Colossyan’s Path from Seed to Series A
Recently, Colossyan secured a $22 million Series A funding round, led by Lakestar and supported by us at LAUNCHub Ventures. This milestone arrives just 10 months after the $5 million funding to the company, led by us.
Witnessing Colossyan’s rapid acceleration and their ability to secure such a substantial investment has been a great experience.
In line with this, Stan Sirakov and Petar Tsachev interviewed Dominik Kovacs — Founder and CEO at Colossyan, to reflect on their journey from Seed to Series A and discuss key learnings from it.
Stan Sirakov: Welcome, Dominik! With a couple of words, can you, please, describe what Colossyan does
Dominik: Colossyan is the AI video platform for workplace learning. You can create learning videos from text by picking the perfect AI presenter and localizing a video in 100+ languages in 4 clicks. Colossyan is trusted by leading companies such as BMW, HP and BASF, saving up to 80% of video production costs.
Stan Sirakov: Thanks! You’ve just raised $22mil, could you walk us through the fundraising process?
Dominik: Absolutely, the Series A process was both strategic and intensive. We began the preparation at least three months before kicking off the actual fundraising process. This early start was crucial for building a pipeline of potential investors. We put together a very comprehensive list of investors, ensuring we had a rich mix to approach.
A critical part of our strategy was the investor relationship building. We didn’t just start talking to investors a few weeks before the closing date target. Instead, we built these relationships throughout the year, laying a foundation of successful fundraising.
The actual process involved creating three ‘waves’ of interactions with potential investors. This method allowed us to maintain momentum and keep the discussions dynamic and engaging. We made sure to have multiple touchpoints with each investor, giving us great opportunity to present our vision, progress, and potential.
Another essential aspect was the preparation of materials. We invested significant time and effort into ensuring that our pitch decks, financial models, and other materials were top-notch. This preparation paid off, as it enabled us to present a compelling and cohesive story about our company’s past performance, current status, and future potential.
Petar Tsachev: Very interesting! However, speaking about general company development in the last 12 months, could you tell us about the general management activities that have taken place?
Dominik: One of the key strategies we implemented was the introduction of annual Objectives and Key Results (OKRs), which proved to be highly effective. We established three company-wide objectives and developed specific Key Results for each. This approach really helped in centralizing our efforts and keeping the entire team aligned and focused.
Of course, we didn’t meet all of our objectives, but that’s part of the learning process. What’s important is that the team really embraced this system. We aimed for such clarity and internalization of these OKRs that anyone in the team, if woken up at 4 am, should be able to recite them by heart.
Another initiative we introduced was what we called “Short term rocket boosters.” This was our approach to short-term planning, and it received very positive feedback from the team. We worked in eight-week cycles, changing goals at the end of each period. These goals were our main initiatives, each with a clear owner and a well-defined “done” definition. For example, one goal might be to develop a Team Workspaces for our product to allow users to manage multiple workspaces, or to reach 3,000 followers on LinkedIn. Each of these initiatives acted as a booster towards achieving our annual OKRs.
Petar Tsachev: How have this affected the overall commercial strategy of Colossyan, what were the main changes there?
Dominik: The transformation on the commercial side has been quite significant. Initially, I was the only one driving sales, experiencing what you’d call founder-led sales. Now — one year later, we’re closing big logos without my direct involvement, which is a huge milestone for us.
For the last 8 months, we essentially built our commercial team from scratch. Currently we have a full blown team including very strong Sales leadership, regional middle management, account executives (AEs) and business development representatives (BDRs) functions.
To be honest, we stumbled a bit at the start by not following the typical playbook. We hired only one AE initially and relied too heavily on him. That didn’t work out as well as we’d hoped, and we quickly learned that we should have started with at least two AEs or two BDRs.
However, we had enough time to rectify this mistake. Now, we have a robust commercial team that consistently crushes its quotas. Both the SDR/BDR and the AE functions are performing very well.
Lastly, we’ve hired our first sales leadership and are now expanding into other geographies with middle-level management. This strategy is working well for us, setting a solid foundation for further growth and expansion.
Stan Sirakov: Dominik, it would be interesting to understand more about the key changes you made on the R&D frontover the past year, both in the engineering and research teams.
Dominik: Absolutely, one of the most significant changes was scaling our R&D team by over 100%. It’s been a continuous investment throughout the year, and we plan to keep investing heavily in this area.
In the early days, hiring was a challenge, but as our brand has grown stronger, it’s become much easier to attract top talent. On the engineering front, we focused our hiring efforts in Budapest and London, while for research, we’ve adopted a remote hiring strategy because we’ve found that talent in this field is dispersed globally, and we want to tap into that diverse pool of skills.
We aim to build four robust AI research teams with a total of 15–16 members. Our approach here is quite strategic. For instance, we’ve shifted from having individual researchers working on separate threads to forming a dedicated research team focused on a single, significant problem. By attacking this problem from various angles, we expect to see faster and more impactful results. We’re still measuring our research initiatives in quarters, but this new structure should accelerate our progress.
Another vital change has been the development of a middle-level management team within R&D. This came at a great time as some of our engineers were really starting to excel in people management skills. With our engineering team now exceeding 15 members, having this level of management is super beneficial. It’s a wise move, especially considering we’re preparing for organizational scaling following our recent funding round.
Petar Tsachev: This sounds like a great achievement; what about the changes in the product management structure?
Dominik: On the PM side, one key mentality shift we’ve embraced is what I call the ‘pedals, stones, and sand’ approach. There’s a tendency to focus too much on the ‘big rocks’ or significant features, but that’s not always beneficial. We realized we were putting too many ‘stones’ in our ‘jar’ and not enough ‘sand’, which represents small fixes, and ‘pedals’, which are improvements. Balancing these elements is crucial for a well-rounded product.
The secret sauce, if there is one, boils down to continuous execution and a strong bias towards action. We’ve started releasing innovations that are about 70–80% complete to gather feedback early. This approach allows us to refine and improve our offerings more dynamically.
Another structural change was the formation of a special platform team. Given the AI essence of our business, this team focuses on infrastructure and acts as a bridge between various departments. It connects with the research team, the engineering team, and it’s essentially the backbone of our product development process. This team is positioned right in the middle, reporting to engineering, while we have our regular back-end and front-end engineers building the product on either side.
The introduction of this platform team has been super beneficial. It has fostered better collaboration within the team, allowing researchers to do their job more effectively. It has also been instrumental in optimizing our gross margins and scaling our infrastructure in a way that supports our rapid growth.
Stan Sirakov: …and how did all these changes (commercial, product, R&D) impacted the Ideal Customer Profile (ICP)were there any changes in this area?
Dominik: One of the most significant steps we’ve taken was hiring our first Learning and Development (L&D) expert. This move has been a game-changer for us in multiple ways. Firstly, it enhanced our understanding of our ICP, which resulted in making more informed product development decisions.
Secondly, it has significantly influenced how we define our marketing strategies, messaging, and positioning. Having a clear picture of our ICP helps us communicate more effectively and resonate with our target audience.
Another thing I’ve noticed is that our ICP seems to be evolving roughly every six months. It’s a dynamic process, and we’re continually refining our understanding to make our ICP more specific. This ongoing refinement helps us stay aligned with the changing needs and behaviors of our customers.
Petar Tsachev: Can you share some insights into the main experiments you’ve run on the pricing front?
Dominik: Absolutely, pricing has been an area of constant iteration for us. On the enterprise sales model front, we’ve made significant changes. Initially, all enterprise pricing strategies were in my head, making me the bottleneck. AEs had to consult me for pricing decisions, which wasn’t scalable.
With the arrival of our VP of Sales, we standardized the pricing structure. This move empowered our AEs to be independent and creative when negotiating with clients. It helped them understanding upselling techniques and leveraging the variable components of our pricing. As a result, we managed to create levers that significantly increased our Average Contract Value (ACV) in the following months.
We also implemented some strategic approaches in terms of contract duration, standardizing 2-year deals, and offering free avatars at the enterprise level. Additionally, we introduced a low-touch/high-touch customer experience model, particularly for the lower tier of the Enterprise segment, such as SMBs. This involved removing dedicated Customer Success (CS) support and live support, optimizing resources while maintaining quality service.
Regarding our self-served model, we’ve introduced usage-based pricing, allowing customers to add more minutes to their plans on demand. We also added more variables to our annual plans. Customers could now get all usage upfront instead of monthly, making annual pricing more attractive. Additionally, we included more free avatars for annual plan subscribers. These changes resulted in increased retention and upfront cash flow, which has been pivotal for our financial stability and growth.
Petar Tsachev: Reflecting back, what are some things you think could have been done better?
Dominik: Looking back, there are definitely a few areas where we could have improved. Firstly, in terms of fundraising, I think a greater focus on storytelling would have been beneficial. While we had strong metrics to present, I realize now that I didn’t leverage my personal story and journey enough. A compelling narrative is crucial, even when you have great metrics. It’s about creating a connection and painting a picture that goes beyond just numbers.
Another area is sales funnel optimization. We started focusing on examining and optimizing our sales funnel relatively late. If we had started earlier, we could have enhanced our conversion rates at different stages more effectively. It’s a critical aspect of sales that we underestimated initially.
Lastly, I believe we should have focused on content marketing earlier on. Content marketing is one of those strategies that takes time to develop and mature, but it can yield significant results in the long term. By starting earlier, we could have built a stronger foundation for our marketing efforts and seen greater returns by now.
Stan Sirakov: Thank you Dominik, it was great having you and keep on with the great job you are doing in the overall company development going forward!
