It’s evident, getting that first customer or the desired volume, takes a set process, time and commitment to successfully onboard each customer, owing to the fact that customer acquisition is the most fundamental element of any business. However, making word-of-mouth an informed business strategy, Munich-based startup Cello has secured investment for this mission.
Based on findings, it’s been figured out notably for SaaS companies, that customer acquisition has long been regarded as one of the primary factors limiting top-line growth, which is understood to be getting trickier with traditional strategies going stale and costly.
Getting customers attracted via word-of-mouth about a product or service has long been a traditional approach. Frankly, for anything from SaaS to restaurants, word-of-mouth is considered the most trusted type of recommendation. While for marketing and sales teams, though, it’s something they have little control of and there hasn’t been a way to leverage it until now.
Therefore, to curb the limitation of word-of-mouth, the Munich-based martech startup which is in its first-year life has raised $2.3 million having developed a user-led growth platform that’s tapping into word-of-mouth as a value growth channel.
According to the co-founder and CEO at Cello, ‘Stefan Bader’: “Scaling product distribution is top of mind for every new software venture, with founders looking to gain an edge over the competition. Top companies are already tapping into their user base to attract and convert new customers, and see further opportunities to optimize this part of the sales journey. This is where Cello comes in. we help SaaS companies turn word-of-mouth into a customer acquisition superpower”.
The latest fund, understood to be the pre-seed investment was led by byFounders, which also saw participation from Possible Ventures, Tiny VC, and Notion Capital; coupled with operator angels emerging from Personio, YouTube, McMakler, among others.
The subject startup will use the fresh fund to build out market share in the continent of Europe and North America. A source familiar with the matter also confirmed the inclusion of a founding team consisting of serial entrepreneurs and veterans from Twilio, Pitch, and Typeform and this assures the company of rapid growth.
Founded in 2022 in Munich, startup Cello is pioneering the development of user-led growth in a new category of growth strategies, marking the company’s product as the next evolution of customer acquisition.
Looking at this from the point of leveraging user-led growth based on the current tech market, it’s been noticed that growth is coming up against a number of challenges. With European SaaS market is believed to have enjoyed the most innovation in the past couple of years and has left a competitive market. However, due to the current economic uncertainty, founders are struggling to continue to onboard customers at the same pace. Consequently, advertising costs are becoming increasingly expensive – for instance, TikTok’s cost per thousand impressions (CPM) is up 185% compared to last year; Meta is up 61%, and Google’s programmatic display is up 75%.
Based on this, the need for an alternative path to growth by SaaS companies has become inevitable. Evolutionary extensions of existing growth strategies have historically driven down SaaS customer acquisition costs. In the meantime, Cello is leading the development of user-led growth in this next phase, harnessing word-of-mouth at a very low CAC.
‘Eric Lagier’, Partner at ByFounders commented: “The fastest growing companies already rely on self-engineered growth loops to amplify word-of-mouth. Cello’s approach revolutionizes the opportunities available to SaaS companies, by enabling them to unleash the real potential of the channel. It’s a product that couldn’t be better timed with the current market trends”.
The Munich-based startup offers SaaS businesses the ability to rapidly grow word-of-mouth into a valuable acquisition channel. While the subject platform aims to redefine how incentivized referrals work in SaaS, by privately incentivizing users with a percentage of all the net revenue (MRR) they refer. With this, the unique recurring commission approach results in bullet-proof fraud prevention, zero payback period, and in turn, a positive return on investment.
‘Philipp Möhring’, Partner at Tiny VC said: “Word of mouth is the most coveted source of growth for early stage startups. We see self-engineered tools for amplifying word-of-mouth are often out of reach for companies who are laser-focused on building a great product. Cello enables this by making SaaS referral programs simple to set up and track”.
As a proof of promising future, high-growth leaders like Pliant, Sastrify, Demodesk, Unlock, and Butter already using CELL to grow. Hence, ‘Simon Leicht’, Partner at Possible Ventures added:
“The progress that Cello has made is terrific, especially as building a business in the rapidly growing SaaS market is hard, especially given the current global market conditions. The Cello team has a clear understanding of their market and a well-defined vision of what they want to achieve. We look forward to working with the team”.
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