Atomico backs Estonian startup Katana’s €9M Series A round as it looks to scale and hire

Tallinn, Estonia-based Katana, a manufacturing & inventory software for scaling businesses, has raised $11M (approx €9M) in its Series A round of funding. With this, the company has raised a total of $16M (approx €13.1M), to date.

Investors in this round

The raised capital was led by Atomico. In addition, the round also saw participation from angel investors including Ott Kaukver (Checkout.com CTO, formerly CTO at Twilio), Sten Tamkivi (CPO, Topia, formerly Skype), Sergei Anikin (CTO, Pipedrive), and Kairi Pauskar (former TransferWise HR Architect); and earlier investor 42Cap. 

London-based Atomico is an international investment firm that invests in ambitious tech founders at Series A and beyond with a particular focus on Europe, leveraging deep operational experience to supercharge their growth.

As part of this investment, Atomico Partner Ben Blume will join the board of Katana. Founded in 2006, the firm currently has $2.7B (approx €2.21B) in assets under management. Atomico has partnered with over 100 ambitious teams – including those at Supercell, Graphcore, Omio, Klarna, Lilium, MessageBird, Gympass, Pipedrive and The Climate Corporation. 

As part of this investment, Atomico Partner Ben Blume will join the board. “With Atomico’s roots in Skype and our four-year partnership with Pipedrive, it also means a lot to me that my first investment as a Partner at Atomico is in an Estonian company,” says Blume. 

Use of the funds

The investment will help Katana to scale its manufacturing ERP (enterprise resource planning) platform for SMEs producing locally, selling online globally. 

The company will also use the new funding to build out its team and the product. Currently, the team includes the product, design, engineering, and customer consulting specialists from companies such as TransferWise, Pipedrive, Bolt, Microsoft, and Skype.

Outdated tools and software

The demand for customised, sustainable, and locally-produced products is growing and SME manufacturers are hence making everything from organic cosmetics to home decor, electronics to apparel, food, beverages, and even surfboards. However, to continue to do business, most of them rely on spreadsheets or outdated, expensive software to manage inventory and production, making it hard to scale and sell omnichannel, claims Katana. 

Kristjan Vilosius, Katana co-founder and CEO says, “For the first time since the 1970s when large-scale offshoring began, local manufacturers who can respond to the localised, bespoke demands of customers are coming into their own. These are entrepreneurs for whom manufacturing is a craft and a passion, but they are being held back by outdated software. Their current choices are either spreadsheets or clunky ‘jack of all trades, master of none’ software that’s not built for the specific needs of small- and medium-sized manufacturers.”

This is where Katana wants to make a difference. According to Vilosius, the company “helps these manufacturers realise their ambitions by giving them flexible, easy-to-use software so that they can focus on the important stuff: delighting their customers!”

What does Katana offer and how was it born?

Katana was founded in 2017 by Hannes Kert, Kristjan Vilosius, and Priit Kaasik. It is a modern manufacturing & inventory software for scaling businesses. Its plug-and-play manufacturing ERP (enterprise resource planning) software for SMEs supports real-time workflows, boosting productivity and enabling material inventory control.

According to the company, the ease of integration is also a big advantage that Katana offers. The platform provides compatibility with popular e-commerce sales channels and accounting tools such as Shopify, Amazon, WooCommerce, QuickBooks, Xero, among others.

Talking about the inception of Katana, Vilosius tells Silicon Canals, “About five years ago, I was helping a good friend of mine set up a modern manufacturing business selling direct to consumer. I was trying to help him find the right software to run such a business, in particular a modern manufacturing ERP with open APIs, modern UI/UX, and all the necessary integrations with various e-commerce and marketplaces out there to really sell omnichannel.”

He adds, “To my surprise, we weren’t able to find one. That made me wonder why something like this didn’t exist. I realised that the manufacturing software vertical hadn’t undergone the kind of disruption that has revolutionised other sectors and that there was a real need from small and medium manufacturers. I jumped on the opportunity to build a world-class project that would satisfy that need.”

Since its inception in 2017, Katana has worked with over 1,500 product-making businesses, and the teams that rely on Katana daily span consumer and B2B industries in countries from the U.S. to New Zealand.

Numbers game

Katana claims to be the top manufacturing app on the Shopify App Store and its revenue grew by 4.5 times in 2020. The company’s revenues come from its monthly or annual subscription packages it offers to manufactures. 

Manufacturing companies subscribe using their credit card after going through a 14-day, free trial. During the trial, they can test the functionalities and get assistance if needed. The subscription cost depends on the size of the client’s business and the complexity of the functionalities it needs. “If you’re a five- to 20-member team, selling cosmetics or some cool gadgets through Shopify, a Katana subscription might cost $100-300 (approx €82-246) a month. A larger factory with 30 or 50 people might pay $400-1000 (approx €328-821) a month. We also have annual plans which offer discounts,” says Vilosius. 

The company currently has a 50 member team, based mostly in Estonia. It is also looking to expand its team and has a range of roles open to join, from developer to marketing positions. All the open positions are listed here.