This morning Candu, a software startup that provides no-code web tools for SaaS apps, announced a $5 million funding round.
TechCrunch caught up with founder Jonathan Anderson and lead investor Villi Iltchev, a partner at Two Sigma Ventures, to chat about the deal.
First thing: This round, a bit like Scotch, has aged. It’s from March. And while it is very common for venture capital rounds to get announced after the fact, a nearly nine-month delay would normally be a stretch. However, Anderson explained that he wanted to hold off on releasing the news until Candu’s product was in the market. That’s a valid reason, so we’re going to chat about the investment despite its age.
The round we’re discussing today is not Candu’s first, as the startup previously raised around $1 million after its graduation from Entrepreneur First, an accelerator with a global footprint.
The $5 million investment began like many venture investments do, with an investor getting in touch with a young company months before a transaction is put together. Iltchev reached out to Candu in September of 2019 after hearing about the startup and liking its effort to allow for far-greater personalization of onboarding experiences inside of SaaS apps.
Anyone who has fired up a new business service, only to be given a walkthrough of how a few of the buttons work — a set of directions that I am sure you also skip — knows that the help can be generic, and annoying. Candu wants to work on the problem, offering no-code development tools to help non-engineers at companies build tailored pages to help with onboarding. What does that mean? With Candu, a SaaS app could offer different user cohorts nigh-personalized onboarding experiences.
So what? For SaaS companies big and small, effective onboarding is an important method of driving user engagement, a key metric for any modern software company. Why? Active users are less likely to churn, and more likely to expand spend on a service over time. So getting users activated well is no small task.
WalkMe and Pendo have built material business by approaching the issue from a different angle. WalkMe last raised $90 million last December, while Pendo picked up $100 million last October.
Candu’s project was interesting, and it had an obvious market, but the deal didn’t come together for a few months after the investor and startup met each other. Iltchev asked Candu to stay in touch, and toward the end of 2019 Anderson reached out to alert the investor that some of his peers were circling. That call led to the round that was announced today.
Superpowers
No-code startups have the potential to empower workers at companies who have to fight for engineering resources. If more groups in a company can build and deploy product, they will be able to move more quickly, and get more done. And they won’t have to beg the engineering team for help.
For that reason no-code startups — and other no-code and low-code projects — are incredibly interesting. In the case of Candu, if its service finds adoption, marketing and customer success teams may be able to create and tweak onboarding experiences without needing help from other teams. That would not only save time, but could lead to better results as more iterations would be possible.
Candu is not done figuring itself out, however. Co-founder Anderson told TechCrunch that his company is still working on solidifying its product-market fit. That is perfectly reasonable for a startup that is still grinding its way through early seed checks.
Asked what the company expects its annual contract value (ACV) to average out to, Anderson said that the market would guide the company, which only launched its service in late October. For now, Candu lists its prices starting from around $200 per month on up. Those targets provide some context about who it expects to sell to.
Regardless, it’s now up to the startup to scale its customer base, and turn those early customers into both revenue and learnings, which it can furrow back into its operations and product. Let’s see how far it can get with its March-era seed investment.
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