Behind the deal: with Liu Kars from Innosend
Start-ups and venture capital, a founder's journey is often intertwined with the search for the right investment. Founded had the opportunity to talk to Innosend co-founder Liu Kars in the office where he, Virgil Swagemakers and the team work daily to grow Innosend. The buzz around Innosend's recent capital injection by Royal Rotra, investment fund G-Force Capital and Harold Huizing, Trust's former commercial director, was picked up by several news sites. But what exactly did this trip look like for Innosend and how did it all come together?
From frustration to innovation
Imagine the frustration of navigating clunky shipping software while running an e-commerce business. Virgil Swagemakers had an eye-opening moment that led to Innosend's start. Although Virgil had set up a few web shops, he always had trouble with one thing: there was no good software for easy, trouble-free shipping. The existing options were full of problems and didn't really work for someone who runs an online store. So he decided to change this with Innosend.
When Virgil approached Liu with his groundbreaking concept, his first reaction wasn't immediately enthusiastic about becoming a co-founder. He had just ended an earlier venture and left behind a talented team. But after careful consideration, research, and seeing the growing importance of e-commerce in the wake of the pandemic, Liu took the plunge with part of his team and joined Virgil to build Innosend.
Building the Right Team
Liu acknowledged that Innosend's success depended not only on the idea itself, but also on the people who drove it forward. Building a team with the right mix of skills, drive and cultural fit was very important. This process laid the foundation for a team that was resilient, flexible and deeply committed to the company's vision.
Innosend has established itself as an intermediary in the e-commerce market and solves critical industrial challenges. Central to their approach is the development of an innovative infrastructure that simplifies logistics for web shops, primarily by making it possible to easily print shipping labels. A remarkable feature is their brand-oriented email system, which seamlessly integrates with the webshop style to create a personalized shopping experience for customers. In addition, they address a core problem for web shops: the complexity of shipping logistics. Their smart shipping rules eliminate the need for manual intervention by warehouse staff and automatically select the most appropriate shipping provider based on package weight and destination. This not only streamlines the process, but also ensures that web shops offer the best delivery options at competitive rates.
Bootstrapping or big funding?
Liu explains that he and Virgil were faced with the decision to raise funding for Innosend. The duo wrestled with a fundamental question about their own business ambitions: “Are we going big, or are we going home?” As Liu puts it, “Were we entrepreneurs who wanted to scale up or did we want to keep it small?” This critical question required honest self-assessment and open communication between the co-founders. Their different perspectives led them to initially bootstrap Innosend.
This choice involved personal compromises, such as skipping salaries and paying development costs out of pocket. But as Innosend grew, they faced the typical growth problems of a thriving company — the need for increased funding to support growth and deal with changes in cash flow. Liu understood the importance of extra help and planned their finances carefully. They made detailed estimates and forecasts about their money flow. This was important in determining how much money they needed and finding investors that were a good fit for their business goals and growth plans.
These investors didn't just give us funds; they were crucial in making strategic choices and provided knowledge that comes from experience. We realized early on that not every investor is a good fit, regardless of the financial resources they bring.
Find the perfect match
Liu took a careful approach when looking for investors. The goal was not just to get funding, but to find partners who could add value beyond money. He looked for areas where Innosend needed help, such as marketing skills to strengthen their brand, sales expertise to win more customers, and logistical knowledge to help their operations run more smoothly and help with growth. This focused method helped select investors who could offer useful advice, connections, and knowledge in the sector.
Using his existing relationships with investors from his previous company, Liu promoted trust and transparency by approaching them first. However, Liu did not limit himself to previous connections. He actively engaged with a diverse group of potential investors that he had met through networks and events or through introductions from people to his network. He carefully assessed each investor on the following points:
- Their experience in e-commerce or similar fields.
- Whether their investment approach was in line with Innosend's long-term goals and growth plans.
- Whether they were able to introduce Innosend to key partners and sources.
- How well their values and work style would suit Innosend's team.
The process of attracting potential investors reached its peak with a series of presentations, including for well-known companies such as Royal Rotra. These presentations weren't just about getting money; they were about starting relationships and preparing for a partnership. As Liu put it, “These investors didn't just give us funds; they were crucial in making strategic choices and provided knowledge that comes from experience. We realized early on that not every investor is a good fit, regardless of the financial resources they bring.”
The selection process was not without challenges. Liu recalled moments of tension: “There were painful decisions. We had promised participation to some but then realized the need to reconsider based on compatibility and shared goals. It's a delicate balance between business needs and investor relations. And bringing in new investors often means restructuring, rethinking strategies, and sometimes making difficult decisions like buying out existing shareholders. It's a multi-faceted process, intertwined with running the business on a daily basis.”
Closing the deal
Liu was determined to complete the deal before Christmas 2023, despite the pressure and strategic challenges. Determined to sign on December 22, he went straight to the complexities of that day. It was an exciting and challenging day, just like the trip itself. Delayed by traffic, Liu arrived thirty minutes late for the signing in IJburg. Despite the importance of the moment, he felt overwhelmed. After the signing, Niek Huizenga from G-Force Capital brought him home. Liu was speechless at dinner, overwhelmed by the magnitude of their achievement.
Based on his recent fundraising experience, Liu Kars shared some key insights for co-founders:
- Find strategic partners, not just investors: “More than securing funds,” Liu emphasized, “aligning with investors who share your vision builds partnerships that shape your company's future.” He underlines the importance of understanding investors' perspectives and adjusting your pitches accordingly.
- Tell your story: It's not just about numbers and predictions. Create an engaging story that resonates with investors. “Tell your story,” Liu advises, “in a way that matches their ambitions and interests.”
- Transparency: Honesty promotes trust. “Be open about risks and challenges,” says Liu, “and show how you plan to address them. Investors appreciate a realistic approach to business obstacles.”
- Stay focused: The process can be tiring. “Stay sober and focused on your goals,” he advises. “Hasty decisions often require more time and resources to correct later.” He adds amusingly: “The gym opposite our building saw me a lot during those months!”
- Delegate and trust your team: As your business grows, delegation becomes critical. “I'm a self-confessed control freak,” Liu admits, “but I recognize the importance of giving team members authority and trust to make decisions.” He stresses the need to balance personal standards with confidence in their abilities and adjust expectations within a diverse and growing team.
With fresh investments under its belt, Innosend is focusing on a strategic expansion into Europe, starting in 2025-2026. Their approach is as thoughtful as it is ambitious. Recognizing the importance of a solid home base, Liu says, “You can focus on expanding, but if your base in the Netherlands isn't strong, you're building on quicksand.”
Looking back on the investor journey and selection process, Liu highlights the value of choosing partners that align with the company's ethos and long-term goals. The decision to work with specific investors was not purely financial; it was a strategic choice to work with individuals and entities that could offer more than capital. These investors bring a wealth of experience, industry insights, and strategic networks that are critical to navigating new markets and cultural landscapes.
One last piece of advice for other founders? “If you're looking for investments and it's getting tough, remember to 'enjoy the trip. ' It's an amazing adventure where you'll learn and discover new things. The most important thing is that you use these experiences to help yourself grow. The things you learn and understand are valuable — they're like an invaluable 'baggage' that you carry around.”