Ukrainian startup PromoRepublic, is a service that helps freelance marketers to create content for social networks, has recently received €500 000 from Ukrainian and Finnish investors. In December 2015, the startup closed the first part of the round and received €100 000 from the Finnish investor Pekka Koskinen, the Vendep fund and the Finnish Funding Agency for Innovation Tekes.fi. Money was spent on preparing the launch onto the US market as the company had to cover costs related to distribution channels analyses and market research. The investment also funded the team’s trip to the US for negotiations with local entrepreneurs and potential clients and partners.
“We spent one month in San Francisco, Boston, and New York and understood how this market works. We saw that reaching out to small businesses directly is very difficult, but at the same time we found a highly developed segment of freelance marketers, so we decided to focus on this narrow segment and to tailor a product to their needs, ” says the startup co-founder Max Pecherskyi.
“We changed our market positioning from an all-in-one marketing service to a more focused one, namely, the Calendar of Content Ideas, that helps to create stunning social media posts based on holidays, trends, events and more,” commented startup CTO Mike Baranovskyi.
The second part of the round was closed last month. The lead investors were Finnish entrepreneur Sampo Parkkinen and Ukrainian VC fund Digital Future. Pekka Koskinen, Vendep and Tekes venture funds became co-investors. The total amount of money invested during the second part of the round was €400 000.
After a startup reaches a certain level of income and number of clients, it automatically receives access to the third part of the round: €1.25 mln follow-up funding on marketing and sales from Tekes.
“The PromoRepublic team was able to build its own distribution channels in two months in Eastern Europe, which helped them to double the revenue for five consecutive months. I have no doubt that these guys will succeed in the US market,” says Sampo Parkkinen.
“First of all, PromoRepublic has been present in Western Europe for some time and it garnered support from large European investors. It is also entering the US market and in our portfolio, we do have a number of projects which are exploring this region. In addition, we have tested the solution with the help of our marketing teams and they loved it as it is an efficient tool for completing their daily tasks,” states Oleksii Vitchenko, CEO of Digital Future.
At the same time, the PromoRepublic team was able to fight the dilution of founders’ and early investors’ shares. Through registration in Finland and by participating in Startup Sauna, the startup has attracted grant funding from Tekes as a part of a startup support program from the Finnish government. Money from venture capital funds and private investors has been received under the terms of a convertible loan and their share will depend on the valuation of the company at the end of the year.
The startup founders are planning to invest money on promotion in the US market. “The segment of software for freelancers in the United States is growing at a rate of 40% per year, and there is plenty of space for new companies on this market. Just after the launch we’ve got more than hundred paying customers from America,” notes Max Pecherskyi.
The second objective of a startup is its integration with large marketing services, such as Hootsuite, HubSpot, Buffer and other marketing platforms that are already used by millions of marketers in the United States. “There is nothing worse than an empty content calendar on Monday. And if you have five customers and five blank calendars, all the worse. We solve this freelancer problem by offering templates for each customer with ready-made ideas, wording, and design,” says the co-founder of the service, Valeriy Grabko.
In order to expand onto the new markets, PromoRepublic is now looking for specialists who are ready to join the team in their Kiev and Finnish offices – marketers, designers, copywriters, and developers.
In addition to the integration with other platforms, content marketing, and direct sales, PromoRepublic sells their service through partnerships with American companies. “We have tested more than 25 different marketing channels in the US, and concluded that cooperation with affiliated networks, niche media and bloggers works in the best possible way. Thanks to them, we are rapidly increasing our US customer base,” adds Valeriy Grabko.
The main office of the startup is located in Helsinki, its product development team works in Kiev, and communication with the US customers and partners goes through a virtual office in Palo Alto.
Before gaining this most recent funding from Finnish and Ukrainian investors the project also received €30 000 from the Ukrainian Eastone Group, the Swiss guru of business modeling David Lottenbach and a number of business angels, including Techstars Boston managing director Semyon Dukach, €25 000 from the Estonian investor Andrus Lauritz and a state grant from Start-Up Chile totaling €30 000.