Monite Revenue, Valuation & Funding (2024)

monite.com launched back in 2020 did a Million Dollar pre-seed Round 0.72 third prime came in after that through 2022 started lending their first customers really late 2022 scaling today 20 customers on board to the platform with real net dollar retention opportunities in the future as they scale volume and usage but doing 20 000 a month right now on revenue from basically nothing a year ago they've got over 50 folks on the team 40 Engineers or product folks of which 25 are based in Georgia so some labor Arbitrage there which we like but look at the scale here nicely in a sustainable way over time we'll see what they do next hey folks my guest today is Ivan Morrison he's the CEO and co-founder of monite the API first fintech company that helps SAS products platforms capitalize on hassle-free financial automation Finance automation for their clients at the company he's responsible for driving product strategy customer acquisition and business growth under his leadership the startup already went live with a number of high profile customers and raised more than 10 million in fronting from season VC firms third prime 0.72 Ventures alongside angels from Big players like karna Mali nayum played and PayPal Ivan you ready to take us to the top yeah absolutely yeah thanks for having me today you bet and just to be clear you're also a co-founder right correct yeah I have a technical co-founder thanks God you can't build an API first company without a genius Tech Guy which my co-founder Andre is what year did you guys launch the company uh so we launched three years ago um and it was like and I like a good accident all the good things in life happened accidentally we both came from New Banks we had a grand idea how to change SME finance and here we are three years later all right so 2020 launch give me a story today of a company or a customer that's using monite yeah absolutely so I think uh just to give you a perspective of we typically serve B2B platforms that have you know if you sell them to SMU users list um right and for example the biggest customer we um signed so far is actually capital and tap I'm a credit card provider for smes in the UK and they already have all this like 300 SUV customers and so what they're doing is they're saying look these guys already using our credit cards but they could do more Finance processes with us so let's for example how plant-based suppliers more efficiently and this is how they basically become a build.com like provider for their clients and all of this functionality for payables automation is provided by Monarch API while capital and sap has full control over their interface how it looks how it works how it works for specific segments of users so we sort of like give them all the functionality and they make sure it's a perfect food for their user and with that they earn more per customer they get more transactions volume and of course this means that their user base is a lot more engaged and sort of more locked in than before let me repeat this back to you for my audience maybe so let's say someone's listening right now running a SAS company that helps sales teams and that means that sales person is obviously probably sending an invoice at some point sitting very close to the payment flows if that B2B status company listings they wanted to launch more fintech products they might look to Mo Knight to help power those apis and launch things like invoicing bill pay and B2B payments inside the application that's that's exactly right like so you theoretically you could just like combat the invoice issuance into your CRM system so that the sales person can one click Send the invoice monitor its paid status etc etc or you could like take an smino bank and give its user to super app capability where they can manage invoices and payables and expenses all in one place so if anything would give people the capability and they can play it in many different ways and so with this product suite and product set what is the average customer paying you today to use this API tool a different sort of uh types of products we sell in different bundles I would say we typically sign deals now ever everywhere above 30 000 per year and will be growing this um very very quickly as we grow in customer accounts and obviously the value of those deals are in hundreds of thousands but what we do is we basically give people an easy way to start get the way to start the justifies integration costs on our sides and locks them in for at least 12 months of usage which is our minimal commitment okay when you look at your current customer base so would you say it's fair to say on average those contracts are called 30k per year contracts for some number of API calls uh we so we don't price based on API calls we price per active SME customer per module per month so it's basically a scalable SAS model and then if people buy payments and some financial services from us we also have a take rate in that so essentially this is how we make money um and the idea is that as they get more active usage they pay us more so it's strictly aligned in terms of incentive only when they make more money we make more money explain to me on the take rate works if I'm a B2B SAS company I use monik to power in-app invoicing and invoices for 100 bucks it gets paid how much is my not going to take for that yeah I think it depends on a specific Arrangement right but we use for example stripe rails in the background for invoice payment links and then there is basically the cost of acquiring money on the cards so depending on specifics of like which card it is ETC for our take rate it could be like zero it could be negative it could be a few uh percentage points the most important thing is that we give a fixed takeaway to our partners so for example who would give them payment for whatever like 2.6 Blended rates and they would say to their client look it costs you three percent each payment which is the market Standard that QuickBooks charges and then they would always on earn 0.4 and so what we do is we fix their earnings but our earnings really depend on how much transaction costs and we run our own risk in that regard 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 evaluation 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 okay so I understand moving forward your targeting Accounts at more than thirty thousand dollar acvs in terms of commitments and contracts but when you look at your history right over the past couple years that your average customer today are they paying more like a thousand bucks a month or two grand a month is that a fair statement yeah absolutely so we usually don't sign anything to face less than that it just doesn't really make sense for us uh we rather look at people like capital and tap that already have hundreds of thousands of clients and those contracts always to go into hundreds of thousands per year in terms of minimal commitments right um so that those are the perfect customers who are targeting yet we make the M3 easy for smaller platforms well starting uh or guys who are just starting up we just are aware that the cost of building this is in the millions so what we ask them to pay as a minimal commitment is negligible even if you compare uh compare it to a price of a single developer per year okay so it is fair to say you have active customers today paying more than a hundred thousand dollars per year uh correct I mean the usage is ramping up right like they sign a contract and they integrate in a few months then okay so they could pay you more than that in the future if they grow into their use so it's a little bit more like we signed a contract let's say 50 Grand a year and this contract has a start date for example the start date could be first September 2023. so since that day they will be paying 50 000 divided by 12 every single month no matter if the user or not according to contracts we hope that they use it very actively and they pay us not 50 Grand but 250 Grand because they have so much excessive usage and this is why our product is not purely technical we also have a lot of support and product marketing on ux UI and on product activation because this is how we make money per active user yeah you're talking about a minimum threshold right the platform spend amount every month is called 50 Grand 60 or whatever five grand a month six grand a month what you're saying is you hope that they breach that minimum and then actually start using more and then you're getting a take rate another unit economic variable based comp which would get the contract up to 100K 200k 300 exactly exactly that's the goal yeah but you don't have you don't have customers today like in the past 12 months that have paid 300 Grand per year not yet no yeah we're we're still fresh in the market so it takes time to roll it out that makes sense that makes sense okay cool that context was helpful thanks for giving that so you get going in 2020. um help me understand how you guys capitalize the business you bootstrapped a raise capital yeah so the first bootstrapped and we actually started as a B2B company so we first built a One-Stop shop for a small business owner to manage finances until we realized that people want this one took shop but we've seen their system of records that could be POS Neo Banks some you know vertical software provider or whatever it may be and that's how we transition into infrastructure Direction in 2021 um and then the race precedes first for B2B Direction uh which was around a million and then we raised a larger seed round and two portions five and five in 21 and 22 um and so our total seed was 10 million dollars led by 0.72 Ventures and third prime and the last portion of seed came in in December 2022. well I just put it up uh so I think it was just a natural kind of development of the business uh 0.72 came in when we just transitioned into infrastructure and then search Prime came in when the infrastructure business was already maturing and we just wanted to like really give it a boost before series a um and we still have a very uh kind of a very good mood for raising a larger series a despite all the market concerns and sort of like negative sentiment and everything uh we are one of very few providers in the new category um and therefore we really want to make sure we're in a good pass to maintain that position how many customers are you serving now today so we have about 20 platform customers and uh basically growing I wouldn't say exponentially but we have a very good growth rate we uh basically 3x customer base in the last six months and I think we have all cancers of even exceeding this in the next six months and when you structure a theater on that spread out like that with a seed and the seed too where the closes are almost a year apart just third prime that came in in late 2022 sit on the same paper as 0.72 or was it different valuations different valuations with a good premium yeah yeah that makes sense okay and then so we don't want to dilute too much right we got to keep it rolling yeah I mean I could look most folks in the seat round back when you closed I mean you're selling 15 20 of the company were you sort of in that same range yeah I think we we always rate like the race was within the market boundaries and we're very lucky to have investors just optimize for long term so it's sort of like in infrastructure they really say like look how much money do you need to build a category leader let's make sure you do this and let's make sure your dilution is between Market standards and that's um that's where we are today and sorry you did the preset in 2020 for you said a million correct yeah okay and who led that uh Tomahawk oh interesting okay and and most preci rounds in that range again you're selling 20 of the company did you do I mean you were in that same range I think yeah we were somewhere around 20 if a member doesn't fail we're even below 20 um I wouldn't remember the exact figure right now but basically we did sort of three rounds and three of them were in the market range um and then a bunch of like we now even did a convertible after the price round uh but all of this is done without hurting the long-term dilution right we're all aware of what series a conditions are and we make sure that we're in a good position to race from a tier one fund yep that makes a lot of sense we're talking about team today how many folks are full-time so we have 50 people full time and 80 of the team is actually product and Tech we're API first company so it requires a lot of Engineers uh we have uh people from all across European and even Global fintech and so very senior uh leadership team for example our CPO then Osborne is xvp product at Marketa which he scaled from 30 people to IPO um our chief of staff Sophie was CEO of Adam bank and we have a number of other great technicals experts like for example Alex akimo of X Out of API teddian or Andrew Ephraim one of the first technical leaders at Mambu and so this is more or less how we think about the team we're on a fairly low development cost base because we base them in history in Europe but we then have which part of Eastern Europe uh Georgia Georgia one one percent tax very very favorable engineers in Georgia um I I want to say 2025 but we also have some Engineers outside of Georgia so it's it's quite a bunch of people how did you establish that like the first person in Georgia my co-founder actually um actually sits with them in Georgia and so like he's the right man on the ground to run the whole Tech show um and that's where we have a lot of also good access to Talent through the right recruiting agencies so we usually relocate people to Georgia um also from you know like ex ukrainians extra Russians like belarussians like from all across very strong Tech Talent um and not all crazy European or us um Texas that would basically mean that we can only run half of that size of the team at this stage yeah that makes sense now you mentioned earlier 20 customers and you know historic I mean you said in the future you're targeting 30k acvs but historically they're more like a grand per month or 12K acvs per year that would put you about twenty thousand dollars per month in revenue is that generally correct yeah yeah that's about right so I think in infrastructure the the thing that is the hardest for me coming from a typical size business is that an infrastructure real revenues always lag behind because there is a longer sales cycle than people have to integrate the minimal commitments kick in and only then they start seeing sort of access usage and I think we're now exactly in a moment when we have most of the customers either integrating or just starting to go live so we're yet to see this mrr acceleration like real MRI acceleration but that's basically how infrastructure business works so people come in many of them sign through for your contracts they're in for the Long Haul but it takes more time to see this Revenue materialize and if you're at 20K a month today where were you about a year ago so we can calculate growth I think like about a year ago we're around zero so like uh we were just launching infrastructure we just signed the first customers we signed them almost for free to make sure that we can actually like you know deliver the service want to deliver and I think in intro also like they don't have a direct feedback loop from a customer from the End customer and this is why it takes longer to launch the product and calibrate that it actually works the right way I would say now a year fast forward a year we feel very confident about the solution we have and this can also be easily kind of found out in our API docs and an explanation guide and everything else that we have in your seed round especially the second close in December of 2022 with third prime it sounds like you're still basically pre-revenue what did you point to in your slide deck to basically say look we're still getting traction even there's not Revenue coming in we're still getting traction give us a higher valuation and give us a five million dollars extra capital yeah I think so I think the this whole round was basically around a very strong panel of opportunities that we have and some of them were closed some are still processing and there is also another component that in API business like when we were raising the first version of see the apis were very fresh they were like barely just going live barely getting tested when we're raising second portion of seed we already had a number of active deployments with some usage data with a lot of battleground testing of apis and was a very clear answer to like why people would buy this and not build in-house why would a big player that has a lot of money partner with Monarch versus like hire another product team and a lot of other things that I think are core to the theories and now fast forward just six months from that second portion of seed we see like crazy pmf acceleration a lot more opportunities coming in it's just generally this Market is starting to emerge in a whole new level yeah that makes sense I'm just curious how you you I mean you're on a path with 50 full-time employees I understand some are in Georgia but you're doing 20 grand a month in Revenue it means you're burning a lot of money per month I mean you you have to either you have to either grow in and go raise another big round and keep feeling that growth or eventually cut back and make sure you can be sustainable for a long period of time without raising additional Equity around where's your head at today yeah I think it's it's uh our our game is rather aggressive and opportunity driven I think it's very simple it's a very simple explanation here right like if you look at the amount of funding any invoicing or accounts payable provider that does B2B raised in order to build a solution you can clearly see that these numbers are at least in the tens of millions I can I can name five companies that are bootstrapped with more than a billion deployed on their platform on their API rails that are that are bootstrapped in the space I just want to point that out it's not required to raise money in my opinion for infrastructure plays like this no I I fully I fully agree I think like maybe people found a way to do this right for us what we see is that there is no real MVP in this market like if people come to us and say Hey I want to be a bill.com for my clients I can't give them like a scrappy little solution that doesn't really work I have to give them something a lot more ready and it actually takes a lot of effort and time to build which is one of the main reasons that people come to us and not build in-house because it does take Millions to build this now once you build this you can capitalize on this very very efficiently and I think for us there is a higher upfront investment but good news is that we don't need to grow the team so much at series a we don't need to keep kind of investing exponentially large volumes in order to monetize it's actually the opposite we invest a lot up front and then this machine can run very smoothly with very little marginal in Bethlehem on top yeah and scale internationally across markets how much would you say you've invested so far like you've actually money you've actually spent so I think I think we are pretty still pretty good in cash like we don't disclose exact numbers but uh we are we're definitely above 12 months Runway um I mean you say you have to invest a lot up front to build something like this right that would be a good reason for customer to pay you instead so I just I'm just curious how much you think you've spent five million bucks so far investing in the product two million what do you think it is I think I think a bit over five okay A bit over five for sure yeah interesting and I would say we're nowhere close to Don in terms of scope that people want right like when you talk about like you know Regional invoicing compliance or other things related to payments um it's more about like do you want to earn 1X per use or more like 2X or do you want to earn 10x and we're moving in a Direction Where We want to promise the platforms that they will make a lot more money for user but in order to do this we really need to build out the functionality and Integrations yep I've been right of time let's drop it here with the famous five one word answers if you can number one favorite book uh what to do is who you are number two is there a CEO you're following or studying um I'm following Elon Musk I'm a big fan of some things I'm not a big fan of others but I like the example number three what's your favorite online tool for building monite a notion number four how many hours of sleep do you get every night uh at least eight don't don't cut down on sleep and situation married single kids uh I'm I'm actually single now so okay any kiddos or no I have one out there's my baby yep okay so no kids all right no kids how old are you Ivan uh 30. last question something you wish you knew when you were 20. uh the problems can solve themselves guys there you have it monite.com launched back in 2020 did a Million Dollar pre-seed Round 0.72 third prime came in after that through 2022 started lending their first customers really late 2022 scaling today uh 20 customers on board of the platform with real net dollar retention opportunities in the future as they scale volume and usage but doing 20 000 a month right now on revenue from basically nothing a year ago they've got over 50 folks on the team 40 Engineers or product folks of which 25 are based in Georgia so some labor Arbitrage there which we like but look at the scale here nicely uh in a sustainable way over time we'll see what they do next uh Evan thanks for taking us to the top cool thanks so much so much for having me 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 buyers try and make a deal live it is fun to watch every Thursday 1 p.m 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 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 nathanlacka.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 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 got to 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