How Kudigo CEO Kingsley Abrokwah grew Kudigo to $50.4K revenue and 300 customers in 2019.

hello everyone my guest today is kingsley he's a gun uh he's a ghanaian tech entrepreneur with a passion for creating technology solutions that have direct impact on the average person on the street and enables them to leverage tech for social economic growth he's now building a company called codigo all right kingsley you ready to take it to the top yes i'm ready nathan good tell us tell us about the company what's the company do and what's your revenue model how do you make money great so the company is called codigo and the company sas startup based out of gather and our focus is to enable and empower retail informal consumer retail in africa to be able to grow their business and study our business so the primaries are simple nathan in our part of the world you have all these small retailers who move so much money do so much transactions but they're unable to grow their business because they don't catch any essential data i start today in 2019 they're still writing books trying to figure out what they do how their bonnets grow so we figured how can we enable their western tech that would help them grow their business scale it and be able to offer the business capital so what we figured was that they have smartphone they have android phones so we don't know what we call the kodi go storefront which is essentially a complete retail builder suite that enables them to capture essential data process transactions accept payments and have verifiable records where they can use to go their business now again to put no barrier to entry in front of them we have a free forever module and we have a premium model but the whole idea is to get as many people as possible to use the solution how many are using you now so right now we have 1 600 businesses in less than two years in ghana in nigeria using our submission currently and we offer the free version and a premium version for 39 monthly which offers them everything they will need how much is it it's 13.99 39 a month one three points by nine oh so fourteen dollars a month yes fourteen dollars a month and they get everything from a retail system to accounting through payments and giving them that essential verifiable data to grow your business and how many customers have you scaled to today so as of today we have a thousand six hundred customers in ghana and nigeria those are users or paying customers so paying customers is 20 of our total users okay so you have about 300 paying customers yes okay that's great so 300 customers paying 14 a month and that is from again about which is about 4 200 per month right now on revenue is that right yes so that's our first revenue model we also make money from payment transactions day process using card qr and mobile money payments and we make on average one percent on the transaction day process so in the past management some perspective in the past month we did over 20 thousand dollars in transactions non-customizations in ghana nigeria and we're making one percent of that exclamations coming to us last month how much total transaction volume went through your system transaction volume non-cash was around 20k usd oh that was a twenty thousand dollar number and you're making one percent of that so about that's another what two hundred dollars yes two hundred dollars but that'll that'll scale though yeah i mean we have very early state startup so like i said we're just two years in their business we just closed that seed round and we've really got a lot of traction in the past eight months yeah how much have you raised today we've raised 550 000 in seed round and we currently are about to bear series a in the next few months as well how much do you want to raise we're looking to raise half a million in our series a and why is that the right amount so it's the right amount because our current product is at a good phase where we can easily acquire 10 000 customers now for us to be able to do that that amount helps us close that particular user acquisition gap and focus on other products we want to go again we are a data company and the data we have will appeal to guys like nestle unilever and other fmcgs so we need to get our current product to get full product market fit and then look at innovation around different products around data engineering around building machine learning algorithm to figure out why particular products sell in certain markets why certain payments might was breaking various market so this race is for our current product and then we will do another range next year for other products so what valuation do you hope to raise the five hundred thousand dollars on is that's an 8.5 million dollar valuation okay so 8.5 million evaluation you're currently doing about 50 000 per year i mean so that is a massive that is i mean that is a huge value don't you ever get nervous about actually growing into that valuation well we don't because nathan again i'll put it very bluntly we have tremendous growth we have lots of partners a lot of well hold on what's tremendous growth what is growth over the past 12 months so let me just give you over the past three months just to show you how to manage the growth rate over the past three months we've grown our transactions by over 400 percent so for example in march we're doing over 600 transactions in may within over 2800 transactions in june with over 6 000 transactions and in july we are on course to do about 10 000 transactions now we just wrote out our premium processing model just two months ago and we've already been able to migrate a chunk of our users into our premiere processing model if we scale this at this projection by end of here we will be doing close to half a million in total non-cash transactions on our platform and that's from only payment processing commission the problem is that's nothing a a business that's built on taking one percent of transaction volume has to get into the hundreds of millions of transaction volume for it to be a meaningful business now by the way you could get there i'm not saying you won't get there but i'm just saying valuing the company 8.5 million dollars because you think you're gonna do five hundred thousand dollars in transaction by the end of this year is a in my opinion a tough sell well nathan so payment transactions is one part of our revenue model for our current products we have two revenue models we have the subscriptions we have the payment processor now if i onboard five thousand by chance instantly on my premium cost of conversion let's say if i ever get 2 000 all my premium subscription that is 164 dollars per user per year i'm getting from those users now if i'm able to scale them to do payment transactions over time that's my revenue life yeah kingsley by the way this is i get that but that's just a multiple i mean that's just a multiplication question right you're basically saying well currently i have 300 customers if i instantly get 2 000 and then you're multiplying by 14 and getting i mean anyone can just say if i instantly get this many customers this is what we're going to be doing but like valuations typically are based on looking at what you've done historically and then that helps investors get confidence that you can actually execute your pro formas into the future so i guess what i'm asking you is um tell me more about the business so that investors or that you feel like will make investors really believe that you can hit these numbers that you're saying what does churn look like today so our chain right currently is around eight percent monthly and it's you know over every quarter horsepower is around eight percent okay so eight per quarter which should be about 32 percent revenue turn annually yes okay and do you have expansion revenue where everyone pays 14 so again we have various product customizations based on who we're deploying to so if it's an average retailer they go with that fourteen dollars if it's a big retailer i would say multiple at let's say 10 or 15 there is a bespoke pricing around that and for us again the focus is on the data that we are collecting because today we are the single larger startups in south south africa led data on consumer retail and that is that nobody has got that is data or fmcgs want that and we already have work in partnership with a lot of the key fmc years in this part of the continent and that is really where our real money makers so this current product we have is to help us get the market entry they want to capture all that essentially so kingsley fast forward a year from today what what do you think will be a bigger business for you your sas product or your transaction business the biggest business files a year from today will be our enterprise data product ourselves product is just to help us get into the market transactions is an add-on value for our customers so they can do non-cash transactions but then our money maker sits on the data that we are able to acquire and how we can use that data to the benefit of partners like fmcgs mfis because look nathan in our part of the world now in south south africa people can't get micro loans because there's no federal federation system businesses are dying so if you are able to help these businesses acquire all the essential data they are able to scale so if today could you go roast us a micro loan product for over five thousand businesses we are certainly helping them grow at the same time making some money of them from those commissions so there's really a lot of value added if we are able to scale this up to other businesses without looking at the short-term revenue potential if you really believe that kingsley you would make everything else free you wouldn't you wouldn't have a 14 month plan because...