Hirize Revenue, Valuation & Funding (2023)

[00:00] Guys, hirize.hr launched, call it eighteen months ago. They put up their first paywall about two months ago, converted 1,400 beta signups into 80 active beta users and 12 of them have started paying, now doing $14,000 of monthly recurring revenue. Esra launched with her co founder, there's two of them, launched their I got a pre seed round done in twenty twenty two, October, a million raised at a 10,000,000 cap, now raising 2,000,000 target, helping for a 20,000,000 [00:24] valuation, managing dilution nicely here, they continue to grow. Again, are core API for these enterprise tech tools. If you're a big company with a thousand FTEs and you want to connect all your resumes into your instances like Oracle and SAP, they help you do that in a streamlined seamless way using AI. Hey folks, my guest today is Aggar Kagan. She's an accomplished two times Founder, VC Partner, Investor, Lecturer, Board Member and Author. She has a successful [00:49] exit and acclaimed book on innovation and is now focused on building Hireize. H r, which is AI based resume parsing and a matching API. Esra, are you ready to take us to the top? [01:00] >> Yeah. Hi. How are you? Yeah. It's that's that's kind about it what you just told. I didn't know that it was that much. [01:08] Well, tell us a little [01:09] bit about give give us a customer story. Tell us about how a customer is using you today. [01:13] >> Yeah. So we focus more on HR vendors and enterprise companies. So we are like, you have to think of hirize like AWS. So it's like a core API using your HR tech stack or in the tech stack of your HR startup. So we focus on HR startup, job boards, applicant tracking steps systems. [01:37] Those are your customers? [01:39] >> These are my customers. Yes. And then we have enterprise customers who use our API in their current system, such as Oracle or SAP or Greenhouse. [01:53] Got it. So just to be clear, a company with maybe a thousand full time employees that is hiring thirty, forty people a month might use your API to power and keep their Oracle SAP and Greenhouse instances up to date. [02:04] >> Yeah. So what we do is we parse. So we extract data from resumes and then match it. We rank the best candidate. So we are not doing this. We're not the first one who are doing this, but we're the first one who are using technology that is used in 2023. So the difference is that when I was doing my first HR tech startup, that was, like, in 02/1012, we were using AI based parsing and matching. And [02:29] >> that was we called it AI, but it was actually keyword matching. That's not what we call h AI today. That's different. So when you do when you extract data from when you extract data with basic AI and then match it with basic AI again, what happens is that you get a lot of mistakes in the system. So the systems that we're all using today, they're using if they're using an outsourced API, which is 80%, they're using [02:59] >> outdated technology to extract data from resumes and then match it. [03:05] What are [03:05] the most common outdated APIs people are using today that you compete with? [03:09] >> So we have Sovereign. You have Afinda, which they're, like, in the middle. They're not that bad. And then you have Archili. [03:20] >> Also not that bad. Sovereign is horrible, and they are a market leader. And with horrible, I mean, they can't extract data, so they can't read non Word or PDF resumes. So what happens is that thirty percent of candidates who apply for a job, they get rejected not based on their skills or their resume, but because the technology can't read their resume. So you might be maybe a good fit for the job, but you got rejected and [03:47] >> nobody knows that you just slid through the cracks or you don't even know that maybe you were good for that job and you start to look somewhere else. That's a major problem. So all HR tech startups, I love what they're doing, but what they're doing is putting a band aid on a system that is inherently broken and we're trying to fix that. [04:08] And Esra, are you in the market yet or are you pre revenue? [04:11] >> No, we're in the market yet. We just started two months ago and we have 12 customers. We have now around 14 k revenue MRR. It's going really fast. It's going [04:24] That's cool. Keep on going 0 to 14,000 MRR in a couple of months. So when did you guys write the first line of code for the platform? What year? [04:32] >> 2021, December. [04:35] Okay. December. Got it. So you've been at it now for about eighteen, nineteen months, something like that. How did you guys and you I guess we keep using the words we. Do you have co founders? [04:45] >> Yeah. Yeah. I do. I have a co founder. We he's the CTO. He's the genius. [04:51] >> So his name is Erin. So Yeah. [04:55] But you negotiate hard. Right? You keep more than 50% equity. Right? [04:59] >> How do you know that? [05:01] I can just tell you're a killer. [05:04] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this, you love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [05:27] your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [05:51] get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna 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. [06:05] Right? So [06:05] 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 founder share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter [06:29] by the event. Maybe you only wanna 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. We'll 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 dataset of SaaS valuations than [06:55] what you can get now inside of Founderpath. 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 wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link, this link, founderpath.com/products/valuations. Or if you go to founderpath.com and hover over products, click on get your valuation here, and [07:19] 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. [07:28] All right. So so so that's great. So you guys split up with going in and have you bootstrapped it or did you raise capital right away? [07:36] >> No. We first bootstrapped it and then we had an MVP and then we did a pre seed. We got like, Axel Springer and Porsche, which is APX. They invested in our first round, in our pre seed round as our lead investor. [07:49] How much was that total? [07:51] >> So in our pre seed, we raised a million. They didn't put a million. They were a lead. But, yeah, they were the first one who were like, yes, let's do this. [07:59] So That was in December 2021 or was this in 2022? [08:03] >> That was around that was in summer end of summer. So that was around October September, October 2022. [08:11] So just last year. Yeah. The market's sort of contracting at that point. How were you able to get that deal over the finish line? I mean, obviously, you have a VC background, it sounds like you know how VCs think. [08:22] >> Yeah. Okay. So first first and foremost, I I mean, I worked in VC for seven years. That helps because people know you. I had an exit, so I'm a second time founder. My cofounder is a third time founder. So that helps because in that stage, you invest in people, and we were strong founders. And then I reached out to only people I know in the VC industry. So I was like, I don't have a lot of [08:46] >> time. I wanna grow. I wanna go in beta. So I just reach out to people who know me, and I know them. And I can be like, dude, come on. Let's do this. [08:54] Write the freaking check. Yeah. Yeah. That's awesome. And did you do pretty standard terms? So, like, you know, you sold 20% of the company, 5,000,000 cap, something like that? [09:03] >> No. Our valuation was $10,000,000 and we did, like, 1,000,000 round on safe. [09:07] Okay. So was it so it was a SAFE it was a capped SAFE, capped at 10,000,000. Yeah. Okay. I mean, I would say that's actually pretty darn favorable. So nice work nice work managing early early stage dilution there. That's great. [09:20] >> And and, I mean, at that time, I mean, we were we knew that OpenAI was gonna do something, but at that time, it didn't explode it yet. So everybody was still like, oh, yeah. OpenAI is queued. But it didn't we weren't there yet. AI wasn't a trend like that. It wasn't the valuations weren't that high. So back then, it was a little bit more tough. Now it's easier. [09:45] Yep. How are you deciding how to invest that cash? Or another way to ask that question might be you raised it nine months ago. How much of the million do still have in the bank? [09:53] >> How much do we have left? We have like around a little bit so $202,150 k left, a little bit So over [10:03] >> we still we're still we we only spend it on salaries. We didn't get salaries for us, for the managing team or the founding team, but just to get our developers in and and then build and [10:16] So what does that mean in terms of full time folks today? [10:19] >> So we have seven people, full and part time. And four of them or five of them now, I just onboarded today a new one, five of them are full time. [10:31] And so when you look at what your your burn is, how much runway would you say your $2.50 k gives you? [10:37] >> So we have we have around, like, six, seven months to go. [10:42] Okay. Does that make you nervous in the market we're in? Like, do you see a path to growing into profitability just from customer sales, or do you have to go raise more capital? [10:49] >> I am raising a new round. I I'm just shopping around. I'm telling everybody what I'm doing. I'm in Paris now at Viva Tech, which is I don't know if you you're in The States. Right? [11:00] I'm in Austin, Texas. Yep. [11:01] >> Yeah. So you wouldn't know, but France is like, oh, we're also on the map. So you have a lot 100,000 people in the city now, 10,000 startups. Elon is coming in on Friday. So it's pretty big. So you have a you have a lot of people here, and I'm just, like, walking around meeting people. And [11:20] So what are you targeting in your seat around? How much? [11:23] >> We wanna raise $2,000,000. We we don't spend a lot on salaries because we got half of our our our tech office is in Istanbul and Turkey. [11:32] Oh, great. [11:33] >> So it's it's it's cheap for us to build. Cheaper. [11:38] And do you think you can raise 2,000,000 and only sell 10% of the company again? Do think you get a 20,000,000 valuation? [11:44] >> Yeah. Yeah. I can. [11:45] Interesting. Okay. Well, that that would be amazing. And then what's the thesis? Where would you invest that money? [11:51] >> Again, salaries, but also sales and marketing. Now we're gonna we wanna grow. We we we've proven that we've we can build. It's a good product. It doesn't, you know, it doesn't like, there are not no any errors. It's it's proved. It's tested, and now we can go wide. [12:08] And, Esra, when did you launch the pricing plan? [12:12] >> Just two months ago. [12:13] Wow. Okay. So in two months, you've added 14 12 customers, 14 k of MRR. Tell me about that. That's fast growth. How do you find and close the first 12 customers? [12:21] >> We had, like, a very long beta stage. So we start our first beta release was in October, November. [12:31] >> And then we had a lot of customers, you know, that were testing it back then. [12:36] So Were they actual betas, Esra? Like, did you when they signed up the beta, did you say at the end of six months, if you love it, you need to start paying $3 a month, or did you wait to negotiate price until after the beta was done? [12:47] >> No. I I wish I did that because I didn't. I I started negotiating after after I launched, which I think we would have more MRR if we did it if we, you know You can't do no do everything perfect. [13:02] When you store your customer, that's at the end of betas from, like, the most likely to pay versus the least likely to pay, what column header in Excel were you sorting by? Was it, like, number of API calls in the beta program or number of team members onboard in the beta program or what was the activation metric? [13:17] >> So for us, it's more like when you it's the stage where you are, where you need our API. So there were a couple of startups that were using our API, and they were building on our API. So after three months and you build on an API, you build your own company whole company around that API, you can't go back. So, like, there [13:38] though. Was it was it once those engineers built on your API, you couldn't measure the number of API calls they were doing per day? [13:44] >> Yeah. Yeah. So they build and they're active. That's a 100% yes. [13:49] I see. [13:50] >> Yeah. So when they so it's like how much you integrate our product in your system. That's one metric. So how far how how many products you use, and then how often you use it. So we had, like, customers that were using it a couple of times a week, and we're like, oh, that's not gonna that's not gonna happen and didn't happen. [14:09] Yep. Yep. There and how many how many folks signed up for beta program? [14:14] >> We had a lot of beta users. We had 1,400 beta sign ups. Wow. And I think we had, like, 80 act actual users. [14:25] 80 active users, and you converted 80 of the active ones into twelve twelve of them converted to customers. [14:30] >> Because we're not a consumer product. So I did had wide reach, so I told everybody to sign up. So we had 1,400 sign ups. And then once you launch, it's like, well, I'm not an HR vendor. I'm not an enterprise company. So I think that a lot of start ups when they say like, oh, I have this many, like, you know, sign ups that sounds great. I can have 10,000. But how many were actual customers and [14:56] >> companies that you wanna do the beta with? [14:58] Yeah. Yeah. You you converted 80. Of the 1,400, 80 were your, like, ICP or ideal customer profile. And of the 80, you got 12 to pay, and you're only two months in. Do you think you convert more of those 80 to pay over time? [15:10] >> Yeah. We're we're working on them now. And then we also have, like, customers or beta users that wanted to become a customer but wait a little bit more, like I said. So I think these are the ones that are gonna bring us a lot more revenue. We have one really big job board that's gonna amazing if it happens. [15:29] That's awesome. Well, I love your story. We're out of time for today. Let's wrap up with the famous five. Number one, Esra, your favorite book? [15:36] >> Oh my god. My own book? [15:37] What's the title? [15:40] >> Disruptive innovation, how to win in times of change. It's get it will get released in July. [15:46] >> Released in July. [15:47] Very good. Number two, is there a CEO you're following or studying? [15:51] >> Oh god. Yes. Bill Gates. [15:54] Number three, what's your favorite online tool for building your company? [16:00] >> I think Calendly. Calendly. I love Calendly. I couldn't live without it. [16:07] Number four, how many hours of sleep do get every night? [16:10] >> Five to six. [16:11] Okay. And what situation? Married, single, kids? [16:15] >> Yeah. I have a startup that I'm married to and I'm dating my startup, and it's also my kid and my team and my kids. [16:22] I'm married, no kiddos. And Esra, do you mind me asking how old you are? [16:27] >> I'm 37. [16:29] Last question. Something you wish you knew when you were 20. [16:33] >> Oh, God. Sleep less. [16:38] Guys, there you go. [16:39] >> Because you know that, you know, after a while, after ten years, you're like, oh, I could do with less sleep. Could have more fun. [16:49] Guys, hirize.hr launched, call it, eighteen months ago. They put up their first paywall about two months ago, converted 1,400 beta sign ups into 80 active beta users, and 12 of them have started paying, now doing $14,000 of monthly recurring revenue. Esra launched with her co founder, there's two of them, they launched their I got a pre seed round done in twenty twenty two October, a million raised at a 10,000,000 cap, now raising 2,000,000 target, helping for [17:13] a 20,000,000 valuation, managing dilution nicely here as they continue to grow. Again, are core API for these enterprise tech tools. If you're a big company with a thousand FTEs and you wanna connect all your resumes into your instances like Oracle and SAP, they help you do that in a streamlined seamless way using AI. Esra, thank you for taking us to the top. [17:31] >> Thank you so much, thanks. [17:33] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. 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, 1PM [17:58] Central. Additionally, remember these recorded Founder interviews go live. We release them here on YouTube every day at 2PM 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 SaaS world, whether it's an acquisition, a big [18:21] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you wanna take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS 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 [18:42] for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty 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 [19:02] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. All right. I'll be in the comments. See you.