“We sold our company in the deal. Froala has had more than $1 million revenue in the past 12 months and got a very good multiplier in the deal,” company founders Stefan and Diana Neculai told ZF in an exclusive interview.
According to market estimates and taking into account similar exits in this business, the deal must have stood at several million dollars, considering the high profit margin of the company.
“Our company has always been very profitable. We had a profit margin of about 90%,” Froala founders said. They declined to comment on the value of the deal, though.
“Now customers will have access to the best text editing component for web applications through Froala,” said Robert Warmack, technical leader for web application development products at Idera.
The two sellers worked with Andrei Pitis, one of the most famous entrepreneurs on the local IT market, as consultant. Pitis was also involved in the development of the local high-tech ecosystem for years, even as co-founder of Innovation Labs, the largest startup pre-acceleration program dedicated to students.
Pitis played a key role in the deal, the Froala founders said.
“Andrei Pitis joined in an advisory role. He made sure we and the buyers were on the same wavelength in those critical moments. Although we and the buyers shared common goals, we are not sure this deal would have been concluded had it not been for Andrei’s help. We got legal advice from Stratulat Albulescu.”
“It’s a major success because it is the success of the founders who developed a product, took it international and now made an exit without even getting an investor in their company. It’s their, the founders’ success,” Andrei Pitis told ZF.
“I hope their success will inspire other Romanians who have accumulated significant technological expertise, too, Froala launched a technical product that targeted a technical audience worldwide, so it managed to globally scale the product.”
Froala had previously received other takeover bids but they did not come at the right time.
“We had been approached by potential buyers from time to time before. So far, we did not go ahead with talks because we knew we could grow on the company on our own. The moment we decided to take the step was after sudden growth that made things difficult for us, as there were only the two of us. The entire process from the first contact to the signing of the deal took about two and a half months.”
Diana and Stefan, who started Froala in 2014, one year after graduating from the Automation and Computer Science Faculty of the Polytechnic University of Bucharest, initially wanted to launch a web page building platform but at the time they were working on it they realized they needed a text editor, which they built from scratch and has since become the company’s main product.
“We started from the need for a tool in the application we were developing initially and did not exist on the market at the time. We stood out from the products on the market through quality and ease of use.”
The first customer came a month later, but the early days were difficult and a time when the two entrepreneurs often thought of giving up.
“It took a month from when we made the product available for sale until the first customer came. Although we had been getting a lot of positive and negative feedback, it was difficult and there were even times when we considered giving up. (…) About a year later we already had major customers like Apple, eBay, Unbounce. I remember that when Apple bought a second license from us we opened a bottle of champagne,” Stefan recalls.
(English version by Loredana Fratila-Cristescu)