How Grain Financial Technology CEO Aharon Navon grew to $1.4M revenue and 2 customers in 2024.

guys common X Banker uh he's raised 19 million bucks hoping to help folks mitigate hedging risks for example if you're selling a hotel bed in California to a Mexican travel agent who needs to sell it to Mexican residents and pesos he'll help you hedge that risk this risk can be significant with the Euro changing for example the past two weeks eight percent against the dollar it's a massive Market his hope is to get this product live in the next six months and process you know caught a billion dollars of hedging volume next year of which she'll make 20 to 30 bips on so call it two to three million bucks and revenue already has a team in place of 20 people looking to scale now with this new money hey folks my guest today is Aaron Naman as a former head of Barclays CMA FX trading platform the co-founder of Israel's largest FX hedging non-bank Aaron brings over 20 years of FX and risk management exposure to his current company which is an embedded cross-currency solution called grain Finance dot Co Aaron you ready to take us to the top yes all right double this down for our non-finance people what does that mean in a simple sentence what hedging for smes what you do why people pay you that's I'm not sure this will find out in the future but basically uh have over 20 years of experience providing uh hedging solutions to a lot of companies small bigs uh private individuals High net worth so I think you know uh we acquired some experience and that's what maybe I'm what I paid for this is so Aaron sorry you got to dumb that down right so hedging risk right now right so there's a there's two currencies people want to do business together explain to us specifically what hedging risk is why do people hedge that risk on currency in a very simple manner when you have an importer for example that is uh buying uh some some type of an inventory for example an importer from the US that is buying a uh for example in the inventory which is wine okay from Europe so he's a donor base he's selling his Wines in donors but he's paying for his uh you know Wines in Europe so the exposure between the Euro and the dollar is affecting him so if he's buying it in Euro for example and you know Tilly's actually purchasing it the euro is going you know uh increasing versus the dollar then he can lose a lot of money basically by paying more so what we're doing here is we're providing him with a hedge that he can fix his euro dollar rate at the uh let's say the Inception of his uh of his order and that's that that way he knows how much he paid in dollars okay for something that he will be receiving in two months time okay and then he knows you know what will be the price for his end clients in the US that will pay for these points and then the actual profit it will be the amount he paid for the specific wine and uh and the the basically the price that he sold the wine at the doors as well so it's dollar versus dollar not dollar versus Euro how big of a risk can this be if I'm a wine owner today we're in a liquor shop in California and I spent a million dollars to buy wine from Europe you know today but I'm not gonna get it until four months from now how much could that value increase or decrease after I've already put up the million USD yeah you know lately it's actually it's very volatile so we can say that over the past even two weeks the Euro increased versus the dollar by eight percent so for example a million dollar or inventory you could have lost 80 000 or 80 000 Euros just by waiting you know for two weeks to pay for the actual uh for the actual ones so that's a lot of money so how much you would have sold those wines you know in the US but I'm not sure that is the profit margin is eight or ten percent so you can even end up losing in his business so that's that's your sales pitch right so you're selling to me now the guy in that runs the wine shop in California you're saying Nathan careful there's an 80 000 risk here pay me at X to get rid of that risk right how do you work your pricing so basically I'm an equality provider so I have liquidities from you know a lot of banks a lot of non-banks and that's my business so I can buy the Hedge very cheaply so for four months time you know I can buy the euro dollar hedge or the euro dollar Ford as we call it in you know in our business at a very good price and that price I'm transferring passing to uh obviously through the wine to the wine buyer okay and I'm just making a small margin on that 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 valuation 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 going to 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 what margin do you reverse engineer for it's basically 20 30 basis points you know about my cost of hedging which is actually very very competitive I mean if you will try to do that for example versus I mean with his local bank it will pay probably end up paying by four five percent for uh the specific million dollars of uh yep so four percent to a bank point two to point three percent for you so what is that what does that mean for me as though as the guy buying the wine from Europe what am I going to pay you to hedge this risk so you just gonna pay me okay a million dollar in four months time and that will deliver you the Euro so you can pay your uh your supplier in Europe okay oh I see that's that's the business we're doing got it so you're not making money you're not making money then from me you're making money on the other side I'm making money from the spread so let's say I bought the Hedge okay if your dollar now is 104. okay that's my cost so I will sell it to you at 104.20 I'm not say give me that I get 104 what a dollar forty 140 104 a euro dollar is 104 now so for one Euro okay it's 1.04 dollars so for a million euro of an order okay you have to pay me one million and forty thousand dollars that's my cost so for me to earn slightly on because that's my cost okay so I will quote you 1.042 which is this 20 basis point that I was mentioning earlier yeah and that's what the basis point is basically uh two thousand dollars okay on a million euro dollar which is close to nothing so you're making effectively 0.2 to 0.3 percent on effectively the money flowing through your system right your gmv if you were a Marketplace exactly I see all right let's get more your backstory here now that we understand sort of the model and by the way our our wine buyers in the US buying from Europe your number one customer sorry no no no no different different uh areas well who what is the like your top three don't name the customers but the top three groups that you serve what are they actually now but we're serving we are more of an embedded Finance so we are providing hedging yeah to travel Platforms in the travel industry okay so for example a bad bank that is selling Hotel Beds okay to local agents so we will provide hedging solution like our engine will provide him prices that he can quote his local agent in his in their local currency so for example if you have a hotel bed in the U.S that he has a Mexican agent that is selling rooms to Mexicans okay which is a little bit complicated but we can give him the Hedge so he can quote they'll tell the price in Mexican peso for his uh Mexican agent and the Mexican agent can pass through the Mexican peso price to his local climb so are you making a flat fee from the hotel bed owner in the U.S or the Mexican agent or no so we're still going to make the same spray that I mentioned earlier no I know that but is there a flat fee on top just to use the embedded Finance Tech stack it varies between currency Pairs and the tenor of the Hedge so a hedge for for example for one month in a hedge for one year is slightly different sorry what I'm asking is a lot of these embedded Finance products will make money on a spread like what you do but they also then have like traditional SAS revenue or recurring fee for the hotel that operate in the U.S you have no flat fees no okay very cool all right give us a history here when did you launch the business what year uh about a year ago okay so fairly new okay got it 2021 and was your first customer someone running a hotel bed in the U.S or how did you get your first customer the obviously look we've raised I mean we are well funded okay and we are about a team of between 15 to 20 employees currently and we have head of marketing head of business we have a head of uh CTO CPO everything and and our new customers are actually we have two big Hotel Beds okay one of them is coming from Israel and one of them is actually coming from Singapore and Japan okay but are you pre-revenue today then you're not live with them yet yes December January we will uh start generating revenues I mean that was kind of funny right I asked about your first customer and your answer was we've raised a lot of funding uh I'm like okay he must be he must be pre-revenue uh because I like Revenue obviously more than customers but obviously I mean I guess that's the question the question I would ask you is you have quite a track record in the space right looking your background why do you need a bunch of money to launch this why sell all that Equity early on look it's basically uh it's very expensive yeah to build such a platform I'm saying Tech okay because I have businesses today that they're doing it in a more of a manual way but to do it uh you know on a scale and and very technological it's very expensive yeah how many engineers make up the 20 today almost half of them ten okay wow okay and and I guess how much did you raise 19 million dollars one nine or nine zero one nine one nine okay I wish I wish nine zero but one night you'd have no equity left if you raise that raise that amount all right so you raised 19 million bucks and that was the first money in yes okay well that would be a very large pre-seed round it was really like a it's more like a probably a large seed round is how you would call that right exactly it's a sea drone basically the the money I mean we got the money from uh you know very good funds that they really believe in the team because just be clear that's all Equity that none of that is a small like debt fund or a warehouse Equity okay yeah um and most folks these days are selling between 15 and 20 percent equity in seed rounds did you sell about the same amount a sort of approximately okay higher or lower a little bit higher okay a little bit more so this was very dilutive for you or this was this a very strategic partner not very diluted you know I don't see it like that well you sold more than 20 of the company I would say that's very dilutive I know but we also uh raised a lot of uh as well and want to build something that is very robust that would be you know a real Legacy so for me let's say for Luke in 10 years down the line and I'll have even two percent but from uh 30 billion dollars business I'll be okay with that it's a big risk though Aaron right I mean how many how many companies that started 10 years ago are worth 30 billion dollars today you're taking a you're taking a massive swing and it's a big risk but it's much harder to accomplish than going and building a 10 million bootstrap company that profits five million a year but I see risk differently actually you know for me once you know raise the money and we have employees so I need to secure them and I need to secure the company so the more money I have you know it's the less risked thing for the company no I would argue it's significantly more risk the more money you raise significantly more risk you have to grow faster everyone burns more you lose your creativity because everyone wants to throw money at problems I would argue it's way riskier to raise a lot of money so I disagree with you on that I disagree with you on that and uh you know we are very patient I'm not in a rush you know to jump on any solution or to try and get every client you know I have enough experience you know to do the right thing and that's why I raised a lot of money from this specific specific basis that they know that we would do the right thing okay in order to be here for a long time yeah it doesn't matter you know I'm not like let's say if I was 20 years ago maybe you know I would try this and try that I know exactly where I'm heading to obviously we're making some mistakes now we'll make some mistakes in the Futures but we have enough you know knowledge and experience to to take this company okay to uh higher levels yeah well listen I'm not rooting against you obviously I think you have a big success but I don't I want my audience to understand if you put a hundred Founders in a room right first off only two percent of them are gonna be able to raise at all right you're one of them right so two out of 100 arrays right and and I mean wait one out of a hundred Investments That VC bun makes Returns the fund becomes we're 30 billion right so you're looking at like point two out of a room of 100 Founders right actually go and do what you just articulated versus the other 100 Founders in that room if they go build I mean it's way easier about a five ten million Revenue company and profit two three million a year right I would say it's way less risky to build that kind of company no no I I agree with you in that but I see differently in that matter that if I raise just five million dollars you know I think I would put my company in a very high risk letting you go bankrupt you know in a year time because we're not going to have enough funding for the next uh for the next one and you know where you don't get enough customers right that's what makes a company go bankrupt is you can't you don't get you don't have customers willing to pay right I mean yeah I'm sorry sorry I'm not saying you I'm saying in general and the market you do it's something you have two customers lined up I'm saying generally speaking the risk is you raise too much money for an idea that you then build spend a bunch of money on and then people don't end up buying it that's real that's like crap that's a bad situation yeah but but the beauty with us yeah that we do have this experience and track record yeah that is actually generating you know very nice Revenue here in Israel we are obviously the the non-bank they're doing you know the most business with the small media businesses so that the faces that are invested in us they can see the track record okay what um what what is your track record what were you doing before this so I was basically head of uh trading uh trading all in Deutsche Bank and Barclays and Barca is to run Sima which is central eastern Europe within Eastern Africa in ethics and rates and six years ago I found the company in that specific area as well providing hedging for small medium businesses in Israel oh sugar soham so and in that specific company I have already 1 500 companies that are doing business with me so you know we know what we do you're talking about Horizon right another reason it's called Financial Services Verizon is the crypto oh it's a that's the crypto specific arm I have two companies yeah one is the actual shock of financial services which provide a hedging for small video businesses and there's 20 people there's 20 people full-time at that company there are more employees there too this is the company that is only the Israeli based companies servicing only Israeli clients okay and this is a very profitable business and this is that that company was a bootstrap no uh funding raising at all and the corn company which is growing that you know we embrace the 19 million this is for international so basically to uh to conquer the whole world U.S Europe and Asia to provide a hedging Solutions on a scale on a technological level is this financial services armed though serving only Israeli clients included in the cap table of the combined their separate companies separate companies yes how did you get investors in green comfortable with this massive side project you have that's still operating today with a lot of employees and bootstrap well over there I have you know it's it's like you're asking Elon Musk how does he can he can run Space six Tesla well no offense but I'm not Elon Musk you're not you're not you're not Elon Musk right I'm not Elon Musk no I'm not I'm not worth 200 billion dollars but but obviously I can run a few businesses and over there by the way I'm I'm only serving as a director and I was founder of that company okay I hardly spend any time there there is a CEO uh CMO everything there the the company is running by itself I'm just on the border uh once a month we have a board a board meeting my uh sort of my my experience and knowledge to help them go further in that respect so well you've already cut your teeth bootstrapping you're taking a very different approach on this one to go conquer the world we're certainly rooting for you we'll see what happens what's your goal next year how much volume you want to process I think we're gonna be up to a billion dollars of uh of hedgings through this specific vertical which called the travel industry over what period of time next 12 months in 2023 which you can say over the next 12 months you know but I mean so I mean look this is going to be sort of a strange question but isn't that too slow I mean the reason it says if you're only making 20 bips on a billion of GMB that's only two million bucks of Revenue you just raised 20 million but isn't that too slow of growth for coming no because it's very exponential because it went before well you're going you're going from zero by the way right though of course it's exponential no I'm saying exponential then in 2024 yeah we would have probably between five to seven billion dollars in packing and then it's going uh in in exponential way so 20 24 20 25 probably was going to be like 15 000. so that that's going to be the sort of the uh the scale yeah I mean but even at 15 billion at 20 bips that's assuming you hit that ambitious goals that's 30 million bucks I think um I mean that's obviously on par with what VCS want to see how What's the total amount if you get this whole Market What's the total amount of processing you think you can power is moving now currently every day in the hedging Market trillions of dollars a day yeah but are you talking about just about hotel hedging and travel hedging we're starting with the hotel vertically we're going to go into account payable Solutions so to a lot of those platforms the logistics we have few verticals we're starting with the the travel vertical yeah yeah well hey that's why we are very ambitious in that respect you know we can see ourselves as the Goldman Sachs of the small medium businesses worldwide that that's the ambition okay that's where we are aiming for yeah look I I mean it's a lot of money to going from you know you if you launch in 2021 you know you're basically saying it's going to take you two and a half years to do two million dollars of Revenue right because that's what a billion dollars of GMB would be at 20 bips right it'd be 2 million by the end of next year um and then you're off to the races so we'll see what happens we're rooting for you we're out of time though for today so let's wrap up with the famous five number one what's your favorite Business book actually I don't have a favorite Business book I'm more into physics and I can tell you what is my favorite book in physics but not in business go ahead physics is the only the only uh Business book that you know I can really relate with the Warren Buffett which was the Warren Buffett way which I read 20 years ago yeah that's a good one number two is their CEO you're following or studying read lately um Stephen Schwartzman from Blackstone which I wasn't really impressed actually but that was the latest one I read number three what's your favorite online tool for building grain sorry favorite online tool online tool don't have any more specific number four how many hours of sleep do you get every night seven to eight hours that's good and situation married single kids could be worse but I have a partner now fair enough any kids yeah two kids two kids okay oh great and how old are you um 49 49 last question something you wish you knew when you were 20 years old foreign I I say every age or every decade I like to live that decade you know I like to make my own mistakes learn from them live experience and and you know take it from there guys common X Banker uh he's raised 19 million bucks hoping to help folks mitigate hedging risks for example if you're selling a hotel bed in California to a Mexican travel agent who needs to sell it to Mexican residents and pesos he'll help you hedge that risk this risk can be significant with the Euro changing for example the past two weeks eight percent against the dollar it's a massive Market his hope is to get this product live in the next six months and process you know caught a billion dollars of hedging volume next year of which he'll make 20 to 30 bips on so call it two to three million bucks and revenue already has a team in place of 20 people looking to scale now with this new money Aaron thanks for taking us to the top thank you very much one more thing before you go we have a brand new show every Thursday at 1pm 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 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