How Freeverse.io Signed Its First 2 Customers Before Its NFT Platform Went Live (Interview with CEO Alun Evans)

Introduction and Background

Nathan Latka

00:00Hey, folks. My guest today is Alun Evans. He's got fifteen 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 Share three d dot I o, CTO of BodyPal, and director of Barcelona World Race the game. He's got a PhD in medical physics from the University College London. Alun, you ready to take us to the top?

Alun Evans

00:20>> Yeah. Absolutely. Yeah. Let's go.

What Are Living Assets and NFT 2.0

Nathan Latka

00:22Alright. You're now building freeverse.io, which is effectively this concept called living assets. NFT two point o is what you're calling it. What does that mean?

Alun Evans

00:29>> Yeah. I think what's really interesting we've seen in 2021 is how the NFT space has exploded. Right? It's heading for, like, 20,000,000,000 in in market cap in this year, I think, from a few 100,000,000 last year. And 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

The Freeverse Vision and Use Cases

Alun Evans

00:52>> at freeverse, when we founded the company three years ago, 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.

Nathan Latka

01:12Mhmm. So give me your top use case right now. Tell us to have a customer using you guys and it's worked exactly how you hoped it would.

Alun Evans

01:17>> Yeah. So actually, we're very excited. We're launching our platform to production next month with our first client, which is a small marketplace in Ibiza, the the Mediterranean island of Ibiza. And 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 event in February next year, and also one with some super big IP based over celebrity IP in The United States. So

01:42>> we're really excited about about that and and see how that goes.

Nathan Latka

01:45You've had three years incubating this, all pre revenue. So that begs the question, how did you fund your personal rent, food, things like that?

Funding History and Personal Runway

Alun Evans

01:54>> Yeah. So we were we were lucky. So both myself and most importantly, my cofounder, Tony Mateus, had previous startup experience, and we had a quite an extensive network of angels. And so we went to them. We've raised two funding rounds so far. We're in the middle of our third funding round right now. And we went to our network of angels and pitched them a great idea to really transform an industry. And I think I think what's

Nathan Latka

02:19>> really important about

02:19When was that first round?

Alun Evans

02:21>> The first round was in 2019. 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 of raising our third round now.

Nathan Latka

02:31So that 2019 round, how much did you raise there?

Round Sizes and Investor Pitch Evolution

Alun Evans

02:34>> We raised 500,000. So we're in Europe. And so typically the initial angel rounds in Europe are much more than perhaps you're accustomed to in The States. So we raised 500,000 from angel investors, and we raised just under 1,000,000 earlier on this year. Now in this round, we're going for slightly something bigger.

Nathan Latka

02:47Mhmm. And so walk me through, you know, when you raised that first round of capital, what's the story sound like? Is it the same story you're telling today in your new funding round?

Raising Money Pre-Revenue on Vision

Alun Evans

02:58>> It's very similar. The difference is now we a product and we have a platform. We have clients contracts that are signed. We have people that are going to use them, right? And I think it's really interesting when you're raising money pre revenue because you don't have, you know, the standard KPIs and the metrics and the revenue and the growth that investors like to see. However, I think a lot of investors, especially sharp investors, what they're really

03:24>> interested in is vision. Right? And if you have a vision that you are going to change the world, right, then that's and it sounds a bit trite, right, to be watching too many reruns of Silicon Valley perhaps on television. But if you have a vision that you are gonna 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

03:43>> in the in the success we found raising money so far.

Team Structure and Co-Founders

Nathan Latka

03:45And so how is the team structured? How many co founders do you guys have?

Alun Evans

03:48>> We're four co founders. So I'm CEO. My the CTO our CTO is Tony Matheus, who's a absolute genius, 30 patents to his name, very intelligent guy, and also a very, very charismatic guy as well. So and then joining us as our head of engineering is Alessandro. He's a real blockchain expert, and Fed Ernesto Lea is our our chief operating officer who's got a lot of experience in managing large teams as well. So we're quite a strong

04:12>> founding team.

Nathan Latka

04:13Obviously, And, you build believe you're building something big, yeah, you want capital to execute that vision, but you also wanna be smart about ownership and dilution. So when you thought about that 500 k pre seed back in 2019, how did you structure that in terms of cap? How much of the company did you sell?

Alun Evans

04:25>> Yeah. Around about 20%. So we 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, you it it's very difficult to control that level of of how much you dilute because, obviously, you want to raise more money to give you more runway. But the more obviously, the more you raise, you know, it's

04:46>> very difficult to negotiate a high 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've done. Again, for this round that we're raising right now, it's it's gonna follow a similar similar similar structure, I think. The difference is now, really, we have a product. We have clients that are assigned. We're launching. We have a road map. And most importantly, perhaps perhaps most luckily, we're in

05:09>> one of the hottest spaces in investment right now, which is the NFT space. So we're very lucky in that sense.

First Two Signed Customers

Nathan Latka

05:14You said customers are signed. How many customers have signed?

Alun Evans

05:17>> Yeah. We've got two clients signed up right now. One of which is this this client in Ibiza. The other is one of the major universities who are interested in living assets for for educate for tracking educational

05:30>> progress and how and your professional training. So one of the larger universities in The States has signed up with us. And so we're

Nathan Latka

05:36just these using guys?

Revenue Model: Subscription and Commission

Alun Evans

05:38>> So we have a really interesting revenue model where we charge it's quite simple in in many sense. We charge a monthly fee based on the number of NFTs that are launched that are launched within that the universe for the client, and also commission on the trades for each sale of those NFTs on our platform.

Nathan Latka

05:53I see. Okay. So what is the subscription fee? You know, average these two contracts together. On average, what are they paying per month?

Alun Evans

06:00>> It depends entirely on how many NFTs they launch. So let me give you an example. Right? So if if a client were to come and launch, like, a thousand NFTs, they would pay, like, a hundred euros a month. So very low sort 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 they're it's the advantage of our living asset NFTs that we

06:19>> don't want them to be valued just by how rare they are. They always be these exclusive expensive things. What we want them 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 Of course. If you imagine GetState where you have, like, a million NFTs being being created and out there in the in the in the universe, and that

06:40>> would be several hundred thousand euros of recurring revenue a month in the in the monthly subscription. But, 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 how much those NFTs will be traded. So that's quite an interesting duopoly between that recurring revenue and and the commission in the marketplace.

Nathan Latka

07:00Yeah. I'm trying to get a 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 wanna pay for this many thousands of NFTs?

Alun Evans

07:09>> So they will both be developing NFTs when as they go off. So to start off with, they'll be launching a few thousand NFTs. The provisions for the contracts we're signing now to launch next year to launch, you know, several hundreds of thousands of NFTs. So that would be a much, much larger escalation.

Nathan Latka

07:24I'll let I know, but but the two signed today, that's what I'm trying to get at. So the two signed today that are starting with like two, three thousand, it sounds like 4,000 NFTs, something like that.

Alun Evans

07:32>> Yeah. That's about right. Yeah.

Nathan Latka

07:33Okay. Got it. So that means each of these contract values are something like a thousand dollars a month, a $150,

Alun Evans

07:38>> I 40,000

Nathan Latka

07:40see. Well, but but no, it's not that they're lower or high. I mean, this is a big deal that you got your first two, you know, basically customer contracts signed. This is a massive moment. I'm curious just to hear how you think about scaling. So when you look at your revenue projections, do you think more revenue growth is gonna come from the original trade of the NFT, the creation of the NFT or on effectually the fees

07:57as those NFTs are traded?

First-Sale vs Secondhand Trade Commissions

Alun Evans

07:59>> That's a really great question. That's a really great question. I think it's really important to separate in the NFT space that firsthand trade versus secondhand trades. From our perspective as freeverse, we charge a commission on every trade on the marketplace, whether it's the whether it's an an a new drop, a new mint of an NFT, or whether it's a trade in the secondhand marketplace. I think what's really interesting in

Nathan Latka

08:22in field done?

Alun Evans

08:24>> So that's depending on the client that usually varies between 4 and 6%.

Nathan Latka

08:28Okay. Got it. Got it. And who's setting the initial value of the NFT?

Alun Evans

08:31>> That's the client a 100%. So they decide what what cost they want to sell it at.

Nathan Latka

08:36Got it. So if they decide they wanna sell it at like a penny, you're getting four to 6% of a penny?

Alun Evans

08:41>> Yeah. But they also get, you know, the you know, 95% of a penny as well. So it's in their interest to to try and sell that price or maybe in their interest to give it away for free, right, to allow those users to upgrade that NFT so the value goes up, then and you're incentivizing the secondhand trading markets.

University Use Case for Living Assets

Nathan Latka

08:56I see. I see. So what would the university use case be? Were they meant to put your NFTs last year, and now it's 2023? What's the use case where an NFT is essentially swapping hands?

Alun Evans

09:05>> Yeah. It's it's a super super interesting use case because there there is no trading. So then there's a completely different business model that we're negotiating with them, which is more based on a on a on a on a SaaS model, on a monthly revenue model or revenue share model. So their their idea and their vision is is that the NFT should is is non transferable. It gets assigned to you uniquely when you sign up for a

09:25>> course, right, or sign up at a at a university. And that that's over your professional career, the the value of the NFT automatically degrades or the level of the NFT automatically degrades as you naturally start forgetting what you've learned. So how do you top up your learning when you go back and study or you attend online courses? And that I think addresses a really huge market there in terms of not just university in the academic domain,

09:48>> but also things like the professional training in the medical world, the engineering world, the legal world. And I think there is a huge opportunity there that's been untapped for really proving. Imagine, for example, you know, I have a PhD in medical physics. I did that twenty years ago. 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

10:11>> about medical physics 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 I been attending conferences and publishing papers and doing more professional training, I could have kept that level and topped up that level of my academic records. So that's something I I think that's a that's a really interesting use case.

Nathan Latka

10:26That's assuming the universities are giving you skills that are valued in the marketplace today, I would have been aware more and more.

Alun Evans

10:32>> That's that's an argument to debate, but I also I think it's not just universities, it's also executive education, it's professional training in various other fields, as we mentioned, medicine and engineering in the legal firm. Fair. 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. I think there's a there's an opportunity there to to standardize But

Nathan Latka

10:54two signed contracts, thousand bucks a month. So you can call it $2,000 in MRR signed, hoping to scale in 2023. You've sold 20% of the company twice, 500,000 pre seed at a 2,000,000 and another million on a seed round earlier this year at a 5,000,000 valuation. You said you're raising now. What are you guys targeting?

Third Fundraising Round and Valuation

Alun Evans

11:09>> We're targeting €10,000,000 in this round.

Nathan Latka

11:12At what valuation?

Alun Evans

11:14>> Again, so you can do the the valuation is yet to be determined, but you can do the math. Right? So if we're targeting €10,000,000 at a at a and want to dilute by 20%, then the valuation would be around about 40,000,000. But we're still still in debate with the with the VCs.

Nathan Latka

11:27How do you how does your brain, like, wrap around that? Right? I mean, you have $24,000 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 $40,000,000. I mean, that's a insane multiple. So what your answer is gonna 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

11:48you have to grow above that before you guys can get any liquidity at the end. So, like, how do you how do you balance all that?

Alun Evans

11:54>> Yeah. I think it's true. And I think that's that's a really good point. It's really a question. It's something we debated with ourselves, whether to raise money now, raise money later. I think, ultimately, it comes down to what we wanna do and what the opportunity is. I I do think that we have an opportunity to make to introduce something that's really, really groundbreaking and different in the field. Could we do that without having that capital? Well,

12:16>> it'll 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 we wanna play it conservatively? In this case, we're considering shooting for the moon. Nothing's signed yet, so we'll see how it goes.

Nathan Latka

12:29Yeah. We'll see. Okay. What's the team size today? How many people?

Alun Evans

12:32>> We're only about nine to 10 people working at the moment, so we're still very small.

Nathan Latka

12:3510 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 10,000,000 now?

Why Raise Now and Team Scaling Plans

Alun Evans

12:42>> We don't necessarily need to raise another 10,000,000. We still have plenty of runway left with our team size. 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. Now I think it is a good time to raise the money. The market is hot, especially in the NFT space right now. And with

13:03>> the contracts that we're signing with with much larger clients for next year with with provisions of predictions, sorry, of of multimillion dollars of revenue, then we need to scale a team in order to support that. Right? And 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 freeverse out to the to the the

13:26>> wider masses and try and get that vision of living assets out there in the market.

Nathan Latka

13:29Yep. And that's something that we can only do with more capital, really.

Alun Evans

13:32>> Yep. Oh, and

Famous Five Rapid Fire Questions

Nathan Latka

13:33we're out of time. Let's wrap up here with the famous five. Number one, what's your favorite book?

Alun Evans

13:37>> My favorite book is probably the first Lord of the Rings book. Sounds like a geek, but there I am.

Nathan Latka

13:43Number two, is there a CEO you're following or studying?

Alun Evans

13:48>> There are many CEOs I'm following or studying. I must admit many of them are in the of the fellow CEOs of the of the the funds that invested in in our second round, but not a specific name that I can say off the top of my head. Head.

Nathan Latka

13:59Number three, what's your favorite tool for building a business?

Alun Evans

14:04>> Wow. That's a great that's a great question. 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 road maps in there, put my deal pipelines in there, I put everything in Jira. I can't get away from it.

Nathan Latka

14:16Number four, how many hours of sleep do get every night?

Alun Evans

14:19>> 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'm I enjoy my sleep.

Nathan Latka

14:26And what's your situation, Alun? Married, single, kids?

Alun Evans

14:29>> I am married with a beautiful wife, and I have one beautiful daughter who I both love very, very much.

Nathan Latka

14:34I love that. Okay. One kiddo. How old are you?

Alun Evans

14:37>> I'm 42 years old at the moment.

14:39>> 42.

Nathan Latka

14:40Last question. What's something you wish you knew when you were 20?

Alun Evans

14:43>> 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 focus a bit more and 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.

Nathan Latka

15:04Guys, freeverse.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, you know, an academic or a piece of knowledge that you learned or taught yourself. They raised $500,000 on $2,000,000 valuation back in 2019 to power the initial version, now signed two customer contracts. They're charging $150 per thousand NFTs you plan to sort of put into

15:25the world. They're signed 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 10,000,000 on a 40, but we will see. Alun, thank you for taking us to the top.

Alun Evans

15:36>> That's great. Thanks very much, Nathan. I appreciate it.

Nathan Latka

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