How Cropin Grew Its Run Rate From $1.5M to $2.4M Selling Agtech SaaS in 29 Countries (Interview with CEO Krishna Kumar)

Introduction to Cropin and Its Mission

Nathan Latka

00:01Hello, everyone. My guest today is Krishna Kumar. He's the Founder and CEO of Cropin Technology Solutions. He's made it possible to enable data driven farming by connecting all the stakeholders in the agri ecosystem. Cropin is a leading global full stack agtech organization that provides SaaS solutions, enabling businesses to utilize technology to effectively drive their initiatives around digitization, predictability, risk management, compliance, sustainability and traceability. All right. Krishna, are you ready to take us to the top?

Krishna Kumar

00:25Sure.

Revenue Model and How Cropin Makes Money

Nathan Latka

00:26Alright. Very good. So tell us specifically what the company does and and what's your revenue model? How do you make money?

Krishna Kumar

00:32Yeah. So, you know, cropin is a full stack agtech company, and we work with b to b. We are SaaS b to b company, and we work with all the businesses who are interacting with the farmer for their business. For example, we work with companies who are into farm farm production like McCain, ITC, Philip Morris, Syngenta. We also work the input side of the businesses who are trying to sell chemicals and fertilizers to farmer where they

01:00want to manage the farmer from the advisory perspective and also from the from managing the retailers and dealers point of view. So one side, we are managing... Helping the companies to help them to grow better with a less less input, providing all kind of advice and support to the farmer. At the same time, we're also helping input companies to educate the farmer how to use their inputs in a better way. The third piece is we also

01:22work with the banks and NBFCs and insurance companies to underwrite their product because, you know, lately, we saw in 2015 that we are sitting on a huge amount of data. It was a critical mass of data. It was, like, close to 88 terabyte of data. We thought how can we learn from this data and give back the insight back to the customer and also to their farmers. And we build a lot of machine learning AI based

01:44capability to, you know, provide this insight the real time to the customer to make sense of it and also help the farmer to grow better.

Nathan Latka

01:44So who who...

01:52Who's your actual customer? Who's paying for the technology?

Krishna Kumar

01:55I think it's businesses who are paying for the technology.

Nathan Latka

01:58The the farmer or what kind of business?

Krishna Kumar

02:00No. So the customers who are engaging the businesses are paying for the money. For example, if you look at McCain, McCain does potato growing for their chips making. They engage in the background lot of farmers to grow the potato. So... But the company will pay our... Pay to us, but they will use our platform to manage their 100,000 growers in different countries.

Customer Pricing and Average Contract Value

Nathan Latka

02:20I see. Yeah. I see. Okay. Very good. So McCain, you've also got like Sadria... Or how do you say it? Sahyadri Farms, these kind of companies.

Krishna Kumar

02:20Correct. Correct.

Nathan Latka

02:20Yeah. Okay. Very good. And then what do they pay on average for this per month? I'm sure you have a lot of cohorts, on average, what would you put it at?

Krishna Kumar

02:36So if you look at our international customers pay us on an average of, you know, $50,000. Some customers have 100 k, 200 k dollars also.

Nathan Latka

02:45Said $50,000 per year?

Krishna Kumar

02:47Per year on an average if I divide the international businesses by the revenue. And if you look at Indian businesses, they are somewhere around $13,000 on an average, but again there are customers who are at the enterprise level paying more than that.

Nathan Latka

03:01Okay. When you look at... If you put your entire... Including domestic and foreign altogether, though, it sounds like the average might be around $15,000, $16,000, $17,000 per year or something like that.

Krishna Kumar

03:11You can say that.

Nathan Latka

03:12Or or is it cohort... Is the Indian cohort that's paying $13,000 a year? Is that a those are not the, it's a very different cohort than your international?

Krishna Kumar

03:20Correct. So if you look at international is much higher and then the domestic is on the lower side.

Company Founding Story and Background

Nathan Latka

03:27Okay. So when did you launch the company? What year?

Krishna Kumar

03:30We So started in 2010 much early than agtech started in the industry. So we started talking about in 2010. We launched our first working product in end of twenty eleven starting of 2012, then we started selling to the customer.

Krishna Kumar's Path from GE to Agtech

Nathan Latka

03:47And what were you, I mean how did you get into this? Did you quit a corporate job and then go on or were you a farmer and then said I wanna build this?

Krishna Kumar

03:54Yeah, so I was in a corporate, I used to work with the GE General Electric. I was hardcore engineer, more of a R and D guy. And then, you know, one of the idea was to do of of my... Something of my own, give back to the society whatever learned from... We have learned from it, and we learn technology. So we did what we best we can do and also I was looking for a sector which

04:17really needs technology where nobody wants to invest their time and agriculture came to the first because lot of farmers take their life because of you know take their life because of the debt and the crop failures and the debt is somewhere around $1,000 for that somebody takes life that's a big issue.

Nathan Latka

04:35A $1,000 in debt and the rates of suicide are extremely high.

Krishna Kumar

04:40Correct, correct. And then the yields are very low, and I thought, like, you know, there is no such platform which has actually bringing this whole ecosystem closer where you can remove the information asymmetry and provide all the right advice to the farmer right from the advisory and also financial product to them so that they can experiment more and become a bit of farmer, have enough cash flow to, you know, do experiments and and help their family

05:04as well. So if that our strategy is not only to help them to grow better, but also we are helping banks and insurance company to reach out to this farmer, provide, you know, data insights to them that you can actually go and lend this farmer because he has been a very good farmer from last three years opening up the black box for them and and help them to underwrite a loan. And also bringing down the cost

05:24of monitoring and underwriting for the bank so that it becomes a viable business for them to

Nathan Latka

05:24Are

05:28banks paying you for this?

Krishna Kumar

05:29Correct.

Nathan Latka

05:29Okay. So it's a different revenue stream.

Krishna Kumar

05:33Correct. So it's it's basically... It's a mostly, you know, machine learning and AI based system, which when the banks try to give lend to a farmer, they Yeah.

Nathan Latka

05:42Krishna. I'm sorry. I totally get the product. I'm just trying to get a sense of how meaningful is it in your business. So the... Just the revenue from banks, like, how much of your total revenue over the past twelve months does it make up like 10%, 150%?

Krishna Kumar

05:53Close to 10%.

Nathan Latka

05:54Okay, 10%. Okay, so small, but it sounds like growing.

Customer Count, Countries, and Enterprise Strategy

Nathan Latka

05:58To me about kinda your key growth, which it sounds like are the kind of the McCain's of the world. Right? So how many how many companies like that are you working with now today?

Krishna Kumar

06:06We have worked with close to a 185 company across the globe. So we are in 29 countries. Mostly, our target customers are enterprise. And once we acquire them, we go to multiple countries where they are working with the farmers, and they onboard the farmers on the platform. So the strategy is to go to the enterprise first and then to the mid sized market.

Nathan Latka

06:06Yep.

Revenue Run Rate and Fiscal Year Close

Nathan Latka

06:26Now can I can I take a 185 customers multiplied by that 50,000 ACV that puts you guys at about $9,000,000 to $10,000,000 in run rate right now? Is that about right?

Krishna Kumar

06:36So you can call it as a 4,500,000 ARR we are targeting because some customers will be on the pilot stage and then they scale up over two to

Nathan Latka

06:42What what are you at now though? What did you close 2018 at in terms of run rate?

Krishna Kumar

06:47So we close at 2018. We closed March 31. We closed at 1.5.

Nathan Latka

06:53Wait. Wait. Sorry. Your your fiscal year ends March... Ended 03/31/2018?

Krishna Kumar

06:59Correct.

Nathan Latka

07:00Okay. And that was... You said you you were doing about 1,500,000 in run rate at that point. So about $90,000 to $100,000 a month?

Krishna Kumar

07:06Correct.

Nathan Latka

07:07Something like north of $100,000 a month. Okay. And then you've scaled now today to about what?

Krishna Kumar

07:13So we are at 2.4 and our visibility is to close it at 4,500,000 ARR.

Nathan Latka

07:19Okay. By by March March 31. This year?

Krishna Kumar

07:21Correct. 2019.

Nathan Latka

07:22Okay. So just to be clear, I mean, that's only... You're you're... I hear you right? You're doing... You said 2,400,000 run rate today, And you hope that in the next two months, you're going to basically double that up to four and a half?

Krishna Kumar

07:37Yeah, because all the hard work of few months are going to close in this this one. So we are in the negotiation and all this stuff.

Nathan Latka

07:44Is okay. So you don't see consistent new bookings per month. It's very heavily weighted between February and March each year?

Krishna Kumar

07:51Yeah. So that has been always a heavy year for us in terms of the ARR.

Nathan Latka

07:56Not just heavy though. I mean, this is like all your... I mean, this is like significant, like doubling your company in two months is basically what you're telling me you're gonna do.

Krishna Kumar

08:04No. So as I said, we have a enterprise client, and there are clients who are also in the line of paying a million dollar... Adding a million dollar ARR. So there are multiple clients with... Where we have been working for four, five months. Past four, five months are going to convert in this month. So they're always on the verge of closure.

Nathan Latka

08:20Okay. So you're currently as a whole company right now doing $2,400,000 a year. You're saying with almost complete confidence, I'm watching your face. You've got contracts where there's gonna be a million dollars that they are wiring to your bank account in the next two months. More than... So more than 50% of your whole business size today is gonna come in from one new customer in the next two months.

Krishna Kumar

08:42No. Couple of customers. So there are two, three... Five, six customer we are talking to. Two, three customers will convert, and the ticket size are going to be a north of a million dollar.

Nathan Latka

08:52How have you been able to... So your current ticket size with a 185 customers at the run rate you just told me would be... I don't know. What what is that? $200,000 per month divided by whatever? They're paying about a grand per month or $12,000 per year. How did you go from these contracts averaging $12,000 per year to ones that are gonna be $708,100 grand per year? I mean, that's a math. If I was in other

09:10words, if I was a company talking to you about to sign a million dollar deal with you, my first question would be introduce me to two other customers that are this size. You would have no one introduce them to because everyone else is paying $12,000 a year.

Krishna Kumar

09:22No. So as I mentioned, this is a mix of customer. There are customers who are paying 300 k as well in our... As ARR. I mean, on the yearly basis. And there's a plan to... We are expanding with them in the multiple countries as well as at... While we are talking to them. So they talk to the world of Syngenta. Syngenta is a, you know, multi million dollar company. They are using our product in 20 countries.

09:42Now when we are talking about a billion dollar clients, because we are talking about a multi... Multi country implementation while they talk to, Philip Morris, who has been our customer. So there are already large agencies who are working with us, scaling up with us, and that's with the confidence to other companies to also, you know, sign up that scale up product.

Nathan Latka

09:59So it sounds like you have serious kind of power laws happening here. True or false? That if you take your highest paying three customers, they make up more than 30% of your total revenue.

Krishna Kumar

10:08So so, you know, 80, 20% rule. 20% will be... Yeah.

Nathan Latka

10:14Yeah. I mean, if you... I just... I'm saying if you're doing $2,400,000 in run rate today and you're telling me you have clients already currently paying you $300,000 per year, that's more... That one customer paying $300,000 a year is more than 10% of your current run rate. So if I add two or three or more of those, it sounds like you have major kind of eighty twenty Pareto principle parallel happening.

10:31Like,

10:33is there a path to upgrade people paying $12,000 a year, getting them up to a $100,000 a year, $200,000 a year? And if so, how do you think about driving expansion revenue?

Krishna Kumar

10:41Yeah. So we have... So so we have already sought this. As I said, there is a 20%... 80-20 rule. There are customers who have signed up pilot 's say 30 k, 40 k grand, and 10 k grand also. But they have a permission to... They are enterprise client. They are they are validating the product, and they will scale up to 100 k, 200 k depending on number of users they will keep adding. So here...

Nathan Latka

11:01But what is a user though? My... I I I don't I don't understand. So I don't think my audience understands. What is a user at McCain?

Krishna Kumar

11:07So user is a, you know, farm farm manager who is managing say hundred hundred farmers under his portfolio.

Nathan Latka

11:14Okay. So it's not the 100 farmers. It's the one manager at McCain managing a 100 farmers?

Krishna Kumar

11:19Correct. Correct.

Nathan Latka

11:20Okay. So you're pricing off the managers at McCain, not the number of farmers they're managing?

Krishna Kumar

11:25Correct.

Nathan Latka

11:25Okay. And then you said in your bio here, I'll just... I I think it's a good place to stick this in here. Right? So you guys so far have digitized nearly 3,200,000 acres of farmland enriching the lives of nearly 2,100,000 farmers. So those are all the farmers managed by the managers at McCain or your other enterprise customers. In addition to creating a footprint in 29 countries globally. Is that accurate?

Krishna Kumar

11:43Correct.

Funding: Series B and Total Capital Raised

Nathan Latka

11:44That's great. Have you done this all bootstrapped or have you raised capital?

Krishna Kumar

11:47So we have raised capital. So we recently closed our series b in end of November. Yeah.

Nathan Latka

11:53Okay. How much have you raised to date?

Krishna Kumar

11:55So this round we raised $8,000,000. Total we have raised for $12,000,000.

Nathan Latka

12:0012. Okay. And why raise the $8,000,000? Why couldn't you stay and just kind of be efficient with the 4,000,000 you raised?

Krishna Kumar

12:06I think because we consciously made a decision to expand in international market, and once you expand in international market, you require, you know, foot on the ground also for the enterprise client, and that's that's that's the cost. The second conscious decision we made to invest more on the AI and ML, that... That's also take a cost because now, you know, we are building those models to detect and predict. So we can predict crops in Nigeria, like,

12:30which plots are on which crop, and then what is the health, what is the yield, and helping the supply chain manager, commodity traders, banking, and insurance industry based on that. So that that's because a huge investment.

Team Size and Headquarters

Nathan Latka

12:40What's the team size today? How many people?

Krishna Kumar

12:43150 people.

Nathan Latka

12:44And where's everyone based?

Krishna Kumar

12:46Bangalore is headquartered and 90% team will be here.

Nathan Latka

12:50Okay. Bangalore and then kind of remote.

Krishna Kumar

12:52Correct.

Churn and Net Revenue Retention

Nathan Latka

12:53Talk to me about churn. It's critical in any SaaS company. What's your churn today?

Krishna Kumar

12:57So, you know, if you look at our value churn is 1%.

Nathan Latka

13:011% per month revenue churn?

Krishna Kumar

13:041%. Correct. Total value churn is

Nathan Latka

13:06Yeah. Yeah. But monthly or annually?

Krishna Kumar

13:09I I I think it's a monthly.

Nathan Latka

13:13About you lose percent revenue churn per month, but then it sounds like you have serious expansion levers. Does your expansion revenue on the cohorts more than make up for lost revenue?

Krishna Kumar

13:24Expansion is there also addition of a new clients are there. So when you... But... Yeah.

Nathan Latka

13:29Yeah. But so whenever you're... People always do this. When you're looking at cohort analysis like churn and expansion, you ignore new customer ads. If you only look at the cohort you signed up twelve months ago, you're saying that cohort churns about 1% revenue per month. That same cohort you signed up twelve months ago, how how how much of those customers upgraded their plans?

Krishna Kumar

13:50Oh, so so so I I can give you an example. So a customer comes with $10,000 in three months. They expand to 100 k because they proven the product in one location. They take it to 20 location because with the learnings and expansion.

Nathan Latka

14:03Okay. But that's not happening across your entire base because you told me over a year. Yeah. So I'm I'm not looking for your best case scenario. I'm saying that cohort. Right? If it's turning 1% revenue per month on average, what's that cohort adding back per month? Is it more than 1%?

Krishna Kumar

14:19I need to check the numbers

Nathan Latka

14:19Okay.

Krishna Kumar

14:19On this one. But I think... Yeah. I mean, we had expanding with the customer.

Nathan Latka

14:26Do you know your net revenue retention?

Krishna Kumar

14:32What do you mean by net revenue?

Nathan Latka

14:34Net revenue retention means you look at people that signed up a year ago, you you subtract out churn revenue, then you add back expansion revenue. If expansion is more than churn, then you have more than a 100% net revenue retention.

Krishna Kumar

14:47I think we are at that.

Nathan Latka

14:49Okay. But you don't know. I'm I'm a little surprised you just raised $8,000,000. These things usually come up on those kinds of conversations. Were there no conversations about these kinds of numbers?

Krishna Kumar

15:00So so basically, we talked about the churn, a number of churns in terms of the value tag. Now we do talk about all these numbers, but I think our retention... So as I said, if our,

15:12you know, churn is like 1% of the value churn.

Nathan Latka

15:16What do you mean by value churn?

Krishna Kumar

15:18So if I have a one crore customer... I mean, hundred hundred k... Hundred hundred k customers to 1%... So if even there are four customer churn, but the value churn will be

15:291% of the 100 k.

Nathan Latka

15:31100. So if you have a $100,000, you're saying a thousand dollars will churn?

Krishna Kumar

15:34Correct. Yeah.

Nathan Latka

15:35It's called revenue churn.

Krishna Kumar

15:36Right? Revenue or value, whatever you wanna call it.

Nathan Latka

15:38Right? You're calling it value churn.

Customer Acquisition Cost and Payback Period

Nathan Latka

15:40We're calling it revenue churn. But yeah, got it. Okay. Good. Yeah. That makes sense. What about... What's it cost you to acquire one of these new customers? Is there... Is it a bing log sales process or how do you look at CAC?

Krishna Kumar

15:51So so it's like a feet on the ground because we are after the enterprise clients. So we have a mix of inside sales and then the feet on the ground. So once she set up a meeting and we go and it close. So CAC will be somewhere around, you know, close to $5,000... $55,000 to $6,000.

Nathan Latka

16:11K. And how many months do you... Does it take you to get that money back?

Krishna Kumar

16:14Eight months.

Nathan Latka

16:15Got it. So you're assuming they're they're gonna pay you $700 a month, $800 a month, something like that?

Enterprise Billing and Contract Structure

Krishna Kumar

16:20So... Yeah. So we basically, we charge them quarterly because they're enterprise clients. So this is how we build that agreement.

Famous Five Rapid-Fire Questions

Nathan Latka

16:29Okay. Very good. Let's wrap up here with the famous five, Krishna. Number one, what's your favorite business book?

Krishna Kumar

16:35Oh, Straight from the Gut.

Nathan Latka

16:37Number two, is there a CEO you're following or studying right now?

Krishna Kumar

16:40Yeah.

Nathan Latka

16:43Is there a CEO you're following or studying?

Krishna Kumar

16:46Oh, Salesforce. So I follow the the CEO of Salesforce.

16:51Mark Mark Benioff.

Nathan Latka

16:52Number three, what's your favorite online tool for building the company?

Krishna Kumar

16:58Favorite online?

Nathan Latka

16:59Tool.

Krishna Kumar

17:02We

17:07we use Pipedrive.

Nathan Latka

17:09Why do you say that was such a confused look on your face?

Krishna Kumar

17:13I didn't understand that's tool. What... I mean, the tool... What do you mean by the tool?

Nathan Latka

17:18So... Favorite online tool to build a company?

Krishna Kumar

17:20Pipedrive is a great example.

Nathan Latka

17:20It's your CRM, it sounds like, or sales process.

17:23Number four, how many hours of sleep do you get every night?

Krishna Kumar

17:26I think six to seven hours.

Nathan Latka

17:28Okay. And what's your situation? Married, single, kiddos?

Krishna Kumar

17:32Married. No kids.

Nathan Latka

17:33No kids yet. And how old are you?

Krishna Kumar

17:37I'm 26.

Nathan Latka

17:3926. Last question.

17:40What do you wish your

Krishna Kumar

17:4036.

Nathan Latka

17:42Oh, 36. Okay. What do wish your 20 year old self knew?

Krishna Kumar

17:46Can you repeat the question,

Nathan Latka

17:46Sure.

17:48Sorry. What do you wish your 20 year old self knew?

Krishna Kumar

17:52I didn't get you. Sorry.

Nathan Latka

17:53What do you wish your 20 year old self knew?

Krishna Kumar

17:5820 year self knew.

Nathan Latka

18:00Sorry. When you were 20, what's something you wish you knew?

Krishna Kumar

18:04Oh,

18:06that, you know, there's a world world beyond engineering. Because India mostly, either they want to become an IAS officer or engineers. So sorry.

Nathan Latka

18:17I didn't catch the lesson there. What what do you wish you knew when you were 20?

Krishna Kumar

18:21So there's a world beyond the engineering.

Nathan Latka

18:23Got it. Guys, Get outside of engineering, there's a world beyond it. Coming from GE, he's now helping farmers be more productive, serving about a 185 companies that manage millions and millions of farmers. He's doing about $200,000 per month right now or $2,400,000 run rate. Just raising $8,000,000 around $12,000,000 in the company to date, 150 people in Bangalore and other remote locations, 1% revenue churn per month. They make that back up with expansion. North of a 100%

18:47net revenue retention each year, spending $5,000 to get a new company like McCain. Again, that's managing all these farmers with an eight month payback period. So healthy economics there Krishna, thanks for taking us to the top.

Krishna Kumar

18:58Thank you, thank you Nathan.