KFactory Revenue & Funding (2023)

[00:00] Hey, folks. My guest today is Vlad Cazan. He's a co founder of KFactory, a growing startup in the first industry 4.0 platform funded by an investment fund in Romania. He's turning factories into smart factories. Vlad, are you ready to take us to the top? [00:14] >> Yeah. Thank you for the opportunity to discuss about KFactory and how we can, digitalize production lines in order to improve performance and productivity. [00:24] So who's buying this kind of technology? Is it Amazon or Walmart, people with a lot of warehouses? [00:30] >> Our customers are factories, okay, manufacturing companies, which are willing to increase the performance and productivity of the production line. So we are a b to b platform and our customers are manufacturing companies. [00:48] Can you name a couple of them that we might know? [00:52] >> Most of the customers are from automotive industry. We have a few customers here in Romania. Most probably you will know the name because they are not like big names which are producing, I don't know, phones or so I can name some So [01:16] you're in automotive, textiles, printing, plastics, footwear, apparel, machine producers, food and beverage, all of these kind of folks that run warehouses. Now, what will one of these customers pay you on average per month or per year to use your technology? [01:32] >> We have multiple modules. So each module is having subscription fee, more pricing, depends on how many equipments you are monitoring, depends how many users. So there is no, let's say average can be from thousands to 10,000 per month or more, but depends. In some cases, the average, what is important to say is that we are charging small money comparing with benefits, but the benefits are huge and the the subscription fees [02:10] But most customers that are paying you something like 2 or $3,000 per month. [02:15] >> Yeah. We can say like [02:16] And put this on a timeline for me. When did you launch the business? What year do you remember? [02:21] >> We have started five years ago. And in 2020, we succeeded to close our first investment round. This year, we succeeded to close the second investment round. So we are doing this for five years already. [02:36] Okay. So you launched in 2017. You launched your first round of financing last year. How much? [02:42] >> The first round was 225 k Euro. And the second round Sorry. [02:48] Vlad. Sorry. What you raised in you raised in 2021 was your first round. Right? [02:54] >> Yeah. [02:55] And how much? 225,000? [02:57] >> 225,000 euros. [03:02] So about 270,000 United States dollars. That was your pre seed round. And then you raised more this year? Yes. [03:09] >> €600,000. In total, almost one In total, almost 1,000,000 US dollars raised until now. [03:21] And most most founders in their seed round, right, are selling 10 to 20% of the business. What valuation did you raise at last year? Do you remember? [03:32] >> Usually, this is not public. Usually, we are right. The average is the first the first round is bigger because and the second round and the third round is lower. So the idea is to to go in third round with more than 60% of the company owned by the co founders. This is the [03:56] So today today, the co founders own 60%? [04:00] >> More. More than this. [04:02] Well, how much that's what I'm asking. How much have you guys been able to keep with two rounds of funding? Because funding means dilution. [04:09] >> Yeah. This is I'm I'm telling you, this is confidential. Usually, we are not disclosing this. [04:15] 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. [04:35] >> I'll show you how [04:36] 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 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 [04:59] because depending on who's doing the buying of your SaaS company, you're gonna 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. Right? So the teal is what a VC would pay. Yellow is what private equity And red is if you [05:21] 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 by the event. Maybe you only wanna see companies that have sold the whole business. Well, here are [05:46] 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 what you can get now inside of Founderpath. And we're thrilled to bring it to you. All right, [06:11] 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 go ahead and sign up to give it a whirl. Again, all that valuation data live right inside [06:36] the platform. I hope to see you there. Alright. Let's jump back into the interview. [06:43] >> Okay. But it's more than 60%. [06:46] Vlad? Got it. More than 60%. The reason I asked this question is because dilution is a very real thing, right? And over time, if you lose control of the business, you're screwed or you can be screwed. So that's why we asked the question, the more you can share, the more my audience learns. So I appreciate you being as open as you can. So got it. So you've scaled now. When did you sign your first customer? [07:10] Was it back in 2017? [07:13] >> Yes. We have started with our first customer. This is how we started the KFactory. So we are not a standard startup for having an idea going in front of investors and so on. We have started with one customer and we've built it [07:32] >> together with our customers, platform. [07:35] And how many customers do you work with now today? [07:38] >> We have 12 customers and 400 more than 400 equipments monitored in real time, industrial equipments. [07:50] Say that last part. I don't understand. [07:53] >> We have more than 400 industrial equipments monitored in this moment in our platform, connected to our platform. [08:01] Where individual warehouses? [08:04] >> We are not dealing with warehouses. We are monitoring production lines. [08:10] Are production lines inside of warehouses? [08:14] >> Inside of factories. [08:16] >> Factories, warehouses. [08:20] Yeah. [08:21] >> It we have a production line in a factory, and then we have warehouses, raw material warehouses and finished goods warehouses. We are dealing with production lines, is between raw material warehouses and finished [08:38] >> goods warehouses. [08:40] So you are in warehouses. You are in finished goods warehouses. [08:45] Just repeating literally what you just said to me back to you. So point being is, how many individual buildings or warehouses or production facilities are you currently installed in today? [08:57] >> We have installed the platform in 12 factories, not warehouses. [09:04] Oh, sorry. So you've only installed this in 12 physical buildings. I thought 12 was your number of customers. Every customer has only used you in one factory? [09:12] >> One factory? Yeah, it's in one physical building. [09:17] But why aren't customers, if they love your product, why aren't they installing you in all of their buildings, in multiple buildings, multiple factories? [09:25] >> This is what is happening with the current customers. We have started with one factory, and now we are extending the solution to other factories outside the main one. So we are dealing with we are working with multinational companies. We started with one plant, and then we are extending to other plants. This is where we are now. [09:47] Of your 12 customers today, how many have you installed in more than one plant? [09:54] >> None yet. We have now contracts signed with few customers to roll out in other plants, so most probably we'll have during the summer the rollout. [10:05] Why not? I mean, you've been building this for five years. If it's working, these people should have you installed in all of their factories, all of their plants. Why are you just now five years in expanding into more than one plant per customer? [10:18] >> Usually when you are building a product or a platform like KFactory, you cannot burn phases. So in order to be able to extend to other plants or to other locations, [10:35] >> you have to be prepared. And this is the moment we are prepared to do this. Until now, [10:41] >> we've been focused on raising the number of customers. This is the most important for a startup and to increase the monthly recurring revenue. [10:52] Monthly recurring revenue, we can take 12 customers times $2,000 a month average, you told me earlier, you're doing about 25, $26,000 a month in revenue? [11:03] >> Yeah. In this moment, yes. [11:05] And if that's what you're doing today, what were you doing exactly one year ago? Do you remember? [11:12] >> Five times less. [11:15] So you're doing about $5,000 per month a year ago? [11:19] >> Less than. [11:20] Yeah. My question then is you you said you launched in 2017, and revenue was just $5,000 a month last year in 2021. How are you paying your people for three years where you basically were doing no revenue? [11:33] >> Investing [11:37] >> our money and investors'money. So this was idea. We started the platform, then we looked for an investor. We found the first investor in 2021. Until then, of course, we're paying from our money. [11:54] Well, that's what I'm asking, Vlad. That's 2017, 2018, 2019, 2020, that's four years. So you guys were just investing, you've personally put in a lot of money basically to just pay yourself over those four years. Yeah. How much have you personally invested in the business? [12:10] >> We didn't calculate it exactly, but I think around [12:16] >> $500,000 at least. [12:18] Does that make you nervous? [12:22] Is that like a lot of money for you or a little bit of money for you? [12:27] >> No. It's a lot of effort, a lot of time and of course money. So if you are prepared to do this, to invest effort, time, money, you can start, let's say, building a startup. Otherwise, after one year, you can be bankrupt and [12:48] you go Well, there's a lot of founders listening right now, though, that don't have $500,000 sitting in the bank. Right? And they're building fine startups. They don't have to put in $500,000 of their own money. My question for you is where did you get that money from? Did you have a company before this that you sold or are you rich? Where did you get this money from? [13:05] >> No, I'm not rich. But as I told you, when I'm saying investment, it means also effort. So it's an opportunity cost. Of course, if I'm having [13:18] My question was how much money did you put in the business? Not how much opportunity cost did you put in the business. How much money did you put in? You said 500,000. Is that not accurate? [13:26] >> This is not money. This is not cash money. Investment doesn't mean only money. [13:33] I'm asking you, though, how much money you put in personally as the founder. Calculating. [13:38] >> We don't know. We didn't calculate it. [13:40] My question then is how where who was paying salaries for four years before you raised money last year? [13:47] >> We didn't this simple. We didn't have salaries. [13:50] So how are you putting food on the table for your family? [13:57] >> Again, if you have money, if you have some some money and you can live two or three years without having revenue, then Okay. You can start to build a startup. Otherwise, I don't recommend So [14:11] you saved up a bunch of money from a former job or whatever, and you went without pay for three or four years while you were building? [14:18] >> Yeah, exactly. You can do this. [14:20] And were you the sole founder or how many people were on the team? [14:25] >> We are two co founders, and now we are seven full time employees. [14:31] Okay. Got it. So and that you guys as cofounders, did you split equity evenly at the beginning 5050? [14:39] >> Yeah. Usually, this is the the model. [14:42] Well, I know usually that's why I asked. I'm asking what you did, The interview is about you. Did you guys split equity fiftyfifty? [14:48] >> Yeah, of course. [14:49] Okay, interesting. Very cool. What's next as we wrap up here? What's next on the product roadmap? You're trying to expand into new factories, new product lines now. What's the next product release? [15:01] >> We are working on these virtual engineers, which is a unique concept worldwide. So we have already a few customers and we are building now, we are working on this one, virtual engineers. [15:18] Very cool. Let's wrap up here Vlad with the famous five. Number one, what's your favorite book? [15:24] >> Life of Steve Jobs. [15:27] Number two, is there a CEO you're following or studying? [15:32] >> Yeah. Steve Jobs and also the guy from Microsoft. [15:39] >> Satya Nadella. [15:40] Number three, what's your favorite online tool for building KFactory? [15:45] >> Only tool? Yep. But we are not using online tools. Only on sales, for example, we are using HubSpot. I I like HubSpot. [15:56] Number four, how many hours of sleep do you get every night? [16:01] >> I'm trying to sleep at least six, seven hours. [16:05] And what's your situation? Married, single, kids? [16:09] >> Married with kids. [16:11] How many kids? [16:12] >> One daughter. [16:14] Okay. [16:16] Congrats Vlad, and how old are you? [16:18] >> I'm 41. [16:20] >> 41. [16:21] Last question. Something you wish you knew when you were 20? [16:29] >> No, hard to say. I cannot respond. [16:32] Well, think about it. Something you wish you knew when you were 20. [16:42] >> Really, it's a a good question. I don't know to to respond right now. Maybe to to have some some knowledge about how to build a business. And to have in school some knowledge transfer regarding this from real entrepreneurs. [17:02] Guys, KFactory is helping manufacturers, product lines, etcetera, digitize their warehouses and factories. They've got 12 customers today. They're doing $24,000 in monthly recurring revenue, up from 5,000 a month just a year ago. They raised about $1,000,000 to date. The co founders still own more than 60% of the business. They split it fiftyfifty at the start, looking to scale. Now they've gone from two people to seven people as they get ready for their next product line release, [17:25] which is digitizing these engineers and workers. Vlad, thanks for taking us to the top. [17:29] >> Thank you. [17:32] 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 [17:57] Central. Additionally, remember these recorded founder interviews go live. 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