Rafflerevenue, valuation & funding

Introduction hello everyone my guest today is suzanne laritzen she in 2018 joined forces with a professor from d2 and founded raffle.ai which deploys intelligent search tools for customer service that gives instant correct answers to your customers and employees while picking up great insights on consumer needs and employee satisfaction raffle reduces calls live chats and emails by 24 and unlocks a constant relearning cycle at the same time employees save eighty percent of the internal search time and get up to speed with new knowledge quickly the company has raised 3.5 million euros in the first 24 months and aims for a series a round late 2021 suzanne you're ready to take the top customer success and experience and automation is obviously very hot right now when did you guys launch the company in july 2018 so we own we are just two years old now and who owns more equity you were the professor we own the same oh very diplomatic of you just right down the middle 50 50. that's denmark i like that i wish i wish folks in the states are a little bit more like that so what's the what's the company do is it pure place ass uh sorry yeah it's pure yeah it's ai actually as a s as a service so it's um it's pretty new in that sense scalable ai has not been possible before but it is now so that's what we're sort of into so is your team super heavy on engineers how many engineers on the team yes we actually have uh 18 engineers and five in sales up until now so it's um yeah and those five folks in sales do they all have a quota yes okay so i'm gonna come okay yeah we just uh i mean we just started the sales part department actually just two months ago so that's pretty new and up until then it was just me selling so it's pretty new yeah and what's your total team size today it's 23 employees 23. okay and how's that compared to a year ago do you remember oh yeah i think we were about eight eight okay and and it sounds like you Raised guys raised capital right off the bat how much have you raised to date uh 3.5 million u.s and two rounds or one round it was uh actually three rounds the first two one was angels and then the second or the third one was venture what year was that angel round that was uh the angel the first angel was when we started out actually three weeks after and then and then second one was in is 2018 18 okay and and then in 19 in the beginning of 19 we had the second angel round and then in the beginning of 20 we had the venture round and can you break those down for me the first angel round in 2018 how much was that for uh that was about 200 000 and what were you guys raising on i mean a lot for a lot of sas founders the first raise is the hardest with your angels i mean you have a deck you're trying to convince your family your friends angels put money in what were you guys selling at that point what was the vision well i have sold another company just a year before i started the raffle and uh in that year i actually just prepared everything so i prepared the business plan i prepared investors i prepared the team so everything was sort of set when we started out in august or in july so so in that sense it wasn't i mean yeah we i just sold the vision and um now i said we didn't have any clients of course we didn't have any product basically we didn't have anything so but we had the idea and we had the right team i guess so that was what if you looked at your customers today on average what are they paying you per month to use raffle uh an average uh per year i would rather say that's a 35 000 usd okay so you're very much an enterprise sales motion yeah and with with that sort of motion how do you you just mentioned you're just now building out your first five folks on the sales team how do you determine what to put their quota at to sell thirty five thousand dollar year plans yeah well we just have a quota today that says one client a month and then that's going up to two clients a month uh within you know after three months and then after six months it's three clients a month so it's it's pretty straightforward in that sense okay but you don't have any sales reps that are that old that are closing four new thirty five thousand dollar your accounts yet right no well um no no not yet um i'm the one setting you well we do have one actually that's just sold last month but um yeah but i'm the one selling the most and right now still so is it fair to say if you expect new sales people to close one new 35 000 account annually each month over a 12-month period that annual quote is about 420 000 about half half a million dollars mm-hmm and one of the things that people always struggle with when they hire their first sales person is what the ratio of the quota to the full on target earnings should be what ratio have you used i'm not sure we have used any to be honest uh i was just uh we've just been very pragmatic in that sense and just sort of just sort of looked at what what is actually realistic what is possible so if you hired me suzanne and i hit your quota over the first year what would i make probably base plus commission total uh you'll probably make you probably make about 150 000 usd okay so my full ot for your sales team your first sales pair should be 150 000 base plus commission what percent of the 150 is commission uh it's about half okay got it so that's fair about 50 50. and your ratios work if my quota is half a million and my full on time earnings is 150 grand that's a 3 4x multiple those numbers works a lot of time a lot of time it doesn't work so that i'm going to see if you can scale the sales team let's go back to the second race so you raised 200 000 to get things going get your first sales how much was the second angel race for uh that was about double the first one okay so 400 and then the rest one was actually venture yeah and then in this year in 2020 you did what a three uh 2.9 million dollar round yeah okay walk me through some of the history here so you sell your first company into or sell a company in 2017 you then go to plan you start planning and blueprinting raffle ai walk me through getting your first customer who was it where'd you get them well actually we started out piloting uh with two customers uh we got them because they were sitting in the same um in the same space as we were uh they had uh some incubators from larger companies we were in sort of you know an environment where there were lots of smaller and bigger corporations with incubators and uh those two first clients we actually got from that what was the incubator space and where is it in the world it was um it was called pier 47 it was just in copenhagen um but um yeah so um yeah it's a larger company yeah okay so you were in uh pier 47 which is an incubation space in copenhagen because you were there you had two corporate clients that you piloted this with did both them convert into a paid account after the pilot mm-hmm that's right yeah well uh yes yes and no because they're not they're not today a client but they did at that at that point they actually paid for for that particular product but we went out of that product space and made another product afterwards we uh we launched our first product uh last summer in oh sorry 2019 and then the second Currently serving 7 customers product we launched in february this year this year so which is the product you launched this year that was the autopilot which is the the one funding the customers and taking first line and zero line support uh off the back of customer service employees so that you know you can have self-service on your on your website basically it's like it's like a customer comes to your website they ask a question in the chat you now using autopilot from raffle can suggest some answers and try and avoid them sending in an email ticket or phone call exactly i see and so how many customers do not have today uh we have seven customers today seven but they're all enterprise so it's high touches yes can i take that those seven customers our plan is to get 20 this year yeah sorry i think the internet connection broke you're fine i was just saying can i take those seven customers times 35 000 a Monthly recurring revenue year you're doing about a quarter million per year in terms of run rate yep yeah and how do you go from 7 to 20 this year uh well we have uh we have had a lot of pipeline that we just need to close off now actually so it's um that's basically more or less me and another girl that's going to close those and then the rest of the sales people are going to to close from first of january that's that's our plan anyway so and are obviously just raised from traditional venture capitalists 2.9 million dollars i'm unfamiliar with how dilutive series a rounds are in copenhagen like i'm in the united states you don't have to tell me how much equity you gave up but generally speaking in a series a how much are you giving up for the amount that you raised in copenhagen uh we have given up almost 50 percent okay so across your angels and your series a folks you've sold about 50 of the company yeah and you and your professor co-founder each still own 25 percent yeah a little little more 27 percent each year okay so okay each to co-founders and how does it make you feel does that feel fair well i don't uh i've actually been thinking about that since you since you last talked but i don't um i'm not in it for the money in particular of course that's nice and everything but i'm actually more in it to see a product that i invented on a piece of paper actually gets live and gets out there and i think this is amazing because we're going to we're going global with this now and we have the opportunity to go global because we have venture so we wouldn't have had that opportunity uh the the the other company i saw was um was bootstrapped so i owned 50 of that with my co-founder he always owned 50 of that we were 30 employees when we sold it we got 50 50 each it was a pure cash sale and that was beautiful but um but this is just completely different it took a long time to build that company because it was bootstrapped so now i wanted to do something you know it was venture backed goes quickly we can go global quickly and sort of that's that's just the condition suzanne how much did you sell that company for in 2017 i can't say i'm sorry can you can you share with me what you grew it to in terms of revenue before you sold uh yes it was uh around 3 million u.s okay so you have experience obviously doing this you did it the hard way in boots trapping now the question is can you take raffle and go from a quarter million run rate to three four five ten million dollar run rate um how are you how are you managing burn how are you managing burn today you've raised 2.9 million you're scaling your team how much burn are you comfortable with each month well we're burning uh i actually just uh she has the numbers i can tell by how she's looking at her yeah i do i do have my numbers i have 160 000 u.s and burn each month total burn or net burn uh that's total burn okay got it so add back about 20 000 in revenue your net burns about 140 000 a month yeah and based off how much cash you still have on the bank what you guys have 10 months around 11 months of runway uh 12. 12 months of runway got it that would mean you guys have what about was that 1.7 million in the bank something like that yes we are and we are going for an a round in september next year how much do you have around well we would we i would like to to raise about 10 million dollars but um let's see and and what do you think you have to get revenue to in order to raise 10 million at a valuation you want well um i would like to go to around 1.5 million dollars uh annual recurring uh and i think that's possible um in october next year okay that's great and when you look at what it's costing you right now to get a new 35 000 a year contract what's your best guess at cac currently um i haven't actually calculated that are you spending any money on ads uh yes we are but we are still figuring out the metrics yeah we're just we're just testing a lot of stuff um you know retargeting campaigns and all sorts of different campaigns but we don't have the metrics ready yet so we're planning to have the metrics ready about february next year and then we'll be able to say a lot more it's it's really it's really difficult to say anything right now at this early stage of course we're trying to figure it out did you publish suzanne i think people are going to want to learn how to raise like you raised 2.9 million recently did you publish your slide deck anywhere or no no we didn't are you opposed to publishing it in the show notes of this of this interview yes yes of course we can we can do that yeah i think people will learn a lot from that yeah all right okay let's let's wrap up suzanne here with the famous five for raffle ai number one what's your favorite business book uh that's uh think slowly think i i don't remember doing it fast and slow yeah exactly exactly that one man yeah number number two is there a ceo you're following or studying no number three what's your favorite online tool suzanne for growing raffle besides raffle well i wouldn't be the right one to say that actually because i don't have a clue it's my cco what do you use mostly online use slack trello something else i use i lose linkedin but that's old-fashioned i guess so uh yeah no linkedin's hip and cool still they just did a nice redesign right i use it number four suzanne how many hours of sleep do you get every night i get seven hours i think that's great and what's your situation married single kiddos um married or um well would you say fiance's fair enough anything and kids yeah how many kids two two when's the wedding when's the wedding date that's exciting no no i have been married before and those are my kids from my first marriage yeah but now you're engaged again right you said yeah yeah yeah i am but uh but it's not yeah i don't know no marriage is always sort of different you just sort of stay in sort of a nice happy fiance mode for a couple of years right exactly yeah okay that's great suzanne and can i ask how old you are i'm 48. 48. take us home here last question what's something you wish you knew when you were 20 um [Music] that's not that difficult guys there you have it she sold her first company after bootstrapping it and growing up to about 3 million bucks in revenue use that cash to plow it into raffle ai which is playing in the customer support automation space they've just passed seven enterprise accounts paying 35 000 annually on average so about a quarter million in terms of run rate they've raised 2.9 million dollars to do it they sold about 50 percent of the company to do it hoping to grow revenue to about 1.5 million in ar and q1 q2 q3 next year and then go out and do a series b raise of around 10 million bucks they're burning 140 000 in net burn per month right now with 1.8 million dollars in the bank so plenty of runway to figure it out as they scale their team up to 23 including 18 engineers suzanne thanks for taking us to the top 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 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 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