Botco Revenue, Valuation & Funding (2024)

hey folks my guest today is rebecca clyde she's the ceo of botco.ai a startup offering intelligent chat nurturing solutions for health and wellness enterprises with more than 20 years of experience in the technology industry she's passionate about advancing women in tech prior to co-founded a digital marketing agency and managed marketing programs at intel rebecca are you ready to take us to the top definitely hi nathan it's nice to meet you okay tell us about botco who are you so you're selling directly to health and wellness enterprises why that niche um well because they had been severely underserved i've been in the marketing automation space for quite some while and i thought that a lot of the marketing technology that was uh built was really suited more for technology companies software businesses but when it came to the health and wellness space they had some needs that were important to being satisfied things like compliance around personal health information the ability to integrate with um benefits and verification of benefit systems so a lot of these providers use insurance as the form of payment um so they have some kind of unique elements to the way that their business is done that had not been addressed by the traditional marketing automation platforms and so i found that there was an opportunity there to go in with a service a product that could really satisfy that gap love that okay and so what are these customers paying on average per month to use the technology you know anywhere from about nineteen hundred dollars a month to upwards of seven thousand dollars a month oh wow so would it would it fair average be like twenty five hundred three thousand something like that around there okay so you're very this is very much an enterprise motion then were you enterprise from day one [Music] yes always our very first customer was a billion dollar company yes can you name who that was yes so there is our massage envy oh yeah of course yeah so massage envy is one of the largest wellness providers in the us they provide clinics all over the country they have over a thousand clinics that have um massage therapy but also a lot of other services as part of their program and they were one of our how do you land i mean they're you know people listening wait how did rebecca land massage envy on day one how does massage envy look at a you know startup company and say we're willing to bet our hipaa compliant chat on rebecca well to be fair i've been working in enterprise for a long time so you know i mentioned the agency that i had started previously so i already had a lot of relationships in the enterprise space that i was very familiar with the agency has worked with health and wellness so yeah my previous agency yes had a lot of clients in this space um i do a lot of public speaking and actually the way that i met them was through a i was doing a an event i was speaking as a keynote at a conference and talking about the power of ai and being able to automate conversations to scale uh an engagement with consumers and they came up and talked to me afterward it was one of their marketing executives and pretty soon i was in the thief tweet with their entire executive team talking about how we could make this happen so did you this was your agency right previously yeah did you shut down the agency in favor of botco the sas company no i hired a management team and replaced myself with other people and turned over the reigns to my business partners and then started this company did you were able to did you sell something there did you get it was there a cash event for you that you didn't plow that money into botco no no okay so you still have exposure equity upside in the agency or rev share something like that over there exactly i see okay but now you're building botco okay now i understand this is massage envy is your first customer now how many customers are you working with today we have about 30 now 30. wow okay got it and and walk me through how you're getting those customers is it still all from relationships from the agency side are you running some other growth tactics no no no that's just how you usually get your first couple of customers now we have a sales team and a marketing function so you know we hold webinars actually we just had one earlier this week we have a lot of webinars and we'll put on events uh people will either sign up because they're interested in the topic uh we provide them with really useful content and usually becca go deep with me on the webinar for a second very people as well yeah so so let's go deep here i know i'm gonna ask some weird questions but stick with me how many people showed up live on the webinar about 25 or 10 we'll usually have maybe about 100 that will register for the live for the event usually a quarter will show up to the live event and then another quarter will watch it on demand but what's really interesting is the people that show up are super engaged right they really want to learn about this topic they uh are spending you know a good hour of their day doing this so nobody spends that type of time unless they're really really trying to make a big decision and so when we follow up with them and try to you know set up a meeting they're usually very keen so you don't try and close them live you don't say go to this checkout page and pay today like what's the call to action the last three slides of the webinar uh yeah usually it's we'll usually have some kind of program where they can meet with us to put together a demo that's uh uniquely suited for their company and so that's that's the call to action is like why don't you set up a meeting with us we'd love to put a demo together for you to actually show you how this would work for your business and then from there we we uh close them after that okay 100 register 25 show up another 25 watch on demand so 50 percent end up engaging with a webinar somehow then some portion of those likes book a demo go back top of funnel how do you get 300 registered oh yeah a lot of different ways so tons of social media efforts so we share it out with our individual networks which are all organic we don't really pay much for social media promotion we do like a tiny bit maybe a couple hundred dollars but we don't spend thousands on promoting it we just the amenities come from either our shares or our shares of shares right so we'll have people who we know like share it out for us we also have um a really good solid subscriber list you know people who have engaged with our content before how many rebecca our webinars i would say we have uploaded like maybe 50 50 000 people in our database already and you've been building that said yes yeah please tell us more about your products and services so they're all updated um because that's that's great yeah and um so we of course you know let them all know and oftentimes that we'll see that they forward it to their teams or to colleagues um we also get on a lot of podcasts like this and talk about the fact that we might be holding a webinar or have something coming up and so we get new new uh participation that way um i'm very involved in the community so i do a lot of stuff in the um healthcare and technology industry so i tend to kind of be at a lot of events and i just tell people what's going on and that's how they also hear about it so there's a little bit of organic you know social media and then of course just reaching out to our database and letting them know that these events are happening and now rebecca can i do the math here 30 customers at an average of 30 000 a year would mean you're about a 75 000 a month right now on revenue is that about right um probably yeah that would be about right yes okay customers that are grandfathered into our earlier pricing so they're not paying as much uh but the rest uh yeah and maybe closer to like 65 70 000 a month in revenue can you do so you have what do we have we have we have 60 more days left in the year it'd be very cool if we were to break a million dollar run rate by the end of december you guys can do it oh i i don't think so no we're gonna we're projecting that for next next quarter is notoriously slow sales month and so we really only have this month left to spell in the short month cause of thanksgiving yeah and help me understand growth so if you're doing about 60 000 a month today in revenue where were you exactly a year ago do you remember yeah we were uh in arr terms we were at about 150 uh roughly um so it was we've more than tripled our business almost quadrupled our business yeah yeah i mean so you've gone from like 12 grand a month or 150 can ar up to 60 grand a month today that's incredible growth um now have you done all this bootstrap or did you raise yeah we raised money so uh we started the company bootstrapped then our first customer actually helped pay for the product in advance which was very nice how much did massage mvp up front uh i don't think they would want me to share that but nice try though so they they were our first customer and then you know they were willing to pay up front before we even had anything to deliver to them which was really great um so i kind of see them as a little bit of they took a chance on us right um and then we um raised money from angels so just you know probably raised about a million from angels um and i got some grant money from the state of arizona so arizona has a really great um startup ecosystem and they actually give out grants to outstanding startups so we got how much from that 150 000 wow from the state of arizona which was great and then we got another 25 000 grant on top of that from another startup oriented group here so that was actually very helpful at the beginning when you don't have a lot of capital to work what year did you raise that million from angels um it was 20 late 2019 was when we started we raised a couple hundred k in 2019 and then 2020 was when we raised it i see i see so all in you raised a million no after the angel funding we raised for institutional obesity then we had we raised another two and a half million from institutional abuse i see and i believe based off my notes that that two and a half was and it closed in february of this year is that right uh right so we had a chunk of it close to february and then we had a couple of investments that came in after yes it was at the beginning of this year tell me more about why you felt you needed to do that obviously ownership is really important you took dilution when you did that why did you need to raise capital to build this i mean technology is tough to build especially what we're trying to do it's not um an application you can build with uh you know a no code platform right so we have a significant engineering team about 10 engineers that work on our product and you know what they're doing is coming up with technologies that handle for example fast knowledge acquisition so we can train ai virtual agents faster we have to be able to understand concepts like you know what do people mean when they're looking for benefits coverage and they connect to other systems of record which we have to have an api development effort that's going on where we're connecting to marketing platforms uh crm platforms and ehr platforms so there's a lot of integration that has to be done in order for our product to be really useful to our customers we need engineers that are building those uh apis constantly so yeah it's it's a it's a it's a big effort from an engineering standpoint and then you know you have to hire people to sell and you have to hire people to market and you have to do all those things so not something that i could have done by myself by any means well if you're going to have to raise money to invest in technology the second best thing you can do is you as a speaker i bet were able to tell a really good story with your deck to try and get a valuation that minimized the dilution you took when you raised 2.5 million bucks what valuation did you end up raising the 2.5 million app so um that money the 2.2 million we raised it like i want to say close to by the time it was all said and done um you know we were raising our valuation kind of object to about 15 million already taken yeah but we had already taken a little bit more so that was like in the three million dollar range where we got to the 50 million so we did the step up strategy it was actually a really great approach i recommend everybody um read there's one of my investors is at ash rust he has a company called a firm called sterling road and he has this really great strategy for how to step up your valuation little by little so rather than taking all the money at one price um he's basically create the system where you create um i guess scarcity around different price points so you say okay i'm going to raise 250k at this price and then you quickly close that round and then you raise another 500 at a you know maybe slightly stepped up valuation and then you close that and what this allows you to do is to more quickly uh move these people along into making a decision investors because especially in early stage they're a little bit like i want to wait you know they're always trying to kick the can down the road they want to participate but they don't want to get uh pay too much and so they're trying to kind of like delay it obviously a little bit so this strategy really gets investors to move quickly because what paper did you use on this was it basically a safe and you just kept increasing the valuation cap so i did i've done a combination so i did at the beginning uh convertible notes um then we actually converted all those notes into security that we issued stock and then we had some investors come in after that wanted to invest after the the securities had been issued and for them we issued a safe note also using the step-up strategy so we would just raise a small amount at a valuation close it out and then if the next set of investors wanted to come in they have to step up this i see yeah this is this is called typically sort of like a rolling close and it is a very effective strategy so just to repeat that back to you rebecca you took the first money and sort of this thing at a 3 million valuation over time as you stepped it up you ended up raising a total of call 2.2 million and the last tranche that came in was at a 15 million valuation post money a little yeah so you have the numbers a little bit off but at the end we ended up with 3.6 million all in raised to date 3.6 million at that 15 million oh i see so so it what when you say you did like a seed of the 1.45 and 20 20 and then the two that we started 2021 is all together it's just a rolling thing so we went from 6 to 15 in that kind of six month period where we were using this stuffing up i see okay that's helpful that's what i was trying to get to very cool it wasn't always like six point eight seven yeah seven fifteen in that um so it's hard to tell that's why it's hard to say like what did you raise it because it was like well who are you no it rolls yeah well is it always it's always increasing we're constantly moving it up you mentioned 10 engineers on your team what's the total team size today we're 25 25 wow okay and um talk to me about churn it's critical in a company like this do you have dollar expansion yet you know considering how big your your clients are yeah so our uh customers that have renewed this year have all either reviewed at 100 or higher so we have some customers that renewed at 200 percent they actually doubled their subscriptions with us um our biggest customers that's what they did and so i would say right now our expansion our renewal rate you know if you average it all out is like 130 130 net dollar retention that's a good place to be and then talk to me real quick sales reps how many quota carrying sales reps do you have and and do you set them you know the standard here you usually set them on a million dollar quota base is 100k if they hit quota they get another 100k so it's 200k on target earnings if they hit the quota for a five to one ratio there is that sort of the playbook you're running there roughly yeah yeah yeah although we use that uncapped plan so they don't necessarily have to we set an accelerator in place if they once they need their quota oh interesting so if they break a million dollar quarter whatever the quota is then they can start making more in terms of bigger percentages of commission very cool and you have to come back on a year and tell us how that's going that's an interesting setup all right rebecca it's time to wrap up what a story here uh number one what's your favorite business book well um there's so many but right now pitch anything i would say because i'm so i'm always pitching that is a good book number two is there a ceo you're following or studying um [Music] you know that's interesting i i look and study a lot of different ceos but i would say probably one that i admire is one that's actually on my cat table that i have really worked with closely his name is brexit and he's the the campus of campus what logic campus logic very cool number three what's your favorite online tool for building botco my favorite online tool for building block code yep there's a tool you use a lot oh in our company that we die by i mean it has to be slack probably all right number four how many hours of sleep do you get every night six okay and situation married single kiddos um kiddos yes three of them uh formerly married no longer three kids wow okay amazing and rebecca do you mind me asking how old you are you don't have to answer and of course you don't have to answer i only ask because it helps give listeners context right so let's take the questions it's okay it's okay i'm happy to tell you i'm in my 40s okay fair enough fair enough she's 40 years old you guys heard it here first all right rebecca take us back to your 20 year old self what's something you wish that she knew i wish that i had um i would say believed in myself more earlier on right i was i was very much a learner during that time of my life and so i i put a lot of weight on what other people would say instead of really trying to rely on my own experience and my own intuition guys botco.ai it's hipaa compliant chat for you know companies like massage envy right this sort of space health and wellness they broke 12 000 a month in revenue exactly a year ago they've 4x2 every year now doing six over 60 000 a month as they look to break a million hopefully next year she's done this in a very capital efficient way with rolling closes 3.6 million raised with the last most recent valuation at around 15 million using this to fund her team's growth and product development 25 on the team 10 engineers two sales reps as rebecca continues to grow rebecca thanks for taking us to 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