Copenhagen, Denmark headquartered online reviews company Trustpilot announced today that is has closed a $73.5m funding round led by London based Vitruvian Partners with participation from all of their current investors – SEED Capital, Northzone, Index and DFJ Esprit*. The round was raised on the back of continued explosive growth – everyday, more than 10,000 consumers sign up for a Trustpilot account and they now have over 13 million reviews for over 100,000 online brands. This round marks a milestone for Europe as it is one of the largest fundraising’s ever for a European cloud based software company and proves to other entrepreneurs that you can build a global business from right here in Europe.
Founder and CEO Peter Muhlmann started the company in 2007 out of a frustration of not being able to sell products online because he was a new merchant and he didn’t feel that people trusted that he would ship them the product once they purchased from him. He quickly started building a prototype and then raised seed funding from a family member so he could start serving new customers in Denmark. Soon thereafter he started getting inbound leads from all over the Nordics once they had heard about the affect that it was having on revenue for his early adopters. Then, in true startup fashion, he started getting trickles of interest from the rest of Europe, and very soon after, the rest of the world. And today, they have customers from over 70 countries and have offices in Copenhagen, London, New York City and Melbourne.
But Peter hasn’t grown the company single handedly, he has built a world-class team of saas experts around him who are some of the best recruiters, marketers, sales people, engineers and customer service experts in their field (and they are constantly hiring new folks all over the world). One of the best pieces of advice Peter ever shared with me related to hiring a recruiter to help him grow the team when they were somewhere around 60-70 people. He wasn’t sure at the time that this would be a full-time job, but if you are growing your company from 60-120 people, it is very unlikely that the growth in headcount will stop. That holds true today still as that recruiter is still with the business and they now over 400 employees in all four locations.
It also helps that they have one of the most interesting saas business models in the market, one not too dissimilar to Yelp’s (although instead of making money from advertising they make money from subscription licenses). Consumers are free to leave comments about an ecommerce merchant that they purchased something from at Trustpilot.com. Over time, a new ecommerce merchant may gather several hundred reviews before realising it. A Trustpilot salesperson will then reach out to that merchant to tell them more about how they can leverage TP to drive more organic traffic to their site, increase the conversion of paid traffic to their site, and drive more onsite conversions – while at the same time listening closely to what their customers are telling them and provide better customer service. This is any marketing and salespersons dream model as there are literally thousands of new leads to follow-up at any point in time and the number of new merchants coming online daily is exponential.
Trustpilot is one of the many examples of a European software company that got to scale incredibly quickly in their home market and created an operational plan to roll-out new markets hard and fast. It’s no secret that the largest market of them all is the US but the company was patient in their approach to launching America before knowing how to quickly move from a sales execution business to a sales acceleration machine. Watching them grow their NYC office from a handful of employees at the end of 2013 to well over 100 employees currently has been amazing – and I can’t wait for more European breakout stories like Trustpilot that are all waiting in the wings.
*Note: I was formerly a partner at DFJ Esprit and co-led the investment in Trustpilot’s Series C alongside my partner Krishna Visvanathan. Krish and I had visited Copenhagen to meet with several startups and our very first meeting with Peter at the breakfast buffet in our hotel (I had Danish waffles and he drank a green tea) was one of the best entrepreneur meetings either Krish or myself had ever had. We knew instantly we wanted to back him and spent the next 6 months selling ourselves and the DFJ network to Peter to persuade him to go with us. It is a privilege to work with talented entrepreneurs and Peter is testament to the entrepreneurial talent we have in Europe.