ExperientialEtc Revenue, Valuation & Funding (2024)

[00:00] Guys, experientialetc was launched in 2017. They hit a million dollars of revenue over the past twelve months after raising $150,000 pre seed round in 2020 at a 2.5 post money valuation. They just closed a month ago a new $200,000 of funding at a $6,000,000 post money valuation. It's hoping to grow from a million bucks in revenue to 3,500,000 over the next twelve months. Historically, his revenue has been split 50% SaaS, fifty percent one time activations, [00:22] launching a new product called XBot, which will help brands like H and M retailers understand heat maps in their store, launch real time promotions, and generate ROI. He's making a big bet that he can sell $3,000,000 worth of that over the next twelve months. Hey, folks. My guest today is Karan Bhardwaj. He is the founder of a company called experientialetc.com, an ad tech experiential agency using technology for brand communication. Karan, you ready to take us to [00:45] the top? [00:47] >> Yep. [00:47] Alright. Give me an give me an example of a customer that's using you guys today. [00:52] >> Today. Alright. So we're just doing something for KPMG, one of the big four's and we've created an innovation center for them. This kind of entails everything from facial recognition to RFID scanning to virtual reality games to a huge tabletop which shows all the stories about where all KPMG has touched different lives in different sectors. We are creating something in the augmented reality space as well. So that's as far as your KPMG is concerned. But yes, all [01:22] >> in all experientialetc is known for creating such tech based activations for B2B clients. It could be permanent installations. It could be rental activations, but mostly we are used for brand launches as well. [01:34] So just to be clear, is this a software you're selling or are you doing custom agency work for every client? [01:39] >> So it is a software as well as the hardware. So we are mostly a hybrid agency. We recommend the user journey. We understand the communication of the brand, what they are wanting to launch, what they want to achieve and design the entire software and then we can recommend the right kind of hardware that should go along. It could be mixed reality headsets. It could be virtual reality headset. It could just be a mobile phone using augmented [02:00] >> reality. It could be an interactive projection. It could be image Are [02:03] you manufacturing your own hardware devices or are working with vendors? [02:07] >> No. We're working with vendors, but we manufacture our own software. So we are a software first agency moving towards from a semi SaaS to a completely SaaS driven business. [02:16] And so right now, like, the last twelve months, if you split revenue on a percent basis, how much how much was SaaS versus not SaaS? [02:25] >> Well, the last twelve months, I would say it's kind of fiftyfifty. But in the last quarter, it's kind of 70% towards SaaS based and 30% towards non SaaS. [02:33] Okay. So what's the average customer paying you per month just for your SaaS offering? [02:39] >> Would be anywhere about [02:42] >> 15 to $20,000? [02:44] Per month or per year? [02:46] >> No. For per campaign. So it it could not be a recurring campaign. Right? Even if it's a SaaS driven thing, could be probably once and then the next month it would not be executed and it would be a month after that. But per customer about 20, 25, 15 to $20,000. [03:00] Well, so Karan, then it's not recurring revenue. Right? So it's it's one time campaigns that you launch using software, but that doesn't give you any predictability in the future revenue streams. Correct? [03:10] >> Well, the revenue streams are projected in such a way that all the softwares that we have deployed, they kind of have a longevity of about a year's time. The client is tied with us with respect to annual maintenance contracts, with fixing the bugs, with ensuring that the software is up care. [03:26] Why don't you charge I guess I don't understand. Why don't you charge for that? I mean, you're the We charge for that. [03:30] >> We charge a small subscription fee. So it's [03:32] normally So 8 to 10 subscription? That's what I asked. What's the subscription fee they're paying you monthly? [03:38] >> So that would be about 8 to $10,000. [03:40] Okay. And and that's after a $20,000 setup fee? [03:43] >> Absolutely. [03:45] Okay. Got it. So $8,000 a month and that's making up 50% of your revenue over the last twelve months. And then the other 50% of your revenue is going from $20,000 setup the custom work and the launch. [03:55] >> Correct. Correct. [03:56] And this is just a SaaS business? [04:00] What do you what I just I just said the split between your revenue is 50% SaaS and 50% agency, and your response was that's wait. No. That's just the SaaS business. I'm confused. [04:09] >> Okay. So I'll repeat myself. So let's say the overall business right now in the last twelve months has been more than a million dollars. And out of the entire million dollars, about 400,000 has been completely SaaS or semi SaaS business. Right? Now out of that 400, 400, 450,000, each and every client is paying me about 20 odd thousand on a monthly basis and then I'm charging them about 8 to 10,000 on a recurring basis. [04:33] Well, They're not charging it. You're they're not paying you 20,000 a month. You just told me they're not paying you 20,000 a month. You said they pay it time and then that lasts for one campaign. [04:41] >> That is while I'm setting the entire software up right in the beginning. But then on a monthly basis, I charge them 8 to 10,000. [04:47] 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 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 Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [05:11] 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 [05:35] 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 [05:57] 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, 1,200,000 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 [06:23] 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 We're right, gonna go back to the YouTube video here in a second, but [06:45] 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 [07:11] the interview. Yeah. So it's not 20,000 a month. I just wanna make that clear. You keep saying that they're paying 20,000 a month. They're not paying 20,000 a month. They're paying you 20,000 to set it up, and they're paying you 8 to 10,000 per month after. [07:21] >> Absolutely correct. Absolutely absolutely correct. Yeah. [07:23] Okay. So when you say you have a million in revenue in past twelve months, 400 K SaaS, what's the rest? [07:29] >> Well, the rest would be activations like projection mapping, growing shows, immersive rooms, innovation centers, experience zones, brand launches, and stuff like that. [07:38] So one time campaign sort of stuff? [07:39] >> That's one time campaigns. Absolutely correct. [07:41] Is that number accurate? You did about 1,000,000 revenue last year? [07:45] >> Yeah. In the last twelve months, more than 1,000,000. [07:47] And what will you do this year you think? [07:50] >> '23-'24 we are poised to do about 3.5 to $4,000,000. [07:53] And and what's gonna drive that growth from where you are today? [07:56] >> So to fuel our I mean the activation business and the clientele that we have got and the team size that we've got is anyway growing. But then majority of this is going to come from a product called XBot. So what we are doing is we are launching a bot which is going to be placed in source and this is where the entire SaaS based pivot is going to come through. This bot basically is good. So let's [08:17] >> say Zara is already my client. H and M is already my client. And I've been servicing them for one time campaigns for all these years. Whether it's for facial recognition or social media campaigns and so on and so forth. Now I'm consolidating everything in one product which is called the XBOT and this piece of hardware is going to be kept in the physical store. So when I walk into the physical store, it's going to identify me [08:39] >> because it's going to link my social media accounts. It's going to tell me what I bought the last time and if I can pair the same thing with something which is kept in Aisle Number 6 and Shelf Number 7. It's also going to tell me which are the best marketing offers that are running and essentially understand my emotions and also do a little bit of gender recognition. Now from the store manager's point of view, it is [08:59] >> also doing the heat mapping. It's also telling the store manager which products are doing well, Which is the cold space? Which is the hot space? What are the kind of offers that are running and which are the ones that you know customers are latching on to more? Which are the social media campaigns? What are the target market? So this export is basically going to be the consolidation of all these products that we have done all over [09:17] >> the years and you know, it's it's going be more of a recurring revenue. [09:20] How much will it cost you to create one Xbox, the piece of hardware or Xbox? Sorry. [09:25] >> So, yeah. So the piece of hardware is going to cost anywhere about 75 to $80,000 because most of the research on it has been done over a period of the last [09:34] three Just just to be clear, you'll spend 80,000 producing the hardware and then you'll upsell it to the customer? [09:41] >> Yes. Absolutely. [09:41] What gives you [09:42] the confidence that you can produce hardware? Do you come from a manufacturing background? [09:46] >> No. So what happens is when we are doing facial recognition, when we are doing gender recognition, when we are doing heat mapping, all this hardware that we have procured over the years, we have essentially deployed the software in the hardware. That has given us enough understanding of how the hardware works. Now what we are going to do is we have kind of procured all the hardware whether it's the biometric lenses or the RFID scanners or the [10:08] >> eye tracking mechanism. We have procured all this hardware. We're going to assemble this, create a bot, create a software and deploy the software. The clients are already ready with us. We just have to place the hardware and charge them on a subscription basis. [10:20] Karan, you didn't answer. You didn't. My question was, it sounds like right now you're using other people's hardware. You now wanna build your own hardware called the x bot. How do you have confidence you're gonna be able to go build a manufacturing plant to make $90,000? [10:35] >> Manufacturing the hardware. I'm sorry if I came across like that. The hardware will still be sourced. It's the assembly of these different pieces of hardware. So I'll have a robot where I have a biometric scanner, where I have an RFID scanner. Everything will be in that bot. Right? So I'm not manufacturing anything. [10:48] I don't want So when you say it's $80,000 to create, what did you mean when you said that? [10:53] >> To assemble the entire thing put together and give it a nice canvas so that it's also appealing because I'm from a communication and a branding, you know, company. So my intention is that it should be good to look at and it should be interactive as well. So which is what is going to take about $80,000 [11:11] Name a company that you think will pay for this. [11:16] >> Anybody in retail. So let's say Jack and Jones, [11:20] >> H and M, Being Human, Aditha Billah. [11:23] And h and so let's use H and M. My audience obviously knows H and M. Right? H and M clothing store. What do they use right now to get this stuff done? [11:30] >> They're not using anything. They have an inventory management system that the store uses uses to calculate as to how the inventory is doing. They have an ERP management system which is calculated in the billing. They have a staff management system. All these things are separate, right? And they are separate for certain reasons. But they have nothing to do nothing to execute the promotional bit of it from an angle that it should be an ROI centric thing. [11:52] >> Because we've been doing individual promotions for them. Nobody has been able to understand the value of something like this which is kept inside the store and which interacts with customers. [12:01] Why would H and M take a bet on you though? Why would H and M believe that you could install this big XBOT thing in their store and combine all these things when in the past all you've done is promote one time promotions for H and M? [12:12] >> But when I did that one time promotion for H and M, hypothetically, I have already done gender recognition for them. I have already done facial recognition for them. So they know that I can do facial recognition, gender recognition. I can do social media campaigns. Now all I am doing is consolidating everything. I might have sold them each of these experience for let's say $30,000 each. But now I am giving them something upfront and don't quote me [12:34] >> on the amount. Let's say upfront on $50,000 on one time payment and then take a recurring payment of $20,000 per month and sign them up for the [12:41] >> next [12:42] Well now it's getting cheaper. You started by saying it was 80,000 and $90,000 Now it's $50,000 [12:46] >> So $80 $90,000 is something that I will invest in this business to create the export. And I said, when I'm selling that to them on a one time cost, right? Because my hardware cost that I'm deploying is one time because all the research and everything over the years. [13:00] I understand hardware is one time. My original question to you is what will you charge customers? And your response was 80,000 to 90,000. So just to be clear, what you're saying is no. That's what you're gonna invest as a company to build the system and then you're gonna charge customers 50 k. [13:13] >> 50 k. Yeah. Nothing more than that. [13:15] Got it. Okay. Interesting. And tell me more, put this all on a timeline for me. When did you write the first line of code for experiential? [13:22] >> Well, I think about a couple of years back is when we started pivoting towards digital campaigns. So that's when we started going digital. [13:30] But what year did you launch the company? [13:32] >> 2017, late two thousand [13:34] And just yourself or do you have co founders? [13:37] >> I have a co founder. I have a CTO as well. [13:39] Okay. So two co founders. Were you guys nice to each other? You split it fifty fifty at the start? [13:43] >> No. So my co founder and me are co founders and the CTO has joined us later on. But all of us have equity in the system. [13:51] Yeah. But I wanna know how you decided who has what. Do you have the most? [13:55] >> Yeah. I have the most. [13:56] And then what? Then your cofounder and then the CTO? [13:59] >> Correct. That's absolutely correct. Okay. [14:01] And have you bootstrapped so far or raised capital? [14:03] >> We've just raised capital, Nathan. About a year and a half back, we were also the first contestant on the Indian version of Shark Tank. [14:10] Very cool. [14:11] >> We didn't [14:12] So how much did you raise? [14:13] >> No. We didn't raise from there because we had already done our seed round just before that. [14:16] So how much did you raise [14:17] in the seed round? [14:19] >> We raised about 150,000 in the seed round. [14:22] And what year was that? [14:24] >> And that was 2020. [14:26] Okay. [14:26] >> And after that, we raised another 100 and no. Another 200, 200 thousand. [14:31] And what year? [14:33] >> This year. [14:35] In 2023? [14:36] >> Yeah. That was at a obviously, at a raised valuation. And now the third round, that is the bridge alarm that we have already got our commitments for. It's at a higher valuation and we're raising about, a million dollars for that. [14:46] When you raised in your pre seed back in 2020, 150 k, what valuation was that at? [14:51] >> That was at about 2,500,000. [14:55] Okay. And the value and the and the raise that you just closed, the 200,000, that was at a higher valuation? [15:00] >> That was at a higher valuation. That was at about $6,000,000. [15:03] Interesting. And the round you're raising right now, what are you targeting? [15:07] >> Right now we are looking at $18,000,000 and we are raising about a million. [15:14] How do you justify an 80,000,000 valuation with a company that just did a million dollars as an 80 x multiple in a time when most people believe we're going into a recession? [15:22] >> Okay. So firstly it's the digital pivot towards export because as a founder, as a business and the kind of clientele that we have most of the investors are interested in us. But they've always come back to us and said that you don't have anything recurring. And to be honest I took that as a feedback. I don't want to stop my activation business but at the same time build the X bot. Now once the belief that they [15:42] >> have an X bot is once the X bot is created and I already have the clients it will be easy for me to start getting recurring revenue. Secondly, I have [15:51] >> the forecasted revenue for the next year is about like I said about $3,000,000 So at a $3,000,000 forecast raising 18,000,000 and an 18,000,000 valuation is about six times of sale or top line. [16:03] Oh, yeah. Forward. Look forward. Look. I mean, you're there are two massive assumptions there. You can actually launch a new product and pivot. You can sell 3,000,000 over the next twelve months. And then, oh, by the way, you want credit for that future, you know, success today in terms of an 80,000,000, 60,000,000 valuation. Do you have someone that's already said, yeah, we'll put up 500 k of the million dollar round. Here's a term sheet, a real [16:23] term Yeah. [16:24] >> Yeah. Yeah. [16:25] You have a word doc in your inbox from a real venture capitalist that says, we will buy the business at 80,000,000 and we will put up the first 500 k. [16:33] >> Okay. So I'll tell you how that work as of now. We have done with a few set of VCs who are already with us. We've done a milestone based arrangement. Every time I hit a certain milestone in terms of top line, that is when I start getting the tranche and I have the contracts in place for that. [16:47] How do you measure top line now? I mean, you do 20,001 time this month, does that count as ongoing top line or that's just one time? How do you how do know what top line even is? [16:55] >> So it's a pivot. Like even they are interested in recurring revenue. So every month or every time I hit a top line it could be probably in sixty days. It could also be in forty five days. They will do an analysis of how much has come through a recurring revenue and how much has come through a one time activation. And then calculate the top top line on the basis of trailing twelve months. So in the last [17:13] >> twelve months and then so on and so forth. So every time I hit a new top milestone, I will get a certain plan share in mind. [17:18] I see. And how many customers do have paying today? The recurring fee, the $8,000 a month? [17:22] >> About six. Six or so. [17:24] Okay. Very cool. Well, great story here, Karan. We're certainly rooting for you. In the meantime though, let's wrap up here with the famous five. Number one, what's your favorite book? [17:34] >> What's my favorite book? [17:38] >> I don't know which one I read last, so I don't want to mention that. [17:42] Number two, is there a CEO you're following or studying? [17:45] >> Of course, I like Jack Ma. [17:47] Number three, what's your favorite online tool for building experiential? [17:52] >> We've been working on many tools. Are you talking about marketing or just about anything? [17:57] Any tool. [17:58] >> Microsoft Teams, Zoho, Keka. [18:01] Number four. [18:03] How many hours of sleep do you get every night? [18:05] >> Good. Eight and a half hours. [18:07] That's good. [18:08] And situation, married, single, kids? [18:10] >> I am married. I have a kid. Yeah. [18:11] Very cool. And how old are you? [18:13] >> I am 42. [18:14] >> 42. [18:15] Last question. Something you wish you knew when you were 20. [18:21] >> No. I think I'm good. I think I think it takes a certain process to evolve from a person. I wouldn't want to know more than I knew in 2017. [18:27] Guys, experientialetc was launched in 2017. They hit a million dollars of revenue over the past twelve months after raising a $150,000 pre seed round in 2020 at a 2.5 post money valuation. They just closed a month ago a new $200,000 of funding at a $6,000,000 post money valuation. It's hoping to grow from a million bucks in revenue to 3,500,000 over the next twelve months. Historically, this revenue has been split 50% SaaS, fifty percent one time [18:50] activations, launching a new product called XBot, which will help brands like H and M retailers understand heat maps in their store, launch real time promotions and generate ROI. He's making a big bet that he can sell $3,000,000 worth of that over the next 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 [19:12] 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 Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe [19:36] 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 SaaS world, whether it's an acquisition, a big fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest [19:59] private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign up for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. 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