Hi Thibaud Martin! It’s great to have you kick off this series of founder exit stories. Could you introduce yourself and the startup you sold?
I’m Thibaud Martin, co-founder and CEO of Jubiwee.
First of all, thank you for offering this kind of content to the community, because it addresses a real need. I remember it was a pain point back then. We were looking for information, but there were very few firsthand accounts available, unless you had one-on-one conversations with founders who had already exited. So, this will be invaluable for those who follow.
Jubiwee was a company specializing in people analytics, which we started in 2016 with three partners: Antoine Bellion (CTO) and Victor Mustar (CPO).
Our goal: to be the Google Analytics of HR! We noticed that large companies were content with sending their employees an annual survey, but then didn't really know what to do with the results. Even when they brought in consultants, it didn't stop the rise in burnout, resignations, and so on.
We felt it was time to truly bring these processes into the 21st century. To do that, rather than one big survey, it was better to periodically send a few key questions (open or closed) that we could then analyze using Natural Language Processing (NLP), one of our areas of expertise.
We could then build a continuous action plan throughout the year, at the team, department, or even company-wide level, depending on the management structure. It was a way to provide real preventative care for HR issues.
Two years after our launch, we raised our first €700k, notably from Kima Ventures. By the time the pandemic ended, we had 15 employees, were breaking even, and had successfully signed major accounts like Allianz and L'Oréal.
At that point, we felt the time might be right to consider an M&A deal.
Speaking of which, what led you to sell Jubiwee?
Our model didn't suffer from the health crisis; on the contrary, because companies didn't know what the impact of widespread remote work would be on employee morale. At the time, we received many inquiries and even built a freemium offer to grow our customer base. Our strong level of activity allowed us to break even and see 100% year-over-year growth. We didn't need a second funding round.
However, the topic of employee engagement and mental health during that period also accelerated the pace for the big players in the market. Eventually, our solution risked becoming a commodity and being "bundled" into the offerings of the majors. Two solutions were then available:
- Carry out a Series A and further specialize our offer in a niche like the NLP mentioned earlier (my technical partners were experts in the field);
- Or, building on our fundamentals, pursue an M&A deal to integrate ourselves into a broader value chain.
We then initiated a dual track to sound out funds regarding a potential raise and investment bankers about M&A opportunities. I also had fruitful discussions with successful former entrepreneurs in the sector and was put in touch with global experts in HR Tech.
They explained to us that the sector was promising and that our metrics were good, without necessarily making us obvious targets for our direct competitors.
Who did you work with for the transaction?
We started talking to potential buyers and French M&A boutiques. However, the terms discussed were below our expectations and reflected a certain lack of confidence within the French ecosystem.
The experts and entrepreneurs we contacted then advised us to reach out to foreign boutiques, particularly in the UK and Germany. We were put in touch with a British banker specializing in HR Tech, Venero Capital Advisors. Their services weren't the cheapest, but they had a proven track record in our vertical. They understood our positioning better, we found them more "bullish" than their French counterparts, and after the usual due diligence, they agreed to represent us.
We took the time to negotiate the deal structure with them, and they were transparent about the divestiture process, especially the timeline. We agreed to start the groundwork around November 2020, with the goal of sending out the first emails the following February or March. Venero planned the targeting well, sequencing the outreach into three tiers—with the most relevant targets in tier 1. And the secret lies in what you actually consider relevant.
I should point out that when you're a start-up, your reflex is often to look at immediate competitors who are slightly larger than you. But there is usually a significant "overlap," especially in terms of product: even if they have managed to raise more or faster, they would struggle at that stage to value our business, beyond a few features, geographical complementarities, and client references.
This option carried risks. So, Venero advised us to put our direct competitors in tier 3, more as a backup.
That’s clever indeed; you can really see the added value of good advice. But could you tell us more about the funnel?
Out of all the companies contacted, we had a 50% response rate. Basically, at each stage, you should expect about a 50% "success" rate, leading to 30 "obvious" companies.
Our process involved 3 meetings, all very well managed by our advisors:
- The 1stst, ideally with the company's CEO or their M&A director, to introduce ourselves and push further into the prospect of a short-term commitment;
- The 2ndnd focused on due diligence, negotiating a potential exclusivity clause, and establishing the valuation and deal terms;
- The last one, which took place post-Covid—and I should note that 95% of the meetings were held online, which is a strong sign of interest.
The exercise also taught us that we shouldn't limit ourselves to HR tech players, but rather think more broadly in terms of an "ecosystem."
In the end, how did the transaction wrap up?
Ultimately, between the first emails sent and the offers received, I would say a conversion rate of between 1% and 5% is the norm.
Regarding the valuation, we found (as we had been warned) that French companies struggled to align with the multiples found internationally, in less stagnant markets.
For our part, beyond the valuation, we worked on the terms of the sale because we wanted all stakeholders (investors, employees, or former employees, etc.) to come away with good conditions and attractive multiples.
Based on your experience, which aspects of a sale should one be particularly vigilant about?
There are many, but that is also the role of your advisor—to guide and coach you.
First of all, you shouldn't limit yourself to the post-money valuation; you need to think further ahead, such as the role you will play post-transaction.
You also need to manage communication with employees effectively—regarding integration into the new structure, which inevitably involves work and a lot of change, but also concerning things like stock options (BSPCE). We often hear criticism of this mechanism, but I can attest that it can benefit the greatest number of people.
Another point: pay attention to what I would call the "fine print," for example, the earn-out. If you are asked to commit to achieving certain goals, you must ensure you are given enough latitude to do so.
A sale is different from a simple fundraising round in terms of time spent, investment, and potential upside for all stakeholders.
What tipped the scales in favor of your buyer? What qualities did you prioritize in them?
What played a role, beyond the economic logic of the deal, was a genuine cultural fit between the organizations. In our case, it was a large startup with an international culture. When you commit to staying on for several more years, that becomes a key success factor!
Looking back, what were the most delicate parts of the operation?
I see several. First of all, we were still a small team (15 employees), so I was still quite involved in operations while also being physically absent from the office.
Managing confidentiality was a real challenge. It had to be respected (down to the details, such as meeting titles in shared calendars) so as not to alarm the staff. The corollary is having solid co-founders capable of taking over and providing reassurance according to the narrative planned for the operation, without spoiling it!
It’s a balancing act, because you have to manage different timelines (Operations vs. M&A) while avoiding the risk of churn before closing...
Finally, the post-op phase again. You don't necessarily think about it when you start, but it’s a real issue. Your company changes, you become an employee from now on, and there will inevitably be a major cultural and organizational impact on the teams.
If you had to do this operation again, what would you change?
Not much. Especially since I am very happy with our acquirer, with whom we have a real fit.
Any advice for future sellers?
The first one that comes to mind, and which was decisive for Jubiwee: don't limit yourself to France and know how to look beyond your immediate ecosystem.
Don't be afraid to open up and talk to experts. If your model is attractive and the growth and market are promising, even the best in the world will take the time to talk to you and challenge you.
Don't doubt your legitimacy!
Thibaud, what’s new with you?
I’m off on a new entrepreneurial, tech-focused, and ambitious adventure.
A category-defining project that, if successful, could well change the state of the art in its market… I’ll keep you posted!
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