Cake Equity Revenue, Valuation & Funding (2024)

hey folks my guest today is kim hansen he's a he wants a world where everyone is free to be creative and as a healthy human being they were born to be he's a serial entrepreneur innovative company leader mentor startup advisor social community manager among many other things including a mountain biker he's now building a company called cake equity.com it's a cap table management platform for startup founders kim you ready to take us to the top absolutely excited all right did you have like a horror story from one of your first startups in the cap table or what what happened yeah definitely it was it has been a tough journey with with equity personally first it was hard to get access to to invest in the companies i wanted to get access to before i was associated investor and secondly my other company i i thought i was i was early so i could kind of push a bit and get ownership in that but i couldn't give ownership to all my other employees as we grew the company and that was a big pain i tried for two years but it was just too complicated and and painful why was that painful so like here in the states obviously you would have an employee stock option plan you would issue shares accordingly we have carter to manage that did you nothing like that existed where you where you are it was some years back at the time i was in portugal building a team there and it was um you know the maturity wasn't there at all in regards to the cap table management and equity and all of that so especially from from cfos at that time it it was just too complicated with tax and all of that you know as you're building a company you have so many challenges understanding the value of using options to to empower and motivate your team wasn't quite there so there wasn't enough understanding of the problem um and as maybe some of us are looking to to silicon valley as inspiration at the time um you know and saying this this is really awesome this tool um as we're building value this could be very valuable uh later on and you know who's gonna who's gonna participate in in uh getting getting a return in that in that value created so now focused on this capital management for startups what's the start what's an average startup paying you per month or per year to use your technology yeah it's we have around they pay a 100 australian dollars for kind of uh average uh our package is is split in in the kind of early startups uh kind of the ones that are uh in that product market fit growth um place and then for kind of later stage um so but but yeah we're really targeting those that have uh that have already got some funding and they're in that really space where they're they have too many things to do and they're growing and they need their cap table to really work well for them and it's super challenging to learn fast so just to be clear on average though these customers are paying something like 100 australian dollars a month or 70 usd per month yeah and what do you upsell against is it dollars of funding raised number of employees managed size of esop pool something else yeah so we have a freemium up to five stakeholders as we call them which is a combination of employees or investors and advisors that are using the equity after that from six and upwards we have different cohorts that you pay as you go as you grow the company i see okay and what's the back story here when did you launch the business yeah we we actually started as a smart kind of blockchain company uh as we wanted to to really we're passionate about creating more liquidity in the private equity space and we saw opportunities in the blockchain space but um we we saw that there was an underserved demand in in australia for cap table management there was nothing here and there was a lot of companies needing that so we kind of pivoted into to like um building the cap table solution also because in the blockchain space nobody was kind of solving the legal and compliance and all of those things which you actually have to solve before you put the platform the infrastructure for equity transactions in place so um yeah we we started with the cap table uh platform and um yeah it's been great what year when did you launch that sorry that's um so cake uh was kind of like three three years ago uh okay so called 29 2018 2019 something like that 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 it 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 valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner 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 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 raised they sold 22 to 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 valuations than what you can get now inside of founder path and we're thrilled to bring it to you all right we're going to 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 very cool and have you bootstrapped the company or did you decide to raise no we had a family and friends and fools initial race in the blockchain then we pivoted into cake and then we had a precede round and a seat round last year um now we're going into a pre-series a round okay very cool so break those down for me how much did you raise in the precede um that was that was around five hundred thousand five hundred dollars australian dollars so got it so that would have been something like 450 000 usd something like that 400 usd okay and what why did you need the i mean you know dilution very well right why did you need to raise that capital to build a platform especially it sounds like you've had some exits under your belt why not just self-fund it keep 100 yeah i think we were definitely also naive at the time as i think many founders are in regards to equity and understanding how to use it well um so and it was it was a bit of an opportunity also to to get put a team together which was is really difficult in australia to to bootstrap i i came from i've been living in portugal for more than 15 years where it's quite cheap to bootstrap with people but in australia the salaries are quite high so to kind of get kick-started a bit with the team we we needed some funds i see i see okay so you raised 500 000 early 2021 pre-seed round then you did a seed round for how much yeah around 1 million okay so 1.5 million sort of total raised last year and most folks in their seed they're saying you know 15 20 percent of the business is that about what you sold so we we actually had so we had the initial round um and then we actually had three rounds so far 500k 1 million and last year we raised three million um with uh jason calacanis and ram percent uh coming in on board rampant is uh an awesome australian bc here and you probably are familiar with jason calacanis and his um his book about angel investing and his fantastic big launch syndicate of angel investors okay got it so before last year you'd raised a million and two tranches call those your two pre-seed rounds i needed a formal seed last year for three million yeah that's it okay sold between sort of fifteen twenty percent pretty standard yeah exactly okay okay very cool so that would be what is that that'd be like a fifteen three million on like a fifteen you know million dollar pre-money evaluation something like that see 10 million pre pre-money okay that's that's fair and and um and i guess what strategically why take it what is that you know 15 again 15 20 dilution right did that enable you to get something strategics in that round or why do the deal yeah absolutely and and also just get these uh these partners on board like the the vc and and jason calacanis and his network um so that's so that you make them use your capital management tool is that what you mean when you say a partner well more as you know there's a brand there and there's a huge network of of people and there's a lot of learnings we can get from from them in that space they're obviously really you know understandable of equity and all of that bringing that in as well as um we started in the australian market we were kind of a service uh offering in the beginning sales led and we had to shift to part of that growth which was a very painful journey until you know it starts taking off and you get product market fit and all of that which which happened around like one and a half years ago or something and then it really started growing um so like as you do that journey it's not a straight line you know it's it's a it's it's uh you do a lot of uh there's a lot of challenges to get to that product market fit where you're just trying to focus and you throw a lot up on the wall and see what sticks until you get that and then you start really making the engine run more and more smoothly as we as we've been doing the last year and really understanding all the data and how to benefit well from that and how many customers today so we have around 3000 people using the platform um we have 650 or something paying customers okay that's so that's pretty healthy conversion rate in terms of product led growth right so what's the pay wall what's freemium and then when they see that first pay or pay wall is it up is it the sixth stakeholder is that what it is yeah exactly and that that depends of course to be what state you're at or if you want to go and unlock some of the better features as well most of the features are are in the free version but if you really need to tap into the power of of cake then it's good to upgrade and and 650 customers paying on average 70 usd dollars per month that puts you at like 45 50 000 a month in mrr something like that yeah we actually had at um i guess around 70k mri oh great you so you'll break the million dollar run right here by the end of the year for sure right and you have negative return retention rate so people tend to well not negative not negative or negative churn maybe you don't want negative retention we have we have a very low churn and we have uh you know um the customers keep paying more as over time which is an awesome thing so yeah so what what flip that for me real quick what's net dollar retention 100 and what percent 105 percent i don't know i haven't multiplied that or looked at that at all so that's just kind of awesome to see that there's big potential there for us to grow the engine well i mean something like capital management i mean that is not something that's easy to rip out once they're in right i mean that's a pain in the butt it's extremely sticky um yeah so it's amazing and yeah as i was getting into before one of the big challenges and why we have been asking needing more funding i guess was was to go global which is what we're doing now so we are in uh we're in the three big hubs of you know the uk and us and singapore as well as australia and we've opened in nine other countries and we're expanding extremely fast in the in the world if you're doing about 70 000 a month today in revenue where were you exactly a year ago uh i think around 10k or something around around 10. wow so you i mean you did that funding round at a 13 million post money valuation with 10 000 an mrr yeah yeah that's a big i mean that's a that's a massive multiplier even for u.s standards right what enabled you to get such a high multiple when you were so early yeah i think um you know it's obviously a hot market and all of that and as we had really strong growth and big support um well what do you mean really strong i mean that was you're right i mean you're big now but you were only at 10 000 bucks a month in revenue what do you mean strong growth uh we had a lot of users and we had like 200 partners in in australia and there was no there was no competitors really here um we kind of you know we're showing that we're winning the australian market and we've pretty much done that we have 20 market share in australia and that is growing every day so um i think that's that potential was definitely there yeah and i mean just for context sake for the audience i mean that's effectively 120 000 bucks an arr out of 13 million post money evaluation is something like 80 84x multiple i mean that's i mean you're growing into it but that's a good one but maybe we're a little bit more um i think okay you were more than ten thousand in mrr april we were at 240 a.r okay a little higher a little higher yeah yeah still okay but you're growing the point is you have three hubs you're also in australia you're growing into it nicely what what do you what's the what's the playbook here to like sell more things to the same customer base right what's the next product look like yeah we we're definitely betting on uh remote teams um as we've seen the likes of uh remote hiring companies like deal and oyster and all of those are grinding exponentially and the the whole world has changed to become a globally connected world so we we think less and less about borders and regions and all of that well but what's what's the playbook there i mean deal remote oyster these are all growing very fast what do you have you identified a mousetrap you think you can build in that space and get some market share yeah so so we we can definitely see you know we have our bread and butter and our awesome product that works really well is giving options to your employees and startups should be able to hire globally and to tap into a global talent pool um so that's what we can perfectly help them with in regards to the equity so working alongside these remote hiring companies that we're doing partnerships with um is yeah where we can really tap into that growth that is happening there and get our get our product out we are strongly convinced that uh you know equity should be borderless um just that we see like there's a lot of ideas around the blockchain space to make this happen um just without a lot of the legal stuff we put the legal and the compliance yeah i mean if you can figure all this out you save people a lot of time because the last thing i want to do is go figure out how to issue options to my employee in bulgaria i have no idea what the tax laws are over there and i will never go figure it out as well as getting investors overseas uh so we can just break down the barriers uh that are currently what's the team size today how many folks full time we are around 25 people and how many engineers um i think we're seven eight engineers okay pretty pretty heavy there and and i guess talk to me more i mean go to market i usually would ask about cac but it sounds like a lot of you wrote it's going from these partners do you pay them a kickback are they an affiliate yeah we have different types of partners so we have partners that are just kind of referring us um and um so there's a discount there um how big like a 30 discount or something there's a 20 discount um and then we have operational partners that we work closely together with that we bring leads to them and they give us a referral fee as well um so and then we have more close strategic partnerships um which is depends on the on the deal i see i see so do you have a cac today have you have you calculated that or no it's not big enough or it's not important uh it's it's less than a thousand dollars and we can optimize a lot on that as we get our seo engine working well this is gonna be produced a lot i see interesting okay very cool this is a great story let's wrap up here with the famous five number one favorite book um being brilliant number two is there a ceo you're following or studying um [Music] i mean it's impossible not to constantly look at elon musk and what's going on whether you tried to or not polarizing failure number three what's your favorite online tool for building cake beside your own i would say profit well is a fantastic tool yep number four how many hours of sleep to eat every night i sleep around seven on average okay and what's your situation married single kids i'm married and have one child one kid oh very cool and how old are you i'm 47 47 last question something you wish you knew back when you were 20. um just start the start the entrepreneur journey right there right then which i think i did just not very consciously guys he's launched a bunch of companies he realized how tr how how difficult it was to issue equity to both local employees but more importantly remote employees in today's remote world he wants equity to be borderless he's executed on that vision at cakeequity.com their last raise was a 3 million seat on a 10 million pre uh pre-money evaluation they grew from about 10 000 bucks a month in revenue uh last year to about 70 000 a month today so really healthy growth as they look to continue to scale for their 650 customers who use them for capital management team of 25 8 engineers all right kim thanks for taking us to the top thank you so much nathan have a good day one more thing 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