Sastrify Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Sven Lackinger. He's the seat cofounder at sastrify, the leading procurement service for SaaS subscriptions. Before the company, he had already founded the parking startup EvoPark, which was acquired in 2017. He holds a degree from WHO and worked for Goldman Sachs, the BCG, and Bain. Then you're ready to take us to the top? [00:17] >> Yeah. Of course. Thanks for having me, Nathan. [00:19] So what? You guys had too many subscriptions to manage at EvoPark, and you said my next company, I'm gonna solve this problem. Is that how it works? [00:25] >> Yeah. That's pretty much exactly what got us started. So my co founder is the tech guy. I'm the finance guy. That's, I guess, exactly where we had the link. And then once our LaPaz company got acquired, even our acquirer, which was a much larger company, had the same issues. So that's kind of [00:40] >> like what got us started last year. [00:41] Tell me real quickly. I'll just close-up the EvoPark story. Did you bootstrap that business before you exited or no? [00:47] >> No. We were the first ever startup that Porsche, the car manufacturer, invested in. So there was a lot of corporate VC, three angel rounds, and then we got acquired back in 2018 with one of the leading parking manufacturers. They basically handled everything that you can imagine that's in the car park, so payment machines, stuff like that, And we were the logical addition to that. [01:12] And so how much total did you raise that business? [01:15] >> We raised single digit million. Back in the day, it was different, smaller agents around and just not more than 2 or 3,000,000 in total. [01:24] Okay. [01:25] >> Quite a quite a easy, easy cast there. [01:27] And how many years? Like, when did you launch that business before you sold it? [01:31] >> We launched it back in 2014. It took us about four years till exit. [01:38] And And what did you end up selling the business for? [01:42] >> That I can't tell, unfortunately. [01:46] Was it enough money for you to take some to put into Sastrify? [01:50] >> Yeah. Everybody took money off the table, and I think it also made a lot of sense for acquirer. [01:56] >> But, it was I I always like to say it was no Facebook. [02:00] So that's obviously what we [02:01] >> are what we're rather up to now. [02:04] But you sold for more than $3,000,000 cash up front. Otherwise, everyone you'd be stuck. Okay, great. So tell us about that. You bring your cofound, you bring your same team from there now into this new business. Did you guys split equity fifty fifty in sastrify or you did something weird? [02:20] No, we actually I'm not sure if it's weird. [02:22] >> So we were like four guys at EvoPark. So all of the other two got 5% each on sastrify. And we did the same thing with their new business. So we kind of cross invested each five percent at the beginning. So the original cap table was basically 45, 45 and then five twice for the other guys. [02:42] Okay. Got it. So original at sastrify is you 45, your co founder 45 and then the other two ten. [02:48] >> Exactly. Yeah. [02:49] Okay. Very cool. And then tell us. Okay. So tell us about the business. Right? So who are your customers? Who are you helping here? [02:55] >> We basically start with any tech company that's above 100 people. That's more or less what we look for, so 100 to a couple thousand people. Really, anybody in that tech space, obviously, as we're based in Germany, most of our customers are around Europe right now, Singapore and some other Asian countries. And now we're basically building that towards the rest of the world. [03:16] And what's the business model? What are these companies paying you on average per month to use the tech? [03:21] >> So our ACVs are around like 25, more or less. We have a basic SaaS model that's tiered upon the total spend of SaaS they have. Basically, what we do is we help them end to end on the process in terms of finding the right solutions, comparing them, getting the right prices for them, actually having a structured buying process, so how to bring software into the enterprise, and then, in the end, also managing the contracts over the [03:50] >> long term. Because, I think, for SAS, the real interesting part is you also like, what do I have when I switch up for renewal? So we like to have a long term perspective on that. That's kind of like how we You can think of us as a virtual procurement department for SaaS. [04:06] And so is that flat fee $200,000 per year no matter how much you save them on tools? [04:11] >> Yeah. We found is I mean, it's obviously quite a young company, so about twelve months old. Nothing [04:18] So you launched 2020? [04:20] >> Yeah. So we launched like I think we kicked off the I think we actually launched February this year, more or less. But we hired a team around, like, November last year. So that's kind of like when we when we got started with the whole thing. [04:34] And tell me about the first customer you brought on. [04:38] >> Yeah. The first customer is actually right in the sweet spot for our customers right now. So it's around 300, 400 people by now. [04:49] >> Can you name them, Sven? [04:50] Are they comfortable being public? [04:51] >> No, that's good. Was AmBoss, a company from Berlin. They do a very famous training app for medicine students. [05:01] >> Crazy month. Really cool company. Basically, we started with them figuring out how they buy software and how to optimize that. [05:10] And you keep mentioning number of team members, but did you price against number of team members or the total amount of total software spend in 2020? [05:18] >> Yeah, we priced against total software spend. But then again, you can't pinpoint it down to the euro or the dollar. That's why we always try to give our Because if we ask prospects, what's your total software spend? Then the typical answer is I have no idea. And if I ask, Okay, how many people are you? Then it's much easier to categorize. [05:41] Don't name this customer, obviously, but today, what's your highest ACV customer? Like, what's your highest plan? [05:47] >> Around 60 ks. 60 ks. [05:49] Okay. And so for them, you're doing everything? Full suite? How much do they spend on software annually? [05:55] >> Millions. Millions. [05:59] >> Again, we found is that it's too cheap, that we are too cheap still, which is a good thing because typically, within the first couple weeks, actually, [06:12] >> we saved them three, four times of that. [06:15] Okay. So AmBoss was your first company. You've got large enterprise accounts and $60,000 ACVs already. How many total customers are you serving today? [06:22] >> Around 70. A bit more than that. [06:25] >> Seven zero. Yeah. [06:26] Seven zero. [06:27] >> So it's been about a year for us. [06:29] Yeah. I was gonna say this is fairly significant. I mean, can I take 70 times $2,000 a month on average? I mean, that's what? $140,000 a month in revenue? [06:35] >> Pretty much that. Yeah. [06:36] Oh, wow. And what were you exactly a year ago? Do you have nothing? [06:40] >> Yep. That that's pretty much it. So we had, like, one or two test customers, but we really kicked it off like from January, February this year. [06:48] Okay. [06:49] So, I mean, I don't have to tell you this. You're from this space. I mean, that's super impressive growth. Did you do this bootstrap or did you raise? [06:54] >> No, we raised a pre seat in November last year when we hired the team. And then we raised the seed round three months ago of about $7,000,000 to now basically just grow all over Europe. That's kind of like the next step. [07:12] Tell me real quick about sort of why you chose to do this way. So the pre seed round last year, how much is that for? [07:18] >> $1,300,000 [07:20] And was that sort of on pretty standard terms, safe 5,000,000 cap, that sort of deal? [07:24] >> Yeah. Yeah. So we I think we had, like we do the price round of a bit more than should should be, like, $6,000,000. [07:32] But you priced it right on the start? [07:33] >> Yeah. Yeah. We priced it right on the start. [07:35] Well, why did you say that? [07:36] >> Yeah, there's some German applications to that in terms of subsidies and whatever you get. So there's like It wasn't too big of a difference. And as we know, most of the investors we onboarded were actually investors from EvoPark as well because we just love to work with them. So it was also like, yeah, super easy structures and everything already in place. [07:57] Sven, you're young. We backed out your first business. You must let us write a check-in your next business. [08:02] >> Yeah. Was everybody was quite keen on on backing that as well. [08:06] Okay. So 6,000,000 valuation last year and then the 7,000,000 you just raised, what valuation was that at? [08:11] >> Yeah. About 27 pre something like that. [08:14] What was that process like? I mean, would you change anything? Did it feel like a fair valuation? [08:19] >> I think it was a decent one. We didn't push it too much. We were rather looking for the right partner. And one thing that we also did, which was not smart, was we raised in July, [08:32] >> which I cannot recommend to anyone because apparently people love to do holidays in August. So that was the only drawback. [08:41] But in the end, we [08:42] >> ended up with a partner that we won with HP from Berlin and Munich. And yeah, they're great, like, really great supportive for us. [08:52] So you sold, I guess, the pre seed, what in the pre seed you sold, do I'm doing the math? 20%? Basically, you sold 20%. [08:58] >> Yeah, it should. Yeah. [08:59] It should be a bit less than that. I think [09:02] >> that was like 17% each. [09:04] Okay. Okay. But now if you look at your cap table, investors own something like 35, 40%? [09:07] >> Yeah. [09:08] Something like that. Okay. Got it. When do you guys start thinking you know, one of the questions I get from early stage founders, especially when they're going through raise process, usually that seed round. Those investors are gonna ask you to set up an ESOP pool, like some sort of equity sharing plan for employees. Did you see that requirement for [09:23] you? If so, how large did you make that? [09:25] >> So we made one with 15% of the original cap table [09:30] >> at the beginning, which we also found and which we're changing now. For some reason, it's very typical in Germany that you set it up that the original VSOB goes only towards the founder proceeds, which is obviously not too great for the founder side. It gives you some additional dilution there. For us, was super important to have the initial team incentivized, obviously, so we were fine with that. But we're also changing it now that we're going through [09:59] >> the rounds so everybody covers it, more or less. [10:03] Interesting. And was the $7,000,000 of that all going on to the balance sheet, or did you take any secondary there? [10:08] >> No, that was all going on the balance sheet. [10:10] Did you ask for a secondary? [10:14] >> Not at that round. But for us, it's not like there's not going to be a secondary for the next couple of rounds, I guess. Let's see about that. But for us, right now, we believe very strongly in it. And we don't need the money for now. So I think it's more focused on the business. [10:32] Sven, how many folks are on the team today? [10:35] >> I think in total, about 53 right now. 50 plus or minus. [10:39] Okay. And how many engineers? [10:43] >> About eight, more or less. [10:46] I was gonna say, this isn't really an engineering heavy problem. It's more like BDRs or like you need business development people to negotiate prices and stuff. [10:55] >> Yeah, we're trying to get rid of that manual part. So the end product should be a platform that can do everything automatically. So we're now heavily investing in that product and engineering piece. But, obviously, the really nice part about the business is that you can theoretically do it with an Excel sheet. It doesn't scale, but if you're smart enough and you just look at enough contracts and processes, you can really do it as a one man [11:24] >> show. And that's what got us started, because transforming that into a platform and really automating it will then basically give you huge leverage on the whole process. I guess the end process for us is really building that one platform where you can handle it like your whole SaaS stack on. [11:40] Vendor raised 60,000,000 on a 600,000,000 valuation earlier in March. Does that feel like a high valuation to you? [11:49] >> Well, it's from what I know, it's about 100x on the ARR. So I guess that's quite what we see everywhere at the moment. I'm not that surprised. [11:59] And frankly, they're doing a really great job there. So you have them in March at somewhere around $6,000,000 in revenue. [12:07] >> Yeah. That's at least what I would assume. Yeah. [12:10] Interesting. Okay. Talk to me. You said you feel like your pricing is too cheap. Right? So so, you know, pricing changes early on. Founders always do it later than they should. Right? So, like, why haven't you changed pricing yet? [12:22] >> We're actually going to do that pretty soon. [12:27] >> Obviously, you're so stuck into operational processes. Why are we too cheap? Just because our average ROI is now six times customers would probably already be happy with four times. Let's put it that way. And now that we have more trust and more logos and huge companies that we work with, I think it's totally fair that our value is somehow proven. [12:49] Are you combining your leverage? In other words Okay, let's make this up. Your professional plan, right? There's a dedicated buyer there. Is that buyer calling up Salesforce and going, Listen, we have 10 sastrify customers that pay you a million dollars per year. You need to give us a 10% discount and then you distribute that discount across those 10 customers you represent that need a Salesforce license? [13:12] >> Yeah, we actually don't do that on bulk level because we see that there's actually more of what we do comes from the efficiency of just doing it more often than once. Typically, if you buy Salesforce in a company, you do it once. Maybe you switch companies, you do it twice. But our team does it every day, so we obviously also know the Salesforce people and they just send over what's already expected to be a good contract. [13:35] >> So it happens automatically, but there's no setup where we just bundle contracts and then distribute to all the customers. [13:43] So you work with Blacklane. Why can't Blacklane just ping Salesforce directly and ask for their best option? Why is Salesforce gonna give you a better offer than they would the customers directly? [13:52] >> I think the big one here is that, for our customers, it's not only about the price, it's also about the process. So basically, the whole reaching out to them, getting demos, negotiating three rounds, as opposed to just telling us, Hey, Sastrify, we need Salesforce. And then we come back with an already basically done offer at a good price at a decent rate. [14:14] I see. Talk to me more about your sales team. How many quota carrying reps do you have? [14:18] >> We just did a split of SDRs and AEs, in total we have about 10 now, 11, up from three, eight weeks ago. What's the [14:29] split of the 11 between AEs and SDRs? [14:32] >> Right now, it's six SDRs and five AEs. We're a bit lagging behind on the SDR side. [14:41] What are the SDRs responsible for? How do you incent them? [14:44] >> Basically, it's getting demos in. That's the reaching out to people, scheduling first demos. [14:50] How many demos should they close every month so they don't fire them? [14:56] >> We just hired them. So for us, it's really now figuring out what they can deliver. Right. So we're ramping it up, I think, to two per week or something right now. But that's like the Yeah, it's still like in the very early stages there. [15:10] Okay. And then those AEs, what do you expect them to be closing per month, you know, once they're fully ramped? [15:16] >> So once they're fully ramped, it's also something like one to two customers a month, which gives you like a total of about 500 ks ARR per year. So [15:28] each year, if those AEs are on target, their quota is to close 500 ks in ARR. [15:35] >> Yeah. Plus minus. Obviously, differentiations in terms of seniority and what they can do and what they can't. Of course. Yeah. [15:42] That's like, I mean, we've not been around for a full year, so it's No, it's impressive. [15:46] >> A lot of, like, finding out what works and what doesn't. [15:50] It's impressive stuff, man. Let's wrap up here with the famous five. [15:54] >> Number one favorite book. [15:56] >> I have to say, The 4-Hour Workweek, it was really transforming. [16:00] Number two: Is there a CEO you're following or studying? [16:06] >> The only guy I'm really following on that is actually Arnold Schwarzenegger, But that's that's a different that's a different story. [16:12] Number three, what's your favorite online tool for building sastrify? [16:17] >> I guess I have to say donut. [16:19] >> I love donut calls with my my team. [16:21] Number four, how many hours of sleep do you get every night? [16:25] >> Try to make it seven. [16:27] Okay. Very cool. And situation married, single kids? [16:31] >> Girlfriend and living together. Not [16:34] >> married. No kids. [16:35] How old are you? [16:36] >> 31. 31. [16:37] Last question. [16:38] >> Something you wish you knew when you were 20. [16:42] >> I guess that you don't have to go to business school to become an entrepreneur. [16:51] Guys, you have it. Sastrify launched, just call it like eleven months ago. They went from nothing to $140,000 a month in revenue in that time frame, serving 70 customers, helping them buy sastrify more effectively. They handle the whole demo process, get the quote process, negotiate the contract. They raised 1,300,000 on a 6,000,000 valuation last year to get going, and then 7,000,000 on a 34 post just recently this year as they scale 53 on the team as [17:12] Sven scales there in Europe. Sven, thanks for taking us to the top. [17:15] >> Likewise. It was good to be here. [17:19] One more thing before you go. We have a brand new show every Thursday at 1PM Central. It's called Shark Tank for SaaS. 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 1PM [17:44] 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 SaaS world, whether it's an acquisition, a big [18:06] fundraise, a big sale, a big profitability statement or 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 SaaS 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 [18:28] for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty 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 [18:47] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.