Avestor Revenue, Valuation & Funding (2024)

folks he launched investor Inc back four years ago in 2019 they've got 100 paying customers today minimum 400 bucks a month these are all GPS managing their own funds LPS can sign up pick individual deals these GPS have brought to Market he also makes money by taking 30 to 50 bips on total AUM today that total AUM is about 60 million bucks on the platform across 30 active GPS that have raised at least a dollar and are doing deals he's looking to grow that again making money on the bip model also making money on a minimum fee for a membership if you want to learn from other GPS and do Cross Steel promotion Etc so we'll see what happens next hey folks my guest today is Audrey millinar he's a co-founder and VP at a company called avesta a technology platform focused on the end-to-end solution for sponsors to build customizable private funds Audrey ready to take us to the top absolutely let's go what is a customer private fund so let me step back a little bit today the private fund industry is almost overtaken the public markets that are truly my audience doesn't know what private funds are give me an example of a private fund today the well-known one a well-known one you know there are BlackRock I mean a lot of there are several private Equity Funds but to get your question very quickly a customizable fund is a private fund where you can pick and choose your Investments think of it as if you go to Fidelity and say I like this mutual fund but I don't like this 20 stocks I want this other 10 stocks so you pick and choose your Investments within a private Equity Fund or a private real estate fund and that's what a customizable fund is why would a GP of a fund like BlackRock or a little small Reit in Dallas Texas why would the gpa.fund want to give individual LPS the ability to opt in or opt out of individual pieces of real estate they're buying doesn't the GP want Soul discretion or all that to move quickly great question there are different classes of GPS there are there are two answers to that question one is passive investors prefer to have the choice so if you want to let it be driven by passive investors so what we have found is 95 of our investors really prefer to pick and choose which deals you want which asset classes you want which time frame you want um and uh so for example just very quickly in our fund and the company owned fund we let investors pick and choose between Self Storage retail Hospitality multi-family uh student housing RV parks so different people prefer different asset classes so it starts from the passive investor and as far as the GP is concerned if you're a BlackRock is perhaps not the best example you ask me for the best known you know fund uh but if you're somebody starting out investors feel uncomfortable giving you the choice of uh saying okay whatever deal you're investing in I'm in investors want to see the deal and then pick and choose the deal so that's a somewhat long answer to your question I like that you're eating your own dog food what's the size of the company run fund you know the company run fund is less than 5 million about five million dollars it's less than the intent of that fund was never to grow the fund uh it was purely to test out large volumes of transactions the allow people to invest do micro investments in that yeah so how many individual LPS are in that fund uh there are about uh I have to check the numbers about 60 in that fund 6-0 6-0 yeah okay and then I guess what's your revenue revenue model how does investor make money okay let's let's get to that so the way what we have done is we built that fund and now we offer that same platform for people to create their own funds it could be in real estate it could be judgment leans music streaming rights we have a wide range of asset classes and then what we charge is based on the assets under management we have more than 100 funds now and based on the assets under management we charge a AUM fee which ranges from 30 basis points to 50 basis points of the Au so I don't know what paid out pay that one on a monthly quarterly bi-annual annual basis uh it's paid out monthly it's calculated uh daily but compared out monthly so okay and you said 30 to 60 bips 30 to 50 views 30 to 50 bips okay what's the average fund size on the platform today so be opened to other funds just a little over less than two years back and so many of the funds are growing they have funds are between one to five million some are 10 million but there are several funds which are growing pretty rapidly so okay so the largest fund is about 10 million uh 13 yeah oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS Founders but imagine if we took all of the valuation data out from over 2807 interviews I've done manually saves you a lot of time well we've done this we've built the into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for evaluation this year now the secret valuation is there's many different ways to value a SAS business so the reason you're going to see three or four different evaluations inside of your founder path dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to do a minority sale that's different and if you sell the whole business that's a different valuation you can see all those when I hover over here here right so the teal is what a VC would pay yellow is what private equity and red is if you sold the whole thing outright now what's cool about this is this is not built off random data again you guys hear these interviews on YouTube all these datas are built from real-time valuation data points Founders share with us on the show so traction 1.2 million seed round 3.7 raise they sold 22 percent of their business go in here and filter by the event maybe you only want to see companies that have sold the whole business well here are a bunch that have been acquired the valuation and the multiple maybe you're going out right now and you're raising your seed round well go in here and look at all this recent seed deals that went down what they raised what valuation they raised at and what percent that they sold there's never been a larger data set of SAS valuation than what you can get now inside of founder path and we're thrilled to bring it to you all right we're gonna go back to the YouTube video here in a second but if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations or if you go to founderpath.com and hover over products click on get your evaluation here and go ahead and sign up to give it a whirl again all that valuation data live right inside the platform I hope to see you there all right let's jump back into the interview do you have like a naturally built-in churn problem and what I mean by that is this if you help an individual GP get their first fund under their belt to build confidence with investors eventually they're not going to want to give investors the ability to pick and choose deals they're going to go raise their own private fund where them as a sole GP have full discretion over every deal which by Nature makes the investor platform I think useless then they churn in fact it's strange that you've mentioned that we have probably the lowest uh amounts of churn less than five percent for a SAS business I'll tell you why once you've got uh what's that five percent on what basis less than five percent of the people have suspended their funds they're not getting canceled it they've just suspended their lifetime monthly quarter annually lifetime lifetime uh so uh and let me tell you the reason we are the only platform in the world which offers a customizable Farm under customizable fund is an evergreen fund so what you don't many people don't realize is each time you do a fun daughter each time you do a deal going through the private uh the PPM process can be very expensive here you create one PPM and you can add new deals within minutes so very naturally the barrier to add new deals is very very low and once you add a deal typically these deals are three to seven years so you have to be you can't really get out until uh the deal exerts and let's say in year two you add another deal then you have another seven years so these are very it's a very very sticky business model which might be of interest to many of you or SAS co-founders so I see okay um and I guess so what's the total AUM today under management across all customers on investor it's still low growing it's about 60 million okay about 60 million you mentioned you have a hundred funds on a platform correct yeah a lot of the funds are about to be in the launch stage so how many actually have closed a fund and done their first deal so about 30 funds have done their first day oh 30 funds are launched still waiting for their first deal the market has become a little more challenging the real estate market because of high interest rates you know that yeah yeah 30 funds are in the process of launching uh give or take a few so roughly so yeah so just be clear you know we're recording us at the end of August here 2023 there's 60 million in AUM across 30 funds that use your platform you're taking on the high end 50 bips right and I assume that's that's annualized right like so in other words that'd be 300 000 right 50 bips on 60 million is 300 000. you're not taking 300 000 here in August you're taking 300 000 divided by 12 in August right correct uh but we have other sources of revenue too um just to be very clear it's not just the platform we help them with all aspects of marketing launching and scaling their fund we help them with legal regulatory we do free fund bookkeeping and background checks accreditation checks so that uh without getting into the details the ARR model is just one element but we have other sources of revenue coming into well I heard that you do a bunch of free stuff is what you just listed where else do you make money outside of the you know the 30 or 50-bit model so there are the background checks is an additional source of Revenue if uh if you do blue sky filings that's an additional source of Revenue but it's fair to say the vast majority of our Revenue comes from the bits model so okay and what would you say over 90 percent uh yeah so today but we want to diversify uh and uh the other point I want to make is it's not the straight bips calculation there is a minimum of 400 per month even if you have uh so we have kind of converted into a membership model where you have to pay 400 because we have a mastermind where people can interact with other fund managers and that 400 a month includes access to the Mastermind plus uh it includes the first million in aun if that makes sense yeah but just it's very easy to clear that hurdle as a fund manager on investor you'd only have to raise a hundred thousand dollars and fifty bits of that is 500 already right are you saying 400 bucks a month is the minimum 400 bucks a month is a minimum oh I see I see so you'd have to be you'd have to be at like a million dollars to break even uh I see I see I see yeah so what what is this really like do you want to be sort of like Tony Robbins right and Lead an army of folks that want to be investors and be in a boardroom Mastermind every month or do you want to be a real sort of fintech you know you know a women or management Robin Hood like play it's absolutely the fintech light so uh but the fintech play with all the bells and whistles so that we are one of so fund managers can interact with each other they can cross invest in each other's deals and we uh another very attractive feature of our platform is now since we have a hundred private uh funds other sponsors want to come and Pitch their deals in front of us and we negotiate preferred terms uh for them uh for our fund managers to raise money for them people would want to get deals in front of your audience if your audience was big so how would you describe your audience today and maybe a good way to ask is how many individual LPS are there across the 100 funds on your platform right now um it's still less than a thousand um okay yeah um but um again there like I said many of the funds have not launched and we do expect to grow rapidly uh once the funds launched do you help a GP raise money like are you effectively a marketing channel for a GP that's got a good deal but doesn't know who to raise from I wouldn't I would say they help them with marketing collateral and we have a marketplace where people can browse through funds but I think it would be misleading we are not attempting to be a broker dealer we are not attempting to raise money for them it's really streamlining the legal accounting and platform processes all in one place where they have to go to multiple vendors right now and uh then it's most of it is the money is coming from their investors who are private to them and they get exposed to a variety of asset classes the funds investors get exposed to a variety of asset classes so just to summarize so far there's under a thousand individual LPS who have put at least a dollar making up a total of 30 million dollars of aus sorry 60 million dollars of aus of AUM on investor that 60 million is managed by 30 active funds you've got another 70 in the pipeline and so you're making on average on the high end 50 bips on the 60 million or about 25 000 a month right now in revenue is that about right uh without getting into the details um that math is correct for the AUM portion but remember all 100 funds will pay a minimum of 400 bucks a month so uh uh I mean the math is better than that but I wouldn't want to get into the exact details of our am right now I'm in our ARR right now so well you articulated that the bip model is more than 90 of your Revenue so maybe it's you know it's 25 000 in mrr maybe it goes up to 30 grand but plus or minus 10 we're in the right range but remember it's uh regardless of the bips model there is a minimum of 400 so all the funds are paying 400 a month at least I know but I asked you how much what percent of your total revenue is the best model and you send more than 90 percent kind of include the membership also the minimum has been oh I see because to us because that we're already offering the 1 million in uh AUM so I include that amount in the bips model too oh I see yeah I see okay well 100 100 100 funds paying 400 bucks a month and it's 40 000 a month minimum in mrr you're doing more than 40 000 a month at this point then exactly I see okay and so we can understand your growth rate where were you about a year ago do you remember uh we had less than uh I would say 25 funds or so so 25 or 30 funds about a year back so so what what in terms of Revenue growth rate so you're gonna be like 20 000 a month a year a year ago uh no they were far lower than that so okay uh uh because a lot of the funds were not yet launched and we hadn't done this minimum amount uh before before so that's a recent uh because now we add a lot of value from The Mastermind so people don't mind paying the minimum yeah which driven most the growth uh organic marketing uh I appear in a lot of podcasts not podcasts like this broadcast related to real estate a lot of referrals that's really been the best source of business I mean they are rarely advertised they have been to like one conference uh and they have not sponsored any conferences uh it's Word of Mouth people because people want to work with uh a lot of the GPS want to work with each other they want to do code GPS it's a lot easier if you have Evergreen customizable fund of funds which allows them to not only work with each other but expose different asset classes for example a multi-family uh GP may want to expose somebody else to a short-term rental or a student housing asset class so yeah yeah how have you funded the business today are you bootstrapped or have you raised you know we raised a little less than a million dollars not because we really needed the money we wanted to reward our early investors in our fund and the early fund managers so they wanted to invest and so they raised that I think they look at a series say uh maybe uh end of the year or early next year so the million dollar seed was last year uh no a few months back a few months back okay now it's not again because we are almost cash flow pasta uh anyway so we didn't need the money so we didn't but I think now we have uh kind of crack the formula on how to grow our Facebook ads are working so now I think we are ready for the next stage in our growth so just to be clear sorry how much did you raise in your seat around 500K uh it's a little less than a million okay a little less than a million got it so call it 800k something like that my statement's still the same earlier this year it's a terrible time to be in the equity markets uh valuations are way down so this means you're taking a lot of dilution most folks earlier this year closing seat rounds are selling 20 to 25 of the company were you in that same range not at all not at all uh they are uh in the single digit range or less okay so you sold under 10 of the business which for 800k which means you got a valuation of over 8 million dollars post money right interesting what would what would um I mean if you're almost uh cash flow positive why would you go you know test the you know very bad Equity markets right now you know in December this year for a series a I told you hit us rewarding our early investors and just now why would you in December of this year you said you would look at raising later this year uh We've you know it's not a given we don't absolutely need it we uh we want to get more strategic investors so uh we can slow down the growth rate a little bit and be uh self-sufficient so it's really about turning on the engine if you will and if the uh multiples are not good enough and if the dilution is too much we we won't raise the money what dilution would you consider too much as founder you know we have been so busy in growing the business uh we haven't had a good healthy conversation on that I would rather not answer the question just because we have not talked about it and I haven't uh we haven't had a good discussion on this we we are having our first investor user Summit in September uh about 60 people are flying from across the country to Portland Oregon after we go past that we figured we'll have this busy conversation in the October November time frame look at what dilution we look at and all that so I it's not that I don't want to answer the question it's just that they haven't talked about you mentioned Facebook ads how much did you spend last month on paid ads couple thousand okay so it's not just organic marketing you're you are doing paid I just started uh a couple of months back yes okay so three you know a couple thousand three thousand a month something like that on paid ads where are you marketing you know the Bigger Pockets you know Facebook group or what are your ads targeting so we are targeting different groups uh sponsors who are creating uh different uh who are already doing syndication deals and things like that and we all tried Google AdWords to I don't think it was as effective we also tried YouTube's targeting people who helped people create funds and but Facebook has been the most effective so far in badri how many folks are full-time on the team today uh there are about seven full-time folks in the US and about a dozen in India okay so call it a 19 total they're very good well we're rooting for you we're out of time now let's wrap up with the famous five number one favorite book Ray dalio principles uh number two is there a CEO you're following or studying um I like Satya nadala I mean it's amazing what he's done uh with Microsoft number three what's your favorite online tool for building a Vester you know we it's I don't know if it's my favorite but we found that airtable has been uh very very effective for keeping track of different operations it sounds like a trivial database thing but we've been using airtable very effectively the number four how many hours of sleep do you get every night I get a minimum of seven I mean I sleep or something I don't skimp on and what's your situation married single kids uh married with kids love travel and always try to squeeze and travel while running a startup how many kids Pottery uh I wouldn't call them kids but they're all grown-ups but two yeah okay okay and how old are you uh I'm close to 60 now so all right we'll call it 58 years young what is something you wish you knew when you were 20. you know I wish I had gone in the entrepreneurial route much earlier than waiting I mean I did start a company in my 20s but it didn't quite take off so I left Corporate America in my early 40s I wish I had left that earlier folks uh he launched a restoring back four years ago in 2019. they've got 100 paying customers to say minimum 400 bucks a month these are all GPS managing their own funds LPS can sign up pick individual deals these GPS have brought to Market he also makes money by taking 30 to 50 bips on total AUM today that total AUM is about 60 million bucks on the platform across 30 active GPS that have raised at least a dollar and are doing deals he's looking to grow that again making money on the bip model also making money on a minimum fee for a membership if you want to learn from other GPS and do Cross Steel promotion Etc so we'll see what happens next Audrey thanks for taking us to the top hey thanks a lot Nathan and that's a great summary I could have done better one more thing before you go we have a brand new show every Thursday at 1pm 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 our poo 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 p.m Central additionally remember these recorded founder interviews go live we release them here on YouTube every day at 2 p.m Central to make sure you don't miss any of that make sure you click the Subscribe button below here on YouTube their 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 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 malacca.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 and if you enjoyed it click the thumbs up we get a lot of haters that are mad at how 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 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