How Ignition CEO Anupiya Nugaliyadde grew Ignition to $46.7M revenue and 5K customers in 2024.

hey folks my guest today is guy pierce and he's got more than a decade of experience in professional services he's a chartered accountant chairman of interactive accounting a progressive accounting company founded in 2009 and an angel investor in multiple portfolio companies today he's the ceo and founder of practice ignition the world's first client engagement and commerce platform for professional services businesses guy already takes the top they made it let's go thanks for staying up late i think you're based down there in sydney right i'm up early it's uh 7 am here oh my god you've got the coffee in you've got your coffee and i'm at the other end right here yeah absolutely fair well okay so practice ignition.com is a site now just to be clear you are not a consulting company you build software for consulting companies correct i see 100 right i explained to my mom like shopify for services right so you think about it like that where the engineer used to run the revenue on payments and connect through the third-party workflows so they can have their tasks billing and collections all tied together to a digital handshake not based on what we do and so so to help me understand can you name a customer that's paying you and what they what they pay you for specifically uh bakertilly in the u.s would be one of the larger ones uh let me think about what else um you said sorry bakertown baker tilly's their large cpa film in the us and uh in canada and they pays for software to help run their contracts um and accountants usually re-engage or reissue contracts every year so there's sort of a phone plan if we can dumb it down to that um and it's like we're selling mandarin mainly to accounting firms 100 at the moment 95 percent of our customer base or cpas and bookkeepers around the world interesting okay so there is a sector focus here it's not just any consulting firm in the world no that's true we do have some weird and wonderful customers in many different industries like small isps education providers lawyers digital agencies marketers etc but the large primary bulk now focus has been on bookkeeping and accounting as every professional services business has a cpa or has a bookkeeper so it's very much sort of let's solve their problem and then they can recommend it to their clients in the long run i see okay that makes tons of sense so what is the average you know baker tilly not actually bigger chili but what's the average customer paying you per month or per year to use the technology the painting is about us 400 a month for a mix of software and payments um so sort of a blended piece the average software uh clip is about 150 us and the payment's about 250. interesting so so what is the 250 is that a percentage of the volume they process through your platform correct so we process both och and credit card in about five countries around the world um us canada uk australia uh new zealand um and we've got a couple of billion dollars of revenue under management and we process north of a billion um annually at the moment obviously that rates that are drawing up got it so you process over a billion per year and these are individual accounting firms like baker tilly sending invoices or quotes to their customers we add all those up it's over a billion you take a small cut of that correct so that's exactly how it works come on guy what's the cut what's what's the smallest uh smallest uh we take about well i mean it's on the websites it's very easy to see but the blended take rate for ourselves is about 50 bibs at the moment um we're looking to push that up um through getting the volume up there and negotiating on our cost side but also just thinking about how we charge smartly for people so people are feeling like they're paying the right amount for the right service ultimately what we're trying to do is just make sure there's no administration make sure they don't have to use another system make sure the clients can see their payments and understand where they're coming from and that everyone's kind of happy on the two-sided degree yeah i mean but guy i mean look just quickly i mean a billion bucks in gmv at a five percent take rate is your lowest that means at a minimum oh fifty fifty bits point five guys sorry sorry sorry point five percent take rate i mean your your minimum revenue there's five million bucks there right if that's your lowest take right probably higher yeah yeah that's great yeah yeah thankfully that's good um what is the how do people get down to 50 bips like what are they what do most people start at is it like 250 bips 2.5 percent no uh yes so the the gross rate uh before we have to pay any of our providers is sort of uh it's about 270 bips in the us on credit card and this is a headline rate um but we have a flat fee charge for ach presently and so if you're processing b2b payments sometimes to say likable.com but you're running it through us between the two parties they're paying a fixed fee of maximum one dollar and so obviously you get a blended rate that take rate comes right down um and so yeah it's a fairly you know nice mix we're just interested in being in the flow of commerce between two b2b parties and you know getting rid of checks right that's kind of our our main secret source and it's a great platform for removing that i'm in layer so everyone gets stuck in and has a good experience yep now i want to i want to get to the round and just do with jmi equity recently like literally a couple days ago but let's go back to like day one for a second when did you guys launch what year uh 2013 we had an mvp out in 2012 um but yeah about eight years ago okay well eight years ago and do you remember the year you broke a million in revenue uh yeah that was 2017. 27. okay so zero to a million five five years that's the is real back then huh oh hey this is whatever trying to sell to account as a bookkeepers they're lovely people um but also trying to have the right level of product in terms of not too structured and flexible and trying to find that balance is is a real pain point and it's a it's a slog um i think we'd only raised about two million dollars in that whole five-year journey so you know we had a very lean main team trying to figure out how to make things work and scale it up and then on it sort of you know more expansion capital and why we went do you remember yeah you did i think you did like three seed rounds a million and 2015 and 1.5 ish in two tracks in 2014 and then 110 angel round i think before that right something like that yeah so we had like uh family friends and fools so my brother my best mate and then my old business partners my old cpa firm then we had a bunch of angels which was um anchored by a guy called craig winkbot who's uh effectively like our intuit founder but just in australia um and on the back of that we then raised from real ventures which is up in canada now i'm based in sydney australia to sort of put how far we had to go um and so john stokes up there i read our first c check and kind of split around into and we had uh enterprise uh software was the company founder here lead the second part of the state round a year later so it sort of split and then it was on to series a uh with uh australian funding particularly now it's great and it keeps getting better but we had four vc funds and two billionaires wrote us five million australian dollar check to give you an idea so it's three and a half us so um at that point we were like you know what maybe maybe this raising thing isn't for us uh we actually got through to break even in 2019 and sat down with friends and advisors and whatnot and was sort of like well where to from here we had this much of the share of the market we had product market fit and we ended up going to look for the biggest and the baddest and had tiger global come along to lead our series b um in 2019 which is phenomenal uh and yeah like you said jmi recently so yeah if you look at the crunch base for us it's like little bits of capital and kind of like big chunk and then bigger chunk and next it'll be five billion dollar evaluation oh my my mother would be so proud but uh look i wouldn't take out that uh take me back i mean managing delusion is obviously critical you want to build a big business and also try and preserve as much ownership for you and your co-founders and your brother your best mate as you can over time right so when you guys went on to that 3.6 u.s uh usd around back in the series a back in 2017 do you remember what valuation you raised that at yeah was it was it was it very dilutive it was it was uh really so australians uh how would you put this they'd like to see efficiency and capital deployment um as a mindset we're used to profitable companies and so when you've got something that's not profitable for growing quickly people sort of struggle um we really needed the capital uh we found great partners once you know the price was on the low end um but we also were sick of raising so like this is gonna be our last round so that obviously played into played into the price uh as well um but we've brought on some great partners so those people who joined us actually helped us get to the b round and onwards so there's a mix of what if um you...