How PLIPAG CEO Cassio Pagnoncelli grew PLIPAG to $120K revenue and 600 customers in 2021.

hey folks my guest today is cassio he's building quote to cash for smbs playback.com.br if you want to follow along his 50 word bio short and sweet passionate computer scientist in the fintech space he's been at hsbc ebank which is soon to be listed and again now co-founder of p-l-i-p-h-g cassio you ready to take it to the top yes how are you doing all right i am well all right tell me about this business here so what kinds of clients are you typically working with good uh the only quick quick reply or the long reply quick reply okay so we tackle uh small mid-size it uh recurring uh recurring services businesses okay and name one of them private schools unions we have a lot in brazil agencies offices rentals there's a lot of businesses let's talk about agencies so an agency does you know let's say they do 100 000 a month in revenue from 10 different clients how can they work with you exactly well um this is very interesting because uh payment culture is different from country to country uh when we started the business in brazil we realized that most of these small business owners they spent a lot of time uh not only uh handling all the the the payment method but also conciliating and in the end of the day actually they spent about 10 15 of their month dealing with all of that uh stuff and they didn't really need an erp or crm they actually they most of our customer base they don't know what a crm is and when they know what the near p is they don't want it because it's just too much um so we decided to create a a super super thin system that would uh take care of the accounts receivable and provide an amazing user experience so costco let's be really specific there's an agency that has the customers that pay them you know each day 10 customers that pay 10 grand a month to that agency in revenue how can you help that agency brilliant so right now if you're in brazil and you have to take care of those those those customers you would spend about two days in your month uh issuing what we call baleto this is a one of the payment methods we have in brazil we have to conciliate you have to uh handle them directly with the bank and you will deal with all the requests your customer will have so if you use bleedback you will just add your customers in this system you will subscribe them to your recurrences and that's it so your two days becomes two minutes per month so that's your work so you pack this what specific cost you what specifically though are you doing are you helping them invoice their customers or are you bringing are you turning monthly revenue into upfront cash or factoring invoices what are you doing yeah everything so basically we our main engine is a payment processing uh system so we do process overdose payments just like stripe would do um but we we don't do um online we do uh our public is our audience is roughly offline uh businesses and well uh there's a lot of things in cash roughly everything from quotes until until cash which is which is processing those payments so they can come to you and do all these things from issuing the invoice to once the invoice is signed you can advance them cash until the invoice is paid you can do the whole thing exactly so uh we help them manage their customers we help them with intelligence we provide them uh a portal for their customers to get those billings get those uh invoices get them get their receipts take care how many customers are you working with down today right now we have over 600 active merchants and over 20 000 payers in our customer base got it so 600 companies and then 20 000 customers there now how do you make money from these 600 customers so we take uh we have a take uh um a percentage fee of all every money that every transaction that comes through the platform we what's that range like one percent or more well effectively that's um [Music] 0.99.98 so it's around one cent i see and so what is the average customer you have 600 what's the average one put through in terms of volume each month so usually those businesses put around oh let me convert to dollars that's about ten thousand dollars in average eight eight to ten thousand dollars so that's that that's the size of a business with uh two three or four or five employees got it so so 10 grand going through one of those businesses and you're taking one percent do you make about a hundred dollars per business per month something like that yeah something like that yeah okay very cool give me the back story here where'd you launch uh well we launched our mvp back in 2018 uh me and michael found that we were we left ebanks banks is uh now uh on unicorns and grew organically uh for in the sector and we saw an opportunity uh in the brick and mortar business in the brick and mortal motor vehicle so there's a lot you know if you're in an e-commerce uh there's a lot of solutions so everything that you need is already there so if you are a commerce there's a pos but what if you're a service uh what do you do so you usually i'm not challenging the product it makes perfect sense to me i understand i have a lot of brazilian founders on diego from rock content others from vladimir where the latest are a pain to work with especially if you're not digital so i totally get the product it makes complete sense i just understand how you've grown so quickly right so you launched in 2018 you got your first customers you're at 600 today how many people are on the team so we are in seven right now seven just yep and have you bootstrapped or did you decide to raise capital we bootstrapped until end of last year and we made our first funding round right now so it's 250. why did you decide to raise 250 000 uh because we wanted to preserve um equity um and we are preparing to make a larger um a larger funding in the next round sorry i'm a little bit confused if you want to preserve equity you wouldn't raise money at all well but time is also a variable so you don't want to go on a loan through all of your time but we want to be efficient as efficient as possible in cash so this is how brazilian vcs look so a little bit different than uh american vcs would would look at eddie so you are looking to build uh an efficient business uh from casio sorry there are people people raise capital and give up equity because they want to move faster to build a bigger pie the flip side to that is you keep 100 of your business and you bootstrap but it's slower growth and a smaller pie so time and equity are usually opposites of each other in this scenario yeah we did something in the middle actually um actually back when we started i would say the the the land the vc landscape was not as developed as it is right now so we wanted to raise with the best so what does it take to raise with the best if you're unproven entrepreneur so let's build a business uh let's do a part and when we mature the business north um then uh we can we we can raise with best and i think we we did we're doing so you raised 250 000 in 2020 correct uh 20 21 early 21 2021 oh this year yeah oh got it okay and and how did you think about was that a priced round or a no um again do you remember was it a priced round or a note with a cap um yes but that's not public infer well regardless if it was a cap or a note right founders choose to fund their business another way this is a show about founding a company so that's why i asked did you did you prefer price drown versus a note for any reason or vice versa i don't know what you actually did um i don't um to be very very honest uh we we set a range in the rounds and we try to accommodate every investor within that within that range and uh we were able to do that so in practical terms yes it was a price round okay got it so so there's not a discount on it it doesn't convert at a 20 discount and when your next price turns an actual evaluation attached to them right actually actually actually we had a evaluation in minds and the vc uh came up came to us and say well i think i think the company is worth a little bit more how about they invest more in the business so would you accept so no discount and then we we essentially took most folks in a seed round like this are selling 10 to 20 percent of the business is that about how much you guys sold uh in the first i would say very close to our 10 cents okay got it that would push you out that would put you at about a 2.5 million dollar valuation when you raise the 250 so you could preserve some equity that's human you said preserve equity yeah a little bit more i see i see very cool okay and so when i look at obviously growth today you know you have 600 customers how did you get those first customers so well the first customers we we we tried a different approach so we're not doing digital markets so we launched the mvp and we tackle we tackled small are private schools within the city so it was roughly based on field sales and we approached every school in the city so we built an inside sales team then um then we found out well uh caltv is not it's not working we need to improve the product and we need to build a digital uh digital marketing process so uh and then we were later going to...