Raffle Revenue, Valuation & Funding (2024)

hey folks my guest today is suzanne laritzen she's professionally brought up in the tech consulting and dot coms of the 1990 she's the founder of log buy in the early 2000's an employee engagement platform which was fully acquired in a split sale back in 2016-2017 at which point our co-founder uh and her were the sole owners today she's the ceo and co-founder of venture backed raffle.ai inventing the future of enterprise search based off ai suzanne you're ready to take it to the top yeah all right so this is your second or third or fourth swing at it with some successful exits in the past correct yes it is okay okay what does it mean to empower your search with ai search for what who's using this employees are using it customers are using it on the website of our customers uh so it's basically just the search they can find what you need like google can find what you need for consumers we make the same search available for corporates okay very cool and remind us i believe you founded this way back in 2018 right yes okay and do you remember i i didn't ask you last time we spoke do you remember back in 2018 what your total revenue was your first year in business oh no it was very very limited no i think we had maybe a bit of uh pocs going on but it was very limited yep yeah okay very cool and then um tell me about um customers today right so you told us about your customers back in october 2020 but nate can you name any customers paying you today yes uh we have uh we have a co-op as a customer we have ian it's customer we have visma it's customer we have ilva which is like ikea um so we have yeah we have lots of different kinds of customers both within insurance banking b2b software and an e-commerce and how many total paying customers today we have around 50 total uh you know big corporates uh we have more customers than that but paying customers and big corporates like enterprise customers are 50. it's impressive suzanne you i don't know if you remember back back in october 2020 you told me you had about seven so you've significantly grown since then now has has your average contract value changed as well or is it still about 35 000 a year on average i know the contract value today is about 25 000 euro oh no sorry dollars dollars 25 25 a per year yes okay so maybe going down market just a smidge is that an intentional strategy or that just happens to be the customers you closed no yeah it's intentional i think we'll probably even go further down because we are targeting also the medium segment today and not only the enterprise markets so so that's intentional now if you have the 50 customers at a 25 dollar acv that means you're at doing what about 1.2 million in terms of run rate right now yeah a little less yes yeah yeah 950 a million something like that you're about to pass a million dollar run right we'll put it that way oh yeah we have parcel million yeah okay you're past a million fair that's very exciting so you've done this i bel i do believe you've also raised some capital tell us about your last funding round well our last funding round was about uh three million um dollars uh but right now actually we're in the middle of an a round i can't tell you anymore about that but i can on wednesday so it's closing on wednesday next week 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 it 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 valuation this year now the secret evaluation is there's many different ways to value a sas business so the reason you're going to see three or four different valuations inside of your frowner path dashboard this is all free by the way is because depending on who's doing the buying of your sas 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 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 raised they sold 22 to 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 valuations and what you can get now inside of founderpath and we're thrilled to bring it to you all right we're going to 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 valuation 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 uh don't share anything you can't but about how much do you think they'll end up being for uh range and and just to be clear too we're recording this on january 12th this will go out on february 25th just for timing purposes yeah but the thing is i don't know if i can if i can reveal that until wednesday so i i know that's um i don't know what i can reveal but but i'm happy to to tell you later on and then you can clip it in or whatever you know that's no problem we would love to do that let's talk about the strategy behind the raise what do you why do you need the money that obviously comes with delusion yes uh we need the money to scale uh european-wise or first of all it's actually going to mean american uh it's it's a u.s um venture capital firm uh so eventually we'll also go to the us but i think we'll wait one year to do that and just scale in europe for now so that's what we need the money for it's basically sales yeah and most most folks suzanne and their series a are selling 10 to 20 to the business were you sort of in that same range yeah okay and and do you have to set up an employee stock option pool afterwards or did you already have one set up anyway we already have one night we do have a warrant program an exit warrant program i don't know what that is how does that work it works the way that you have you have the option to oh you have warrants that will be released um the day that we actually exit which is the day where we sell more than 50 of the company so you have to stay to the end so to speak or to the day that we exit to to get value for that money if you don't stay you will lose it uh so it's basically a way to say to people that we really want to stay on board for you know for the long run um yeah and what are those called sort of what warrants it's a it's an exit warrant program hmm interesting i like that i have not heard that before so that's interesting it's just a warm program and it's just exit based so i think i i think yeah exactly most most people would probably just say it's a warren program yeah fair fair fair i like your idea better though that's kind of fun um yeah okay talk to me about the customer growth how have you gone from 70 to 50 where are you getting these customers uh it's it's uh in the nordics uh primarily but uh we've just i mean we've just scaled the business we have been much more clear in the mission now we have a product now that can scale very very pro very rapidly and and also we can now implement the customer within two days uh which we were maybe two months um doing you know just one and a half years ago it would take us two months to actually implement a customer so it's just it's just more rapid now it's it's um it's a clearer vision so and how many folks are on the team full time uh 20 20 is on the team full time and then we have eight part-time uh employees as well how many engineers we have 12 engineers now back in october of 2020 you told me hit about 23 on the team did you have to let some people go but still have that revenue growth maybe because of covet or something no i think what we what we calculated that point was also the part-time employees so we haven't we haven't scaled that much we have scaled about five full-time employees since then and then some part-time employees as well but um but still we have grown 305 in revenue or in arr since yeah i don't care about team growth i care more about revenue growth i'd rather you build a billion dollar company with one person on it you know have you changed anything about your sales motion with your sales reps last time you told me you had five quoted carrying reps and their quota targets were set at about 420 000 bucks of new er per year it's the same okay it's basically the same mm-hmm yeah but well it's um well i i wouldn't say that it was working perfectly before it's working perfectly now so did you have to make any changes to make that happen or no uh yes i think the product has developed so that it's easier to implement as i said before so it's also easier to sell because it's a box product it works off the box so it works the same day that you actually get it and you don't have to train um on the ai anymore you did before and um and then i mean it's just um if we are also more mature we have a bigger brand today so it's always you know as time goes it will always be easier to sell the product as others have you know if your neighbor has it you want it so it's it's a it's basically about that i think no i love the story makes a ton of sense now you've mentioned these exit warrants uh you've talked about the three million seed you did now was that seed was that like traditional seed round you sold you know 20 of the business back then too yeah okay so it's like what a 15 million evaluation something like that yeah okay interesting and did you were you the sole founder prior to that uh no we are two um founders um owning you know um equally um um much and uh and then we have some investors from the very beginning that were angels that threw in money in precede how much was that and then the next year uh that wasn't true that was already in 2018 actually so they threw in um i would say it's about 300 uh 300k uh us from the beginning and that's what we lift from so to speak for the first year yep and so and is it fair to say sort of investors now today own about 40 before this series a own about 35 of the business the current round yeah that's fair yeah yeah yeah and then you guys how much have you reserved for employees uh we have reserved um nine percent up until now yeah pretty pretty fair you'll probably increase that after the series a yes exactly yeah can you share what you're increasing that to or no uh no because i'm not really sure yet that's no problem yes no problem so 35 to investors nine for employees that means you and your you and your co-founder own about 22 percent each as of today that's a very good calculation yes okay very cool that sounds like you're managing the cap table in a super healthy way it'll be fun to see what you do with this new capital in terms of investing in sales and marketing when you say move into the us market does that mean literally opening an office here or hiring sales reps here or what but not i i don't think we're going to do it right now i think we're going to do it in in 23. so we are first going to expand in in europe uh we have plenty of room in europe we have the whole nordics which we are not we are only beginning there and then we have germany of course and the uk and the netherlands that we're going to focus on very interesting now you have a high acv which means you could have a high tack as well what are you spending to get a new two thousand dollar a month customer did you know uh yes uh our ltv or our uh customer acquisition cost is uh five i think at the moment um and and that is only because we have an ltv only on three years that we calculated with so i've i've learned that five years is actually normal so uh so basically our the the formula should be better um but uh but we're quite conservative in that sense so five from a conservative point of view yep fair enough and if you're again if you're managing and you think your annual contract values are somewhere in the 25 000 a year range multiplied by three years you know you get up to about 75 000 there so you're telling me that you're totally comfortable spending 15 grand to acquire that customer a five to one l2d cache where are you spending that money is it on the sales rep commission or something else right now we're only doing direct sales so it's it's primarily actually just on salaries um so and and of course commission bonus and stuff like that but um but not so much on the marketing side we're going to focus on that a lot more in the coming year and also the branding of course yeah net dollar attention about 100 sorry do you know what your net dollar retention is is it above 100 i have no i don't know okay i actually saw that question i i don't know i i had to ask my accountant that's funny you're referencing the latka sas report that you filled out and i was like and you're going what is this what do you mean net dollar yeah exactly yeah yeah you guys will get to that soon you're growing so fast right now you probably don't have time to think about it but it's a great story suzanne i hope you come back on in a year give us another update in the meantime though today let's close out with the famous five number one favorite book uh well i think it's still think fast and slow yeah you're consistent number two is there a ceo you're following or studying no number three what's your favorite online tool for building raffle what is my favorite one online tool um i i don't understand the question sorry a tool a tool that you use like a like a tool uh like google docs or uh slack twilly hubspot a favorite online tool that you use yeah okay we use hubspot we use slack we use lava i don't know if they're favorites but yes which one do you use the most i use hubspot i'm serious all right number four how many hours i sleep to get every night uh i get uh seven okay and what's your situation married single kiddos um um i have a boyfriend and i have kids not married two and two kids right two kids here and have you had a birthday since we last chatted you're looking younger but i have to i have to ask oh my god i won't put 50. oh happy birthday you said 48 last time so 50s right happy 50th that's exciting don't look a day over 30 suzanne all right yeah okay take us take us home something you wish you knew when you were 20. uh yeah i think i i think i would probably tell myself to relax a bit more but i still don't so i guess i'll let him learn guys there you have it raffle.ai is ai powered search for the enterprise they've got 50 paying customers that pan average 2 000 bucks a month so 90 000 100 000 bucks a month right now in revenue just broke a million dollar run rate up from twenty thousand dollars a month back in late 2020 scaling nicely raised a seat around back in 2020 three million on a 15 million post money evaluation about ready to close this series a look out for that announcement here soon as they look to scale in the u.s suzanne thanks for taking us to the top great thank you thank you one more thing before you go we have a brand new show every thursday at 1 pm 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 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 1 pm central additionally remember these recorded founder interviews go live we release them here on youtube every day at 2 p.m 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 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