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Estonian startup Katana makes manufacturers love software

‘Make locally, sell globally’ is the motto and the principle of one of the most successful Estonian startups Katana. Kristjan Vilosius, co-founder and CEO of the business, spoke at the Estonian startup pitching event Unicorn59 that Katana's goal is to make the manufacturers love Katana's software as much as they love their own products.

Unicorn59 is an event organised by Invest Estonia in cooperation with Latitude59 and Startup Estonia whose aim is to introduce the rising stars of the Estonian startup market. The startup Katana, founded in 2017, develops business software for manufacturing companies and has won the hearts of both clients and investors.

Kristjan Vilosius, Hannes Kert and Priit Kaasik are the core team behind Katana. The idea began to develop around 10 years ago – before founding Katana, Vilosius was an active angel investor. He also put his money and time into manufacturing companies in which he is still a shareholder. He invested in timber production and windows manufacturing, as well as in the well-known ultracapacitor manufacturer Skeleton Technologies, where he was part of the council. “I saw the frustration, modern companies felt when they tried to use the old systems that were dominating the market,” Vilosius recalled how Katana began four years ago.

Initially, they started filling a very narrow market niche. They created manufacturing and inventory management software which helped micro manufacturers reach their clients easily through Shopify. Now, Katana has become a useful tool for small and medium-sized enterprises which have linked to (or are about to be able to link to) platforms such as Amazon, WooCommerce, Quickbooks and Xero.

Half of Katana’s clients use the option to put their products up directly on the online shop, but the rest are larger companies who use wholesale distributors or mediators. The company is moving towards large and global manufacturers. “It is a long journey, but we want to get there,” Vilosius stated.

He talks about his company passionately. What makes his eyes sparkle? Vilosius believes that there are two things. Firstly, there is a huge market that they can improve. Secondly, there are the clients. “We are able to work with awesome small and medium-sized enterprises who sell directly to clients,” Vilosius said.

“They are fans of their product or field. They are very passionate about manufacturing the product and everything else they do. They want to fight against mass production.” Many clients use locally sourced commodities and sustainable manufacturing. “We see how they can grow rapidly with our software,” Vilosius describes his source of inspiration.

He believes that client feedback is extremely important for them. “We are client-centred,” Vilosius explains. “In reality, this means that we mark down every phone call, every demo and every conversation with our clients. Based on this data, maps are created and, through these patterns, we can see where we can improve. This is one of the most important inputs.”

Attracting talent

The company is also an attractive employer. The team, which works on two continents at the same time, has grown to almost 60 members. Among them are former specialists and leaders from companies like Wise, Pipedrive, Bolt, Veriff, Microsoft and Skype.

Vilosius considers their largest win to be the fact that they survived the initial phase and made it to the growth phase. “This is a huge accomplishment for every startup,” Katana CEO said. Second win is holding the growth tempo to justify investments. “We have paying clients in 60 countries,” he says. “We are a global company.” Thirdly, he considers it important that the global leading evaluation platforms have ranked their software in the top three in the field. And, of course, the attention of investors is crucial. In 2019, 42GAP, a fund with German roots, invested in the company, as did European big-name Atomico at the beginning of this year.

Next fundraising

Investors believe in the success of Katana. What is remarkable, is that the company has managed to raise money in one of the five largest Series A funding rounds, which made 9.25 million euros this year. The lead investor is venture capital firm Atomico whose figurehead is Niklas Zennström – and he knows the Estonian startup ecosystem inside out. Zennström is a co-founder of Skype and an investor of Pipedrive, which achieved unicorn status last year.

Estonia’s own technology sector has also contributed to the firm. For example, payment platform’s Chief Technology Officer Ott Kaukver, Chief Product Officer of Topia and former Skype Estonia CEO Sten Tamkivi, Chief Technology Officer at Pipedrive Sergei Anikin and former HR architect at Wise Kairi Pauskar have invested in the company. Katana has gathered 13 million euros in capital.

Figuratively, there is a line behind the door. Last year, when the voice of Estonian startups, radio programme ‘Restart’, asked almost fifty investors to name three Estonian startups to consider and where they would invest if they had the opportunity and the means to do so, Katana was once again at the top, occupying fourth place after Pactum, Bolt and Veriff.

The investments were put into product development, marketing, sales and team building. “We are hiring new people, both in Estonia and North America,” Vilosius says. “By the end of the year, we hope to do so in Australia and New Zealand, too, where we have clients even now.”

Katana is planning to seek additional funding in 2023.

If you are interested in investing in Katana or some other Estonian startup, feel free to contact us via e-Consulting in order to schedule an appointment with one of our investment advisors, happy to help you on your journey to start building your unicorn in Estonia.

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