How Almabase CEO Kalyan Varma grew Almabase to $3.8M revenue and 240 customers in 2024.

hello everyone my guest today is kanye navarro he strongly believes that technology should work towards improving human relationships instead of replacing them the ability to bring communities together and benefit all stakeholders is what drives us he's been personally impacted by the lack of scholarships and with alma base now he's helping institutions make their education more accessible kalyan you ready to take us to the top let's do it all right so what is arma base so which school did you go to nathan virginia tech okay how many times did you get asked for a donation after that after you graduated i i i put them on my spam folder there you go that's the story of like so many of us so that's what we really help improve i think 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 but obviously you know student debt is increasing um you know donations are going down which is a huge problem for universities that's what we help solve so we help universities build really strong lifelong you know give and take you know very strong relationships uh with their alumni and the value prop is obviously that we help them increase alumni participation so more and more alumni give back to the university are you taking a cut of donations done for your platform or is it just a sas model it's a sas model primarily but we've been recently uh over the last i would say 12 months or so we've started making some revenue out of the cut of the donations as well so we'll come back to that in a second if we just focus on the sas side for now what's the average university paying you per month or per year to use the tech so i mean it ranges between you know i would say four thousand dollars a year for some of our products to somewhere like fifteen twenty thousand dollars a year for some of our products but if i had to like just take an average across all of our customers all of our paying customers right now i would say it's between six to seven thousand dollars a year okay got it something like 600 700 500 600 per month yeah that's about right we only do annual contract so we only count uh arr okay and what are they why would someone pay sort of 4 000 for a year versus 10 000 for a year what are you up selling against sure so we have three different solutions primarily one helps with purely like fundraising uh so digital fundraising uh solution and then we have one specifically focused on alumni events virtual and in-person events and then we have a solution which is primarily around building a community of alumni online for any university or high school so the community product is a little more expensive that's so that's again depending on the size of your alumni anywhere between eight thousand dollars to like fifteen thousand twenty thousand dollars a year the fundraising and the event solution come in at about three thousand four thousand dollars a year to start with uh along with like a transaction fee for every donation or event uh ticket purchase when did you launch this idea what year so this i mean the startup was officially formed in 2014 that's when we actually started arnold base but the idea the seed of the idea really happened in about 2007 or so so you know i'm from india i went to school in india and this happened with me where you know some of my classmates and friends had to like drop out of school midway during my junior year junior year um right and then that's what really led to me sort of starting a non-profit at that point which basically reached out to all of our alumni raised money uh and then i graduated joined goldman sachs for a full-time job did that for a few years but i was always running this on the side along with a friend of mine um and that's really when over those years when we were raising money from alumni of our institution we realized that not just at our college but you know institutions globally the relationship between alumni and there are no matter is just based on loyalty and not like a true relationship which is where we realize that this needs to get fixed and that's how we started alma base in uh 2014 2014. and do you remember the first customer can you tell us that story that's actually my alma mater so we started with uh you know selling in india because we when we started the is really uh naive i mean we said everybody in the us has already figured out how to do alumni relations and we're going to do this for india so we were like let's just bring the best ideas from the u.s and implement it in india we unfortunately did that for about three years um sold to pretty much all of the top tier institutions in india and then we were like okay where do we so we have bits pilani we have iit bombay we have pan iit um you know christ university etc so some of these top tier institutions in india but then we had no way to go after that so then we were like okay you know there's a much bigger opportunity uh in the us so that's when we started shifting focus to the u.s roughly in like mid 2017 or so and how many customers you know have today so today in terms of paying customers we have 240 uh institutions a majority of them are in the us about 90 92 percent of them are in the us um roughly a half an hour split between independent schools and higher education and are you seeing people more reliant on you during covert or less i mean so it's interesting because our existing customers have there's been no churn at all so you know there's they've seen a bigger need for our base during these times but also uh you know reduction in tuition fees and you know fundraising during this time means that there's less budget for new purchases so yeah i mean renewals have been great uh sales is not as fast as we would have liked it to be okay and and origin story here it sounds secure at goldman for a bit was goldman right before 2014 so i was at goldman for three years right after i graduated so 2008 to 2011. so i literally joined goldman sachs during the peak of that recession i was there till 2011. 2011 i actually started an e-commerce company um because i thought that's what i was going to be interested in 2011 india e-commerce was a big deal um ran that for about three years again that was again very focused on social impact primarily from uh so i started an e-commerce marketplace which would basically sell products that are being manufactured by non-profits only so every store every product would have a story behind it and that was the unique sort of angle to it as opposed to just a product and a price and then you buy it then really didn't take off uh didn't get the traction that i would have liked and then 2014 i sort of switched to sort of starting out my base that's been an idea that i've had forever and have you bootstrapped armor base yeah it's an interesting uh story i do save your bootstrap but we did raise a little bit of money up front um you know between that 2014 and 2017 phase where we weren't really sure of what we were doing we did raise uh some money uh from angel investors again alumni of my own alma mater as well as 500 startups the accelerator program in the bay area how much would you raise a little bit of money uh the total money we've raised uh is about 500k uh during that time but what's interesting is during that whole three years where we raised 500k we didn't really add a lot in terms of arr but then we've been bootstrapped since then we raised a little bit of debt um in the last couple of years from lighter capital um we raised i think 250k uh in debt uh so far from lighter capital and you know when did you raise that debt so we raised 100k in 2018 um and then uh 150k uh during like december of 2019 or like closed in jan 2020 so about six months ago you're from gold goldman so i'm expecting you to be able to explain this very clearly so that anyone can understand it how does a lighter capital rbf revenue-based financing work it's pretty simple actually i mean sense that you don't need to put any collateral up front it's revenue based financing so they give you a certain amount of money based on how much revenue you have and what's what are the projections etc so it's a fairly safe bet from their side as well so we're we're doing it at 40 uh you know over three years so for example if we raise 100k we're repaying k and the way the repayment works is it's a cut or it's a percentage of monthly cash receipt right so if you let's say in a certain month let's say we get 100k in cash we pay 9k 10k something like that and then it goes down over a period of time in terms of the percentage of the cash flow etc so it's a fairly straightforward instrument what determines if it goes from nine percent of gross monthly receipts down to five percent of gross monthly receipts it's the i think they basically put a cap in terms of uh for the first i think million dollars per year in cash receipts it's about nine percent if i remember correctly and then between from anywhere over 1 million to i think 1.5 or 2 million it's five percent and then if it goes beyond two million then it's like point one percent or something like that got it so just to summarize again i've heard of terms i've interviewed many people that i've raced from lighter but there's essentially a repayment cap which is usually between 1.4 and 2x...