This was originally published on Dealflow's #272 issue. Dealflow.es is a weekly newsletter about the Spanish startup ecosystem, sent every Monday and currently received by more than 8,500 people. Sign up here.

This article is only based on publicly available info. We (K Fund) are not investors in Holded.

You don’t need to have a big market share in an appealing market to have a large exit

Holded claims that more than 80,000 customers have used its “ERP for SMBs and freelancers” software. I bet those are total customers/users at some point in the life of the company, and not active ones. According to Jesus Martinez of La Informacion, Holded had €4m in ARR at the time of exit.

Holded follows a freemium model. It has a 14-day trial for SMBs and the “most popular” plan is the €79/month one, according to the company’s pricing site. For freelancers, Holded can be free forever as long as you only send 50 invoices per year.

If we assume that Holded’s ARPU is €948 per year (€79*12), that means that Holded has around 4,200 paying clients (€4m/948). In Spain there are around 2.8m SMBs and 3.2m freelancers. If we assume a TAM of around 3m, this implies that Holded has achieved a significant exit with a tiny fraction of the market as clients (0.14% in terms of paying clients, 2.6% if we were to take into account the 80,000 user number).

I'm not saying this will always be the case, but successful exits tend to be outliers and this was also the case in the grand scheme of things.

Hot market and single source of truth for financial data of SMBs and freelancers

Why has Holded been able to get to a €120m exit with just €4m in ARR and in only 5 years? I bet it’s a combination of having built a great product in a crowded market (usually, best product wins, and if you combine that with product + distribution, it’s a winning formula), the fact that the “ERP for XYZ” sector has been growing in relevance in the past few years, the opportunities that having thousand of SMBs and freelancers as users/customers unlock (Holded is the single source of truth for SMBs financial data) and, I’m guessing, fast growth.

One of the larger SaaS exit in Spain to date

If I’m not mistaken, Holded is one of the larger SaaS exits in Spain to date. The other big one is AlienVault, which has very different characteristics compared to Holded (B2B enterprise, security sector, headquarters in the US, etc).

The vast majority of large tech exits in Spain have been B2C companies (idealista, eDreams, Privalia, Ticketbis, etc). However, in the past few years there’s been an explosion in B2B SaaS companies in Spain (and everywhere else) with significant funding going to such companies.

Holded is, hopefully, one of the first and larger exits in the space.

If founders want to exit, they will

According to Crunchbase, Holded had raised more than $26m in funding from various investors, including business angels in the SeedRocket network, 4Founders Capital, Nauta, Lakestar, Elaia and others.

The company raised a €6m Series A round led by Lakestar in April 2019 and a €15m Series B led by Elaia a few months ago (Feb 2021). More likely than not these investors were expecting a bigger outcome but, if founders want to sell, and this was probably life changing money for Holded’s co-founders Javi and Bernat, there’s not much VCs can do.

Congrats Holded!