‘SSUP! Team 53°N interviewed Copenhagen-based CTO and co-founder Mikkel Boje (left on picture) of Capdesk – a story about finding the right business idea and the right business partners.
We met Mikkel in his office in a building that was previously a stronghold for Danish photographers. Although some photographers still have their studios there, recently a handful of start-ups have moved in as well. After getting a cup of coffee, we sat down in a meeting room that looks more like a movie theatre, with red cinema seating on the side… it even smelt like an old movie theatre. It was in this scenery, that Mikkel started telling us about his dream; how he teamed up with his old friend from University Martin Damhus (also co-founder at Capdesk, right on picture) in multiple attempts to create a successful business.
In chronological order…
Bear with us for a moment – we’ll tell you what Capdesk is all about, but first we have to tell you Mikkel’s story.
With a bachelor’s in computer sciences and biology, Mikkel decided to follow his passion and studied Artificial Intelligence in Edinburgh, UK. “After that period, I was slightly disappointed, since I found out that this was probably not happening in my lifetime, at least not the multi-purpose AI. Of course, I couldn’t see what was going to happen in the next 10 years,” Mikkel explained to us. He decided to change his path and moved into a fast-growing Danish IT consultancy in 2008. There he learned project management skills and IT delivery of complex systems. “After becoming a manager, I got really tired of being a consultant. This was not good. Martin, who also worked for the same company, and I discussed starting something for ourselves for years already. However, we never found the time for it.” At that point Martin already had two children and Mikkel was about to have one.
Together with two others, Mikkel and Martin decided to cut their ties with consultancy in 2012. The idea was to take a couple of months and come up with an idea… but the idea didn’t come, unfortunately, and time was ticking. Mikkel decided to start doing IT consulting services on the side again, as a freelancer. “They liked me anyway, so it was not hard to find projects, and it was an easy way to fund ourselves,” Mikkel explained. It stretched their ideation period, but the idea didn’t come. Another attempt: now all four were doing consultancy services in order to find the problem and learn how to solve it on the job. “The idea was to do 1 or 2 types of projects over and over again and become really good at it. Then the idea would come by itself. Although our attempt lasted for almost 3 years, which was extremely good for the consultancy business, we never succeeded.”
The problem was that with all four having technical backgrounds (mathematics and computer sciences) they lacked commercial skills. It was time to partner up with entrepreneurs who could fill their gaps. The other two guys left the team and Mikkel and Martin went on, looking for very specific profiles. “They needed to have a mix of all: a good idea, knowledge in the main domain, and the capability to sell. We tried it a couple of times but found out that there was always one dimension missing.”
We would probably have given up already a hundred times, but not Mikkel and Martin. In 2015 they met Christian Gabriel and Casper Arbøll, both about 10 years younger than them but with a more generalist and business background. This was the start of Capdesk.
Only the beginning
Christian and Casper both had in-depth knowledge in equity crowdfunding and helped other companies to raise money for 1-2 years. They saw that equity crowdfunding platforms were mainly offering services during the crowdfunding period, but then left ventures behind with an investor relations problem. The idea was to help companies with this problem by making communication with a large number of shareholders much easier and by facilitating share transfers between owners in a secondary market for private companies. Mikkel and Martin believed in it but had to gain the trust of their new partners. While working part-time as IT consultants, they stepped into a 1.5-year warranty agreement with Christian and Casper. After this period, they earned equity and with some money from a lead investor (angel) and an initial investment round of private and public money, all four decided to go for it… full time and as equal owners.
But hold on… now Mikkel and Martin found the right partners, this doesn’t mean that they found the right idea. The investor relations platform that they created was basically a tool that enabled crowdfunding players and their investors to share news and give feedback (communicate with each other, like a large board meeting). Therefore, what they needed was a lot of investors and crowdfunding platforms that are willing to use Capdesk’s services. Unfortunately, Mikkel and the team found quite a bit of reluctance within their customer base. “The traction was simply not there since the value proposition was not strong enough. We found out that most companies just don’t see investor relations as that important. We did a thorough analysis – directly after finishing a large funding round, which is bad practice – and decided to make a fundamental pivot to our proposition.”
Equity management and administration
As part of their first product, companies could see which investor owned what share of their business and investors had full visibility of what companies they had invested with. Capdesk decided in 2017 to make this the core of their business and to become an equity management service provider. Now, Capdesk offers a tool to companies that created transparency around their cap tables (capitalization of the company), focusing mainly on more mature companies with a large number of share and option holders.
With the financial services of Capdesk, companies can easily obtain the fully diluted ownership shares of each and every stakeholder. On top of that, a couple of value added services are built in, like an exit calculator (“what would I get, if I now step out”) and decision-making functionality (“what would happen if I go into a certain agreement”). Normally, figuring all this out would cost companies a lot of time and money, where most of the reporting is outsourced to expensive lawyers and accountants. Capdesk makes this easy and affordable, giving immediate transparency through a dashboard-like interface.
Making the pivot
Although the pivot (Start-up jargon for a drastic change to the business model) probably came at the worst possible moment – “directly after finishing a big funding round is a bad move” – it was of huge importance for Capdesk. Before the pivot, the team was constantly looking for ways to improve the product, but this process was very unstable. “Now, after the pivot it is much clearer where we are heading to. We have a good and stable product roadmap and it is also much easier for sales people to convey the message. Casper and Christian also moved to London now to be closer to the business,” Mikkel explained. The only problem is probably that they are now running out of money again, and a next round of seed funding is coming close quickly.
Another next step is marketing; it took a while, but now they have the right product-market fit, customer acquisition becomes very important. “Direct sales works, now we just have to push and scale-up fast, and get our pricing right.” Apart from more marketing people, Mikkel tells us that they also need more people with domain knowledge, like in-house legal advisers.
And finally, the traction is there!
With three different subscription models, ranging from 50 to 200 pounds a month, Capdesk saves companies a lot of money, time and frustration. Month-on month growth of paying companies is ~50% and with another funding round, they can break-even already in the next year. So, investors, pay attention here…this might be your next big bet!
Thanks, Mikkel, for a very personal story. Exciting times ahead and we are 100% sure that your flexibility and persistency will pay out eventually.
And finally, our two wacky questions…
…If Capdesk was an animal what would it be? “A rhino… every product version release has an animal name. The rhino was the release for the pivot”
…And if you can hire anyone in the world for Capdesk who would it be? “A world class and experienced B2B Marketing leader, that preferably has a finance background and a good network”