silo AI. Harry also participated on our fireside chat on the event which was very much appreciated. So welcome Marc Irisson the head of TMT in trans corporate facts. Right. Thank you for having me. You you're coming from Paris like coming from sunny Paris. Excellent. Let's keep the politics for today and focus on
the business to business (B2B) and technology. That's something what you do. What are the trends in in that sector? It's it's obvious that if you look on a general perspective M&A is a bit in a in the middle of nowhere at the moment. The truth is that the market is very much polarized and TMT the tech space is no stranger to that. Um obviously when you look at the market right now
you can still see a very decent amount of deals in tech. uh I mean the latest uh assassin index that we provided to the markets show that we're still having a very high uh volume deals across the globe in the US and Europe particularly and funny enough Europe is uh is is doing more deals than in in the US for the for the time being and it's way higher than the last 6 months six years
average so there's still a decent amount of deals um but if you look into the details you will see this very polarized market is also So the truth in the tech world. So what does it mean? It means that we've been saying so for a while now now but there's a very strong flight to quality. Uh we started seeing that in the 2023 Mhm. year and it just keeps on growing and the result is that you
have those assets which are flagship assets that that would go for sale at crazy high multiples.
uh with twin we're talking well above 20 times EBTA multiples we're talking about still the a 10 times ARR multiples and on the other end you have these still nice assets but they're not like super qualitative assets they're just okay assets and these one I've seen the valuation come down um and I'm not even talking about those assets that are like a bit in trouble or not delivering the right
SAS metrics which are not even selling anymore because there's such a mismatch between the expectations of the sellers what the buyers are ready to to offer that isn't what either processes are dragging into months not years many years or they just don't go through and they are stopped so the market is is is still active um I very much believe that it's full of opportunities right
now and if your company has demonstrating strong SAS metrics strong SAS KPIs is it is still a very very good moment to go to the markets because on the other end if you look at the private equity side of things they still have a lot of money to invest the famous dry potter I mean the pilot is not is not reducing at the moment uh money is still there and they need to invest uh because
at some point I mean the the ops have given them money and they need to invest them in companies so they can provide return so it's as always in this kind of situation opportunities to seize but you have to be at the right place at the right time. Yeah. And uh you coming from the France I I have to use Y analogy here. So that could be a could be a very good vintage because the there are parties
debate in investing. It could be a good vintage for exit because if you are quality uh and and you you have a high multicol and uh here at the trans link Nordic tech starts the companies all about our five million are have a fantastic rule of 40 metrics most of the time. So I think we will have a very good vintage of companies here. Yeah that's true. I mean I always amazed by the the quality
of the SAS companies in the Nordics and in Felon especially. Uh I have to say that it's uh always very inspiring to to look at those companies because a lot of the trends and the initiatives and the new things are coming from Norics uh and from France uh which is rather rather large country uh it's always surprising and and quite compelling say well these guys have something very interesting and then well they are very nice metrics they managed to grow the business
very fast and the question is how how [ __ ] can they take it uh how [ __ ] can they take it alone uh within the Nordics, outside of the Nordics and and maybe outside of of this job piece. So yeah, it's very interesting. Yeah. Uh that's so Mark uh Erson great to have you here and uh may I suggest uh we finish leave the wines to you in France and uh then we share the business s we can definitely
find a deal there. Let's go and meet the fantastic Nordic tech stars in our our event. Thank you Sam.
So welcome uh Petri Hman from uh LUI a VA private port company. Welcome here to transync Nordic Techstar 7. Thank you. It's a pleasure to be here. You were the helpers to get us to the VA actually few years back. Good to have you here. I mean you recently posted on LinkedIn that your company a broker a number of important smetrics. What what were those? Well, I think the most important one
is the rule of 40 and uh that one we we reached now in uh with the August numbers last 12 month uh numbers and um I don't know if they're s specific but customer satisfaction NPS and also ENPS they they are on a very very high level and I I mentioned those in my LinkedIn post because I think that of course in SAS business it's well it's not easy to reach the rule of 40. But
depending how how like committed customer base you have, it's always easier to adjust the costs. But then ENPS customer satisfaction uh and and uh NPS would suffer. So I wanted to really to highlight that we reached the rule of 40, but it's a kind of like a sustainable growth company taking care of the customers and and people as well. Yeah, great stuff. And uh also another while you broke this is
uh what we arrange here subway Helsinki it's only for the companies who are broken the 5 million. So you know clearly passed that already. Yes that one we have passed. So it's uh above 8 million. Yeah.
And revenue is nine. So very highly AR driven business. And uh yeah 5 million we I think we reached that already in 2020 or yes do great stuff. Uh but that's still quite exclusive. I mean as an investing banker uh I view the sort of the elite prof of the Finnish uh companies to be in the businessto business s is that still the sort of magic uh segmentation in Finland to be in the
business businessto business s um uh well depend on the business because of course we we work with the uh in the event management industry man management field so that's rather niche and that's why we have been going out from the Finland some from the very very ear early days as well and and currently about third of our uh revenue is outside of Finland. The B2B sauce um that's the place
where I like to be and of course uh depending of the size of the industry you can you can live and prosper in Finland as well. Excellent. And uh the then about the Finnish uh business community, it's uh I mean you probably know many people here now but but it's a small world here and especially coming from Turo region. I think it's it's nice to visit the the current capital city of Finland. Uh
we are still the original capital city of Finland. Uh but I think well looking from abroad you there's the say that Finland is not the country it's a country club and when you consider tu then it's is it like the living room of the country club or I don't maybe yeah back room backstage or something like that but yes it's uh um actually I've been thinking about it many many times that
in the beginning it's a very good thing to be kind of like the biggest fish in the pond. fund. So you get everybody knows you get recognized instead of like a very tiny fish in in a huge market and then then enter a big bigger market. So that has been our strategy. We last met trans corporate finance founder at Peron's birthday party. So it was fantastic party. It was fantastic party. I think it was organized with our shop. That's so it. So if you want to have a good event management,
go for it. Thank you. Exactly. Thanks and thanks for the invitation. and uh let's go meet the other other guys. We do that. Excellent. Thank you. Like I'm Harry Brad. Is that the English pronunciation?
Mm GP, right? Yeah, that's right. I mean Harra or Herobra, however you want to pronounce it, but NGP is our private uh entity where we invest in AI software IT companies. Very good. and you are kind of not a family office but uh really a GP and uh growth partners but uh uh some of your early success been have been truly spectacular. You have Alpha Sense and Silo
AI which are huge wigs. Uh tell me a little about those. Yeah, thanks Sammy. Uh yeah uh Alpha Sense first 2014 we entered uh we we met Jack Koko and he really made a great impression at that point of time. And the RR or annual recurring revenue was roughly a couple of million uh dollars. Now it's just broke yesterday $500 million and the last investment brow was valued at 4 billion. So
really a great success story in vertical AI and then silo AI we entered the company in 2018 one year after it was founded. We knew data oya and we have to charm data. Sadly it took nearly 6 months to charm him and at that point of time the company was roughly at couple of million uh euros of sales. Uh still braving into black and and uh well uh the the outcome was quite different from
what we first expected. Yeah. And uh sounds like you kind of have a AI in both of those. uh and uh but this who you we are now at Translink Nordic tech starters and our focus is that most of the companies here are uh B2B SAS companies with over 5 million AR rs is it uh is that the sweet spot for you guys or we're we're quite flexible uh so my partner Mikoleno I mean he used to work in Deva
Cohen's lab in the AI lab he's the most famous AI person in Finland and uh so we've had for 10 years we've operated we've had AI focused roughly twothirds of our of our our companies have that flavor uh but we are we can do anything from uh VC 100k uh tickets to larger tickets so we're quite flexible and we can compete with the largest funds here in Finland so to speak and some of them are
truly spectacular 500 million are just mind models that's the sweetest level of success yeah yeah can say so so I It's great to see I mean looking at AI there's the the horizontal place but I what we really feel the value is is in the vertical place such as in finance and now alpha sense kind of taking full on board the gen AI kind of features in its platform has really kind of compounded and we believe it will IPO pretty soon so that will be something uh phenomenal also from a Finnish
history perspective so to speak a good point I mean on transient corporate finance publishes this uh quarterly report on S and uh in the sort of a strict strictly businessto business s which is not doesn't necessarily use AI the vertical valuation is a little bit above five times a r and uh the horizontal uh arr multiple on the listic uh companies is a little bit below three so you
can see kind of a and they used to be in the same multiple and of course over 10 times in 2021 but uh you you clearly do a lot of segmentation analysis for where the value is exactly and then of course there are the outliers such as silo AI. So in that case I mean we were when when we entered the case and to be honest we were thinking first that if we would enter kind of a free two to three times EV sales so two to 3x to the sales that would be a good outcome like EDAN and fluid
are kind of the so far the flagship cases uh in in Finnish value added resellers and so forth. But then we quickly realized you know the company was looking into something quite different and then uh when OKAI came on board. So then we quickly realized we had to spin off silo genen a product company because you cannot often operate a Perth company and a services company in the same company and there things led to one thing led to another and we really worked hard with
Lumi. So the supercomputer here in Finland which A and B is really stacked with the hardware and there we get to the interesting discussion of what is more important the large language models or the pipes and the energy which are needed for that and there of course we all know history silo with $665 million US versus the roughly 20 million uh sales. So there we kind of the EV sales was much higher
than we first expected. Fantastic value creation. Could you have you har Brad here and uh let's let's go meet some of the Finnish death stars here in the trans event. Thank you Sam glad to be here great. So welcome Milo B the co-founder of Inman right? Yes. It's one of the fastest AIdriven uh platforms from Finland. Could could I call it also businessto business s? Yes business business s
definitely uh we sell most of the private equities investment banks consultancies so businesses only.
Yeah and trans corporate finance is also a proud user it and uh it's actually quite good in uh finding uh I mean you use market tech kind of tools to find companies and but you have taken it one step further. Exactly. So whenever you really want to find a good list of companies and analyze a set of companies were really good at bringing all of that data in there and enabling you to
analyze it with Yeah. And I I'd use it also for platform building and this is for private equity or company. Exactly. Exactly. Whenever you want to analyze a market or a specific company that's when it really shines relatively new but you already done number of funding rounds. Yes. Unfortunately or or happily I don't know which way to put it but we started the company a bit over three and
a half years ago. I mean at the very beginning we raised like 125k. I don't know what to call like French Family Fool funding or something like that. Then after the kind of first year we raised our 1.5 series seed and now kind of beginning of this year we raised our series A bit over 10 million round. Yeah. And I noticed on your cap table one of my generations uh I by far the
most intelligent guys Tom W is with through joint defects is also investor. Exactly. Yeah. And he's been investing more I think Shroud as well. So I think he's happy at least at the valuation growth.
You also like more global and uh strong focus in the American market. Yeah, exactly. Around 60% of our AR comes from the US, 30% Europe, 10% rest of the world. It's a very global product. So really anywhere you want to analyze companies worth for Finnish company that's always good ambition. And uh one of the persons I interviewed here was Harra and he was talking about alafasense having already
500 million AR. It's like a you're not quite there but you're growing very fast. So rule of 40 all the time. Yes. Well rule of 40 is kind of funky when you're rowing 700% a year. It doesn't work that well. It it becomes a funky funky equation. Rule of 700. Yeah. Something like that is closer to it. But uh eventually obviously as we continue rowing more and more it has to stabilize a bit and we'll afford it becomes more more relevant there and hopefully someday catching up to options in
the growth rates as well. Your funding is uh is kind of the growth driven but also I guess capital management capital management I guess it's cost some money to generate a bank. Yeah well I mean we have to invest a lot into the product and it is a product company there's so much things that we can do with the product. So like investing more and more into it just makes a lot of sense and also obviously we were going so fast the customer acquisition wasn't very profitable. The customers
weren't very happy with the results that they were getting. You are in the sweet spot where you use AI uh to try S. So I is that the sweet spot at the moment? I mean it is a compared to starting a different type of startup I'm very happy that we started a startup that's like a B2B SAS with an AI focus. It's a it's a good space to be definitely. I was yesterday in the Finnish uh Gina agentics network which was like a couple of weeks ago and already got like couple thousand
people and uh I did stuff you can do with like AI in a white code. It's also can be a disruption but if you born AI driven then you're kind of the one disrupting it from somebody else. So that's always good for you if you're on that side. This is a small community. uh we'll see a lot of friends in this event companies with high ARS and good metrics. Uh is the businessto business SAS
community something that should still focus on? Definitely. I I'm a big believer in guess like B2B SAS and a bit of AI sprinkled on top of it. It's just a fundamentally really good business model.
What I always find really funny about it is that like we let's say we sell to our customer and they buy our tool for€ 10,000 euros and we're actually very happy like we got 10,000 euros out of it. Uh but it's so amazing. They pay the 10,000 every year from that point on which is which is I'd be happy with the first 10,000 but they keep paying us as they continue to be happy. It's a it's an amazing business model and there 700% growth I guess some negative cash flow for the
growth so the profitability I guess in the in the face up phase but the net revenue retention and churn are still yeah you can get obviously leader from like net revenue retention churn figures you get a lot of indication of how how profitable the growth is actually but also things like CAC uh CA multiples and like customer acquisition costs and just you can look at the customer usage as well to get indications of like okay what's the gross margin going to be if there's like usage costs and
that kind of things and uh do you have time to do like the key account management that that kind of growth you have to automate it. Yes. Well I mean historically we were really poor like uh if you think about the situation two years ago we didn't have anybody doing it but now it's you know six person team doing customer success and it's like a proper function but two years ago it was it was me. It's a inspiring story and uh you being um relatively young guy with with your co-founder because you have good chemistry with your partner team. Everything's been working really well with
us. We have very simple structure where I do the commercial side, they do the product side and that has worked really well for us. Yeah, you you haven't started white coding yet. Yes, unfortunately there would be so many good features coming out so quickly but excellent. Good having you uh Neil and uh it's a good product and thank you for having me. Welcome uh Pekaban from Basto Group. Uh thank you. That's the you have over 20 million of revenues but what exactly do you
do? So we are a compliance uh services house uh offering various kinds of compliance as a service uh products. Uh our services help companies understand uh compliance requirements, show their own compliance and monitor their suppliers, customers or any other corporation partners uh compliance. Great to have you here. I think you are bought on by one of our favorite family
over Capitalist. That's correct. Yes, we uh just did the deal with them on very early today. So So we love those guys. uh but uh it's uh this event where this is recorded is translink Nordic tech stars and uh a lot of the companies you you have make here on the software as a service business. Do you have that kind of a recurring revenue element in your business? We do. Yes,
we we are almost 90% recurring revenue and strive to be maintain that ration also going forward.
Okay. But you have a little bit of services. Some of our services were short consulting or let's say help to our customers in the beginning and not all all services uh renewed automatically but almost all. Are you not really a wreck tech? So sometimes people try to kind of lead into that space where the you have to do certain bureaucratic functions because you hate them you outsource it but uh you just need to do things right. Is it kind of the you should have the ESG joint driving your
business? Absolutely. Yeah. So, so what we do is we make uh socially responsible business as easy as it can be so that it actually happens in society. That's our mission to advance the responsible society. So, we want to free the particularly the midsized company from the headache of of compliance management so that they can focus on on serving their customers and what they're good at. Was you translate it? Was it means responsibility? So we we have coined the
term we are the company carrying that name here in Finland. Do you use that probably when you go over Finland? Absolutely. And uh very proudly and and that's that's the main reason why most of our people actually work at West Group and where they where they stay. Yeah. It's it's it's good to be on the on the side of the good guys. Absolutely. And now at this uh Nordic Tech Stars, we have both investors and uh some of the leading Finnish companies here,
but we also have a lot of international guests here. How is your internalization strategy? Well, so so we we are we we are a growth company. We want to be a growth company and uh we have a lot of opportunity still in Finland. Uh we want to broaden our service offering. Uh regulation keeps mounting up. We want to be there for our customers to solve the future needs. We can still expand to
uh some industries where we are underpenetrated. Um u but yes internation is something we're working thinking very hard about and uh we hope to see that in the coming years uh in the next stage.
Yeah. uh would you entertain doing a bit of a mergers and acquisitions to get that going? Well, Vto Group did its first acquisition ever this spring. We inquired a company offering uh legal uh compliance services and uh it wasn't the last one we we entertain. That's yes. Yeah. But yes, acquisition could could be a way of starting an international side of our business. Excellent.
Good to have you here in the among the rest of the native tech stars. And uh I think let's go ch that the people in this very thank you for having me here. Bonjouru Elliara Infra capital great to have you in Helsinki transl you coming from Paris I take it and can you tell a little bit about your company especially it's a s part of the fund. Sure. Uh so Infraia Capital Partners was
originally launched in 28 as an infrastructure investment firm. So we 14 investments in Europe so far. Two in the Nordics, one in Finland, one in Denmark. In Finland it's a company called one year that we did say PSG equity. Uh in terms of deal structure, we have very flexible. We invest as minority orders as well as majority holders. We are very flexible on that. The only nonflexibility we have is that we don't invest in consumer businesses. So it's pure B2B software.
Uh we are 11 people sitting in Paris uh with asset managers and investors in the team and we are part of the global infrastructure partners platform which provides us uh and provide a company support in head hunting cyber security issues compliance legal issues during the holding period I would say free of char it's not it's completely free of charge. Yeah. Uh great focus. So uh uh we f at
least from an industry banker's point of view are very good in businessto business SAS companies. Is that the kind of what are you looking and what kind of companies in that segment you would be looking here in Finland? I mean we are we have sector understanding in terms when it comes to SAS we like critical industries like cyber healthcare you name it but we we are very flexible and what we like with Finland and we have seen it with one click LCA and we the partners of the team that one of the department visiting in for instance he was he was at his previous film
uh what we see with this kind of of companies that they are very mature uh early uh because they they they understand that they need to go abroad quickly to capture the European markets. So they structure very early and they are very capital efficient from the beginning. So what we like is the mindset of the the Finnish entrepreneurs that are able to structure their team very quickly and very early and royal to capital efficient plan uh to to scale in Europe and maybe in the US afterwards. But that's what we are looking for. We are looking for entrepreneurs that are very
um conscious of the of the of the scale they they need they need to achieve very conscious of the the support they need to to SC in Europe. So they they come to us and they say, "Yeah, I need to to to grow in scan you up. How can you help me?" And we have people in the team that have connections and we can support in business development. So that's super helpful. Uh so that's that's what what we like and uh yeah, of course the Finnish uh market is is very very very deep.
Uh and what I like is that it's not only located in Hzinki, but you have great companies in Ulu, you have great companies in Tere, in Tokyo. So it's a very very diverse and we spend a lot of time here in the team. We have a a Finnish guy that's called Ari Salonen. He's the former general manager of Bassware North America and he he's a Finnish guy and he founded a Finnish company Midaxo and yeah so we we kind of know the ecosystem and we like the environment and we want to keep
investing in this. This is the colors of my eyes. The final question I mean in Translink we published this quarterly SaaS valuation report and uh um rule of 40 is that something what do you use or is that just to play for you guys? We I mean we look at it uh but it's not like an investment criteria per se because depends on the the type of EBITDA first. So it's it means is it
full cash EBITDA or are the expenses fully expensed. you you have a very very very negative EBITDA but a rule of 40 still below. So it's it's very difficult to say yeah I'm not investing in a business because it's below the 30. So it's it's a criteria that we look at but we try to it's a good proxy I would say but we try to um to to factor what's actually uh to be kept in that
loop uh to make sure that we don't like we are not too aggressive uh on the uh on the judgment on on the company. Uh we we track it over the holding period but we are not the kind of fun that would say yeah it's below the 40 points so we are not looking at it. It's not what we walk. It's not how we work. Sorry. Uh but it's it's a good proxy. Uh but it's not the the basis built. Excellent.
And today uh you will with some of the best SaaS companies here in so uh maybe you have a had look on those profiles. So great to have you here in housing the early and infra capital. Thank you.
Thank you for your time. Thank you. Thank you for watching this special episode of translars. And um if you are interested in the similar content on looking behind the investment banking day-to-day activities, let me know. Uh I could also do this in Finnish. And as you have listened this far, I would really appreciate if you could support channel by subscribing it. Please contact any
of the translate finance experts. If you have a business which uh is in a similar field as as this companies mentioned here or you want to have a discussion on the valuation trends or interest banking products applicable to your your business we can be found at the www.translinkcf.com
or fi. Thanks. And the final thing you should also consider subscribing to uh Translink quarterly SaaS valuation analysis. It's a fact packed with valuation trends in the SaaS business and its constituents such as uh separate valuation for US markets, European markets and high growth
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