40 Million in Funding & Digitizing the Trades Industry: The Success Story of HERO Software

About this episode

Michael Kessler has written an impressive success story with HERO Software. The company is revolutionizing the trades industry with innovative ERP software solutions and now serves over 6,000 customers. In conversation with Fabian, the CEO shares valuable insights into building his company, which has already raised over 40 million euros in funding.

The Pivot from Lead Generation to SaaS

HERO Software originally started as a lead generation platform for the trades industry. However, it quickly became clear that a strategic pivot was necessary. "The switch to a full-fledged SaaS solution was the right step," Michael explains. This pivot enabled the company to develop a comprehensive ERP solution that helps trade businesses digitize their processes and work more efficiently.

From early mistakes, the team learned valuable lessons that sustainably shaped the business model. These learnings flowed directly into product development and helped create a solution truly tailored to the needs of the trades industry.

Digitization in the Trades: Challenge and Opportunity Combined

Digitization in the trades industry is complex but offers enormous opportunities. Many trade businesses still work with outdated processes and paperwork. HERO Software makes these businesses more efficient and gives them valuable time back – tradespeople can save up to two hours daily through the software.

The challenge lies in convincing traditional businesses of the benefits of a digital solution. At the same time, the software must be intuitive enough to be easily operated by less tech-savvy users.

Fundraising Strategy: From Crowdinvestment to VC Rounds

A special aspect of HERO Software's growth story is the fundraising strategy. The company raised over 40 million euros through various funding rounds, including two crowdinvestment rounds and a VC round with Capnamic.

"Crowdinvestment was a crucial step for us," Michael emphasizes. This form of financing not only enabled capital raising but also helped build a community and gather valuable feedback from potential customers. Nevertheless, there are several points to consider with crowdinvestment, which Michael explains in detail.

Product Development and Pricing Evolution

HERO Software built its product modularly to serve both small trade businesses and larger companies. This flexibility was crucial for growth.

Particularly interesting is the development of the pricing model: from originally 20 euros per user, the price rose to over 60 euros. "Our customers are willing to pay more for a premium solution," Michael explains. This shift to a premium product was possible because HERO Software delivers real added value and demonstrably saves trade businesses time and money.

Team Building and Leadership Principles

Michael has built a team of 200 employees and follows clear principles in hiring and leadership. Central to the company's success are the values of ambition, trust, and fun.

Scaling a SaaS company brings particular challenges, especially when building a performance-driven organization. Michael shares his learnings on supporting first-time managers and explains what hypotheses are necessary to achieve 10x growth.

The HERO Software Flywheel

An important success factor is the HERO Software flywheel – a self-reinforcing cycle of product improvement, customer satisfaction, and growth. This concept helps generate sustainable growth and strengthen market position.

Conclusion

Michael Kessler's success story with HERO Software shows how important it is to address the needs of a specific industry while being flexible enough to adapt the business model. The pivot from lead generation to SaaS, the thoughtful fundraising strategy, and the focus on real customer value have made HERO Software one of the leading providers in digitizing the trades industry.