HBox Revenue, Valuation & Funding (2024)

hey guys recording this here on what is it Friday the 19th maybe you're seeing this on Monday at the latest but I want to let you know we are almost sold out for founder comp sorry founder 500 in Austin Texas here in about a week uh it's gonna be an amazing event 500 B2B SAS Founders I'm looking at the attendee list there's almost um there's almost 60 founders with more than six seven million bucks in ARR it's an incredible group of group there's over uh there's over a hundred over 150 with more than a million uh more than a million Revenue it's an incredible group you don't want to miss it uh grab your hotel grab your flight grab a ticket right now I'll put the link in the bio um in the description here on YouTube and I think there's only about three tickets left okay about three tickets left I'd love to see you guys there don't be bashful grab your ticket now hey folks my guest today is brand new Prasad he's a Serial entrepreneur currently the founder and CEO of hbox a virtual First Care platform company that helps customers in eight U.S states and he's growing quickly they've participated aggressively in the Indian investment ecosystem both as a venture partner in O'Reilly Ventures and as an angel investor Bono you ready to take us to the top yeah sure so it's basically my background is um Bonnie let me let me let me let me lead here okay let me set you up for success with my audience so guys first off if you want to follow along the link is hbox.ai yeah and so Bonnie would start with the start with the platform right so when you say building virtual First Care platform what does that mean so we are uh we are an end-to-end uh uh platform and services company and we serve uh clinics across eight states in U.S where we not only provide the hardware and the software technology but we also provide the end-to-end care delivery services like clinical uh care coaches with billing infrastructure and so on so the basically what we do is we work with clinics mostly specialty clinics like pulmonologist Cardiology what do you mean sorry but you keep using the word Kleenex I don't understand so they are outpatient Healthcare Providers like um if you these are individual clean uh practices or group of Physicians come together and create a legal entity that work with the hospital systems so basically those are healthcare clinics which specializes in three specialty area which is pulmonology cardio biology and Nephrology so we work with so we work with these Physicians to create a virtual clinic inside their clinic so what does that really mean is we provide the required hardware and software for their patients and work with them to help them to Monitor and manage their chronic conditions honey understood so you're selling the positions that work with Hospital chains you're selling directly to those clinics when you say hardware and software plus Services if you look at your total revenue from last year what percent would you say was hardware sales so we don't um the hardware is not sold as Hardware it's an integrated subscription model so we lease those Hardware to the patient so our revenue is all uh subscription Revenue so we don't sell the hardware as a subgrade So when you say the hardware is leased what does the hardware do you have by the way can we see the hardware do you have it there near your desk can you hold it up uh no unfortunately I don't have it right now but is essentially consists of a 10 inch display tablet which we call as health part that comes with different medical devices that gets attached to that tablet depending upon the chronic condition that we are managing for the patient so for in case of pulmonologists it can be as simple as a pulse oximeter plus a spirometer in case of cardiologists it would be a blood pressure monitor and in case of uh it can be a weighing scale it can be a blood sugar Monitor and depending upon the chronic condition the common element is I want to say focused on on the hardware for a second okay so the hbox smart kit I see on your website which it looks like there's an iPad thing there's a little thermometer gauge then there's a little finger thing to get your your blood pressure I think in a couple other tools what does that hbox market that I'm looking on your website what does that cost you to purchase from the manufacturers so we for us landed it comes to close to 200 dollars landed in so we're going to do these are customized even though they are standardized products it's uh branded hitchbox and we work with certain you know so volume commitment and so on so the total cost for us is uh around 200 landed and what volume would you have to commit to with the manufacturer to get your price down at 200 landed so anything between it depends on the iPad volume such as medical devices so it's somewhere around three thousand uh units three thousand units okay time for manufacturing 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 and and how is it 200 landed I mean there's an iPad I see in this package I know iPads just by themselves are five six seven hundred bucks yeah so these are uh it looks like an iPad those are Android tablets which are customized for hbox so they come with uh our built-in software so they are not an iOS platform they are an Android okay same same question though an Android tablet is going to cost just by itself more than 200 bucks correct that is where the that's where I meant that we tap into the um my previous Venture was in the same space so we work with the contract manufacturers in China to bring down the cost so you can get if you purchase three just talk about Android tablets for a second if you purchase 3 000 units and commit 300 years you can get your cost for those Android tablets under you know 150 a unit okay that's right oh wow okay got it okay so your Hardware's 200 landed um that makes a lot of sense and then what do you lease you mentioned you lease it back to your customers the Physicians and clients what's the what's the monthly lease payment so we don't uh let me give you a walk you through our business model right we don't lease Hardware separately what we do is we charge per patient on a per month basis anyway between depending on the volume of the clinic anywhere between 60 to 79 dollars per patient per month okay and and what does that per patient does that number of patients in the system is that just the patients that visited that month no those are the patients that whom we have delivered these uh uh service with which includes the hardware okay my question is a physician or clinic over a five-year period might see a thousand patients correct but last month maybe they only saw 10 patients are you billing against the 10 patients or the Thousand patients no 10 patients but all those 10 patients would have been given this Hardware that they can carry to the patient's home and this is a subscription that patient uh The Physician prescribes to the uh patient to for a 12 months period so we so if I'm a physician if I'm a physician running a clinic in the you know in Kansas here in the U.S and I go this month in August and I visit 20 clients in person at their house using your Hardware kit I will pay you for 20. no no no no no Nathan you got it wrong it is that when the patient visit the physician the the patient gets this kid to take it home it's not the physician is using it and when the patient takes or gets the kit uh to take it home and then they take use the kit on a daily basis and they are remotely monitored and then we have our care coaches who help them to manage the chronic condition I see so the clinic in Kansas me I'm a physician I might see 20 patients in a month I'm going to want to give each of these 20 patients take to their house this tool that you gave me that the hbox smart kit and then you're gonna Bill me sixty dollars per the me as the clinic 60 to 80 per month per per package or client that I visited the 20. correct I see I see and the reason why you would do as a physician is because Medicare reimburses for these services so Medicare reimburses anywhere between 140 to 200 dollars per patient per month for you as a physician and we help that process as well we make the claims we get the reimbursement for you as a physician and I recharging yeah so last month how many Physicians uh are paying you at least a dollar so we today on our platform we have close to 100 providers what we call Physicians and we are generating uh our ARR right now is 1.4 million and so what does that mean those 100 Physicians how many clients like how many kits have they handed out oh so totally it's around 1800 uh right now sorry so one thousand eight hundred thousand eight hundred yeah okay um and so just to be clear 1 800 you pay you pay 200 bucks a pop so that's 360 000 for those kids where did you get that money to buy make the initial Hardware so we are initially the C there is a two round of funding we have done one is a c drone um which is a small safe note that we raised Capital last year August and then uh right now we did a pre-cd say Safe Note as well so the My Equity is through safe note thank you so when you did when you did the round last year how much was that for uh that was a safe note so the valuation cap was 5 million and this year it is 30 million how much did you raise though last year uh it was uh 750k so you raised 750 000 on a safe note precede round at a 5 million cap and then you raise your traditional seed round this year yes and that's also on safe note and 30 million valuation cap and Via raised another 800k 800k okay that makes sense um got it and so if you're doing 1.4 million in AR today what were you doing exactly a year ago do you remember yeah it was around 100K we just started so the company the first commercial launched with the clinic was happened last year April I see so 1.4 million run rate today is means you're doing about 115 000 a month in Revenue that's one year ago today you were only doing like five or ten thousand a month in Revenue yeah okay wow so nice growth how have you signed up how have you found a hundred physicians in the US to sell to sure that's an interesting story in itself so what we have done is uh we have worked with the initial customers that we acquired through our connects uh to make sure that they generate Revenue through the Medicare reimbursement process that has led us a strong uh Bond so all of the 100 providers that we have on our platform is through reference from existing our customers so we don't have a single sales person or a team that is going after okay but but that's not so how did you get the first customer ah that first customer was through a connector of our my previous Venture and uh we had the first three customer was through our Network and after that those customers have referred other customers and those customers have referred other company customers because the value and the business model for uh in from our perspective drives that kind of referral program and if there's 1800 um in the wild today you know kits devices again you charge 60 to 80 per month there um where do you where's most your Revenue growth coming from is it is it one physician getting more clients or is it adding new Physicians altogether it is it's a combination of the both so what happens is once we add what I call as Clinic can consist of multiple Physicians within a clinic right so once we add a clinic on to our platform and a provider or a physician onto our platform it it takes at least is continues to grow the patient because as you said in your Cancer's example there are 10 patients visited this one next day next day in patients visit next month so that's an engine that gets kick-started and then we add other clinic so it's a combination of uh clinics on and providers on our platform which will continue to grow as well as adding new new clinics and new providers so we have a strong pipeline as I said the referral Network kicks in and they refer more and that adds on to our Top Line one way to ask this question is to look at your net dollar retention so what is your net dollar retention the past 12 months um it is pretty much uh we haven't lost a single uh client so far because it's uh it's very simple because uh our model is I would say still we are early on in the evenings because it's uh it uh we are in business only for last 12 months and so it's very hard to compute those numbers yet but based on our retention so far we haven't lost a single customer yet yeah but so net dollar retention is really asking it's a combination of have you lost any but also how much have you up sold right so when you look at the customers that you're working with exactly one year ago what percent have they expanded by oh sure so that's been phenomenal right so it's been like uh typically the way we measure our business is if you sign up a physician and if they have a thousand patients in their uh EMR system for last one year and it takes close to a year for us to grow their uh to enroll their patients 26 percent of that so it's roughly we add from it takes uh for a thousand patients into the 260 patients have been added in the last nine months so okay but that doesn't make sense because if all if all 100 Physicians you're working with have added 260 right patients that's way more than eighteen hundred yeah that's a great question right so most of these patients we have added is in the last three months I see so how many patients how many how many how many clinics were you working with exactly one year ago it's only three three okay got it cool what when those clients signed up those three clinics a year ago how many patients did they start with what was the first order they purchased the first month was like 20 people and what have they expanded to now today 260 yeah right to 300 ladies also yeah tell me more about the team how many are full-time today we are around 30 people three zero three zero and how many engineers uh are on uh nine people all are in India our R D team is in India but the rest of the team uh what we call as a customer success and Care coaches which are medical clinical staff are all based out of us yeah very cool and do you have CAC are you paying or doing any paid spend to get customers uh no this is so far we are being lucky as I said we are going through referral programs and which is basically the existing customer referring other uh Physicians to get onto our platform and what dollar volume of Medicaid or Medicare reimbursements have you processed personally through the system so so far right now as I said to for us to generate 120 K per month so we are processing close to 300 350k per month of claims okay are you are you are all those three thousand dollars in claims monthly getting accepted and reimbursed yes yes that's the reason why we get close to half of it uh from as our invoice okay got it very interesting What's the total opportunity here how many how many you know patients are at at home where you know uh clinics and Physicians have to give them this Hardware device sure so that's another great question right with the 100 providers we can potentially reach close to 180 000 uh patients that's just our install uh clinics and providers but if you look at the overall Market size uh in Medicare there are close to 40 million patients with chronic condition that can be prescribed this solution and are you guys profitable today are you burning cash we are learning cash predominantly because of The Upfront growth that we have seen in investing in the hardware and so on yeah how much are you burning per month we are burning close to not matches uh around 30k does that make you nervous yeah and it is nervous because of two reasons right one is uh whether when to rise significant amount of equity that would help to continue to the growth versus uh kind of managing um our Equity uh very uh smartly and that's a challenge because our business the best part of our business is that we are generating uh uh cash from day one and this is a uh and the the subscription model is very consistent for 12 months because this is backed by Medicare reimbursement and there's a chronic condition that needs to be managed so there is not so much volatility in the patient population pool so all those gives a good view into our Revenue stream being stable but having said that how do we uh the equity part of the challenge to answer your question the challenge for us is how much to rise through Equity versus uh the growth and which would give us the optimal return for us as a Founders in the long run do you still have a hundred percent of the 800 000 seed round cash in the bank are we have close to 600k okay so do you I mean how many does I mean that that would mean your Runway what is about 20 months are you okay with that amount of Runway today uh it's actually yeah I'm okay as long as we are happy with the growth the problem where you're trying to solve is to increase the growth and there was a huge problem possibility to increase the growth and hence we are now internally debating whether we should rise Equity capital or through some other debt financing and other routes because if you raise debt how much would you try and raise uh close to and it needs to be uh phased out so we are looking at anywhere between one to one point five million to cover our uh Hardware costs the real challenge for us is to if we right now we are adding 300 patients a month and as I said we have added lot of new providers onto our platform who have not started the engine once they start the engine that 300 patients per month will go to thousand patients per month in next three to four months which is drastically increases our uh working capital need and yeah that's the challenge we are trying to resolve whether Equity is the only way we are in talks with some series a uh Health requises as well look at the considering the valuations and those kind of things that is where we are internally figuring out what is the right capital structure for us to optimize I'd be shocked if you can get a series a investor today in the compressed Market to give you value higher than your last round or your last round cap of 50 million I mean that's almost a 25x multiple you're just not seeing those today anymore I'd be shocked yeah but we when we raise the 5 million we didn't have any uh wait you raised five million no not raise five million when the valuation crap when the previous year was 5 million but you just said you raised it 30 million right you say you raised 800. yeah it's a 21x multiple and 1.4 million in ARR I'd be shocked if you find a VC state of leader series a that's one to pay higher than a 21x multiple considering the compressed Market yeah but the the current we will be reaching close to 3 million error by end of this year so uh it's next another photo uh for for four to five months because I mean it's incredible gross but even that to beat a 30 million evaluation with three million AR means you got to get someone to pay higher than a 10x I'm seeing class companies today not be able to get 10x multiples like they used to eight months ago so we'll see what happens but the nice thing is you've got nice growth uh and you got 20 months of runway on that note uh Bonnie let's wrap up here with the famous five number one favorite Business book um how to make elephants dance okay number two is there a CEO you're following or studying uh Elon Musk number three what's your favorite online tool for building hbox metabase number four how many hours of sleep do you get every night close to six hours that's good and what's your situation married single kids oh I'm married and I won uh 11th grade daughter oh amazing and how old are you I'm 45 45 last question something you wish you knew when you were 20. yeah no to start the entrepreneurial Journey a little bit earlier than where I started I started around uh 10 years back so 35 I wish I did it a little bit earlier age box was doing 10 000 bucks a month in Revenue a year ago now doing 120 000 a month for 1.4 million Runway they're giving uh uh iPads and uh temperature monitors and finger you know pulse monitors to Physicians 100 Physicians use their setup Hardware which they then give out they sell out to they give out basically to patients who have to stay at home right so they can do home monitoring currently across these 100 Physicians they've got 1800 devices out in the wild they charge between 60 they charge a position between 60 and 80 per month per Hardware set they've given out but the nice thing is they also help the Physicians get Medicaid and Medicare reimbursement for the tool so it's still that positive for them they're scaling nicely raising 800 000 seat on a safe with a 30 million cap recently uh deciding not they raise more Equity or debt to fund an additional toront of hardware our purchases we'll see what happens Banu thanks for taking us to the top thanks 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 live and the founder shares back-end dashboards their expenses their revenue our poo CAC LTV you name it they share it and the 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