Almabase Hit $1.1M in ARR on $500K of Equity and a $250K Loan
Three products priced from $3,000 to $20,000 a year, 240 paying institutions, and $750,000 of outside capital in total — most of it a revenue-based loan.
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Almabase reached $1.1 million in annual recurring revenue with 240 paying institutions on its books. The number worth holding next to that one is $750,000 — every dollar of outside capital the company had taken in six years. Two thirds of it was equity raised and largely spent before the business found its market; the last third is a loan.
Kalyan Varma’s company sells software to universities and independent schools for the unglamorous half of alumni relations: keeping in touch with graduates so that asking them for money is not the only thing the institution ever does.
The big issue here is that universities don’t do a good job of maintaining a good relationship with their alumni. It’s always one-way traffic — just ask for donations all the time once you graduate.
Kalyan Varma, co-founder and CEO, Almabase
Varma opened by turning the question on his interviewer — which school, and how many donation emails since graduating? Nathan Latka, Virginia Tech, said he had put them in his spam folder. That is the market.
What Almabase costs
Almabase sells three products, and the price gap between them is the whole upsell path.
Digital fundraising — from about $3,000 to $4,000 a year, plus a transaction fee on each donation.
Alumni events, virtual and in person — the same $3,000 to $4,000 band, plus a fee on ticket purchases.
The alumni community platform — $8,000 to $15,000 or $20,000 a year, priced on the size of the alumni body. This is the expensive one, and the one the other two lead toward.
Across every paying customer the average lands at $6,000 to $7,000 a year, or roughly $500 to $600 a month. The full range runs from about $4,000 to $20,000. Contracts are annual only — “we only count ARR” — and there is a one-time implementation, setup and training charge of $3,000 to $5,000 on top, which Varma expected to add about $150,000 across that year and which he was careful to flag as non-recurring.
Three years selling to the wrong country
Almabase was incorporated in 2014, but the idea dates to about 2007, when classmates of Varma’s dropped out of his Indian college mid-degree for lack of money. He started a nonprofit that raised from that institution’s own alumni, kept running it on the side through three years at Goldman Sachs from 2008, then spent 2011 to 2014 on an Indian e-commerce marketplace that only sold products made by nonprofits. It did not take off.
What he took from the nonprofit years was a specific observation: the alumni relationship almost everywhere runs on loyalty rather than on any actual relationship. Almabase started in 2014 to fix that — in India.
The assumption that cost three years. “We were really naive,” Varma said. “We said everybody in the US has already figured out how to do alumni relations, and we’re going to do this for India.” They sold BITS Pilani, IIT Bombay, PanIIT and Christ University — and then ran out of institutions worth selling to. The move to the United States came around mid-2017. By 2020, 90 to 92 per cent of customers were American, split roughly evenly between independent schools and higher education.
The first customer, before any of that, was his own alma mater.
The $750,000, and why a third of it is a loan
Between 2014 and 2017 Almabase raised about $500,000 in equity — angels who were alumni of Varma’s own college, plus the 500 Startups accelerator. He is blunt about what it bought: “During that whole three years where we raised 500K, we didn’t really add a lot in terms of ARR.” The company has been bootstrapped since.
The rest is revenue-based debt from Lighter Capital: $100,000 in 2018 and $150,000 closing around January 2020. Varma, who spent three years at Goldman, explained the instrument more clearly than most founders manage.
You don’t need to put any collateral up front. They give you a certain amount of money based on how much revenue you have and what the projections are, so it’s a fairly safe bet from their side as well.
The terms: roughly 1.4x the principal repaid over three years, collected as a percentage of monthly cash receipts rather than a fixed instalment. The percentage steps down as the business grows — Varma put it at around 9 per cent while annual cash receipts are under $1 million, about 5 per cent between $1 million and $1.5 or $2 million, and a fraction of a per cent above that. He hedged on the exact figure: “I don’t quite recall if 9 per cent is accurate, but somewhere around that range.”
Asked how that compares with an interest rate, he declined to convert it, and the reasoning is the practical one: “Are we going to generate revenue that’s way more than 140K or not? If it is, then that’s what we need.” The bank alternative had been quoted at a maximum of $40,000 to $50,000, which was not enough to matter.
The economics underneath
Almabase was cash-flow positive at the time of the interview — a little over $20,000 a month against monthly spend of $65,000 to $70,000, after costs were cut in March 2020 when COVID hit.
CAC: $1,500 to $2,000 in lead generation, plus roughly $2,000 of account-executive salary and commission, for a fully loaded $3,500 to $4,000 per new customer.
Payback: six to nine months on an average $6,000 to $7,000 annual contract.
Churn during COVID: none at all among existing customers. New sales, on the other hand, “is not as fast as we would have liked it to be” — tuition and fundraising shortfalls meant no budget for new purchases.
The team of 25 held five or six engineers, two product managers, three account executives and three SDRs, all of them carrying quota. Varma is direct about why the price point works at all: the team is split between India and the US. “If I were to build this team entirely in the San Francisco Bay Area it’s never going to work out with that kind of price point.”
The bottleneck is not money
Asked what he would use more capital for, Varma said money was not what was in the way.
I think marketing is the key bottleneck. From a brand story, we just haven’t really done that well. So far we’ve been focused on outbound sales — we go outbound, reach out to every single university and high school. But from a marketing perspective, inbound demand gen, we haven’t really done a lot.
Two other lines were just starting. A professional-services arm — advising schools on how to run the alumni programme rather than only selling them the software — was two or three months old. And a cut of donation volume had begun to show up in revenue over the preceding twelve months, though Varma was wary of leaning on it: charging purely as a percentage of donations, with no subscription, “is going to get a lot of noise in terms of the kind of customers that we attract”. On 5 May 2020, the day of that year’s emergency giving campaign, the platform processed a little over $2 million in donations for its customers.
Asked which kind of founder he was — the billion-dollar swing or the profitable business he could get rich from — Varma picked the second without hesitating, and gave it a name: ValueSaaS, meaning value for every stakeholder rather than only the cap table.
Where Almabase is now
The Almabase profile on GetLatka carries $3.8 million of revenue as an estimate for mid-2024, and a headcount of 78 as of October 2024 — three times the team, and more than three times the revenue, since this conversation.
One small inconsistency is worth flagging rather than smoothing over: Varma gives 240 paying institutions early in the interview and then says “we work with 250 schools” later on, and the closing summary rounds it to “several hundred”. The paid number is 240.
Sources — Kalyan Varma interviewed by Nathan Latka; the recording is dated 5 August 2020 on GetLatka and the video was published on 24 October 2020. Revenue, customer, headcount, pricing and funding figures are as stated on the tape or from the Almabase profile on GetLatka, with dates as recorded; the 2024 revenue figure is carried as an estimate.
