From startup to successful screening organisation

How does a startup grow to a scale-up? In this article, CFO and co-founder, Job van der Weijden, tells how Validata accomplished its growth.

To continuesly grow your business – even in uncertain times – you have to take risks and be an enterprenueur. Starting any business is a risk, this is no different for Validata. More than ten years later, Job van der Weijden, CFO, can say that taking risks has led to great success, but we are not there yet.

Over the past eight years, Validata has managed to achieve an average revenue growth of 35%, innovation of our screening application, and development of both product and organisation in a niche market. For 2022 we expect a growth of over 40%.

But how does Validata achieve sustainable growth? In this article, Job discusses the various topics that underlie this success and shares insights that may help your startup move forward.

Facilitate stable growth

To start an organisation, there evidently has to be sufficient demand for the product or service you offer. There are two important questions you should constantly ask yourself as an entrepreneur: is there a need for your product and will there be continuous market demand? And are there any developments or trends you can capitalise on? For instance, a trend that might spread from abroad or technological developments that might result in an increased interest or importance.

When we started in 2009, our product was new and we were in the middle of a financial crisis. We managed to get sales calls, but progressing to contracts was very difficult. We had to create a market. It wasn’t until 2012 that we started generating turnover, after which, fortunately, things quickly started to move in the right direction.

An increase in demand naturally means growth of the organisation. Initially to keep up with the quantity sold, but also to provide stability. In Validata’s case, stability means providing a scalable solution that anticipates our customers’ interests. For example, customer personal requests are translated into future-proof functionalities by deploying them for all of our customers. Meaning, we constantly ensure privacy and security of both client and candidate data.

Make sure you hire and retain the right people

As you grow as an organisation, it is all the more important that you hire honest candidates and retain employees with integrity. As time goes on, new positions emerge that were less essential when you started your business. Think of a Project Manager who can efficiently set up and oversee large projects. You will realise you do not only need the essential people to regulate your core business, but also the people who ensure that the organisation can continue to grow sustainably.

In addition to employing the right people, regularly ask yourself the question: how can our employees perform their work as efficiently as possible? To gain insights, Validata monitors our employees’ satisfaction in various areas. By doing so, can learn from their staff and better understand which subject matters need extra attention.

Find balance with stakeholders

To set up an organization and keep it healthy, you need sufficient financial resources. Finding investors is therefore vital from a financial point of view. Besides, it can help enhance your network and gather additional knowledge and expertise. Validata (formerly known as CV-ok) started with its own money and bank financing, which unfortunately was not enough to start up the organization. Through crowdfunding, the founders were still able to take the next step. A kick start and a very pleasant way to build the company in the first few years.

However, involving investors can also cause too many divergent opinions and expectations to come together. You may reach a point in which decision-making can become complex and different parties have to convince each other of their views. It is important to find a balance and understand when it is time to take back control. This happened in Validata’s case. In 2021 the founders were ready to expand across borders and go international. This lead to them asking themselves whether the shareholders would still fit into this long-term strategy. They realised that they had the vision and utilities to take back full control. Therefore, the founders bought out the external shareholders in October 2021.

This enables the organisation to steer its own course. That being said, Validata’s founders still want to challenge their thinking. Therefore, they consciously chose to form an Advisory Board, constituted by other entrepreneurs that challenge them and oversee that they stay engaged in the right things. In addition, Validata continues to work on an optimal financial structure with external stakeholders, such as banks.

One of the main reasons for success is gathering the right people around you, both internally and externally. This can vary depending on the stage the company is in.

Turn your current customers, into loyal ones

The proof of Validata’s success is in its customers and their loyalty. An important part of the turnover growth comes from our existing customers. They have already become customers, but you want to keep it that way at all costs. Therefore, cherish these customer relationships and make sure you don’t forget about them.

In 2021, growth from our existing customers was 15% and we had a churn rate of 1.5%.

Reinventing your positioning and staying relevant in your market

When Validata started, they had positioned themselves as an HR tool. However, reinforced legislation and regulations caused employment screening to become increasingly common and even a requirement for some sectors. Due to this fact, Validata is now shifting towards a compliance tool that automates and digitises HR processes. It is important to keep an eye out for (technological) trends and the market’s needs and desires. As a result, you stay relevant to your target audience.

In addition, it is wise to take a critical look at the procurement of operational processes. It pays off to ask yourself where you can make the biggest difference. Validata’s goal is to set up their processes as efficiently as possible so that they can keep a steady gross margin and also increase the speed and user-friendliness of our services.

Establish a stable foundation to build upon

Since Validata was founded in 2009, they have developed as the market leader in employment screening in the Netherlands. This gives a sense of stability. It has enabled them to grow across the Dutch border and open a branch in Stockholm, Sweden in May 2021. The stable base in the country of origin provides comfort and space to take new steps.

The organisation started on equal terms as they once did in the Netherlands, except this time they had learned from their experience and customers which resulted in the product responding better to the wishes and needs of the Swedish market. Besides, they have a network of Dutch customers who also have a branch in Scandinavia.

Our expansion to Sweden, feels similar to when we started setting up our organisation in 2009. Although we are now much bigger and further developed, we still start over again in an unfamiliar market. Each country has its own culture and working atmosphere. We have to find our place in that and that takes dedication and time. Itis a continuous learning process.

Around 20% of our screenings are requested for candidates outside of the Netherlands or Sweden. These are candidates who are being screened for a client with their headquarters based in these countries. Over the next five years, Validata wants to offer its services in at least five European countries. The organisation can only do this if they deliver the same quality in the Dutch market as always and their focus on this foundation remains as strong as ever.

Entering a new market may feel unfamiliar and scary, but you have successfully accomplished this before.

Recap of tips

There’s no trick to become a successful entrepreneur. However, there are some basic lessons, like smart investing, networking, and developing self-discipline. Besides that, we have put together a summary of Validata’s learnings along their journey of growth:

  • Facilitate stable growth: scalability is key to keeping up with increasing demand and providing a future-proof solution to customers.
  • Hire and retain the right people: to continue sustainable growth, you need the right employees who are willing to work together for the success of your organisation. At the same time, an employer can learn from its staff by gaining insights on the subject matters that are essential for employees to work efficiently.
  • Find a balance with stakeholders: Being an entrepreneur is a learning curve. Therefore, it may be wise to put together an Advisory Board with whom you can exchange ideas and strategise.
  • Turn current customers into loyal ones: it is easy to focus on acquiring new customers, but don’t forget about customer loyalty. Making your current customers fans of your product or service is equally, if not more, valuable.
  • Reinvent your positioning and stay relevant in your market: markets are constantly changing, so it is important to monitor your customers’ needs and desires and check whether your positioning is still relevant to them.
  • Establish a stable base to build on: make sure you have established a solid foundation before expanding internationally. This keeps revenue coming in, allowing you to invest in expansion.

Besides all of the above, the most important thing is to just know who you are and why you are doing it: define together the core values you stand for as a company, believe in them and act accordingly.

Please note, that the suggestions in this article do not guarantee your organisation’s success, but show how Validata has grown over the years.