Forecastr Revenue, Valuation & Funding (2024)

forecaster.co helping CEOs and CFOs do their financial planning they're doing 120 000 a month today in Revenue up from 30 000 a month just a year ago they raised five million today targeting another eight million round right now their last round valuation was a 10 million valuation at about 27x multiple we'll see what happens now they've gotten some good interest inbound already serving 550 customers that pay on average 218 dollars per month again forecaster.co hey folks my guest today is Logan burchett he's from Nicholasville Kentucky and currently the founder and COO of a company called forecaster.co it's an online software that helps Founders forecast Revenue predict Runway and understand their numbers and get funded as co-founder and it came up with the idea back in 2018 and they've since grown to a wide user base taking the company through prestigious Tech stores accelerator uh raised five money venture capital and then grew the team to over 25 folks all right Logan Ray tickets to the top I am ready Nathan happy to be here all right yeah this is the hot space I mean you saw companies like pry and finmark raise VC and you know they exited but it was pretty quick and you sort of Wonder well wait a second can you actually build a big software company in this sort of forecasting space yeah it's a really great question and it is pretty wild to see how how hot this space is I mean if you go back you know to the pre-carta days you know Carter got really really big back around like 2018 and of course now it's a seven billion dollar company so I think what happened was you saw a lot of these people that kind of mentally connected the dots that hey if this can be done in a cap table you know this if you can basically software a cap table then a finance model kind of sits adjacent to that so you're seeing a lot of people kind of coming out of the woodwork tackling the space uh but to your point it is is quite a bit more complex than the cap table management software whenever you really get into it um and I think that what you're seeing is there are a lot of people that are tackling the space you know pry and finmark both had really really solid exits for where they were you know in terms of Revenue and customers they were both relatively early but they exited for for a decent amount we of course know that pry exited for 90 million we haven't yet found out publicly what what finmark has it for but you know but and the pry 90 million though how is that split up between cash and stock that's a great question and and like honestly like we don't 100 know the answer to that if I had to guess I would say it was pretty heavy stock um but you know I either way I mean I know that they weren't really generating a ton of Revenue um but I but either way I mean I think that the Space is really really interesting just because it's been dominated by Excel 98 of financial models are built in Excel to your point the challenge is maintaining the flexibility that Excel has but also creating a standardized product that then you can integrate with and things like that we've got about 550 customers right now doing about 1.4 million in Revenue um and we're seeing you must listen to the show you you give me the numbers I don't even have to ask that's great oh no well I'll tell you everything we're so transparent like I mean we we share our financial model with people that's just kind of the company that we are so we don't mind we don't mind sharing stats we don't mind any of that uh but and so if you're doing like 1.1 today or about 90 000 bucks a month where were you exactly 1 one year ago do you remember so we were so 1.4 today we were doing about just shy of 30 000 a monthly reoccurring Revenue about a year ago okay like high 20s now we're at about 120 a monthly recurring Revenue yeah that's great that's the product to build in the space for sure and moving Upstream is definitely kind of like the direction that we're going and building out those those broader feature sets for folks so so those 500 for the customers say what are they paying you per month on average yeah so we only do annual subscriptions uh and it's and it's an interesting question because historically it was a one-size-fits all we're still technically in beta if you go on our website you'll see a beta tag we're going to be moving that off it's more of a marketing play at this point but for the longest time people just paid us a standard two thousand dollars a year and then we would give them a white glove onboarding because they got us paid back like we got paid on the front end we could afford to put some analyst hours behind the account get them set up get them trained all of that here in November we really started rolling out our variable pricing model which similar to pry this is inspired by pry uh we're going to be pricing our annual contracts based off of the monthly expenses of the customer so the idea there being that larger customers we can afford to spend more time with we can get them set up we can train them make sure that they get more more success out of the platform as much as we can get and then we'll charge them more for that so to directly answer your question of the 550 if you just do a straight up Blended average today then it's about fourteen hundred dollars if you like discount it per year uh because we do some discounting for partners and things like that that's slowly creeping up since November since we started releasing this wait what do you mean by that if I take 120 000 bucks a month or 1.4 million AR divided by 550. it's about 2500 per customer per year on average yeah okay so it's um I guess prior to November it was kind of like roughly about that like 1500 14 15. oh I see so like our highest paid customer right now pays us about 15 000 per year um prior to that they were paying the highest paid customer paid us two thousand dollars per year it was just because we hadn't really focused on our pricing model up until that point oh what's going on there YouTube good to see you guys now imagine this you love watching these interviews with SAS 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 the into the beautiful interface inside of founder path check this out I'll show you how you can access this in a second but you log in you connect your stripe account you see your valuation real time you can see what it changed over the past 88 days and even set goals for evaluation this year now the secret evaluation is there's many different ways to value a SAS business so the reason you're going to see three or four different evaluations inside of your founder path dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're gonna get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to 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 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 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 1.2 million seed round 3.7 raise they sold 22 percent of their business go in here and filter by the event maybe you only want to 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 going out right now and you're raising your seed round well 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 data set of SAS valuation than what you can get now inside of founder path 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 if you want to check this tool out if you want to jump in and sign up you can check it out for free to get your valuation at this link this link founderpath.com forward slash products forward slash evaluations 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 all right let's jump back into the interview so what is something obviously don't name a customer but someone paying you 15 000 per year how much total expenses do they probably have yeah so it's usually so if you're at that fifteen thousand dollar tier then you've got over 500 000 a monthly expenses okay interesting interesting so it's sort of like what is that like 10 it's like 15 20 20 or something like that 20 or no what is that two percent two percent of monthly expenses yeah something like that we we now we the reason one of the main reasons that we wanted to kind of like price along the expense curve is that we never wanted to be like an overly significant portion of your overall expenses it's kind of our idea uh yeah yeah so exactly yeah yeah so you're paying sorry no it's actually it's three percent so like if you're paying 15 grand a year and you're doing 500k a month in uh in expenses it's like it's like a that's almost three percent that's super cheap right um yeah well and so what I'm I always like it when someone takes money from that they saw a competitor doing what they liked and they're implementing themselves a lot of people their egos are too big to copy which but like I think that's ridiculous so what what did how did you know that it was working for pry how did you know it was a good idea to copy yeah so what's funny is we didn't right we saw that they were doing that obviously we saw that they had uh some success in their exit depending on kind of like what what what it ended up looking like but what we did was we really liked the idea I mean expense-based pricing for obvious reasons it's kind of a good way to price along the demand curve so once we decided that this was something that we wanted to look into we just went back and just started doing like plain customer Discovery we went back to our old customers our beta customers and we said Hey listen you know if we were to price in this way and if we would kind of reassess your price every single year and we did it with this fashion how would that make you feel what would you think would that turn you off would you be okay with that assuming that we're adding more value as you're getting bigger as well we're not just charging you the same for charging you more for the literally same thing and they all were like yeah I mean I think that that's totally reasonable it seems like a fair way to price never going to be too big of an expense if you do it this way and that's what that's whenever we we went forward with it was how do you do that though like let's say my I'm with forecaster and you and I are negotiating my new plan for the next 12 months are you looking at my monthly expenses from last month being 500k or are you saying Nathan what do you think your expenses are going to be 12 months from now yeah we do it we do it retroactively so we look at your your like really like the average of of the last three months worth of expenses in order to try to like um you know deal with seasonality if you have like a big expense month or something like that I'd be lying to you if I said that we had that completely nailed down because we just rolled this out in November so that hasn't happened yet so like in theory that's how it would work and we hope that we hope that it works you know without it but uh but that's that's the idea anyway we have some prepped everybody into that conversation on the on the front end though yeah walk me through you've mentioned put analysts on the account a couple times what does your team look like today let's just start off with Ninja how many are only writing code Engineers yeah so it's about so it's it's pretty even right so we have 33 employees right now so you can pretty much split it evenly between growth financial analysts and development like that's really kind of like it's almost like a third a third a third um and so what you just zoned in on it is the what we call our White Glove onboarding so it's I think one of the key differentiators for us in the space like we I was a fractional CFO for a number of years as was Michael founder Stephen and we just knew that if you plop somebody in kind of like a deeper like financial analysis software they're going to fall flat on their face it's it's kind of like a specialized business function so having a seed stage founder jump in and just say here's the keys go ahead have fun that wasn't going to work out too well um so what we do instead was we only do annual contracts we'd pair them up with a financial analyst a finance expert specifically for Venture Finance their job is to help them build the model use the data that they have help inform the forecast train them on how to use the forecast and then we check in with them sporadically right and that's kind of like it's almost like a um I don't like to use this word but it's kind of like a blend of like SAS and services in a way now the idea is most of the services component is done on the front end with an onboarding and then you kind of fade off kind of once the customer's been trained up but who are like where do you find these these analysts you know for example I mean stripe and some other even SPV sometimes like their their folks in their newly doing new deals with saskat means they actually have like a massive team in India that does a bunch of like the literally cleaning the p l the balance sheet et cetera who like who are some of these folks that you put in your financial analyst category yeah no that's a great question so uh we everybody hears that's an analyst is based in the US except for uh one of our analysts whose name is Phoebe who is based over in the UK um I mean we a lot of them are previous Founders right we just hired uh we have I think three analysts that were Founders before they joined forecaster as Financial analysts and they were like kind of financy Founders we have some folks that were like accountants beforehand but like all of these people are kind of more financial inclined math the people that are really really interested in startups um and so they so you know they wanted to kind of jump on board on on us while we're kind of like near the ground sure so what is he like Sundeep he's based in Austin you just hired him this was like a month ago it says he's starting unless you found him through Linkedin and he's got a lot of experience at the new chip accelerator before this but like what is his day-to-day at forecaster look like yeah so this is his second day so right now his day-to-day is just getting onboarded but it's day to day the way that we kind of think about it is it's going to be basically split almost 50 50 of going into forecaster and helping our clients like actually build out their financial models and forecaster and getting on calls with them just kind of what does that mean though is it is he saying like hey here's how to connect your QuickBooks so we can start manipulating your data or is it like upload the CSV folder to populate your charts yeah it's it's more just like straight up bottoms up Financial modeling so it'd be like hey let's go in let's connect your QuickBooks account we'll show you how to do that but then oh I see you have these Revenue categories and QuickBooks let's go to the revenue stream section of forecaster build this out make sure it has all of your important metrics in there make sure that we can craft the story that makes sense to investors lenders what have you that's so is he the one where if in QuickBooks the company has labeled a bunch of these weird things and you're like no in forecaster this is actually cogs and this should be a team he's helping like sync the two 100 yeah so it's basically just like I mean at the end of the day we want to build a forecast that our customers can understand and use in this actually valuable so that's why we go through and a lot of times we'll get people that say hey my Quickbooks is a mess like my accounting like I don't really know that's okay Sandeep would be the type of person that would go in say well let's set up your forecast where it makes sense we'll map it back to your QuickBooks but this can be your source of Truth Now and Then inform them on how to use it plan for cash fundraising all of that stuff really interesting speaking of fundraising so if you guys bootstrapped or well we know you raised because you said it in the bio but let's walk us through the rounds when was the seed appreciated so we're deep in the throes of it right now Nathan so we're in the middle of a series a at the moment so we've raised in total about five million dollars kind of as you alluded to in the bio we're in the process of raising 8 million more so we actually just kicked this off on the 17th my co-founder Stephen is actually out in San Francisco right now and he's just kind of back to back meetings but we raised a pre-seed round on a convertible note then we raised a seed round which is led by Resolute Ventures out of San Francisco and now hour in the middle of our series a round eight million dollar series a round when was the seat around what year that was February of 2021 was whenever we actually got the cash closed and we kicked it off basically Jan wanted that okay okay so precede there and how much did you raise there and the pre-seed we raised we over subscribed to 600 000 Round Up to 750 at the seed round we raised 200 uh 2.5 million and then in between there we had some like little like Bridge rounds when you add it all up it's around five million and that sorry that pre-seed round of 600k that was you set out a 7.5 million cap no that was on a convertible note uh and there were two caps because one of them was a tax Stars cap and the other one was just the Louisville Kentucky teeny tiny you know small town investor cap of like I think I think it was like two and a half it might have been three million dollars or something like that okay fair enough fair enough and then the seed most people are selling 10 to 15 of the company in the seed round are you sort of in that same range yeah we we did it was it a 10 million dollar post so it was all right yeah that's not bad at all and then what are you targeting with 8 million what would you like to see in terms of post money valuation uh has it I hesitate to honestly say this just because we're big proponents of just like letting the market determine evaluation but what I will say which I think is a pretty safe answer is like we're raising eight million dollars so if you're trying to sell roughly if you're trying to keep it in that 20 that'd be a 40 million dollar post so thirty two three that's kind of what we're hoping for uh but we'll see we'll see what the market says what is the market I mean everyone's saying right now you can't raise money right what are you hearing I mean are you do you have a term sheet yet no we don't have a term sheet but we're we're on our first round of like second meetings there's definitely interest you can definitely raise money right now and this is kind of like what we've seen obviously we talked to a lot of VCS gearing up for this series a basically what we've heard is that yes capital is still being deployed yes you can still get a round done what you're probably going to see is valuations kind of squeezing like you're not it's not going to be 2019 you know where you have companies with like no Revenue that are raising you know I mean 40 posts though would still put you out like a 28 29x multiple your current 1.4 that's still pretty healthy oh big time Big Time yeah don't get me wrong I mean like I'd be very happy with that with that valuation if we can get it um I think I think in like 2019 you might have seen an even higher valuation just because the markets were going going a little bananas um but yeah yeah I mean you can still get around that is what we've been told and so when you email all these VCS in a recessionary period what's the subject line you use to get them to open and return it do you say like netball retention 150 raising now must open like yeah it's a great question and I would say that uh luckily we don't really do a whole lot of like cold email Outreach to investors like we have a really great Network through techstars we have a really great Network through Resolute I mean they're absolutely incredible and we're big proponents of the idea that like cold cold emails while fundraising it's just really really hard it's really really tough to get an investor to open up a cold email and then take a meeting with you if you can get warm intros it's so much easier but it's all in the prep work right if you you need to get like a giant list of investors this is your target list and you got to do the work to be like okay I know this person that knows this person that knows this person give me affordable email intro and then that's how you get a lot of meetings and we've got I think 45 meetings set over like whenever we started you know a few few days ago uh until the next couple of weeks and like I said we're running the tight process here so we're already getting you know follow-up meetings but that's awesome man what is your burn profile look like today obviously you always want to you know the best alternative to raising the stronger you are the better around you can probably actually race so like when you look at what you're burning today per month what do you guys you know on the order of magnitude of what yeah it's it's it's just over about two hundred thousand dollars that we're burning per month to 220 230 depending on the month and then obviously once we get the eight million in we'll probably ramp that up for a little bit more sales and marketing and just be clear your your net burn monthly right now is about 200 Grand correct yeah yeah okay and and so what does that leave you in terms of Runway right like cash in the bank it has 10 months of Runway 18 months of Runway more well right right now we're actually at about 13 months worth of Runway assuming that we don't raise any more money and that's mainly because our current investors have already committed to the series a and they've already funded a portion of that so oh nice nice so you sort of how about you sort of you sort of had initial close already because the the 2.5 million folks they put in more correct yeah yeah and yeah pretty much everybody that's invested in the company we send them an email said we want to give you guys first crack at it and then we got about 500 wait where where was the next story I have 2.5 seeds 600 pre-seed but you said you've raised 5 million today where's the other like 2 million we've had we've had a few kind of like Bridge rounds in between then so we had an extra 200 000 between this series The pre-seed and the seed and then we did another like I think 1.1 uh so so we had some like Bridge rounds in between yeah I see I see very cool um I guess last question before we wrap up it's very hard to get CFOs to stop using Google Sheets and Excel why do they log into forecaster every month yeah so it's Integrations analytics and Reporting are really the big three so I I think that the reason that it's really hard to get uh CFOs to quit using Google Sheets and Excel isn't inherently because they just love writing Excel formula so much it's just because that's what they're used to in Excel has just been the default for so long but I think that the chat the opportunity really that we have and this is why we're seeing so much success in the space is that we can match excel's flexibility but we can do so in a way that we can still integrate with all of your data so you're not having to go in and literally update it every month that's how you get them interested is you say look I can give you the same amount of value with less amount of time and then I can make it a lot more collaborative with the better user experience and all of that so and are you usually those 550 customers is it usually the CFO paying on their card or is it the CEO paying on their company card usually the CEO paying on their company card almost interesting so are you selling to you would say then you're selling to CEOs and then relying on the CEO to get the CFO to use it our average user is like a seed stage founder yeah that's exactly right so then but then we obviously have companies larger than that series a series B so then those then it kind of like the keys are kind of handed over to the CFO at that I see well Logan we're certainly rooting for you it's a heck of a story let's wrap up here with the famous five but number one what's your favorite book uh my favorite I'm all right so I'm not I'm not uh you know uh sucking up here but I think it might be your book how to be a capitalist without any Capital oh no you read it I read it so I actually bought a uh a Chrome extension because of it it's called flowtime.biz yeah yeah I bought it nice in your book yeah yeah that's all that was one of my favorite first business deals I ever did I had no idea what I was doing but it worked out nicely flow Time website blocker very cool all right thanks for the compliment number two is their CEO you're following or studying um CEO uh Brian Halligan I really like Brian Allegan yeah I think he said I think he's really really interesting I like it because he had a very high chair rated HubSpot and he was able to like chop that down to basically nothing which is really interesting yup yup number three what's your favorite online tool for building forecaster besides your own favorite online tools notion I think it's really uh very flexible and I you know use it for a lot of stuff number four how many hours of sleep do you get every night oh I'm uh I'm asleep I'm crazy but I'll sleep I get eight hours a night I make sure I get eight hours a night I have to I'm the same way what's your situation married single kids I am married got married in pandemic 2020 so congrats any kids yet or no nope nope not yet yeah all right and how old are you Logan I am 31 years old last question something you wish you knew when you were 20. something um that you don't have to take a standard career path you don't have to go work for the man you can build your own thing uh I didn't whenever I kind of like came to that conclusion I immediately left and started forecaster and I'm never I don't think I'm ever going back to a standard nine to five so guys forcaster.co helping CEOs and CFOs do their financial planning they're doing 120 000 a month today in Revenue up from 30 000 a month just a year ago they raised five million today targeting another eight million round right now their last round valuation was a 10 million valuation at about 27x multiple we'll see what happens now they've gotten some good interest inbound already serving 550 customers that pay on average 218 dollars per month again forecaster.co go check it out Logan thanks for taking us to the top thanks so much Nathan 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 our poocac 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 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