Volta & Cashforce: A Journey from Start to Exit

Cashforce exit
"You can’t connect the dots looking forward, you can only connect them looking backward."

1. Start

Nicolas Christiaen (Cashforce), what is the origin/founding story of Cashforce? Where did it all start? What was initially the problem you set out to solve?

Nicolas: While I was working in PE, we looked at the Business Intelligence space and we discovered several unexplored areas, which were working capital and cash flow automation. Very quickly, we understood that the cash forecasting process for enterprise clients was complex and inaccurate, and there were a myriad of entities, banks, currencies, and ERP systems that they had to work with to get oversight over their cash flow. With Cashforce, we decided to connect these data sources, clean and enrich the data from those sources, and provide useful insights to our clients to improve their cash flow process.

Nicolas, How did you go about acquiring your initial customers? And when did you see the initial triggers that you were on to something of a significant scale? Was that also the point you started considering external capital? 

In 2013, we built the first prototype and onboarded four customers. We picked up these initial customers through my own network in PE and through finance consultants that picked up on our noise on LinkedIn and Twitter. They were interested to understand the potential of the solution we were building. The interest from people outside of our own direct network and the increased momentum for the topic ‘cash forecasting’ is what triggered me to consider the raise of external capital

Frank Maene (Volta Ventures), How and when did you get in contact with Cashforce and what sparked your initial interest?

Frank: My former colleague was the one who initially got in contact with the Cashforce team. We both found that Cashforce was headed by a very entrepreneurial founder. Additionally, we saw an upward trend in the market, there was an increasing focus on cash flow awareness and cash transparency, as well as a need for an aggregate view of individual Treasury Management Systems (TMS). Lastly, there was a momentum of rising adoption of financial analysis in the cloud. It was the combination of the above that led us to move forward on the deal.

Nicolas, in building Cashforce what worked, what didn’t, what fell flat?

When we eventually raised the initial round, we had € 1 million in the bank account. This was frightening at the start: we did not have a perfect PM-fit, we didn't know fully yet how to spend the money wisely, as we did not have all the information yet to make our strategic decisions.

However, very quickly, we became laser-focused on repeatable sales, shortening the sales cycles, and building a sales team. We initially thought we needed to hire more experience in the industry / the financial space in order to sell, but in reality, we built the required experience through our network and in-house. All in all, we were able to sell well. As we focussed on sales, we overlooked one (important) flaw: the technical architecture or tech stack. Volta and the board brought it up already, but as it goes in startups, you are running and solving many small issues on the go, so it became a second priority. This almost resulted in theend of the venture.

In this context, I would like to include my first book recommendation: The Phoenix Project. In the beginning, we underinvested in operational fundamentals (that allow us to scale), proper product management and R&D processes, security, and compliance. The longer you keep goingwithout it, the longer it takes to correct it. To all early-stage founders out there, invest in these operational fundamentals, especially if you have to sell to enterprise customers, it will pay off!

Frank, How did Volta offer support as the first VC on board?

We are there to advise, but not to run the business (which is a concern many early-stage startup founders tend to have). We like to position ourselves as a confidante of the CEO and the founders throughout the entire journey. Also, with the more difficult steps along the way we try to help the team strategize on how to handle situations. We have seen startups succeed but we have also seen startups fail over the course of years. We try to learn from these experiences and adapt those experiences to your situations on a flexible and dynamic basis. In quite a few founding teams, one of the founders leaves. In the case of Cashforce, we helped with the process of a co-founder's exit.

Human capital is one of the core pillars we offer support on, both on a strategic hiring level and hands-on recruitment. In the case of Cashforce, this meant that we saw a promising graduate, paid for his growth hacking training. He was initially hired as growth hacker by Cashforce early on, and grew to become Head of Product. Michel Akkermans, one of our LPs and a close advisor to Cashforce and investor, helped Cashforce find a very solid COO.


2. Fundraising

Nicolas, What was the identified growth opportunity to raise a new round?

In 2018, we found great door-openers for our business: the banks. The banks wanted to be more attractive to their clients, the corporates. And we leveraged that momentum to close partnerships, the first one was BNP Paribas - later others as Citi, Bank of America followed. We eventually converted 50-60% of our leads through indirect sales. While the focus was on sales and growth the communication between departments (such asProduct & Sales) was getting less streamlined. At some point, we were selling so far ahead of the roadmap that it led to a lot of disruption in the company.

Secondly, we bumped into other operational challenges. The technology stack was (still) a blocking factor, customer success capacity was limited, as well as the resources to lead onboarding. Also, the necessary corporate IT and security still needed to be fully implemented. So, the opportunity to scale sales through the banking channel, as well as the investment in R&D and resources triggered the next financing round. Immediately after that round, we hired a great COO, who helped to get things on the rails again, and re-invented our technology stack.

Frank, when the new round needed to be raised, how did Volta help in the fundraising process?

One of our core tasks as a VC is to ensure that you are ready to raise the next funding round. At Volta, we advise startups to not put all their eggs in one basket when fundraising, the same goes for thinking about long-term strategy. In both cases, you want to keep your options open. In the run-up to the fundraise, we review the deck, listen to dry runs of the pitch, provide feedback, help to set up both the long list and short list of VCs to reach out to, and send out the intros to the VC funds to get the initial conversations going. One of those introductions was to Inkef, who joined Cashforce in their Series A.

Nicolas, what was the rationale to bring corporate VCs or venture arms on board? What did they bring to the table?

In our case, the banking partners were strategic to our growth and at the same time, banks saw an alliance with a FinTech (like Cashforce) as a strategic move too. Because banks are interacting daily with our clients - the corporates, we could help them at the exact right time (and speed up the sales cycle).

Frank, did you anticipate pitfalls in working with CVCs and how did you avoid or mitigate these?

It depends on the specific corporation. Most are quite beneficial: they give confidence to prospects to work with you and they can be a great partner channel. Some, however, export slow decision-making and risk aversion to board meetings, which can have a negative impact. Depending on your company and market, a corporate VC can be beneficial or not. In the case of Cashforce the decision-making was very fast, it yielded increased credibility, and above all leads.

3. Scale

Nicolas, how did you manage to scale your team and create and maintain alignment in the team as you scale?

In the beginning, when scaling the team, we needed to balance high-potentials and senior people, as the young high-potentials can also slow down your growth. Next, developing good onboarding processes helped to maintain internal efficiency. As I mentioned before, internal (inter-departmental) communication and alignment started to become a challenge when we started to scale. And, just as we wanted to scale heavily, covid broke out.

We used the covid crisis for a complete turnaround: we built a completely new product andreshaped the business by taking into account all of the learnings of the previous platform/ organization, and making ourselves ready to scale. While going through this transformation, we wanted a new, fresh culture to emerge... As you can imagine, that wasn’t straightforward, given that people were not in the office anymore (so everybody was less acquainted with what his/her colleagues were doing).

This is where the second book comes in, ‘No Rules Rules’, which I highly recommend reading. It describes the Netflix culture. We implemented a variation of that, and focused on the context vs control principle. Simply explained: a lot of organizations are controlling top-down decision-making entities. They make little use of contextual leadership, where leaders set the context and everyone else has the freedom to decide what they want. Everyone who hears this will say “this makes a ton of sense, you just give the freedom to the people, you let them be ‘empowered’”. The reality is not that easy. Changing your own behavior and your team’s behavior is an exercise that took months of nurturing.

Finally, we introduced a new value framework during covid: it made a big difference. Clearly communicating these newly defined values, and leading with them, allowed everyone across the different teams to take independent decisions based on them. It ensured that we could keep our culture together in the hypergrowth environment.

Nicolas, when did you start considering internationalization and how did you structure the initial steps?

When starting our business, we were selected to participate in the Techstars program, hosted in New York City, which gave us the US perspective immediately. Also, due to the nature of the business, as we sell to international corporations, we were an internationally-oriented company from the start. We focussed on the main cities where our clients are: London, New York, Amsterdam, Paris, Brussels, Zurich, Geneva... Of course, you need to test out things in your home market (an important step!), but it didn't take long before we hired a Salesperson in the Netherlands and one in the US.

When you take the initial steps in internationalization, it is important to take into account cultural differences in selling, purchasing solutions, and services. Our extensions were mainly sales offices and salespeople. The biggest challenge there is keeping them in touch with the rest of the team, across time zones. What helped us at times, was to share experiences with start-ups/scale-ups that were having the same internationalization challenge.

Frank, when do you recommend portfolio companies to look across the border? 

Most founders understand that they need to start in their own country but they look to other surrounding countries quite quickly. Belgium or the Netherlands are too small as a market in the long run. Expanding into other European countries means that one has to work with different languages, legal frameworks, cultures, and buying behavior, to name a few, but again coming from small countries means that most startups have that international outlook from day one but then need to execute on it. 

We urge founders to strategically think of international expansion as soon as possible. Do thorough research on the other markets you might want to expand into. Find out why they are viable and important markets, and how you can have a (long-term) competitive moat once you have entered them. One should also be aware of how hard and costly international expansion can be due to regulatory approvals or expensive data sources you have to acquire. Our experience is that expanding in the EU is substantially less complicated that expanding into the US, in view of the size of the market and the competitive environment but also cultural differences that are sometimes bigger than expected.

Some businesses are local from day one, gaming companies and consumer apps often require far less localization than high-touch SaaS companies. Cashforce had the benefit of having global players as customers from day one, finding product-market fit with a few of them in the markets closer to home, allowed them to cater fittingly to the other global players as well

4. Exit

Nicolas, when did you decide that you wanted to pursue an exit?

After the COVID crisis, which we used to build a completely new product & organization, we closed a couple of incredibly nice deals, such as Kimberly-Clark, Hitachi, Unilever, Kellogg’s etc. This led us to an all-time high in terms of sales momentum and we hit all of our targets. Given the consolidation dynamics in our specific industry, we had a choice to partner with another player or to proceed as a stand-alone entity. We were a very niche solution in a market of big whales. After receiving an offer, a lot of other parties showed their interest. In the end, the option to go for an exit got more and more attractive.

Frank, in what way did Volta guide Cashforce in the exit process?

We always advise our companies to implement optionality, this means they are always incontact with potential follow up investors and possible exit candidates, this way you keep your options open and when an exit opportunity comes you are prepared. We use a structured exit process we help implement to prepare companies for the exit process as soon as relevant. Also here it is important to keep your options open: having multiple candidates, if possible, but also being realistic that these things take more time than expected and sometimes do not materialize. It is important to have backup scenarios. Also, when negotiations become difficult, it can be great to leverage your VC as the bad cop.

Frank, what do investors focus on in the exit process, once a potential acquirer has been selected?

In the exit process, it is very important to assess the likelihood of success; what are the realistic chances of the deal actually closing: If not so great, it may be better to look into another possible exit candidate. It should be a fair deal for all. Furthermore, it is important to minimize earn-outs (as you have no control anymore on what is invested in the business after the exit, and who the leadership team will be) and the escrows. We focus on alignment in the shareholder group to ensure we have a clear message to the acquirer and the group doesn't slow down the process.

Nicolas, can you recall any advice or insight in particular from Volta that helped you a ton?

As a person, I tend to be quite modest, (a bit too) realistic, and I don’t like to overplay achievements (anxious that one day, you might run into bad luck). I remember when Frank advised me to be less modest in presenting our achievements & aspirations ;-)

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