The cost of customer acquisition is the main factor that limits the top-line growth of SaaS companies. In the current market, growth is being squeezed by external factors, too. On a macroeconomic level, founders are struggling with the new reality of the tech downturn. Additionally, the cost of advertising is skyrocketing. Meta’s cost per thousand of impressions (CPM) is up 61% compared to last year; TikTok is up 185%, and Google programmatic display is up 75%.
Due to these market conditions, SaaS companies need alternative paths to growth. Evolutionary extensions of existing growth strategies have historically driven down SaaS customer acquisition costs (CAC). Word-of-mouth is a key factor in evaluating traction in early- and growth-stage startups. Despite its importance, the channel is not well understood by founders.
This is where Munich-based Cello steps in. The startup aims to give SaaS businesses the ability to rapidly grow word-of-mouth into a valuable acquisition channel. Whether a company is product or sales-led, SaaS companies can add a new ROI-positive, scalable channel in hours instead of months, without the need to manage any operational overhead. And for offering ‘user-led growth’ for customer acquisition strategies to harnesses existing user base at a much lower CAC, it has brought in €2.3 million in a pre-seed funding.
The round was led by byFounders, with participation from Tiny VC, Possible Ventures and Notion Capital, together with angel investors from Youtube, Personio, McMakler, and others.
Cello counts the likes of Demodesk, Sastrify, Unlock, Butter, and others amongst as its customers. The company will use the funding to build out its market share in Europe and North America.
Stefan Bader, co-founder and CEO at Cello said: “Scaling product distribution is top of mind for every new software venture, with founders looking to gain an edge over the competition. Top companies are already tapping into their user base to attract and convert new customers and see further opportunities to optimise this part of the sales journey. This is where Cello comes in. We help SaaS companies turn word-of-mouth into a customer acquisition superpower.”
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