When Anders Lillevik started his procurement startup Focal Point two years ago, he outsourced development to Ukrainian engineers.
In its first year, the company raised $500,000 in pre-seed funding from New York-based Surface Ventures and was one of 10 companies in Techstars Atlanta’s 2021 cohort.
Lillevik was impressed. When the company was ready to hire an in-house development team, he recruited in Ukraine. Eight developers based in Kyiv were hired.
At the beginning of this year, the company was prepared to make additional hires in the country. Then, signs of a Russian invasion emerged.
“When you see 100,000 troops along the border, you know they’re not there for a picnic,” Lillevik said.
The company conducted daily, virtual meetings to make sure everyone and their families were accounted for. Money was wired to the developers for food and shelter.
In the last two weeks of February, expenses for the company doubled and production came to a halt, Lillevik said.
Now, production for Focal Point is back on track. Lillevik hired four more Ukrainian developers and raised $3 million in seed funding, led by West Coast-based Susa Ventures and global venture capital firm Amplo.
Staying in the country throughout the crisis gave Focal Point a strong reputation among Ukrainian developers, Lillevik said.
“Developers who wouldn't talk to us before were disillusioned that larger companies pulled out at the first sign of trouble, opposed to a startup who doubled down and only continued to expand … I think that will help attract talent in the future,” Lillevik said.
Focal Point provides large companies with procurement management software on a single system that helps customers see every step of the process. Procurement is the process or solution where companies buy goods or services to run their operations. For example, a restaurant will require vegetables, tables, chairs, napkins, etc.
“When I was a CPO, my company was spending $12 billion a year on goods and services,” said Lillevik, who spent 25 years working in procurement at companies such as The Federal National Mortgage Association (Fannie Mae) and QBE Insurance Group Ltd. “It doesn’t take a lot of mismanagement to leave money on the table.”
The market potential for the company is $2 billion dollars, said Lillevik. There are up to 12,000 enterprises that could utilize Focal Point’s services with an average contract value between $100,000 and $200,000.
Focal Point currently has four enterprise customers and looks to reach 10 by the end of the year.
It looks to expand its Atlanta staff from three full-time employees to 10 by the end of the year and add three employees based in Eastern Europe. Those hires will be in sales and customer support.
