Are you struggling to drive organic growth in your company? House of Control, a Norwegian software company, is an excellent example of a firm that grew its ARR rapidly by specializing in sales processes and customer success. Here is how House of Control switched focus from profitability to growth and how the different elements influenced the journey.
CEO Lasse Sten founded House of Control in 2006. The software facilitated contract management, effectively simplifying the work of your CFOs and finance departments. The company’s growth has been consistently stable since its founding, and its yearly dividends are pleasing. After seven years of steady growth in ARR and continuous product improvements through customer driven innovation, they wanted to shift their focus from profitability to rapid growth. Thus, they started looking for a new owner to buy out their shares, and the prepaid dividends would allow the company to scale faster.
Viking Venture’s first interaction with House of Control was in 2015 when Lasses Sten called. He connected us to an advisor and explained the company’s new direction comprehensively. The company essentially wanted to bring on a majority owner to ensure the company would focus on growth rather than profitability in the coming years. Viking Venture acquired 55% of the company for NOK 44 million in cash. Before the purchase, House of Control had NOK 32 million in ARR. The first objective after the funding boost was to increase its ARR to 100 million.
It is practical to expect several changes in the firm after a change in ownership. Our first initiative as the new investors were to specialize sales processes and help the workforce differentiate between farming and hunting. Although House of Control had an effective sales organization, they still needed someone to focus more on the customers. Lasse eventually employed marketers, meeting bookers, and customer success departments to avoid overworking the best salespeople. Optimizing contract management was our next initiative as investors. Instead of long contracts that offered less charge flexibility, they implemented shorter ones. Shorter contracts are more flexible and can work with a value-based and customer-scaled pricing model.
In 2019, House of Control hit its goal of increasing ARR to 100 million. The primary reasons behind the company’s success were implementing a proper pricing model and a well-functioning sales and customer success organization. They had professionalized the organization and built a scalable management team. At this point, House of Control started to look for new options to continue the growth journey.
During the summer of 2020, Viking Venture successfully listed another portfolio company, Mercell. House of Control was a smaller and less technologically advanced company than Mercell. Small businesses find it challenging to get through an IPO, making it necessary for them to grow further for that to be an opportunity.
After 15 years of organic growth, House of Control acquired dinERP in august 2020, which resulted in a more effective company by improving KPIs and dropping churn. It also contributed to helping House of Control accomplish a successful IPO. The IPO issued by Viking Venture for House of Control was NOK 350 million and a NOK 300 million sale. Viking Venture sold 37% of company shares, getting 2.5 times back on the investment.
After enlisting in the Stock Exchange Market, House of Control made several acquisitions to grow its ARR. The companies purchased included Business Analyze, Keyforce, Egreement, and Effectplan. In 2021, the company raised its ARR from NOK 128 to 196 million. The need to change direction became evident before the 2021 Christmas season. The terrible market development environment made it more challenging to acquire new companies. Instead of focusing only on growth, they turned back to profitability and cutting costs. It would help to understand that inorganic growth is as substantial as organic growth in the stock exchange market.
The new focus by House of Control made them go through the companies bought. They sold parts of DinERP back to its founder in the first year as it did not fit the business well because of its on-prem products. Disposing of some of these products effectively reduced costs.
In August this year, Visma showed interest in buying the company. This following a structured process. In this period, the ARR for House of Control was at NOK 215.5 million. Here are the results of the investment:
One significant benefit of specializing in sales processes in your organization is fueling ARR growth. This article explains these upsides by focusing on the growth journey of House of Control. You can use the information shared here to switch operational focus and increase your company’s net present value.
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