Sumsub Revenue, Valuation & Funding (2024)

hey folks my guest today is vachassov giulio def he's a cto and co-founder of some sub he's a guy has over 20 years of it experience and a phd in computer science he's a product oriented cto and again the co-founder of sum sub which is aml and kyc tool okay watch yourself you ready to take it to the top yeah sure let's do it all right so for folks not familiar with banking and finance what is aml and kyc um basically you can say ml is anti-money laundering right and kyc stands for know your customer and basically it's kind of identity verification so you help companies to onboard bonus users as many as possible as quickly as possible but at the same time keeping frosters at bay right and of course if company is regulated then of course we're keeping uh we help keeping this company staying compliant now are our banks your main customer or who's your main customer main customers yeah we do have banks fintech actually crypto quite a bit uh actually car sharings marketplace shared economies basically everywhere kyc's needed nowadays and so how what did some of these customers pay you per month to use the technology how much yeah how much they pay you yeah we have about like 40 customers that we consider top uh tier one customers that are paying more than 100 000 a year right but some of them paying over 1 million actually this is fascinating okay so this is these are obviously huge so just be clear your largest customers acv is high they pay you how much two million a year a million a year even more maybe maybe five seven okay and so someone one of these customers paying you five to seven million dollars per year how many i imagine you bill based off number of verifications right yeah yeah it's a little bit more complicated than that because we charge for sub-service so we say because some customers need one service some customers like construct the flow from different parts so we kind of have sub services and we build per sub service so how many customers you ask well no i guess the question yeah i guess yeah how many customers that's a good thing um over 1 000 customers but 40 tier 1 customers paying more than 100 000 a year okay well what is the that's great to understand your tier one folks what what does the average customer pay you per year more like 10k or 5k a year yeah something like 10 to 20 i would say okay interesting and so um i guess put this all on a timeline for me when did you launch the business if you go to our website it says 2015 but the story actually starts a little bit before then in 2012 when i got mad like met co-founders and we were doing actually anti-photoshop software to determine what or photoshop so basically you detect which parts of an image were edited right but then at some point you are kim kardashian's worst worst nightmare yeah so yeah but at some point we realized that uh it's only part of a story because our customers potential customers they don't care about whether the image was modified or not they care whether they can trust the end user and then we pivoted in 2012 or 15 and that's when things started to look good for us okay interesting so i guess did the business almost like die before you pivoted what made you want to pivot yeah because yeah there were hard times actually working like let's say without salaries and like with our own savings you were working next three years between 2012 and 2015 with no salary no no there were good times so we also raised like some engine cut for like half a million something but then there were hard times when there was like one year uh of in you know just working but uh i was actually working part time was my pet project back back in the day it was a little bit later when i officially joined samsung 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 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 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 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 valuations than what you can get now inside of founder path 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 when did you join and like quit your job and go all in on some sub what year um 2018 okay but before i was actually working at night so i mean you know this entrepreneurial life um yeah before i was more like consultant and like bringing my experience to the guys so that they can build on substantial business but actually i can explain where like why we almost died because i think it was about a because of the expectation mismatch our customers actually they wanted our product but they expected magic where you can detect like every modification even if the image was sent over whatsapp or you saved multiple times right but the life is more complicated than that so that's that's why we had to review it and we don't regret because obviously it looks good so far so what is the i guess you say guys and we had to pivot all that how many co-founders are there uh overall four actually the other three are brothers two of them twins which makes a really fun case for wild face matching algorithms that's funny okay so there are three brothers would you say that they were like struggling until you came in in 2018 i mean were you coming in to help save the business um now that we were struggling before 2015 when we pivoted then we again we struggle because like we're trying to find the right compromise between you know because some customers also wanted magic like super complicated solution but you kind of built complicated solution overnight so like it took us a while but at the same time i think it was a good thing that our first customers were from car sharing industry and they were super picky about like the rules and amount of documents so and that's why from the let's say day one our kyc system was built to be extensible like very generic so that we don't spend let's say developer resources but rather offload it to uh technical support and things like that but when you join full-time in 2018 i mean having an equity conversation is tricky it's like one versus three because they're all brothers right do you guys just put everything equally or no uh initially no but then like they probably saw my impact and then somehow they offered me just like i didn't have to negotiate so it was just split equal enough okay so it's basic you know outside of other investors and all that and employee option pools you each basically own a fourth of the business something like that yeah exactly okay very cool so let's okay so the pivot ha so 2012 is launch date it's a side project for you you're helping the team through 2015 photoshop software they pivot in 2015 to more like aml kyc identity verification you get excited join full-time 2018 prove your worth get more equity uh and grow the business now when did you start was 2018 the year where you start gotting getting into aml and kyc um no even before that because i was reading about that and of course like i'm still kind of consulting and helping guys but yeah i got probably most of my knowledge after 2017 i would say okay and did you guys so you mentioned you raised half a million bucks what year was that 2012 ah it was 2015 and 13. yeah but we raised since then i think only just a little of capital like 6 million in 2020 right and half of it actually went to secondary so actually um i'm i'm very happy how managed to build such a product without almost no external funding right and where cash for positive and that's no i mean that's incredible so i guess you can't get a secondary done unless your economics are really strong so you guys have must have very strong economics i mean let's dive in there a little bit right so if you've got a thousand customers pay an average ten thousand bucks per year that means you're doing more than 10 million run rate today right uh no it's more than that last year we made 25 usd uh usd 1.5 million us dollars with uh 4.4 year-over-year growth and now run rate i think 45-15 okay got it so you're you're running that's us dollars 45 million currently yeah okay up from sorry you said 20 25 million last year yeah overall the revenue last year was 25 million that's incredible so so and are these run rates i mean so have you basically doubled the business over the past six months is that what i'm understanding i mean the end of our last year was really successful because we got some big customers on board or on board and then they also kind of uh trusted us more regions because we're dealing with international businesses and very often big companies actually first start with like let's say asian region and then they expand if they're happy in what you're doing yeah this makes sense but just to be clear if you're doing a 45 million dollar run rate right now that means you're doing about 3.7 million a month in revenue right that's correct and then going back one year you're saying you're doing about two million a month in revenue probably the beginning of the year i don't remember exactly but maybe it was even like seven hundred thousand in the beginning i mean they did the beginning of 20 years the beginning of 2021 yeah interesting okay okay so really really good growth here i guess to take when people are going to hear this and go what do you mean they had troubles in 2018 there they've got 450 million run rate almost so i guess do you remember what revenue was back in 2018 i remember in 2019 it was about 1 million but in 2018 i don't remember okay but it was less than a million right yeah so you've gone from a million dollar run rate to 50 million dollar run rate over the past 36 months uh yeah i guess that's correct i mean watch yourself that's look we have a lot of data on sas companies i mean that you understand how impressive that is i mean that puts you in the top like two percent of fastest growing sas private sas companies in the world yeah we're pretty happy [Laughter] all right so so i guess you raised 6 million seed in 2020 okay what valuation was that do you remember 18 what's money okay so so it's 12 pre 18 post and all all of the 6 million was secondary no no three million went to company and three million one to the second try okay so tell educate everyone on how secondaries work i work with a lot of founders trying to do secondaries but a lot of people don't understand what it means and how it works i mean i'm i'm a cto so probably do you think i'm the best person actually to explain well let me ask you did you did you sell some shares personally yeah no no no so there were shares like going into one investors and then another investor came on board and he bought the they bought those shares okay so employees co-founders didn't sell any equity oh i see okay so the 50 secondary was to buy out the pre-seed guys that put in 500. yeah oh i see okay um this makes a lot of sense so you're doing i i guess the last thing i'll ask is if you were doing you know 700 000 bucks a monthly recurring revenue back in when you did that seed round right that would have that what i mean that's effectively an 8.4 million run rate right why do you think you only got a valuation of like 2x revenue i know because we had i think lots of dependency on ico back in the day and it was kind of a little bit of unstable i think so we didn't get a very good multiplication to be honest interesting what do you mean by your depend on ico on like token offerings yeah yeah so we were doing a little bit of kyc for some cryptic projects so to say uh yeah so that's i see that's why i guess i see okay so i guess any plans to raise today are going to keep bootstrapping yeah exactly we want to actually raise series b and that's why also partially while we're talking i guess and we're also talking to a couple of fans uh at the moment yeah so we have all the numbers ready let's say but we're i would say in a luxury position because we're not burning money right so we can really how much water do you profit per month do you know uh bitter is about 10 to 20 percent okay well 10 of 3.7 million in mrr i mean that means you're taking about 400 000 bucks in cash profit per month right yeah i wrote about that so you have a lot of leverage so what kind of deal are you looking for there's investors listening right now what kind of deals will be the perfect deal i mean initially like we'll look at what like similar companies like we are uh raised so we're thinking about 80 to 100 million but at the same time for us um right now is more important strategic partnership because we want to expand a new market to land new offices in different regions we have some interesting m a opportunities and of course we are a product oriented company and actually we were focusing on product too much like we were not focusing on sales and marketing it was like more or less word of mouth right and now it's time actually to probably raise some money and invest into proper like sales marketing i love this okay so you're thinking about raising 80 to 100 million in your series b yeah okay and what valuation would make you guys really happy or like a range is fine obviously don't you want to say something specific but what's a range actually i don't know like before this podcast like i was asking our financial guys or like guys that are responsible for you know talking to the fans like to give me an estimate to say no no we're not ready at this point yet so probably i won't tell you and i just i'm afraid to to lie right now because if i calculate and multiply something then probably won't be a right number but i mean so look i'll do it for you right so that you don't have to have a history i mean based off what i've seen like recent deals in the marketplace even with valuations coming down in the past sort of six months so you see this in the public markets i mean if you take your run rate today at 40 45 million you know you're seeing companies like you with your growth incredible growth over a hundred percent your year your scale is impressive uh you were seeing these companies trade at like 45 50 x over the past six months there's been a tight like a little pullback so like i still think you could probably get a 30 x multiple which may be raising 80 million or 100 million on a 1.3 billion dollar valuation you're talking in bs that can maybe does that make you feel like whoa we're worth 1.3 billion i didn't expect that um yeah sometimes like i have this creative thoughts but i prefer like to focus on product you you know and just go all in and not think about this because we have like specialists who are doing this part of the business and i'm just trying as a founder also to understand the mathematics and mechanics of all this fundraising and like revenue whatever that's probably the smart way to do it let's go back to talking about products since your cto how many verifications monthly are you processing right now it's from half a million to one million from how much half a million to a million yeah i should have prepared much better actually to this question but wrong about that okay 500 000 to a million that's across all your customers yeah yeah i mean there are different kind of checks though because i don't have a breakdown some some of them are very easy to like let's say ml screening some of them are super complicated some of them are most of them are actually classical igb identity verification it's basically some sort of id document class itself and and why would you say you've been able to grow so fast 25 to 50 million in revenue without a sales team i mean would you say it's because you price against number of verifications so people upsell themselves um there is of course a sales and marketing team i mean it's just i would say sparking like sales maybe 2030 okay 30. but i mean honestly probably it's not in the very good shape right now that's again like where we want to like hire like super senior people that can bring the order to to this process but most of the like revenue actually comes comes from the new clients right and those clients that actually coming from our competitors and because one of the differentiators that we have we work very well globally like in emerging markets and i know that many guys out there tell the same thing but also the quality that's what matters and we know how to work with those complicated regions and when such clients come to us one particular region complicates region they a b test us they see that we perform and they say okay can you do brazil right now yes yes of course they try brazil and they see again that we perform and that's how they really put some of them put lots of traffic on us although in the beginning it was a little bit you know little but then it grew really this makes sense what's the total team size today how many people uh about 300 a little bit more 300 people wow and how many engineers engineers i would say 50 60 and plus maybe 20 30 like qa and like engineering managers 60. well this is a heck of a story uh i'm really excited to see what you guys do over the next quarter uh in the meantime though let's wrap up here uh with the famous five i just love number one favorite business book a business book it's actually not a book but a series of podcasts from stanford university i think how to build a startup i think i listened to exactly like in 2016 and it actually helped me a lot i think to understand how you should approach the product your customers like for example build the product that 10 people love and then scale it up and things like that number two is there a ceo you're following or studying ceo um not really not not really i'm also not a ceo although like sometimes like i'm doing things like also talking to the customers but i guess it's a founder job right it's not cto job but also number three what's your favorite online tool technical tool that you use to release code at some sub i mean i admire like jetbrains product they uh they develop the ideas uh the development environments for the for the developers so what's their url uh jetbrains.com jetbrains.com okay number four how many hours of sleep do you get every night now i get much more than your guests i would say like seven to eight hours i used to be like a six hour sleep guy especially when i was working in parallel but then i listened to joe rogan podcast with the match uh walker i think the guy who wrote the book while we sleep and then i kind of changed my head it's a little bit that's amazing uh you're a big podcast guy huh have you heard did you did you listen to our show before you came on were you ready for it um i listened to you to a couple of uh shows yeah but actually like one week ago and uh yesterday of course just to you know get a feeling and of course i needed to to listen to it because i need to prepare to give all those numbers to be honest i didn't know all of them let's say one month ago like half a half a month you know i know guys before the show watch stuff goes nathan please don't kill me i said i'm not gonna kill you i think this is gonna be a great story it's been a great episode so last two questions here married single kids what's your situation uh merit one daughter playing drums going ice skating enjoying amazing how old are you uh 36 36 last question something you wish you knew when you were 20 no no i i was thinking about this question and probably i would question myself whether i should be doing phd if it's worth it right yeah yeah all right it was fun but nonetheless who knows anyway guys some sub.com launched in 2012 they raised a 500k seed back in 2015 they pivoted in 2018 to aml and kyc verification processes now serving over a thousand customers paying average ten thousand dollars per year they're doing 3.7 million bucks in mrr up from 2 million a year ago in 2021 and up from 700k mrr in 20 to late 2020. so about a 45 million run rate today very capital efficient only 6.5 million raised they're looking at doing their series b this year we'll see what happens they're looking to raise 80 100 million and i think they can get over a billion dollar valuation i think it's gonna be a very hot deal i love the founders uh investors go go get em go reach out we'll see what happens but watch us up thanks for taking us to the top yeah 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 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