How Fundapps CEO Andrew White grew Fundapps to $10M revenue and 45 customers in 2018.

hello everyone my guest today is andrew white he's the founder and ceo of fund apps a reg tech company which provides compliance monitoring services to investment managers fund apps currently services three of the world's 10 largest headphone hedge funds and monitors over 6 trillion usd of assets every day fund apps was founded in a spare bedroom above a pub and has never taken a penny of funding andrew are you ready to take us to the top yeah indeed how are you doing i am doing well okay i love that you're bootstrapped for those that have not heard of you what are you doing how do you make money a very simple idea so we rather than people that manage your money doing compliance for themselves they send us the data and we will do compliance for them so we provide the infrastructure we provide the technology but more importantly we provide the regulatory expertise so i we have a team of legal and compliance people and understand the rules and regulations across the globe making it easy for fund managers hedge funds to be compliant with regulations in 95 countries okay and is this i mean is this an agency or a sas platform this is absolute sas platform so we contract with the fund managers uh it's a yearly sas you know agreement very simple very normal and what would you i'm sure you have a lot of cohorts of customers but i'm going to force you into an average here i mean what would you say the average acv is on one of these customers uh so we started about a hundred thousand dollars of course got it okay great okay good that's helpful to understand and then help me understand the back story here so when did you launch company what year uh launched in 2010 so just had her eighth birthday uh very simple normal background that i did this before and in the previous lifetime i kind of thought i could do it better use the clouds make it fast whereas my previous company was very much an on-premise play this let's let's make a cloud i provide this as a service nobody wants you know people want a glass of milk they don't want a cow and so it was very much let's provide the service rather than the infrastructure yep on-prem to cloud is obviously a healthy trend what's the team size today how many people we are currently 46 people globally uh 42 are you know 42 in the uk 84 in the us okay so uk and kind of remote locations 46 and how many customers have you scaled to today bootstrapped uh we currently i think our latest total as of as of yesterday was 45 clients globally okay and and you know walk with you i assume this is a really high touch model just because it's sensitive data and big contracts if i'm right break down your sales team for me um it is high touch but not as much as you expect so our sales team is currently your typical you know for senior sales people um two sdrs and obviously the uh in a marketing team as well currently two people okay and is there any kind of customer success team focused on driving expansion revenue and onboarding correct so we only have three services currently but are increasing uh hopefully soon to be four or five uh but for us yes we do have a client success team very much about getting our large banks who are you know not used to the cloud not used to sas for some of our clients their first sas experience for one of our clients very first cloud experience so you know trying to get them comfortable with everything increasing you know usage all that kind of stuff so yeah and andrew let's dive into that so i want to dive into pricing here especially in the reg tech space right so if someone signs up with 100 000 contract for you in year one um based off the process you run them through what do they usually expand to by the end of year two would you say so that's a good question so we're unusual like that that basically our fee is is everything it's the entire shooting match for one service so we don't typically have an upsell or isn't the silver gold platinum service levels that you might have in your typical so for us it literally is it will be an uptick every year based on on uh cpi uh cost increases but generally no what does that mean is that cost per integration no no uh consumer price index uh retail price index whatever you want to call inflation okay so so for for us once we've sold the clients it's very much uh pretty much the same level unless we sell them another service well so so why would someone sign up at 100 grand a year versus a million a year what's the difference oh so we have that's a very good question that's the big differentiator so for us it is very much to do with the complexity of a client so for example a really small us hedge fund maybe 500 million dollars under management trades in a few countries has one portfolio would pay a fraction of what let's say a household name like jp morgan or citigroup would pay when they trade in 95 countries up thousands of portfolios and they manage trillions so it's very much about the size and complexity of a customer okay so you do have kind of pricing axes that are around assets under management number of portfolios and number of countries you're trading in yeah and a few more on top but it is very much trying to try to calculate how much or how much pain it would cost the customer do themselves you know how many bodies that they have to throw at this and that is to do with exactly complexities like that this is what i'm trying to understand though so let's say i sign up today and i only have 100 million bucks in assets under management one portfolio three countries um your tool helps me so much i triple year over year and so right so now i'm doing you know 300 400 million bucks assets under management three portfolios maybe 15 countries am i still going to pay that same year one price uh generally yes so we we try and keep it as simple as that if you're not really causing us more pain you know you're not strapping you know making our servers fall over you're not kind of pushing the client success team then for us you're the same type of client it's very rare that a client would increase size so dramatically that they become a different beast so for us what we call organic increase which as you said would be you know going from 100 million to 500 million will be included in the price where we would say okay you've moved to different categories what we call non-organic growth i.e m a you purchase one of our other customers you purchase uh prospect of ours and then we say okay you've gone from 200 billion to 500 billion you're a different organization so that's when we would trigger a price increase so andrew is it fair to say that you you don't have expansion revenue very little of those yep yeah yeah interesting okay interesting so so of the i imagine then you probably have i mean of the people you've got the 46 people how many of them are sales oriented um seven okay interesting and how many of them are like yeah that's pretty old how many of them are kind of like marketing and onboarding uh well they're two different teams and marketing for us is two onboarding is about six interesting okay and so how do you measure the success of the onboarding team if it's not expansion revenue it's i assume it's usage metrics but what uses metrics yeah uh we're kind of uh an old-school business in that respect i mean once the customer is using the system and resigning then it's a successful customer i mean we obviously use metrics like net promoter score you know we do we do conferences you know signing up to things but generally regtech is a very boring area in the respective it does it does a job if it does that job well and it fulfills the purpose job done shall we say obviously customer satisfaction insurance ratios are important but you know we've only ever lost one customer in eight years of business and that was a fairly weird scenario so in that respect we're sticky so when you look at your your cohort churn on our revenue basis each year i mean is that just 100 percent gross and net pretty much yeah that's interesting um really interesting so so ha this market is a small market in terms of just number of logos to go after i imagine if you have no way is that right okay 2 000 right yeah oh okay that's actually bigger than i thought yeah and you've got 45 now i mean it's it's a long tail but i mean there's 500 large asset managers you know you've got about a thousand hedge funds you've got quite a few investment banks but uh you know yeah and then i mean can i kind of back into math here you mentioned earlier kind of minimum start is a hundred thousand you know acv and 45 that puts you at about caught 375k per month i mean is that generally directly correct it's it's quite a bit higher than that yeah i mean we obviously uh have various various types of clients that go quite large as well but you know ballpark is not far off do you have 20 million ar in your sites or is that like a stretch goal that's still maybe two years out in dollar terms it's it's in our site next you see that do you say that because it makes the the crazy games right now with exchange rates well exactly depending where brexit goes uh et cetera that might could be a five-year target if brexit goes well it might be a one-year target but you know uh next one to five years shall we say i won't push you harder than this have you broken 10 million bucks in arr i'm very...