Freeverse.io Revenue, Valuation & Funding (2024)

hey folks my guest today is alan evans he's got 15 years experience in the tech industry and has a strong passion for building teams that create products to solve real problems he was previously ceo at share3d.io cto of body pal and director of barcelona world race of the game he's got a phd in medical physics from the university of college london ellen you ready to take it to the top absolutely yeah let's go all right you're now building freeverse.io which is effectively this concept called living assets nft 2.0 is what you're calling it what does that mean yeah um i think what's really interesting we've seen in 2021 is how the nft space has exploded right it's heading for like 20 billion in in market cap in this year i think from a few hundred million last year and uh it's great we're really excited to see that there's been so much of an explosion in this space but i think a lot of the value of current generation nfts are based on the speculation about how rare they are and at freeverse when we founded the company three years ago um what we were really interested in is how we could generate nfts that would actually have value based on how they are used so how the user can actually interact with those nfts and affect their value and therefore drive up the price and so that they can buy and sell for something that's not just speculation so give me your top use case right now tell the story of a customer using you guys and it's worked exactly how you hoped it would yeah so actually we're very excited we're launching our platform to production uh next month with our first client which is a small marketplace in ibiza the uh the mediterranean island of ibiza and uh we're very excited we're signing a couple of deals unfortunately i can't announce who they are we're signing a couple of deals one for a huge um event uh in february next year and also one with some super big ip based over celebrity ip in the united states so we're really excited about about that and see how that goes you've had three years incubating this you all pre-revenue so it begs the question how did you fund your personal rent food things like that um yeah so we were we were lucky um so both myself and most importantly my co-founder tony mateos had previous startup experience um and we had a quite an extensive network of angels and so we went to uh then we've raised two funding rounds so far we're in the middle of our third funding round right now um and we went to our network of angels and and pitched them a great idea to really really transform an industry and i think i think what's really important about when was that first round the first round was in 2019 uh the second round was earlier this year and now with the boom with nfts we're seeing a great interest from investors now so we're sort of in the middle of raising our third round now so that 2019 round how much did you raise there we raised half a million so we're in europe and so typically the initial angel rounds in europe are much smaller than perhaps you're accustomed to in the states uh so we raised half a million from angel investors then we raised just under a million uh earlier on this year and now in this round we're going to slightly something bigger so and so um walk me through you know when you raise that first round of capital uh what what's the story sound like is it the same same story you're telling today in your new funding round uh it's very similar the difference is now we have we have a product and we have a platform um we have clients contracts that are signed we have people are going to use them right um and i think it's really interesting when you're raising money pre-revenue um because you don't have you know the standard kpis and the metrics and and the revenue and the growth that investors like to see however i think a lot of investors especially um sharp investors um what they're really interested in is vision right and if you have a vision that you are going to change the world right then that's uh and it sounds a bit trite right to be watching too many reruns of silicon valley perhaps on on the television but if you have a vision that you are going to change the world and that vision is coherent and you're a strong team then that's something that investors like to see and that's something i think that's been reflected in the success we found raising money so far and so how is the team structure how many co-founders do you guys have uh we're four co-founders um so i'm ceo um my uh the cto our cto is telling mateos who's uh absolute genius 30 patents to his name very intelligent guy and also a very very charismatic guy as well so um and then joining us is our head of engineering he's alessandro he's a real uh blockchain expert and uh ferrana stanley is our chief operating officer who's got a lot of experience in managing large teams as well so we're quite a strong funding team and obviously if you believe you're building something big yeah you want capital to execute that vision but you also want to be smart about ownership and dilution so when you thought about that 500k pre-seed back in 2019 how did you structure that in terms of cap how much of the company did you sell [Music] yeah around about 20 so we've tried to structure every single of the rounds following the standards you know diluting 20 i think it's very difficult when you're when you are raising in a situation like that in your pre-revenue um you it's very difficult to control that level of how much you dilute because obviously you want to raise more money to give you more runway um but the more obviously the more you raise um you know it's very difficult to negotiate a higher valuation for the company when you're when you're raising so much money when you don't have that revenue so it's something we find um again for this round that we're raising right now it's going to follow a similar uh similar similar structure i think um the difference is now um really we have a product we have clients that are signs um we're launching we have a road map and most importantly uh perhaps most luckily we're in one of the hottest spaces in investment uh right now which is the nft space so um we're very lucky in that sense you said customers are assigned how many customers have signed yeah we've got two clients signed up right now um uh one of which is this uh this uh client in ibiza which is one of the one of the major universities you're interested in living assets for educate for tracking educational um uh progress and then and how in your professional training so one of the larger universities in the states has signed up with us and we're judging so we have a really interesting very new model where we charge uh it's quite simple in maximum money sense we charge a monthly fee uh based on the number of nfts that are launched that are launched within that the universe for the client and also commission on the trade for each um sale of those entities on our platform i see okay so what is the subscription fee you know average these two contracts together on average what are they paying per month um it depends entirely on how many entities they launch so let me give you an example right so if a client were to come and launch like a thousand ft's they would pay like um a hundred years a month so very loads of initial subscription that scales very quickly so if they're you know launching with a million nfts and the advantage of our platform is that it's the advantage of our living asset nft is that we don't want them to be valued just by how rare they are they don't want to be these exclusive expensive things what we want to be is that they can essentially be given away for very low cost or for free and then evolved and upgraded if you like by the users so if you imagine good state where you have like a million nfts uh being being created and out there in the in the in the universe and that will be several hundred thousand euros of recurring revenue a month in the in the monthly subscription but um you know it really depends also as well how much of those nfts are traded because a lot of our revenue predictions come on forecasts of how much those revenues we trade averages entities will be traded so that's quite an interesting duopoly between that recurring revenue and and the commission in the marketplace yeah i'm trying to capture a sense of how big these first sort of contracts are so between the two of them how many total nfts did they basically sign and say yes i want to pay for this many thousands of nfts so they'll both be developing entities when as they go off so the to start off with they'll be launching a few thousand nfts um the provisions for the contracts we're signing now uh for to launch next year uh to launch you know several hundreds of thousands of nfts so that would be a much much larger escalation oh and i know but but the two sign today that's what i'm trying to get at so the two signed today though they're starting with like two three thousand it sounds like four thousand nft something like that yeah that's about right yeah okay got it so that means each of these contract values are something like a thousand dollars a month a hundred fifty dollars a thousand employees i see well but but no it's not that they're lower high i mean this is a big deal you got your first two you know basically customer contract sign this is a massive moment um i'm curious just to hear how you think about scaling so when you look at your revenue projections um do you think more revenue growth is going to come from the original trade of the nft the creation of the nft or on effectually the fees as those nfps are traded that's a really great question that's a really great question i think um it's really important to separate in the nft space that first-hand trade versus second-hand trades um from our perspective as freebus we charge a commission on every trade on our marketplace whether it's the whether it's a a new drop a new mint of an nft or whether it's a trading secondhand marketplace um i think what's really interesting what does that feel so that's uh depending on the client that usually is very between four and six percent okay got it got it and who's setting the initial value of the nft that's the client a hundred percent so they decide what cost they want to sell it at got it so if they decide they want to sell like a penny you're getting four to six percent of a penny yeah but they also get uh you know the you know 95 of a penny as well so it's in their interest to try and sell that price or maybe they want to give it away for free right to allow those users to upgrade that nft so the value goes up and then you're incentivizing the second-hand trading market i see i see so what would the university use case be where they meant a bunch of nfts last year and now it's 2023 what's the use case where an nft is essentially swapping hands yeah it's a super super interesting use case there is no trading so there's a completely different business model that we're negotiating with them which is more based on on a on a on a sales model a monthly revenue model or revenue share model um so their their idea and their vision is is that the nft should um is is non-transferable it gets assigned to you uniquely when you sign up for a course right or sign up at a university and that over your professional career the value of the nft automatically degrades or the level of the nft automatically grades as you naturally start forgetting what you learnt so how do you top up your learning when you go back and study or you attend online courses and i think address is a really huge market there in terms of not just university and the academic domain but also things like um the uh the professional training in the medical world the engineering world and the legal world and i think there is a a huge uh opportunity there that's been untapped for really proving imagine for example you know i have a phd in medical physics um i did that 20 years ago uh and to be honest i haven't gone back into the field for a while and so my linkedin profile says i have a phd and yet what do i know about metaphysics today in the modern world very little right and so that should be reflected in some sort of way of tracking my knowledge in that had been attending conferences and publishing papers and doing more professional training i could have kept their level and topped up that level of my academic records so that's something i think that's uh it's a really interesting use case it's assuming the universities are giving you skills that are valued in the marketplace today which i would would swear more and more yeah and that's that's an argument to this debate but also i think it's not just universities also executive education it's professional training in various other fields as we mentioned medicine and engineering and the legal firm there are medicines are actually doctors are actually required to carry on the professional training and that's done in a very ad hoc way right now and i think there's a there's an opportunity there to sort of but to sign contracts thousand bucks a month so you can call it two thousand bucks an mrr signed hoping to scale in 2023 you've sold 20 of the company twice 500 000 preceded a 2 million and another million on a seed round earlier this year at a 5 million valuation you said you're raising now what are you guys targeting we're targeting 10 million years in this round at what valuation uh again so you can do the valuation is yet to be determined but you can do the math right so if we're targeting 10 million euros at uh at a uh and want to dilute by 20 then the valuation would be around about 40 million but we're still still in debate with the with the vcs how do you how does your brain like wrap around that right i mean you have 24 000 bucks in arr so if you just calculate and do this pure on on science right and math right that would be a multiple out of 40 million i mean that's a just insane multiple so what your answer is going to be is well nathan it's a big vision which is fine but you're also like rapidly decreasing your optionality in terms of an exit because you have to grow above that before you guys get any liquidity at the end so like how do you balance all that yeah i think it's true and i think um that's that's a really good point it's really a question it's something we debated with ourselves um whether to raise money now raise money later i think ultimately it comes down to what we want to do and what the opportunity is i do think that we have an opportunity to make um to introduce something that's really really groundbreaking and different in the fields um could we do that without having that capital uh well it'll be more difficult and it'll be slower and we may not get there in time we may be beaten there so it's a case of like okay well do we want to shoot for the moon or do you want to play it conservatively in this case uh we're considering shooting for the moon nothing signed yet so we'll see how it goes yeah we'll see okay what's team size today how many people we're only about nine or ten people working at the moment so we're still very small 10 people so how do you spend a million you just raised a million bucks earlier this year where's all that money gone why do you need to go raise another 10 million now um we don't necessarily need to raise another 10 million we still have plenty of runway left with our team size um the question is more well it's not whether we whether we need to raise the money it's whether we want to raise the money and whether we think it's a good time to raise the money um now i think it is a good time to raise the money the market is hot especially in the nft space right now and um with the contracts that we're signing with with much larger clients for next year with with provisions of with predictions sorry of of multi-million dollars of revenue um then we need to scale a team and support that right and um also bear in mind we've done zero marketing really next to zero marketing and so we really need to scale that marketing side that marketing aspect of the company to bring the message of freebus out to the to the the wider masses and try and get that vision of living assets out there in the market and that's something that we can do with more capital really oh and we're out of time let's wrap up here with the famous five number one what's your favorite book my favorite book is probably uh the first lord of the rings book sounds like a geek but there i am number two is there a ceo you're following her studying um there are many ceos i'm following are studying i must admit many of them are in the of the fellow ceos of the uh of the the funds that invest in us in our second rounds uh but uh not a specific name that i can say off the top of my head number three what's your favorite tool for building the business wow that's a great that's a great question um i'm a tech guy and it sounds really silly so one of my favorite tools is jira i i put everything in jira i put my product roadmaps in there i put my deal pipelines and i put everything in jira i can't get away from it number four how many hours i sleep to eat every night quite a lot i sleep quite well i sleep a solid seven or eight hours every night and i'm pretty pretty happy with that i enjoy my sleep and what's your situation alan married single kids i am married with a beautiful wife and i have one beautiful daughter who i both love very very much i love that okay one kid oh how old are you i'm 42 years old at the moment 42 last question what's something you wish you knew when you were 20. god that's a great question i wish i if i could tell myself as a 20 year old well i then i wish i could tell him to um focus a bit more and uh stop enjoying mucking around on his bicycle and going out playing in the mountains and focus a little bit more because if you focus on things you can get things done and that's something i've definitely done in the last decade guys freeburst.io got going in 2018 think of it like living assets living nfts that can be transferred or in some cases not transferred but degrade over time if they're tied to an akka you know an academic or a piece of knowledge that you learned or taught yourself they raised 500 000 bucks on 2 million valuation back in 2019 to power the initial version now sign two customer contracts they're charging 150 bucks per thousand nfts you plan to sort of put into the world they're assigned again with those two customers looking to bring on you know four five six more over the next quarter or two as they look to think about their series a round maybe raise 10 million on a 40 but we will see alan thank you for taking us to the top that's great thanks very much nathan i appreciate it 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 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 private slack community for b2b sas 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 nathan lacka dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes 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 got to push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya