eAgronom Revenue, Valuation & Funding (2024)

hello everyone my guest today is robin salus he's the son of an organic grain farmer built his first company in high school and is still operating that visible is still operating with 50 employees he studied computer science and is now building something that accelerates the transition to sustainable farming it's a software play the website is called e aggro nom.com robin you're ready to take to the top yep absolutely okay so i obviously love a situation where there's a computer science major who's familiar with farming that builds code that you're using yourself so what got you into like grain and farming is it a family thing yeah it's a family thing and you know i think estonia is uh one of the small only countries in the world when farming and computers are so much connected so at one time carmen came three computers to all the farmers and that's how i got the first computer that's amazing okay so what does the business do well i think the main message is that carbon credits will transform farming and what we do is we provide carbon credits to farmers and for this we need a monitoring system farm management system and and and yeah so we give carbon credits to farmers to through this and and is it software though is it a sas business yeah it is a sas business well sas for us is more like infrastructure farmers use this to manage the farm and um to get the overview of the farm and and then we give succession to farmers but for us this is just infrastructure and we are building the carbon business on top of it so how do how does a farmer pay you well farmers farm basis annually so depending on the package from few hundred top few hundred errors a year to like twenty thousand dollars a year and what sorry what is that usd you know off top of your head well you well the same numbers basically okay got it so they're so what's the average monthly price point well thousand bucks a year a thousand bucks a okay got it so something like called a hundred dollars per month but they sign annual contracts yeah they pay up front when did you when did you launch the business uh it was in 2016 2016 and i mean how did you get your first couple customers i imagine you were probably the first customer right yeah well it started from building a tour for my father we went through like 20 different tools didn't find anything good then built the one for my father and other farmers saw this and they were they wanted to start using it as well but the problem is that i'm not really very good in tech and then i called to my friends denver at the time was head of the dev team in uh big us company and uh and then we started together and how many customers do you have today uh a thousand five hundred one thousand 1 500 amazing so i mean can i take 1 500 times 100 a month you guys are doing about 150 000 a month in revenue yep that's great and and where were you a year ago in terms of revenue do you remember yeah well we doubled that that's really cool because uh we had to cut our budget because of the kovid and so we spent less money in 2020 than 2019 but we added more revenue than ever before so that helped us to make business much more efficient and at the same time open the carbon opportunity which means that and i think the main thing that changed also is that uh if you go with farm management software to farmer then you're saying that hey you get a better overview and maybe you can do better decisions and you will save time but it's hard to put this into the money now with carbon credits we can go to farmers and say that hey you use our program and you will get and we will get the transparency and good over of what's going on in the farm you will follow our guidelines so you you will capture more carbon and we will put make turn this transparency and increase capture carbon from the air into carbon credits and we can sell this to companies who want to offset i see and this will result in farmer earning let's say like three thirty thousand dollars a year or two a year and we will take just ten percent out of it so the value proposition gets much more clear and how do you package and sell the carbon credits power packaging the carbon credits yeah how do you sell them well there are big corporations who want to offset their footprint and and they came to us and saying the thing is that agriculture is one of the best places to reduce emissions and increase capturing and and that's why they came to us and asked like hey it's possible that you will help us to offset our carbon footprint and we went to our farmers and worked together with them to reduce their emissions and increase carbon capture from there and and turn those things into credits what is that what does that mean though like i guess i don't understand you have 1500 farmers using your product you have ultimate transparency because you're measuring you're capturing all the carbon credits that those small farmers could be getting but they're saying we don't want it and they give it to you and you package it and sell it to a bigger company that wants to offset their agricultural costs yeah it's yeah exactly they want to offset their carbon uh co2 uh footprint so farmers can sell that back to like you the like the grid and they can make you pay them for that yeah exactly so basically in the in the past the farmers were only harvesting uh yield and crops and and they were selling their crops away and there was some company who bought the crops and then sold this to other players who wanted to buy the crop right now uh it's the same thing is happening with carbon so um carbon credits is uh additional extra income for farmers and and how much did you pay out last year to farmers for their karma their carbon credits well uh actually first credits over there are generated by the end of this year and and but just to keep you understanding then our current customer base can uh capture approximately one one million tons of carbon annually and this is for 30 million dollars and this is just our current customer base is putting the value of 30 million on those carbon credits is that the local government in estonia no no well we have customers in seven countries including well six in their opinion and one is australia but but but this is uh well it's it's basically voluntary carbon market and uh uh there's companies like indig uh doing similar things in uh north america we are just uh one of the i think the first mover in europe and if you're doing 150 000 a month in revenue today what were you doing 12 months ago uh two times less two times okay so you're so half of that yeah so something like 75 000 a month so you doubled over the past 12 months that's amazing man yeah and the best thing is with the smaller cost space now have you done all this bootstrapped or did you guys raise capital no we raised capital as well so our even our own paid customers inves invested 1 million dollars so they invested through the holding company 50 farmers said that they want to be part of the vision and they invested but we also have vcs they have given majority of the money we have raised 5 million dollars in total and and and we have angels as well on board builders of different different unicorn startups and you're raising 10 million dollars seriously this spring okay so you're right and so why is 10 million the right number right now why do you need 10 million what will you use it on yeah we will we will use it on well i do you accelerate the carbon business to enter uh high volume markets meaning markets where it's possible to produce a lot of carbon credits the big potential to change farmer practices so they would capture more co2 from there and and and secondly we will use it to well increase our remotes monitoring capabilities so we can deal with this higher volume to make sure that we can still continue producing good uh transparency credits how what valuation will you target raising the 10 million on how much of the company will you sell well i think in this stage uh most of the startups are thinking about giving like 20 25 away so you think you can raise it like something like a 50 million dollar pre-money valuation 60 million post money something like that uh well it's something something like this yeah interesting and are you leading this process which of the three founders is leading the fundraising process yeah i'm i'm leading fundraising and then we have uh steinberg who's more with tech background focusing on the uh on on the deck side then we have christian luha the former executive of uh nike was head of nike russia head of mike cruise head of nike football department and he is leading the business and then we have in the leadership team also match rosenberg leading our carbon program who was head of sustainable and responsible business in syrgenta europe australia africa and uh and uh middle east and syngenta is the biggest aggregate business in the world you have a sas business right now doing 1.8 million a year in revenue the carbon business you said is worth potentially 30 million a year that's what those carbon credits are worth 1 million tons of carbon annually uh how do you make money on the 30 million value did you take a cut yeah exactly so well how much uh it depends on the size of farm but uh and like i think i'm not allowed to give exact percentage but uh but that that's one of the area with a cut and then it also boosts our sales of our uh fms business and digital consulting la okay i know you can't talk about individual farms and the cut you take from individual forms but like generally speaking are we talking like two percent ten percent yeah yeah well i think i think it it's something like from five to fifteen percent depending on how big is the farm got it so just to be clear you have two revenue streams sas is about two million a year this year you will capture one tons of carbon from the measurements you're doing with your sas platform from 1 500 farmers that 1 million tons of carbon is worth about 30 million in carbon credits you think you can take something between 5 and 15 of that 30 million value as a new revenue stream that you're launching this year yeah exactly very cool what about churn do these farmers stick what's your turn rate oh yeah well the annual churn is is below 10 that's impressive what's expansion revenue look like on a percentage basis excuse me is do you have any ways to drive expansion revenue to farmers where they pay you more year every year yeah they're paying us we we basically increased our prices uh i think fifty percent uh uh like five zero percent uh during the last 12 months what does that mean in terms of what your net dollar retention is over the past 12 months uh i we have i i don't know this by heart but uh but it's it's it's higher than one so it's higher than 100 yeah yeah you know a lot about business i think you know relative to like what you're doing you built this company in high school with 50 people do you still have equity in that business the first piece is yeah i still i still go to shareholder meeting once a month how much equity do you own uh i think well from from from the from the first business a bill yeah maybe 20 20 25 or something like this what was that business well it's it's uh doing uh well basically half of the estonian six-year-old children uh kotas our science class every day every every week and uh so it's virtual learning [Music] right now it's virtual it used to be physical so they went over there but then there was fertile virtual like infrastructure they had games and videos and so on but it was it was a really cool uh uh high school project that we started uh but and it's it's good to see that's still going on it it made me it gave me understanding that if you have something that you want to change in the world then building business is one of the best ways to do it that's right robin what's your team size today on the new business uh 40 people how many engineers uh half of them 20 engineers and how many sales reps uh well basically we have uh five people is in management and rest of the people are either sales account management customer support interesting do you have any quota carrying sales reps uh what what occurring with the sales target where they have a quota oh yeah yeah well uh approximately uh 40 40 farm 40 60 farmers a year but but how many employees do you have that have a quota target uh well i would say six or seven six or so right now yeah yeah but but but but um basically for us sales is very seasonal uh so there we acquire more farmers during the winter period when farmers have uh more free time and less during the summer time and what's your customer acquisition cost what's it cost you to get a new 1200 a year farmer uh it's below annual customer value is higher than the custom requisite by how much uh not much maybe 10 percent uh but it's okay it's farmers farmers pay us up front a year yeah so you'll spend a thousand bucks but then they'll pay you 1200 immediately so it's an instant payback yeah very cool when you raise the 5 million you took a million from your customers and 4 million from vcs that was last year what valuation did you raise at uh well uh the last round was i think uh 60 million dollars one six yeah pre money yep yep did that feel fair to you at the time uh i think so i think so because well uh we we have developed a lot with year and uh and obviously we see similar kind of companies raising with better terms in north america but but well we just have to be more efficient than these guys i love that robin let's wrap up with the famous five number one what's your favorite business book uh well favorite business book i i would i would say maybe steve jobs biography number two is there a ceo you're following or studying um hey yeah i think i think my father is one of the coolest ceos i i know what's his name robert robert i love that okay number three what's your favorite online tool for building the business life try number four how many hours of sleep do you get every night uh eighth and what's your situation married single kids i'm in a relationship crazy girl who runs no any kids no kids and how old are you i'm at 25 25 last question robin what's something you wishing you knew when you were 20. well don't stress for well there's no need to stress about anything it will go over well guys there you have it e aggro nom.com it's a business that has almost two million a year in revenue servicing 1500 farmers with a piece of software they then use the software transparency and data to capture carbon credits a trillion uh tons uh sorry a million tons a lot of tons sorry one ton uh per year they that's worth about 30 million dollars worth of value that's a new business line they're launching this year raising 10 million dollars out of between a 40 and 60 million dollar pre-money evaluation now the last round was a 5 million dollar round in 2020 at a 16 million valuation robin we're rooting for you thanks for taking us to the top yeah thanks one more thing before you go we have a brand new show every thursday at 1 pm central it's called shark tank for sas 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 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m central to make sure you don't miss any of that make sure you click the subscribe button below here on youtube the big red button and then click the little bell notification to make sure you get notifications when we do go live i wouldn't want you to miss breaking news in the sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something 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