Serviceform Revenue, Valuation & Funding (2024)

hey folks my guest today is arante Gomez she is she was born and raised in Sri Lanka now based in Europe she moved to Melbourne Australia for University then ran and sold a mobile coffee catering business she found another business problem and built service form she's now grown up to a team of 52 people and raised 3 million USD a Harry Potter fan she builds Legos for fun and took up golf reselling again now building serviceform.com which helps you get rid of bad customer experiences around here are you ready to take us to the top Yes sounds good very exciting all right what does that mean tell us an example of a customer using you and how you help them get rid of bad customer experiences okay a good question so um with whatever we have done so far Nathan it's been that anything that we've offered is being around website conversion so that has been basically the main focus and something very important to highlight is our customer audience has always been the traditional business so I don't know how much you know of the backstory of how service form was born but you know the idea was that we were working with the traditional businesses in the hospitality space and we saw what year was this when did you launch this was in we actually started in early 2018. okay so before that we had a little a coffee catering business in in Melbourne then that's how service form was born so when that happened we were working with hospitality partners and you know these people are very good at what they were doing very good at events running a catering business but knew very little about technology or even what's out there available in the market so our customer audience is basically the traditional business so if you think someone like so it is your coffee shop it's your your coffee shop your mobile coffee caterer coming was it would be a great customer for service form exactly perfect that's amazing and then help me understand how you price right so are you selling 10 bucks a month 100 bucks and what's your average customer paying per month right okay so with even though we are SAS we are more service model Source right and the fact that we're working with the more a traditional business around real estate Automotive anything in the service industry uh so we do have the typical assassin monthly subscription so our pricing starts from about 250 euros upwards a month yes okay what's the average customer pay would you say that's about 300. okay and your biggest customer pays how much yes I was getting to that uh I didn't pay about almost four thousand uh per month per month yes and why do they pay so much more you're giving them more leads or getting more product they have more seats why do they pay so much so it's a mix of a lot of things it's a mix of so because when we start working them it's because we have a whole sort of conversion tools that we use and right now we've actually gone out of the space we've gone into management meeting scheduling all of that so when we start working with them it's always to do with conversion and with a few tools that you know can actually help them get started but then more time goes on we add in the other tools depending on the size of the business and then comes in more seats because we have a live chat so a software we have our uh a meeting scheduling you know seats um so all of that and then also it depends a lot on the size of the business very cool I love this okay so uh that's helpful you launched in 2018 your your your company was your first customer sort of your mobile Coffee Company how many customers are you serving now today so right now a bit over 400 around 420ish okay and then if you look at it in in sense of like because we work with a lot of Partners other tools alive in about maybe over 2500 websites that's okay so one of your go to markets is through Partners definitely okay let's talk about that in a second if we take your 420 customers though at the average price point of 300 a month that would put you at about 120 000 a month right now in revenue is that about right actually it's more it's about 150 000 I mean mrr now so your RP is a little bit higher then yes this is great 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 the 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 evaluation this year now the secret valuation is there's many different ways to value a SAS business so the reason you're going to see three or four different evaluations inside of your founder path dashboard this is all free by the way is because depending on who's doing the buying of your SAS company you're going to get a different valuation a VC is going to pay a different valuation private Equity Firm is different if you're going to 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 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 raise they sold 22 percent of 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 valuation than what you can get now inside of founder path and we're thrilled to bring it to you all right we're gonna 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 valuations 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 okay so if you're doing 150 000 a month today in Revenue help us understand growth around the what were you doing exactly one year ago so I think last year I remember when we ended because at that point was when we arranged our big funding round a big seed route of uh 2.2 million so at that point I think we were about 65 000 in mrr so I think growth wise it's now been 8.5 to 9 month on month that's incredible so 65 000 a month a year ago up to 150 000 a month today you mentioned a seed round so you closed that last year it's 2.2 million you said it was early this year so we started Commerce like the whole discussion late last year and we closed it early this year interesting and and um 2.2 million preceded around I mean most folks are selling 15 to 20 to their business in pre-seed routes were you in that same range um no we are much more than that in terms of the uh wait I don't understand the question yeah so someone give you a check for 2.2 million bucks most pre-seed rounds that Equity investor is going to get 15 to 20 of the business yes absolutely it's around that you were in that same range okay very good so we could take 2.2 million then times like six or seven you raised it like between a 10 and 15 million multiple valuation valuation not multiple evaluation you're you're hitting figures all right very cool why did you I mean look dilution's dilution right you just give up 20 of your business so why'd you need to give up that amount I mean why can't you build this and bootstrap it well multiple things it's it also comes down to like let's say because me and you are my co-founder it's just the two of us who started and now we are almost team of 16 based in both countries six zero six zero wow I know right uh so we started in Finland because he Spanish we were operating you know the coffee business in Melbourne but then we realized if you really wanted to do business globally it would make sense maybe if he moved ourselves into Europe so he's finished and that's when you know we opened up the actual business in Finland but then we were operating in the finished market and if you have operated in the finished Market you would know a lot of companies don't tend to go outside so like everything that we were doing everything we were learning was very much towards the market and we and we realized it was time for us to step out and then that's we thought hey it might be nice to bring in people you know who have done this before get new ideas move into different markets so with that in mind and then and then we really wanted to push and grow the business so then of course we thought investment would be the way to go and then that's been a Swedish we say uh a company backing Minds came on board yeah 60 people that's a so for 1.8 million in Revenue that's a lot of employees it's taking you a lot of humans to generate not a lot of Revenue 30 000 Revenue per employee why do you need so many people good questions so with us being sauce and working in the traditional space you know because right now I'm sitting at a weework in London and if you go and ask anyone here about what a CRM is a a conversion software they'll all know what it is but you go out and speak to more children the businesses out there they don't know right so working with that Target Market we have seen that we just can't can't handle the tools to them and tell them great you pay us a month and subscription fee now you can go figure it out and here's your health documentation it just doesn't work that way we've tried it so we have a whole customer success team in place to you know make them successful so with that we have many humans on board how many on customer success so I think we have about 15 uh where are they based they're based in Finland Sweden Spain and Sri Lanka okay I mean but how do you how do you pay so I mean what I'm looking for here is are you paying some of these 60 employees like really low amounts of money that's the only way that you could generate Revenue at 30 I mean profit when you're doing 30 000 Revenue per employee yes but I I also want to touch on one more thing and the other reason why we have too many people is because of entire business so far I would say maybe about 95 of it is outbound sales driven so that's where you know more people come in sales and we have about 25 percent sales team do they all have a quota actually 20. do they all have a quota yes we do um but the like the fact that the code writes around uh about six deals a month per person which is how much revenue so it ranges it'll be about thousand five hundred in mrr okay so you're asking them a sales rep in a year to add 1500 of new mrr per month or that would be 18 000 of new MRI per year right times 12 is about 216 000 of new AR per rep per year how do you pay a rep if they're only bringing in 200 Grand of new ARR so we structure a lot of it through um so we of course we have the a base fee and then we structure most of it through a performance fee so if you were hiring me what would my base fee be ah it depends I'll have to interview you and you can let's say let's say I'm like I'm a junior I'm just getting into sales like what's the lowest my base could potentially be if I'm working for you so it'll be about I would say 2.5 per month per month okay so 2500 per month and then if I hit my quota Target how much could I earn over the year um let's see so our commission model is very much structured towards mrr right so with every uh deal brought in we do 2x in mrr does that make sense no so if I close 100 a month deal how much commission do I get on that you make 200. what if the customer that I bring insurance after one month so that's other thing so so because we do um as a service model we don't we don't charge them also I mean we don't do any separate setup fees but what we do is on a minimum base we charge them either three months six months or 12 months so then you know guarantee that they pay up for three months that makes a lot of sense okay and is this why you've been able to more than double your Revenue year over year it's the sales motion yes it is and and something that we've been really trying to figure out uh this year uh which we started is the marketing side the inbound side but we all know how it takes time finding the right message uh that definitely takes time has worked really well for us and then we are focusing we have what we're basically doubling down on what's working for us yeah that makes a lot of sense now when you launch the company imagine a co-founder did you guys split 50 50 at the start yes even Steven right down the middle even Steven and fun fact we also married no ah that makes it a little easier okay so the only other people on your Capital was besides you and your spouse is the pre-seed investors and maybe some employees with the ESOP pool at the beginning what did they put in how much total uh so that's in total we have about 2.5 million race okay so the Angels put in 300 000 back in 2018. yeah so it didn't come all at once so it was like you know uh bits and pieces because now they have been on board with us for you know ever since we started fair fair okay but you and your your spouse still own together what about like 75 to 80 of the business something like that I think it's about 65 yeah 65 okay that's not bad very cool all right what do you want to grow Revenue to with this new round of funding so you spend the 122.2 million what do you hope revenue is at when you run out of that money okay so let's go with yes so by the end of this year we're estimating uh to hit about 170 000 in Mr and that's about maybe 1.5 to 1.6 million in Revenue yeah and next year what we're very excited about is getting that up to 500 000 in mrr and this now our main markets that we operating has been in Finland um Spain and Sweden and and Finland has been the market that's been doing well so far so we want to get a Sweden and and Spain up to that same level and then we have plans to expand into a few other markets well aranti we're certainly rooting for you this is a great story you guys got a lot of Revenue here before you did that 2.2 million around so hope you come on in a year and give us an update but in the meantime let's wrap up with the famous five number one what's your favorite Business book Business book um how to influence uh friends no I can't remember what's called How to Win Friends and Influence People how to influence and Influence People yes all right number two is there a CEO you're following or studying uh I've always been a huge fan of Richard Branson um I think I would give my entire entrepreneurship career to him yeah I love that number three what's your favorite online tool for building service form uh Google Chat that's that's one main tool that it's been very important number four how many hours of sleep do you get every night uh depends five six five okay situation married well you're we already know you're married any kids no no kids okay and do you mind me asking how old you are um 29 29 last question something you wish you knew when you were 20. something original I was 20. hmm well that I would live in the U.S because I've always loved New York and I did it guys there you have it serviceforum.com launched in 2018 after she sold her mobile coffee delivery company service form helps small companies and smbs like her Coffee Company get more leads faster they've got 420 customers today that pay on average 300 bucks a month doing 150 000 a month in Revenue up from 65 000 a month just a year ago so really nice growth she just closed her pre-seed 2.2 million Roundup between a 10 and 15 million evaluation her and her co-founder which also happens to be her spouse still own over 65 of the business we're certainly rooting for them arante thank you for taking us to the top thank you Nathan one more thing before you go we have a brand new show every Thursday at 1pm 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 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