DriveX Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Rauno Sigur. He's the CEO of DriveX, a technology partner for insurers, mobility, leasing, and dealership companies. Drivex leverages computer vision, offers a quick, easy, trustworthy way to remotely inspect a vehicle. Rauno, are you ready to take us to the top? [00:16] >> Oh, yes. [00:17] All right. So who Are you selling directly to the insurers? Are they paying or is it somebody else paying? [00:23] >> That's a great question. Yes, we sell directly to companies, and we're also launching a product directly to consumers who would like to get help in pre inspecting cars. [00:35] Mhmm. When you say you sell to companies, name a couple of them specifically. [00:39] >> We're really strong in our in our home region, which is Central And Eastern Europe, and we work with the largest groups such as Vienna Insurance Group, and also ERGO, which is a part of Munich Re. [00:52] This makes sense. So how do you price the tool? What a big insurer in Estonia pay you? [01:00] >> Well, there are two factors to that, mostly, on a general level. Of course, the volume of inspections in a given period, let's say a month or a year, and what kind of features the company wants. Because our competitive advantage is how much the company or client can tweak the solution themselves. So we're looking at between 2 to €7 per inspection. [01:26] I see. So call it call it like like 6 or 7 US dollars per inspection. [01:31] >> Roughly that. Yes. [01:33] And what I guess help me understand. So how does the technology actually work? I'm an insurer. How do I remotely inspect a vehicle of someone I'm insuring? [01:41] >> That's a great question. So in our region, and also in The US, fraud is a very big issue. So that's why insurance companies are pre inspecting the car. That's really important to understand what damages are pre accident and post accident. Now, with our technology, they just need to have the vehicle information such as number plates and BIN code, generate the DriveX link in our system or through API, and send the link to the consumer, usually with [02:14] >> an SMS, and it's all web based technologies, you don't need to download or install anything, and depending on the workflow that the insurance company is using that defines the images and validations, then the consumer, the owner of the car, just starts capturing photos. And what is really interesting is that we analyse those images in real time, and also provide feedback to the consumer in real time to ensure the image quality and also the trustworthiness of data. [02:43] Okay, got it. So, the main way that you're ingesting data is photos taken from the car owner, they send it to the insurer, so the insurer can better underwrite the car owner. [02:53] >> Exactly. And they I use those pre inspection photos when there's a claim, so they can go back in time and compare what was the original condition, because in The US alone, over $7,000,000,000 per year is paid out in fraudulent claims, and they could use that technology to [03:11] Yeah, like, I guess what I'm asking is, there's no way, you're not installing software on these cars, because I mean, part of it is, what if damage occurs if non visible, you can't capture it in a photo, and there's a claim on that. How capture do that? [03:24] >> That's a brilliant question again. Thanks. So our vision is to combine different technologies together. So today, we're in roadmap, we're executing the visual inspection, but we also want to incorporate audio diagnostics of the car, and also connected car data we can access over the cloud of the manufacturer, the car manufacturer, to ask fault codes of the car, let's say engine or mileage and so forth. So that brings a three sixty view on the vehicle's condition, but [03:56] >> of course, there are some damages that really cannot be seen or even through fault codes. [04:02] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 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 Founderpath. Check this out. I'll show you how you can access this in a second. But you log in, you connect [04:25] your Stripe account, you see your valuation real time, you can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [04:50] get a different valuation. A VC is gonna pay a different valuation, Private equity firm is different. If you're gonna 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 [05:12] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction 1,200,000 seed round 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna 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 [05:37] going out right now and you're raising your seed round. We'll 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 dataset of SaaS valuations than what you can get now inside of Founderpath. 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 [05:59] if you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation 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. Alright. Let's jump back into [06:26] the interview. And, Rauno, how many inspections did you do total last month? [06:32] >> We're still in early stages, so we're talking about 10,000, 20,000 inspections per month. [06:39] Well, I mean, that's still a ton. So I mean, if you did 20,000 inspections last month, can we multiply times $7 per inspection to get your revenue? [06:49] >> Yes, you could. And if we're also updating our pricing right now, so the prices I told you was what we have, what we're charging right now, but obviously, we have customers who were early adopters, and then the price of course is a little bit the same difference, I mean, cheaper, because what we're building is really deep tech, and how we are better is that we have customers even before we have the technology. So we're really building [07:17] >> it to better customers. I think [07:18] great you pre sold it. But if you had to look at the average price that these insurers paid per inspection last month on the 20,000 inspections, would that be more like 4 or $5? Something cheaper? [07:31] >> It's cheaper. It's around a few bucks, because we launch our product in stages, and the first stage the value we provided was image quality detection and visibility detection. Now we're adding the damage detection, which increases the price of the inspection and the value that we provide. [07:50] Okay. But just to be clear, earlier you said inspections cost 6 to €7 per inspection. That's obviously a little more expensive than historically what we charge because you've matured Historically, your you said each one's a couple bucks. I mean, can we take 20,000 inspections last month times $3? You're doing something north of 60,000 USD per month? [08:09] >> Well, if you make the math, then yes. [08:13] Well, I mean, it's not just the math. I wanna make sure I'm calculating that accurately. Are you doing more than 60 k a month? [08:18] >> Currently not. It's less. [08:20] Okay. When do you think you can break that? [08:23] >> We actually have the plan to break that in the end of this year. So we're currently growing about 20% month over month, if we look at the subscriptions and the MRR we're making. [08:37] Okay. Okay. So you're closer to like 30,000 a month right now in revenue, with a path to get to 50 or 60 by the end of the year? [08:44] >> Yes. [08:45] I see. I see. And if you were at around 30,000 a month today in revenue, do you remember where you were exactly one year ago? [08:52] >> I would have to say that we were like four or five times less. [08:57] Okay. Revenue. So like 7,000 a month or something, something small. [09:02] >> Mhmm. [09:02] Amazing. Now how did you put this on a timeline for me. When did you guys write the first line of code for this technology? What year? [09:09] >> We started we registered the company in twenty nineteen December, but actually, we had the first customer in place in April 2020, and that's where we really started to build the code and the product. [09:23] So first customer was 2020, and how many customers are you serving now today? [09:28] >> We're serving 15 customers right now, but we're already signing first letter of intent in the rental industry, which will be the biggest market of our business. [09:38] Yeah, that makes a ton of sense. Of the 15 customers, you know, you do 20,000 inspections across all 15. Does one of them make up the majority of those 20,000 inspections? [09:47] >> No, it's actually quite distributed. So, yeah, not a big wheel there. [09:54] What is the biggest one? How many inspections does the biggest one do per month? [09:59] >> I would say they do a couple of thousands of inspections. Per [10:04] per month? [10:06] >> Yes. [10:06] And that's an insurer or a rental company? Rental car? [10:10] >> That's an insurance company, but in the rental markets, the market need is totally different. You have companies who need to inspect thousand cars per day, not per So that's why we need to build the next layer of the technology and make it reliable, precise and fast. [10:25] You keep saying we, tell me more about the founding team, how it is. [10:29] >> Obviously, I'm not the only one. So we have three co founders, and we really have experience in tech before. Estonia is the, we say, the land of unicorns, because we have the most unicorns per capita in the world. So, we did it before in the banking industry, in the governmental industry, and also Lastman Technologies. So I was in sales, and the CTO, he built the product, builds the product, and also the CPO was a sorter analyst. [11:01] I see, and did you guys all split equity evenly at the beginning? [11:06] >> There are two ways to do that. Yes. One is equally, but we did it the other way around. [11:12] Which is what? [11:14] >> I can't disclose the exact equity amounts, but we had to really dive deeper what is the role of each person, and also how much it's worth given the [11:27] Give me an example. Give me an example. Mean, don't don't share individual equity amounts, but why might you get more equity than the analyst, for example? [11:36] >> Well, we analyze the job description, and the CEO really has to overlook everything in the company, including the product area, the development area, and also the sales and business development, plus fundraising. So, yeah, there there really are two schools of thought here. [11:55] So are you the CEO? Do you own the most equity? I see. And then what? The CTO is the next most, and the third co founder is the next most? [12:04] >> You could put it like that. Yes. [12:06] Alright. Cool. That's helpful because there's folks listening right now thinking about launching their own companies and, you know, just splitting equity equally is rarely the right answer. It's lazy. It just means you didn't have tough conversations. [12:17] >> Yeah. And I recommend to have those tough discussions right in the beginning, and there were several because obviously it needs to be well thought through and argumentative. [12:27] Yep. Yep. [12:28] >> A constructive manner, of course. [12:30] That's right. That's right. And now tell me more about how you guys have funded the business. Are you bootstrapped or did you raise capital? [12:36] >> We have raised to date €1,200,000, which is like 1,400,000 in the US dollars also. [12:46] Was that one round or multiple rounds? [12:48] >> Two rounds. We have done a pre seed, and now the first seed round just closed it. We have Plug and Play Ventures from Silicon Valley. [12:56] Much was the seed? [12:58] >> It was 1,000,000 US dollars. [13:00] And then there was a 400,000 pre seed last year? [13:04] >> Yes. Actually, 300,000. [13:08] 300,000 last year pre seed. Now most folks in their seed, Rauno, are selling like 20% of the business. Were you guys sort in that same range? [13:16] >> You could say that, yes. And we really why Estonia startups are so great is first, the amount of money raised versus the actual revenue, there's a good balance between those two, and also really thinking how much equity do we really need to give away, how much capital do we really need. Not taking less, not taking more, so we did a very extensive analysis about that too. [13:41] Mhmm. Yeah. If you sold 20%, you raise at a 5,000,000 valuation post money. [13:47] >> Yep. That's the range is is pretty much true. [13:51] And was that with an Estonian investor, or did you race from The States or somewhere else? [13:56] >> Yeah. As I said before, there were a lot of unicorn and Sunicorn founders who are backing us from Estonia and the region, but the lead investor came from Central Europe, Czech Republic, because that's one of the key markets we want to enter and establish ourselves as dominant players, but and and plug and play ventures from Silicon Valley to bridge us in the next round to the big market we're after, The US market. Name [14:27] some of the top SaaS unicorns in Estonia. [14:31] >> Well, the original unicorn was Skype. [14:34] Yep. [14:35] >> I don't many know that that was Estonian. But then we have Veriff, which is a know your customer unicorn, and we have TransferWise, which is now called Wise for payments. There are, I don't know, 10 unicorns at the moment, actually. [14:53] Very cool. Alright, tell me more about your team. How many folks are full time? [14:57] >> We have 11 people full time, and I would say 50% of those are product people. We have all our core expertise in house, including sales and marketing. [15:09] And last question here as we wrap up. I mean, how do you go now branching and go from 15 customers to 30? It sounds like you're going into the rental car space because there's just more inspections happening. How do you land that first customer there? [15:21] >> We're actually doing it right now already, and really having those letter of intents in place, having paid pilots, and developing the product exactly based on the market's needs. So, it's a standard procedure, and the goal by the end of the year is to have 40 customers. [15:43] Well, Rauno, sorry, you're taking for granted how hard it is to get a paid pilot. A lot of my listeners are trying to figure this out, so it's not I'm trying to help you teach them effectively, right? So when you say a paid pilot, have you mocked up a spec of what the thing will look like for the rental car company and said, pay us now and we'll build this over the next six months? Walk me [16:01] through what you sold in the paid pilot. [16:02] >> Sure. Well, it all starts doing a bunch of interviews first, like really listening to the customer and doing the mom test. We have to learn that too. Not to sell too early, not to sell your idea, but to learn their process and their problems and their ideal product that they're looking for. Have they even looked into solving that problem before? And then building the mock up, like the clickable prototype, and showing combining that together with a [16:30] >> live demo of the product and the clickable prototype. That's what we're doing right now. [16:34] What did you use for the mock up prototype? You're talking like Figma? [16:38] >> Yes. Figma is a great tool for that. We use that as well. So, yeah, the clickable prototype [16:43] is You're you're you're selling with the clickable Figma file. [16:47] >> Yes. Exactly. Okay. Exactly. [16:49] And then and then let me just play devil's advocate. The car company is going, wait, I'm not paying for this. You don't have anything built yet. And you're saying, no, you've gotta pay us this amount upfront. Like, do you negotiate that? [16:58] >> Mhmm. That's that's that's where the skill comes in. But I guess the key thing here is how to find and identify the early innovators who really want to develop this with you, and they're ready to maybe just put a small monetary commitment there. [17:15] What is small on you? What's the size of it? [17:18] >> We could do a pilot where they just inspect, I don't know, 100 cars and pay, I don't know, €500, $500 for that, but that shows that the customer is serious, they want and they invest their time to provide feedback and, you know, measure the KPIs, because then we can do the next iteration and build even the best product, because [17:43] But this most paid products pilot, they're not paying for like a SaaS fee up front. They're paying a one time fee, $500 to do a 100 inspections, and you're hoping you can get them into a more recurring fee later on. [17:54] >> There are clear KPIs. So if we deliver those KPIs, then there's Maybe a couple [17:59] of those KPIs. [18:01] >> Well, definitely the speed of the service SLA, like how fast should we detect those damages, then the precision rate, how many damages should detect, what are the false positives, false negatives, then the customer satisfaction ratings, how much that the people loved the inspection process, how easy it was, and of course the savings. I can't go into details here, Like, the monetary savings compared to the old process. [18:32] Yep. That makes a ton of sense. Okay. Very cool. Let's wrap up here with the famous five. Number one, what's your favorite book? [18:38] >> 48 Laws of Power. [18:40] Number two, is there a CEO you're following or studying? [18:45] >> I think Elon Musk. [18:47] >> Yep. [18:48] Number three, what's your favorite online tool for building DriveX? [18:52] >> Online tool for building DriveX? I think Unlock, it's like a tool for connecting remote teams together and having fun activities together. [19:02] Number four, how many hours of sleep do you get every night? [19:06] >> This night. [19:08] On average? [19:08] >> Or a second night. Average. Eight. Yeah. Okay. I I need to rest well. [19:14] And, Rauno, what's your situation? Married? Single? Kids? [19:17] >> I'm in a relationship, and I hope to take it to the next level soon. [19:22] That's awesome. And how old are you? [19:24] >> I'm 31. [19:25] >> 31. [19:26] Last question. What's something you wish you knew when you were 20? [19:31] >> Can you repeat, please? [19:32] Something you wish you knew when you were 20 years old. [19:37] >> That I can make it. I just have to believe in myself. [19:41] Guys, there you have it. Drivex.io, helping insurers help consumers do more reliable car inspections to decrease fraud. He processed 20,000 inspections last month, which generated 30,000 of monthly recurring revenue, up from 7,000 a month just a year ago. Healthy growth rate. Team of 11 today, they raised 300,000 pre seed last year, just raised a million seed round on a 5,000,000 ish post money valuation. Now scaling 50% of their team are engineers focused on building the next [20:06] gen iteration of the product for rental car companies. More scans, more revenue, more accuracy problems, they'll figure it out. Rauno, thanks for taking us to the top. [20:14] >> Thanks. [20:17] One more thing before you go. We have a brand new show every Thursday at 1PM central. It's called Shark Tank for SaaS. 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, ARPU CAC, LTV, you name it, they share it and the buyers try and make a deal live. It is fun to watch every Thursday 1PM [20:42] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. 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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 [21:46] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.