Holded Revenue, Valuation & Funding (2021)

hello everyone my guest today is javi fonda villa he was born and raised in barcelona spain has been and has been creating his own ventures over the last 13 years at the age of 20 he founded a retail company and raised up to 100 employees in 14 stores across spain later he co-founded holded a business operating system for small businesses to manage sales finance operations and hr and one single beautiful platform javi you ready to take us to the top yeah thank you all right so this is great so it sounds like you're serving small business owners help us understand as holded a pure play sas company uh it is until today yeah okay what's happening today well actually as you know there's a big trend of sas companies moving beyond being only software and entering into other type of services in our product actually there's a lot of things happening around financial services so we are about to deploy our first let's say this is around this which is all the payments together with stripe payment initiation um to start offering this type of of services to our customers and do you see this being a meaningful revenue stream for you in other words you know over the past 12 months how much transaction volume have small businesses put through holded so in 2019 we had a gmb of almost 4 billion euros and help us understand how that works for people that for people that don't use the tool how does a business owner use you so the the basic use case is it's a this type of small businesses normally they tend to digitalize the financial management also invoicing accounting so this is the base use case that we're covering and this is where we have 60 to 70 of the features but then from there we help them to digitalize other areas of the business that normally will keep on a spreadsheet or on paper or you know like these people doesn't really have a manager on hr so nobody's thinking on buying a dedicated hr tool that's right so you're helping them with invoicing accounting managing their team project management inventory management and even crm yeah somehow everything is connected now so we're not pretending to be salesforce we're just giving you the right features to our customers to be able to track sales and not without really going to a dedicated crm that is actually something they don't really need and javi how what do customers pay you on average per month today uh today is around 40 years per month okay and when did you launch the company what year back in 2016 we started with hold it and we launched the first version on january 2017 so we've been a little bit more than three years and a half in the market and who is we what are your co-founders so my co-founder bernat so i met him on facebook and he has an engineer background well i mean he's been coding since he was seven years old and we had a match on social media about like we were you know wanting to develop a really similar project and and we were like really complementary profiles so we met and and we started with hollet do you guys split the equity 50 50 yeah wow very fair are you guys hobby the only ones on your cap table today or have you raised outside capital no we've actually raised three rounds until today so we have a group of business angels that basically helped us on on starting with the project and then we onboarded already two busies how much total have you raised uh seven million euros today okay seven million to date and what walk me through sort of how you got your first so you know you find your co-founder on facebook you guys launch your mvp in 2017 how did you get your first 100 customers uh well we've used uh online channels now so since the very beginning we want to build an evolution of the year to be mandatory things to make the whole sir the whole process of purchasing an implementation cell service so we needed to actually acquire customers that were already online so we started using mostly google search and social ads and and we've been scaling the payday channel until today that's still our number one channel how much did you spend last month on ads uh around 250k and how many new customers like how much new monthly recurring revenue do you get from that spend uh almost 20k in that new mrr that's great those economics work nicely yeah actually we've been playing around a lot uh during the last nine months we've created the growth team which until last year we were super focused only on product development so most of our team was engineers and customer success to understand the customer feedback uh science summer 2019 we started to think about hey we need to become also professional on user acquisition no and so we've built our growth team we made we made really good hires here and we've done really good projects behind to be like more efficient into our acquisition machine so what would you say your average cac is to get a new 47 a month customer uh so now he's around 300 euros okay three so 370 us dollars something like that and besides paid ads are there any other paid channels you're testing like dedicated emails or branded content sponsorships anything like that well there's multiple projects uh going on now but i can say that today we're living out of the paydays channel and the word of mouth slash virality which represents 40 percent of our acquisition no because we asked customers how did you met us because the attribution is really hard no so we have multiple attribution systems but in the end what we rely is on what our customers are telling us interesting and so this is how you got your first i mean you knew early on that it was going to be paid ads so that's how you got your first hundred customers used online channels how many customers are you serving now today three years after launch uh almost nine thousand okay nine thousand and and would you where do you think you'll experiment in the future i mean how do you go from nine thousand customers to twenty thousand customers well i think so in our case we're going to the really micro segment also companies between 1 and 20 employees when we are have customers beyond that no but this is our our focus now we're talking that in spain france or other markets this is represents almost 95 of the economy so the target audience is massive the main challenge for a company like ours is how do you reach this audience at the speed and the cost that you want no um so the paydays channel helped us to make an acquisition machine really quick and reach these customers who are really in the high intent demand part of the funnel and now we are deploying other channels that are helping us to reach other types of customers so for example the partners channel we're partnering with accounting firms in one site and agencies in another site and to be able to reach this type of customer who's not really actively looking for something and they are relying this decision into a partner knowing to someone they they trust um from there we are also adding other product virality elements that will help us to to reach other customers so just to put you an example on the possibilities we have um our 9 000 subscribers they have 1.4 million unique businesses in their contacts in hold it which means 1.4 1.4 million unique businesses which means that through viral tools we can reach and those businesses most of them their potential customers are holded so what we're doing now is to analyze and to develop features that allows us to reach those customers through our existing customers so under the umbrella of the product virality so your 9 000 subscribers for example they all have their crms connected what you're saying is you add up all their crms you have potential to reach 1.4 million smbs exactly i see i see interesting okay and so uh 9 000 customers paying on average 47 per month what's monthly recurring revenue today so we are at uh almost i think four million dollars so doing the conversion but where the is that euro or yours or usd so 3.4 million euros 3.4 annually yeah ar okay got it so yeah about four million dollar run rate or about caught 340 000 a month in mrr walk me through the decision to launch this new financial technology product you know percent of gmv yeah sure so it's a as i said no there's a big trend on going in this direction so in the end with this small business segment there's a limit on the how much money you can charge them no they have limited resources so and we don't want to change the game we don't want to go up in the market so at some point you need to find new revenue channels to monetize better your customer base but in the end it's also because we believe this is a also giving a lot of value to our customers so in the first stage of this deployment we're not that thinking that much about making money out of that but to give more value and to concentrate more actions into the platform now as i said there's already the invoices are already issued in our platform the invoices are already received into our platform and what we want is to be also part of the process of the payment both both from the collection and the payment side so you don't need to leave the platform to do that and i'll put you an example so when a traditional smb they tend to have at least two or more banks so once you want to pay your employees or you want to pay a bill you necessarily need to leave the platform go to one of those banks and initiate the payment by copying all the bank information from the platform also we want to avoid this stock process and be able to do that directly from the platform directly from the invoice and actually you can automate and start programming when you want to pay your bills without so giving features that normal banks are not offering today and that we're going to be much faster and offering those su super smart and if you're doing about four million in terms of run rate today what were you doing exactly a year ago do you remember so a year ago well we've closed 2019 at 2 million so we are uh uh so 2 million euros and so this year we're going to do to do something around 2.2 2.3 x of growth which with with the cobit uh i mean we were quite happy because it was yeah it was a really weird year that's not bad at all okay so you've raised seven million dollars when was the last raise in april 2019 and how much was that one for 5.5 million euros and what valuation were you able to raise on what what was the last valuation yeah 22 million post money 22 million post money do you feel like that was a fair valuation yeah or you have plans to raise this year uh well it's it's something always an open topic we're a really cash cash efficient company so we still have uh 60 of the round in the bank and so in our case it's not that we need cash to survive it's just that if we have more cash we can accelerate our plans no yeah yeah so 60 of 5.5 million you still have about 3 million in the bank no need for cash right now growing nicely yeah are you profitable today or burning capital we're burning capital but most of this capital is the for user acquisition so we we control a lot at the burn and also as one of the main channels of spend these paid apps is something that you can turn off from one day to another no so you can really feel the control of the business how much are you burning per month net burn 200 250. not not bad uh basically that's your paid ad spend like you said and what's your team size today how many people 71 people so how many engineers around 30 30 okay very good any quota carrying sales reps at this low price point or no we don't have sales team it doesn't work right well it was one of the main things we wanted to change is to make a self-service product a self-service product that actually is quite wide no and so we like to say that it takes minutes to start using it but it takes a lifetime to become a master that's right hey churn's critical in this space javi as we wrap up what's gross revenue turn per month uh well the logo churn so we don't really track gross churn because we have a lot of movement on expansion and downgrades of people trying new add-ons and so on but we have we're quite proud of our log return rate we have an average of 1.5 percent per month uh working with this smallest business segment is is quite good and you expand by more than 18 percent your net revenue retention annually is more than 100 yeah so our net mr retention is around 125 oh that's great that means expansion is something like almost 40 to 43 percent yeah that's great last question on the gmv model how are you gonna monetize that are you taking one percent two percent three percent how much are you going to take well still an open topic so for example in the payment gateway as we're partnering with stripe so they are giving us a revenue share on top of their commission no so if they charge a 2.8 percent and we can get 20 30 commission also we'll be having i think something like 0.8 or or so or a little bit less so strike charges two percent and you will get 30 of the two percent yeah something like that and eight percent is what's right just from the standard rate yep yeah very good so i mean do you do you anticipate all four billion going through this new partnership or no i'm sorry can you repeat that because you freezed a little bit you're processing 4 billion in gmv if stripe takes 2 that's 80 million and if you make 30 of that that's 24 million in revenue is that what your projections look like for this new stream or no uh yes and no so we are not that ambitious and we don't think we're going to be able to capture the 100 gmb through the payment gateway you know uh so for example when we've done our financial model thinking about the fintech we've only used the invoices between zero and 500 or a thousand euros because we don't believe someone is going to pay it an invoice of 10 000 euros with a credit card no yeah um so actually and we we are going to work a lot on making sure the adoption of this feature is the right one is this is not something it's going to happen day one no so actually our model is that we we do have four years to make sure that we're able to capture up to six percent of the gmb but only on the gmb below a thousand euros invoices no so which for example last year out of those four billion we had almost 800 million of invoices between zero and a thousand euros no um so we know when we release this feature we need to work to make sure people adopt it and people understands it and you know so it's not going to be something from day one but definitely it just makes a lot of sense and we've seen other success cases like wave app that they just live out of the out of this uh financial service no yep very good hobby this is good stuff man let's wrap up here with our famous five number one favorite business book uh favorite business what book uh the hard things of the hard things number two is their ceo you're following are studying right now uh the ceo of shopify number three what's your favorite online tool for building your company for building my company besides hold it uh i don't know i don't have a lot of them no but i would say that today in our company slack and intragona are the two main ones number four hobby how many hours i sleep to get every night six and what's your situation married single kiddos uh single uh no kids no kids and how old are you 33 33 last question what's something you wish you knew when you were 20 uh can you repeat that what's something you wish you knew when you were 20. that's a hard question huh um i would say nothing i mean if not that would have changed my career no and i think everything you do takes you to where you are no so no it's not not necessarily a regret it's not something you would change just a piece of information you wish you knew um again i mean i'm quite happy of everything i did even i closed my other company you know but everything gave me like a really high level of experience on so i don't like to go to the past and and change it so i would stick on on on nothing guys hold it launched in 27 it did two million dollars an ar run rate in 2019 have doubled they're doing 4 million this year just launching a fintech part of their platform where they'll take a percent of gmb throwing through their platform they process 4 billion in payments from small businesses last year they serve over 9 000 small business customers they're burning about 250 000 per month but still have more than 3 million cash in the bank their last round of 5.5 million in 2019 was at a 22 million post money valuation they've raised 7 million dollars total 71 people on the team 30 engineers uh churn is incredible in a good way they have 125 net revenue retention even in the smb cohort space javi thanks for taking us to the top thank you nathan one more thing before you go we have a brand new show every thursday at 1 pm 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 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 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m 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 sas world whether it's an acquisition a big fundraise a big sale a big profitability statement or something else i don't want you to miss it additionally if you want to take this conversation deeper and further we have by far the largest private slack community for b2b sas 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 for that at nathan laca dot com forward slash slack in the meantime i'm hanging out with you here on youtube i'll be in the comments for the next 30 minutes feel free to let me know what you thought about this episode 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 gotta push them away click the thumbs up below to counter them and know that i appreciate your guys's support all right i'll be in the comments see ya