Insights into Aiven’s Growth Strategy and their $100m Series C
Leveraging Product- & Customer-Focus with Inclusive Leadership
In May 2019, we announced Earlybird Venture Capital’s first investment in Aiven when leading the company’s $10M Series A round. Just 9 months later in February 2020, we doubled down in their $40M Series B round, enabling Aiven to sustain its tremendous growth trajectory. Today we are pumped to announce that we continue to strengthen our commitment to Aiven by heavily investing in their $100M Series C round, led by Atomico. We are excited to welcome Atomico, and especially Hiro Tamura onboard. The round is joined by significant investments from existing investor IVP (🥳🦀❤️ to Eric & Michael), and new investors, World Innovation Lab, Salesforce Ventures, Daniel Dines, Brandon Deer, Ilkka Paananen, Ott Kaukver and Thijn Lamers.
Our investment is a testament to our belief in Aiven’s extraordinary commitment to combining the best open source tech with cloud infrastructure.
In our previous blog posts we outlined why we were amped up about the market opportunity and how Aiven continued to develop and impress us. Today, we take a closer look at what has driven this tremendous growth since our initial investment. For us, it is clear: Aiven’s exceptional and easy-to-use product enables developers to leverage cutting edge, open-source technologies for creating performant data pipelines.
Aiven believes that open source delivers the best technology for the industry and are proud to play their part in the movement. The team has always had close ties to open source communities, contributing to projects such as PostgreSQL, and now as a company, publishing and maintaining community projects like PGHoard and Karapace.
Aiven’s exceptional and easy-to-use product enables developers to leverage cutting edge, open-source technologies for creating performant data pipelines.
Aiven provides customers with a platform from which they can launch a fully-managed, open-source, multi-cloud data infrastructure within 10 minutes. One that simply integrates into existing workflows and allows the enterprise users to refocus their attention on building their core business. Aiven hosts and manages open-source databases, monitoring tools, and messaging systems like Kafka, Elasticsearch, Grafana and PostgreSQL. To see how easy it is to deploy a service on the Aiven platform, just click here.
These aspects have led to an exceptional product offering for their customers.
A product-led, go-to-market strategy enables growth
Aiven’s go-to-market strategy is a combination of product-led growth and top-down sales motion. The focus lies on a product-led growth strategy which is both product- and customer-centric. Here, the product is the main vehicle for customer acquisition, activation, retention and expansion and therefore — growth.
The change in consumer behavior has resulted in a shift from sales- and marketing-led strategies to product-centric growth strategies. Based on Hubspot research, only 19% of buyers want to talk to salespeople when first learning about a product. Sales representatives agree, as 57% think that in recent years buyers have become less dependent on them during their decision making progress. Buyers want to self-educate themselves and try the product before going through a time-intensive onboarding process. This puts the advantage with startups, the product visionaries and do-ers. 🙌
Companies that leverage this strategy — think GitHub, Zoom, Slack, Datadog — are able to grow faster and more efficiently by utilizing their superior products to unlock a new pipeline of users automatically. Enterprise comparables aggregated by Meritech show that the median implied Annual Contract Value (ACV) of public-listed B2B SaaS companies is only at $28k and the median magic number (Last Quarter Net New Implied ARR/ Prior Quarter S&M Expense) for those companies is respectively at 0.9. Based on these two indications, one could infer the increasing importance of product-led go-to-market strategies as a complementing success factor in B2B SaaS. It just makes sense: the winning go-to-market formula should be centered around the users, who derive value from it via their daily use — why should executives dictate which tools developers should use and accordingly disrupt their work flows?
The winning go-to-market formula should be centered around the users, who derive value from it via their daily use…
Product value drives the viral momentum, while adding product features leads to enterprise-wide adoptions. This adds new users and new use cases which boost the growth within the existing customer base. After some time, most B2B SaaS companies adapt their go-to-market strategy by parallelizing a top-down/more outbound oriented enterprise strategy, which fuels growth even more.
Aiven’s go-to-market strategy follows the same rationale and can be summarized in Figure 1, below.
Visualized, Aiven’s GTM strategy is shaped similarly to a bow tie. Marketing is responsible for driving traffic and creating awareness and hopefully, an efficiently managed funnel is allowing the product to do its magic. Only if leads/trials drop out of the funnel, an inside sales/technical sales team steps in. Aivens’ average net retention rate over the last twelve months has been around 150% (vs. 115% median of peers) and we noticed customers fully trusting Aiven with their infrastructure after just three months.
So Aiven’s customer success and technical sales team especially focused on proactive relationship management throughout the lifecycle, including upsell to existing accounts (visualized in the right side of the bow-tie). As mentioned, strategic partnerships and accounts enjoy a parallel “fast-track” enterprise motion; this involves the classical sales support from Aiven’s side to individually cater to more challenging set-ups.
The success of this strategy is clearly visible in Aivens’ impressive capital-efficient growth. Aiven has shown best in class SaaS metrics, which are built on the above-mentioned logic.
A welcoming and inclusive leadership style
But Aiven’s success should not be judged purely on financial growth. We have proudly seen how early Hannu, Oskari, Heikki and Mika (pictured below L-R) not only build a culture that puts the customer first, but is also built upon a leadership style that cares about Aiven’s brilliant and talented team.
The four founders (remotely) hired more than 100 FTE in 2020 alone. We respectfully remember the founders’ first question in Q2 of 2020 when the spread of Covid-19 forced Europe into lock-down. They wanted to know how other Earlybird portfolio companies had taken care of their team and were even more interested in how to guarantee a remote on-boarding setup, that is welcoming and inclusive at the same time.
At long-last, when finally allowed to fly in for in-person board meetings in September 2020, (it is still our plan to host Q3 board meetings in Munich for Oktoberfest, fingers crossed 🤞), we were even more proud to observe the personal and professional development of key team members. It’s been impressive to see how the founders have inspired entrepreneurial, energetic and self-reflective qualities in their early employees. Many of those early team mates have now taken on leadership roles.
(Aiven’s founders) wanted to know how other Earlybird portfolio companies had taken care of their team and were even more interested in how to guarantee a remote on-boarding setup, that is welcoming and inclusive at the same time.
The next chapter
We are thankful to continue being part of Aiven’s success story. The Series C capital increase will be used to further attract brilliant talent to the company and expand Aiven’s international footprint even more rapidly.
To get started on your own fully-managed, multi-cloud hosted database and messaging service, sign-up here.
To join the Aiven team, please see their current job offerings here.
So grab a drink 👀 👇🏽 when tuning in for a Clubhouse session on March 25th in a conversation about growing B2B SaaS companies in Europe and the US with Aiven, Atomico, IVP and Earlybird.
Written by Paul Klemm from the Earlybird Digital West investment team. To read more about Earlybird, visit our website or follow us on Twitter.
