How Cledara Grew 5x in 2022 and Closed a $20M Series A to Build the Biggest Software Management Platform (Interview with CEO Cristina Vila)

Audience Warm-Up: Software Spend Survey

Nathan Latka

00:04So guys, before we jump in, out of curiosity, I want you guys to just think real quick in your head. How much do you think you're gonna spend this year on all your software expenses? Think about it in your head. How much do you think you're gonna spend on all your software expenses? Now at Founderpath, we average about $27,000 per employee per year just on software expenses and you guys are going to have a better number

00:27than I am, but I want you guys on the count of three to yell out what your number is, your total software expense you think you're going to spend this year, all your software, HubSpot everything. Alright, one, two, three.

00:39So an average of about 1,630,000 is what I heard.

Cristina Vila

00:42>> There you go.

Nathan Latka

00:44What is it? What do people spend on average per year on software or maybe is it per head on So

What Cledara Customers Spend on Software

Cristina Vila

00:51>> I can tell you our customers spend about between 50 and 100,000 a month on software.

Nathan Latka

00:59And is that is that could you give us like a per capita versions like per head? What's the average software company spend per year on software? Do you know?

Cristina Vila

01:07>> Per head, it would be hard to say because our our customers have somewhere between, you know, 50 people to 800 people.

Nathan Latka

01:16So it's 50 to 800.

Cristina Vila

01:17>> Hard to say. Yes.

Cristina Vila and Cledara Introduction

Nathan Latka

01:18Well, Cristina's story is really impressive. They were so gracious to host me and Alex and the whole Sass Doc crew. This must have been a year and a half.

Cristina Vila

01:26>> About a year ago.

Nathan Latka

01:27Yeah. About a year ago in bars beautiful Barcelona. And then I'm going, for Christmas to spend it with my mom in Loveland, and I was pinging them, and Brad goes, I'm in Colorado. And I said, well, let's hang out. So they've now opened an office in Denver and so what we want to focus on today a lot of folks at the beginning of today raised their hand when we said who's not from The States and so

01:47I thought a really valuable use of time would be how did you guys move from not The States to now very much in The States whether that's Denver or I hear maybe New York happening. So we want to talk about that and then also talk about how you guys managed to get a $20,000,000 series a done in September. Now you guys have to remember markets were sort of crashing in terms of equity way before September. So

Closing the $20M Series A in a Down Market

Nathan Latka

02:08we're gonna hear all the ways. How many times did the deal almost die?

Cristina Vila

02:14>> Well, I can tell you that we started fundraising in March when everything was starting to go on a downturn. We had to pause because nobody is gonna do anything at this point in time until we figure out what's going on with the tech sector. And and in the end, yes. So it it took us about all those months that you were so you're counting.

02:36>> But how I would say, I mean, was very painful. Like, I can tell you that. It was very painful.

Nathan Latka

02:44These deals that people don't realize that they think, you know, you get some investors, you get a term sheet, you do two weeks of diligence and you're close. These things will die 100 times. You think you're about to sign, then it dies. You think the sign dies. So just to be clear, when you say in March, you had to pause, did you have a signed term sheet that thing got pulled and you had to re come

Cristina Vila

03:02back to it?

03:02>> No. So we started the fundraising march. Okay. We are gonna send emails to investors and then nobody was moving. Every everything was like, maybe we speak in a month or maybe we schedule something for, you know, in in a in a few weeks. And then we realized, okay, that's just not going to move forward. And what we did is, okay, what can we do? Well, we just need to make sure we continue growing. In the end,

03:24>> you know, last year, we grew five x. So, okay, markets were not good, but we were growing really fast. And the reality is that then some of those investors that had seen that had heard from us in March, and then we started fundraising again in June. I think right after SaaStock Europa, I remember I was on one of these chats, and I had the brilliant idea to kind of mention to, Eleanor from Sifted, yeah, we're gonna

03:50>> start fundraising Mhmm. In a couple of weeks. And, but then, yeah, then it went very quickly. Right? Because people had seen where we were in March very clearly, and then they saw where we were, by June when we restarted them in September. It was all done.

Team Size and US Expansion Strategy

Nathan Latka

04:05And it's very important. I think how you guys have expanded geographically is just a great story, but I want people to really perk up and listen, understand are they at your stage, are they further than you, are they behind you so they they can listen to you with that context. So to the extent that you can, like how many folks are full time on the team today would you say?

Cristina Vila

04:20>> In the whole company is, 80 people.

Nathan Latka

04:2380 people. And how many are only US?

Cristina Vila

04:26>> So at the moment in The US, we have seven. And when we started selling into The US, we actually had nobody in The US. So when we were thinking, okay, we want to expand here. And, obviously, I love derisking whatever I can derisk. And we knew that the same problem existed here. Companies buy SaaS, companies spend on SaaS, waste on SaaS. And when we started having conversations from the team in London, very quickly we saw, okay,

04:56>> that is, you know, the problem exists. But until we have sales, we are not going to have somebody on the ground. And we waited until we had about 50 customers here in

05:09>> The US.

Nathan Latka

05:10Sold the first US did you who sold the first US customer and what was the average ACV?

Cristina Vila

05:14>> The first US customer thing was Brad.

Nathan Latka

05:17Sold it?

Cristina Vila

05:19>> Yes. Yes.

Nathan Latka

05:20How much was it for? Do you remember size?

Cristina Vila

05:22>> Oh, we're we're talking $500. $500 a month.

Nathan Latka

05:25Okay. So six six k ACV was the first sale.

Cristina Vila

05:28>> Yes.

Nathan Latka

05:29And, is Brad still selling in The US today or no?

Cristina Vila

05:32>> If if he's selling.

Nathan Latka

05:33Is Brad still the lead sales guy in The US today or have you replaced him?

Cristina Vila

05:36>> We I mean, he still does a lot, but we have replaced him. Yes. Now we have, Bradley actually. So similar name, but we did we did hire somebody else here. And but yeah. So it's this. We just wanted to make sure that there was a real opportunity here. We just didn't want to do what some companies, you know, there are different strategies. Some companies send their landing team, and they try to expand directly from here. And

06:02>> we took the approach of, okay, let's test it from from The UK. We know what good looks like for us. Mhmm. And then as long as it's more or less there, we'll we'll do it. And we we then yeah. In September after our city's day, we decided to open the office in Denver.

Nathan Latka

06:18So we'll get more into the Denver story here in a second, but with 80 folks full time, most private SaaS companies today that do have VC funding will do somewhere like around 130,000 in revenue per employee. Would you guys say you're sort of in that range? Would you between like 9 and 20,000,000 in ARR? Are you sort of in that range today?

Why Cledara Chose Denver

Cristina Vila

06:35>> We are close to that range. Yes.

Nathan Latka

06:37Oh, the bottom or the top part of that range?

Cristina Vila

06:39>> The bottom.

Nathan Latka

06:40Okay. Cool. But growing nicely. You mentioned five x past Yeah. Twelve months which is great. So why Denver? How did you run this process?

Cristina Vila

06:47>> So we were exploring San Francisco, New York, Denver, and Austin. At the time, people told us, don't come to San Francisco. That was about, eighteen months ago. New York was very expensive, and also people were telling us, no, people don't want to come to the city anymore. I don't think that's true. The city is great.

Nathan Latka

07:06You're feeling and I can tell you're loving New York.

Cristina Vila

07:08>> I do love New York. And then between Austin and San Francisco, when I was talking to people in Austin, what I realized is everybody was saying, oh, are here for a couple of years, and then we'll go back to wherever we we are from. And that for me, when I'm looking to create a team, I want teams that are relatively stable. And we know that people like to move, people like to explore new job opportunities, But

07:34>> I was making sure that, okay, we can create a stable team so that we don't lose all that knowledge constantly. And then also in Denver, have great universities, great engineers. A lot of tech companies have second offices there, and you also have a lot of great companies that are born there. So that's what led us to to Denver and I love skiing.

Nathan Latka

07:56So you

07:57know then you love skiing?

Cristina Vila

07:58>> I love skiing. So you know, for me that was another bonus.

US vs European Pricing and Product Bar

Nathan Latka

08:01Very cool. How many so raise your hand if you are based in Europe or some not in The US and you and you already have at least one FTE in The US. Anybody? Okay. Okay. Cool. Okay. This is great. So I'm gonna throw it over to you guys. Bridget, do you have any questions for Cristina in terms of US expansion?

08:20Hardest thing about US expansion, people like finding people in US or like you're talking like people, location? Everything.

Cristina Vila

08:28>> For me, when we were starting, the hardest thing was just that things are actually very different. Like, just from the way in which you contract people, the way in which you pay people, the way the things that are, like, the what people expect when when you are interviewing. Then also the from a product perspective, the bar is much higher here. Right? Like people really want more. They're also willing to pay more. Right? So that's something that

08:57>> I think as Europeans, we need to take into consideration that sometimes become with our European product and our European pricing, and we are just undermining ourselves.

Nathan Latka

09:05Well, hold on. Will you sell the same product in The U to a US customer as you would do in parts? Like, did you charge The US customer double?

Cristina Vila

09:12>> No. Actually, what we've learned is that we just can raise it in both markets, and the value is there. And I think that's the other thing that we've realized that, or personally, I've realized. I think sometimes as founders, we we see the, let's say, the complete product in our minds, and we feel okay, it's not fully there, therefore the full value is not there, but actually the value is there. People are paying for it. And we've

09:37>> now this year doubled prices or we've increased prices twice, and we still don't see, any pushback during sales calls.

How Cledara Makes Money: Two Revenue Streams

Nathan Latka

09:48Wow. So one of the things with your permission, you can reject this. There's no problem. But when I met with Brad in Denver, I had no idea your business model was what it actually is. Because I interview companies that do what you do all the time, and many of them are not doing well because it's effectively an agency that's negotiating contracts, and then they go out of business a year later. That is not your model. It's

10:07very different. Are you open to sharing how you guys make actually make money?

Cristina Vila

10:11>> Yeah. Yeah. Absolutely. So we we have a a fintech product embedded into the into our solutions. So essentially, we are a and what we do is we provide companies with a with a process for their businesses which starts with helping you assess what you should buy, then paying, actually paying for the software through our, platform. So we provide you with a virtual cards to pay for it, you can initiate the transfer through us. And then, we

10:41>> enable you the ongoing management. So how many licenses do you need or how, who who needs access, and we provide visibility to the whole business. So then we do we have two revenue streams. One is the subscription to access the platform, and then the other one is the interchange revenue that gets paid to us directly from Mastercard.

Nathan Latka

11:01And here's what shocked me. What percent of your monthly revenue is interchange versus SaaS?

Interchange vs SaaS Revenue Split

Cristina Vila

11:06>> 60% is interchange and 40% is, SaaS.

Nathan Latka

11:1160% is interchange. So raise your hand if you know what interchange means. So okay. Some people do. Okay. This is like this whole model of SaaS plus in my opinion. Like, it makes it way more sticky. I imagine way more valuable. I'm curious how your equity investors reacted to this when you originally pitched them and they saw this growing interchange, but explain how this works. So I'm a company. I'm processing x amount of dollars through you

11:31every month. How do you make money on that?

Cristina Vila

11:34>> So the customer doesn't pay anything and that's the beauty of it. Right? So whenever you pay for something with your card, there is a percentage that the acquirer takes. And then of that percentage, the majority comes to the issuer, which in this case is us. And so it's something that the customer doesn't feel at all, like you don't feel like you are paying a percentage on top to us, but we get it directly from the card

12:01>> schemes.

Nathan Latka

12:02And when you add up the total sort of GMV, right, cost volume going through Cledara on a monthly basis today, where what range is that in?

$500M Volume Target and Debit vs Credit Interchange

Cristina Vila

12:11>> So so I can tell you that this year we're gonna do 500,000,000.

Nathan Latka

12:14So $500,000,000 and you helping software companies buy other software?

Cristina Vila

12:19>> Yeah.

Nathan Latka

12:20And when you look at interchange, is the is it debit or credit?

Cristina Vila

12:25>> In The UK and in Europe is debit, and in The US, it's credit.

Nathan Latka

12:29I'm gonna try and simplify this because when we go in the weeds on this stuff, there's and anyone in here who isn't anyone in here in the credit card, GMV, margin space? Okay. Yeah. So you're all smiling. You're going, okay. This is gonna be hard to explain because it is. It's very hard to understand. Who's the issuing bank, who's the issuer, is there a project manager, who's coming in. Bond is a great sponsor that also plays

12:48in this space. Most people would say that the max interchange you can make, know, top line on a debit product in The States would be something around 2.6%. And ultimately depending on if you have a program manager or not, you, Cledara, or whoever is helping the processing, you could end up with net interchange of something at like 1.8 to 2%. Then every the other point six gets taken by the the, you know, banks, the other folks.

13:17Help me understand how you guys negotiated those margins because if you're doing $500,000,000 in volume, point 1% extra is a big deal.

Cristina Vila

13:25>> Yes. So I mean, we negotiate quite high up. So we are very close to Say

Nathan Latka

13:30that again, you never what?

Interchange Margin Negotiations

Cristina Vila

13:31>> Like, we keep the majority of Uh-huh. Of that percentage. So on that, I think we've we've done great negotiations with our partners there. Because as you say, obviously a small percentage when you talk about these figures, it's meaningful.

Nathan Latka

13:45So did you guys use a program manager when you launched Who did you use?

Cristina Vila

13:48>> So we actually work with Bond in The US and we work with in UK and Europe.

Nathan Latka

13:54And how does Bond work?

Cristina Vila

13:56>> How does Bond work?

Nathan Latka

13:57How do you work with Bond?

Cristina Vila

13:58>> So we integrate with them and then, we programmatically create the virtual cards that we that we need from them.

Nathan Latka

14:05Just a little product placement.

Cristina Vila

14:06>> They're a good sponsor. Figured I teed it up pretty organic. I

14:09>> love I love that.

Nathan Latka

14:10Go for the kill, you know. There you go Bond. We'll get that recording for you. But okay. So okay. So that's the model today. So is that how you go from 9,000,000 a year in revenue to a 100,000,000 year in revenue? It's going from 500,000,000 one volume to 5,000,000,000 volume, or are there other revenue streams that we don't know about yet?

Cristina Vila

14:26>> There are there is more, of course. There is always more. So with the with us, we so at the moment, what we are doing, if you can think of Cledara, is we are aggregating the demand side of software. Right? So we are creating a very powerful plat platform to help businesses buy software. And with that, we are learning a lot around what, companies use, what they use alongside it, when they churn, what do they churn to.

14:53>> And this is all, information obviously that, vendors find very useful. We don't share it at the moment. That's not something that we're doing. But it is true that in all these conferences, whenever, you know, vendors come to us, they say, hey, do you have a marketplace? Can we be part of your marketplace? We want to be able to get your customers to find us more easily. So what we've started doing is create what we call the

15:21>> Discover feature, which is essentially, if you are trying to buy a CRM, we will say, as a company, you are you have this profile, and programmatically, we will tell you what are the top three CRMs that companies like you are buying today. So that's, something that we are that we are now testing. It's being very successful and then obviously we will just open it up more in a marketplace form.

Nathan Latka

15:49And can can you you're gonna do sort of G2 model where people can pay for paid placement at the top of the recommendation list or

Cristina Vila

15:55>> No. So we want to we on that we are very clear. We always want to be on the side of the buyer. So therefore, we would only ever recommend something that our that we see that based on how customers use it makes sense for you. So it would always be like based on on usage.

Nathan Latka

16:12Very cool. Before I'm I'm gonna throw it over to you guys for questions here in a second over the last minute, but how much do you think you guys will grow this year?

Growth Target: Minimum 3x in 2023

Cristina Vila

16:19>> Minimum three x.

Nathan Latka

16:20Minimum three x. I love it. Alright. Minimum three x. Alright. We got a minute left. What raise your hand if you got a question. Alright. You got a question? Throw one at her. She said so many.

The Four P's Framework

Nathan Latka

16:35Oh, yeah. Sorry. Sorry. I told Cristina, I wanna do something different. So if you're here for the four p's, you gotta catch her outside. But what are the four give us the four p's real quick, and then they can talk to you off stage about it.

Cristina Vila

16:45>> Yeah. So the the four p's are so when whenever something goes, you know, maybe not to plan, what I always turn to is what can I control? What are the things that I can really influence? What can I focus on? So it's pricing, it's product and positioning, and it's then planning internally in the company. And whenever things don't you see that, you know, that the market is throwing tons of things at you. Okay. But I I

17:11>> know I can control this, so let's make sure that we optimize on those ones for the current conditions that we are, handling. But, yeah, happy to speak to anybody, that wants to, about it. And and then maybe one final thing. Right? So,

1,500 Subscriptions Per Day

Cristina Vila

17:27>> you mentioned, you know, about Cledara and and how, you know, what's what's there for us and in the future. But something super interesting, our customers today spend or are renewing or buying 1,500 subscriptions a day.

Nathan Latka

17:46Wow.

Cristina Vila

17:46>> Like this is a lot

Nathan Latka

17:48So two if two different customers both are buying HubSpot, do you count that as two or one?

Cristina Vila

17:53>> That's one customer buying HubSpot.

Nathan Latka

17:56But when you say they're buying 1,500 different like SKUs, HubSpot would be one SKU.

Cristina Vila

18:02>> What do you mean?

Nathan Latka

18:03When you say all your customers are buying 1,500 different softwares per day. Did I hear that right?

Cristina Vila

18:07>> Yes.

Nathan Latka

18:08Would you count like if if two different customers both pay for HubSpot, is that No. That's two. That would be two. Yeah. Yeah. Okay. Okay.

Biggest Software Management Platform by Volume

Cristina Vila

18:14>> Yeah. Yeah. Okay. So there are a lot of different, yeah, people buying software and redeeming software every single way. Alright. So this makes us the biggest software management platform I think in the world at the moment in terms of volumes.

Nathan Latka

18:26There you go. So guys, I mean, is impressive. Launched several years ago, gonna process $500,000,000 in volume this year and not your average spend management system. They're very smart in terms of how they're doing it, building the business model. Now 80 people full time with a bunch of folks in The States. There's an office in Denver. There's a marketplace coming. She hopes to three x this year. Please give it up for Cristina from Cledara.

Cristina Vila

18:48>> Thank you.

Nathan Latka

18:49Thank you so much.

Cristina Vila

18:50>> Thank you very much.

Nathan Latka

18:51After you, please.