How Almabase CEO Kalyan Varma grew to $1.1M revenue and 240 customers in 2024.

Almabase CEO Kalyan Varma

Hits $1.1m revenue helping universities manage alumni donations - YouTube

https

//www.youtube.com/watch?v=ZNuZHcVHm_o

Transcript

(00:00) 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 (00:32) 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 (01:02) 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 (01:33) 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 (02:01) 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 (02:34) 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 (03:06) 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 (03:36) 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. (04:03) 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. (04:25) 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. (04:51) 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 (05:28) 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. (05:53) 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 (06:22) 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 (06:51) 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 (07:23) 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 (07:58) 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 (08:29) 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. (08:54) 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 the total loan you said you're at about 1. (09:13) 4 it sounds like so if you raise 250 000 total what you're going to pay back total over time is about 350 000 or 1.4 x the 250. and the way that you pay that back is gonna be right now about nine percent of your gross monthly receipts and that could drop if you grow pretty quickly yeah i i don't quite recall if nine percent is accurate but somewhere around that range how do you compare that to just regular debt where it's just a flat simple to understand interest rate in other words if i asked you what's the interest on this money how would you try (09:44) and calculate that yeah it's not that straightforward i think we just took it you know based on the simple math that are we if we're going to get this 100k are we going to generate revenue that's way more than 140k or not right and if it is then that's what we need right so we didn't really i mean we did i think talk to a bank in bank of america as our banker we did talk to them but there was lots of complications and also they said we can give you a maximum of 40k 50k something like that which wasn't sufficient at the (10:12) point that we raised and we had a good relationship with lighter so that's what we went with and what's your monthly recurring revenue today so we're in terms of arr we're about 1.1 close to 1.1 million um so 90 91 92 something like that in terms of mrr yeah so so lighter can usually go up to like three four x of your mrr which is exactly what it looks like it sounds like here if you want to continue scaling the company and using debt right so that you and your founders keep owning 100 of the equity where would you go or how would you (10:45) think about a bigger debt deal what do you mean like would we be raising more debt or would we be doing equity is that your question yeah you i mean you there's two types of founders founders that want headlines and want to go for a billion dollar win which is high risk and those that want to keep as much of their company as possible and build it to a 10 million dollar profitable thing that they can get rich off of which are you i'm the second one i mean we call that values as actually i don't know if you've heard that before but what we (11:14) mean by values has is creating value for every stakeholder so right like founders for sure but employees um you know customers making sure everybody has value in this equation is what we build for so yeah we're certainly going to be uh not going to be type a which is like raise tons of money and hopefully get there but yeah we're more of i mean at this point money is not really our bottleneck there's a few things that we're solving for but whenever money is a bottleneck i think we will raise a little bit of debt (11:39) uh to keep us going what's the bottleneck i think marketing um for me is i think the key bottleneck from a brand story i think we just haven't really done that well i mean so far we've been focused on outbound sales right so we've done sdr a's we go outbound reach out to every single university and high school um you know see if they they're interested in what we're doing but from a marketing perspective inbound demand gen etc we haven't really done a lot and so that's really the next few months for me in terms of focus (12:10) interesting what's the team size today how many folks so we're 25 people totally and how many engineers five six engineers uh two product managers yeah and do you have is this price point a price point where you can put sales people on it with quota do you have any quarter carrying sales folks yeah we have quota carrying sales folks we have three account executives and three sdrs all of them have quotas obviously top of the funnel bottom of the funnel etc um and yeah so it works out for us um you know because some of our people are in (12:46) india and some of our people are in the us um and and we do some of us shuttle it back and forth as well and i mean i if i were to build this team entirely in let's say the san francisco bay area it's never going to work out uh with that that kind of price point but yeah we do have an advantage in being able to uh you know hire people from lower cost locations you wouldn't have raised the debt if you didn't see way to reinvest to drive growth which probably means you're burning a little bit of capital per month right now about (13:13) how much are you burning but actually not at this point i mean we have significantly cut down costs in march when we started seeing covet hit and like you know we wanted to obviously you know play it safe at that point uh so our current uh monthly spend is about 65 to 70k per month so you're probably getting about 20 20k per month right now yeah a little over that i mean because one is the i mean we spoke about sort of the recurring revenue but we also have other sources of revenue which is like i said a little bit of transaction (13:43) charges we do uh for every new customer we do have like an implementation and setup and training cost which is like one time up front right how much is that usually um it depends again like it's anywhere between three to five thousand dollars one time um right but we also sometimes give a discount and things like that so roughly right now for example this year we're projecting that to be about 150 k dumps over like one time obviously that's not going to record next year unless we get new customers that's one but we're also starting to play a little (14:13) more in the professional services side so now we're actually going in not just giving our software to schools but then we're saying hey like what are the parts of the alumni program that you want to run better we're going to come help you because we work with 250 schools we understand how this works for different kinds of institutions we're going to help you run the program et cetera again that's a new idea we've been only doing that for about two to three months especially since covid uh given the layoffs and things like that but yeah (14:38) i'm hoping that that becomes a much bigger piece of the pie and how many donations gmv have gone through your platform say in 2019 ah i don't have that offset off my head but the only stat that i do remember is very recently about so fifth of may i think it was was called giving tuesday now as like this one big charitable donation day and on that day i think we processed a little over two million dollars in terms of donations for our customers that's one number that i remember what's your thesis on scaling the sort of take a (15:11) percent of the donations model right which can be lower touch and potentially grow pretty quick yeah so i mean i think we want to sort of use the fundraising not as in i think where we really do well is when people have all of our products right like we run the end-to-end sort of alumni program from data to engagement to fundraising um so we don't really see a lot of value i mean we do give you know customers the ability to try no cost but only a transaction fee for one campaign just to give it a shot and then we say okay you have to be a (15:46) subscription to be able to keep it going right i don't really see a lot of value in just saying just pay as a cut because we get a lot we're going to get a lot of you know um noise in terms of the kind of customers that we attract we want to be really focused on the kind of customers that where it makes sense to have all of our products and what is your current tax right now to get these new customers so i did put this map together um i think our cac from a lead gen perspective is obviously different for different channels but i think it (16:15) averages out to about fifteen hundred to two thousand dollars per customer in terms of lead gen uh and then if i add the cost of the account executive as well including salaries uh commissions and things like that that's another two thousand so it comes back comes out to about uh you know between thirty five hundred to four thousand um to essentially bring in a new customer so the payback that we look at is somewhere between six to nine months um in terms of payback very good all right caleb caleb let's wrap up here with the famous five number (16:45) one favorite business book i read a lot of uh biographies i don't know if i have a favorite business book but i would probably pick uh never split the difference by chris watts that's what's your favorite bio elon musk i loved that number number two is there a ceo you're following are studying yeah greece from freshworks yeah when are they gonna ipo i couldn't tell you but i love him for his uh storytelling abilities i mean that's one thing that i'm trying to learn from him number three what's your favorite online tool for building ammo (17:21) base i love asana that's something that we've used right from the beginning number four how many hours of sleep to get every night about six hours okay and situation married single kids married um 33 years old one kid she's one year old oh that's exciting okay last question here uh kalyan what do you wish your 20 year old self knew i keep telling this to myself all the time uh do less and get more done guys i'm a base helping alumni programs have a better relationship with their alumni communities and ideally raise (17:56) more capital they've got several hundred schools on the platform doing about one point uh yeah about 1.1 million in terms of run rate right now 240 customers or schools they raised 500 000 bucks to do this their cash flow positive about 20 thousand bucks a month 25 on the team six engineers they look to continue to scale spending four grand to get a new 500 a month customer so six and nine month payback period calyan we're rooting for you man thanks for taking us to the top thanks nathan have a good one one more thing before you go we have a (18:26) brand new show every thursday at 1 pm central it's called shark tank for sas we call it deal or bust one founder comes on three hungry buyers they try and do a deal live and the founder shares back end dashboards their expenses their revenue arpu cac ltv you name it they share it and the buyers try and make a deal live it is fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p. (18:55) m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack (19:20) community for b2b sas founders you want to get in there we've probably talked about your tool if you're running a company or your firm if you're investing you can go in there and quickly search and see what people are saying sign up for that at nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode if you enjoyed it click the thumbs up we get a lot of haters that are mad at how (19:44) aggressive i am on these shows but i do it so that we can all learn we have to counter those people we got to push them away click the thumbs up below to counter them and know that i appreciate your guys support all right i'll be in the comments see ya