Sumsub Revenue, Valuation & Funding (2024)

[00:00] Hey, folks. My guest today is Vyacheslav Zholudev. He's a CTO and cofounder of sumsub. He's a guy has over twenty years of IT experience and a PhD in computer science. He's a product oriented CTO and, again, the cofounder of sumsub, which is AML and KYC tool. Okay. Vyacheslav, are ready to take us to the top? [00:19] >> Yeah. Sure. Let's do it. [00:20] Alright. So for folks not familiar with banking and finance, what is AML and KYC? [00:27] >> Basically, can say AML 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 honest users as many as possible, as quickly as possible, but at the same time keeping fraudsters at bay. Right? And of course, if company is regulated, then of course, we're keeping we help keeping this company staying compliant. [00:55] Now, are banks your main customer or who's your main customer? [01:00] >> Main customers? Yeah, we do have banks, fintech, actually crypto quite a bit, actually car sharings marketplace to share the economies, basically everywhere gateway is needed nowadays. [01:13] Mhmm. And so how what did some of these customers pay you per month to use the technology? [01:18] >> How much? [01:20] Yeah. How much they pay you? [01:21] >> Yeah. We have about, like, 40 customers that we consider top tier one customers that paying more than 100,000 a year. Right? But some of them paying over 1,000,000 in insurance. [01:33] This is fascinating. Okay. So this is these are obviously huge. So just to be clear, your largest customer's ACV is high. They pay you how much? 2,000,000 a year? 1,000,000 a year? [01:42] >> Even more. Maybe maybe $5 to 7,000,000. [01:47] Okay. And so someone one of these customers paying you 5 to $7,000,000 per year. How many? I imagine you bill based off number of verifications. Right? [01:56] >> Yeah. Yeah. It's a little bit more complicated than that because we charge per subservice, so to say, because some customers need one service. Some customers, like, construct the flow from different parts. So we kind of have subservices, and we bill per subservice. So how many customers you ask paying? [02:14] Well well, no. I mean, I guess the question yeah. Yeah. Guess yeah. Yeah. How many customers? That's a good thing. [02:20] >> Over 1,000 tech customers, but 40 tier tier one customers paying more than 100,000 a year. [02:27] Okay. What what is the that's great to understand your tier one folks. But what does the average customer pay you per year? More like 10 k or 5 k a year? [02:35] >> Yeah. Something like 10 to 20, I would say. [02:38] Okay. Interesting. And so, I guess, put this all on a timeline for me. When did you launch the business? [02:44] >> If you go to our website, it says 2015, but the story actually starts a little bit. Before then, in 2012 when I got met like, met cofounders, and we were doing actually anti Photoshop software to detect Anti what? Part Photoshop. So, basically, you detect which parts of an image were edited. Right? But then at some point [03:05] You were you were Kim Kardashian's worst worst nightmare. [03:09] >> Yeah. So yeah. But at some point, we realized that 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 two thousand twelve fifteen, and that's when things started to look good for us. [03:27] Okay. Interesting. So, I guess, did the business almost like die before you pivoted? What made you wanna pivot? [03:33] >> Yeah. Because yeah. There were hard times actually. We're working like like, let's say, without salaries and or like with our own savings. [03:41] You were working three years between 2012 and 2015 with no salary? [03:46] >> No. No. No. There there were good times. So we also raised, like, some pension capital, like, 500,000 or something. But then there were hard times when there was, like, one year of, you know, just working. But 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 sumsub. [04:05] Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders. But imagine if we took all of the valuation data out from over 2,807 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 Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect [04:29] your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna [04:53] 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 [05:15] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founder share with us on the show. So traction, 1,200,000 seed round, 3.7 raise. They sold 22% of their business. Go in here and filter by the event. Maybe you only wanna 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 [05:41] going out right now and you're raising your seed round. We'll 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 dataset of SaaS valuations than what you can get now inside of Founderpath. And we're thrilled to bring it to you. Alright. We're gonna go back to the YouTube video here in a second, but if [06:03] you wanna check this tool out, if you wanna jump in and sign up, you can check it out for free to get your valuation at this link. This link, founderpath.com/products/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. Alright. Let's jump back into the [06:29] interview. When did you join and, like, quit your job and go all in on sumsub? What year? [06:35] >> 2018. [06:38] Okay. [06:38] >> But before, I was actually working at night. So, I mean, you know, this entrepreneurial life. [06:45] >> Yeah. Before, I was more like consultant and, like, bringing my experience to the guys so that they can build substantial business. But, actually, I can explain where like, why we almost died because I think it was about 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 [07:11] >> more complicated than that. So that's that's why we had to to pivot, and we don't regret because, obviously Yep. It looks good so far. [07:18] So what is the I guess, you'd say guys and we had to pivot all that. How many co founders are there? [07:24] >> Overall, four. Actually, the other three are brothers. Two of them twins, which makes a really funny case for our face matching algorithms. [07:34] 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? [07:45] >> No. We're struggling before 2015 when we pivoted. Then we, again, we struggle a lot 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 cannot build 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 [08:11] >> 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 technical support and things like that. [08:28] But, Vyacheslav, when you joined 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 split everything equally or no? [08:39] >> Initially, no. But then, like, they probably saw my impact, and then somehow they offered me because I don't have to negotiate. So it was just split equally now. [08:49] 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. [08:57] >> Yeah. Exactly. [08:58] Okay. Very cool. So let's okay. So the pivot so 2012 is launch date. It's a side project for you. You're 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, and grow the business. Now when did you start? Was 2018 the year where you start getting into AML and KYC? [09:21] >> 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. [09:32] Okay. And did you guys so you mentioned you raised $500,000. What year was that? 2012? [09:38] >> It was 2015 or '13. Yeah. But we raised since then, I think, only just a little of capital, like, 6,000,000 in 2020. Right? And half of it actually went to secondary. So, actually, I'm I'm very happy how we managed to build such a product without almost no external funding. Right? And we are cash flow positive and [10:03] 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 paying an average 10,000 per year, that means you're doing more than 10,000,000 run rate today. Right? [10:22] >> No. It's more than that. Last year, we made 25 USD USD, 25,000,000 US dollars with 4.4 year over year growth. And now run rate, I think 45 or 50,000,000. [10:35] Okay. Got it. [10:37] So your your run rate, that's US dollars, 45,000,000? [10:41] >> Currently. [10:42] Okay. Up from sorry. You said 20 to 25,000,000 last year? [10:46] >> Yeah. Overall, the revenue last year was 25,000,000. [10:49] 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? [10:57] >> I mean, the end of our last year was really successful. We because we got some big customers on board onboarded, and then they also kind of 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. [11:18] Yeah. This makes sense. But just to be clear, if you're doing a 45,000,000 run rate right now, that means you're doing about 3,700,000 a month in revenue. Right? [11:26] >> Yeah. That's correct. [11:27] And then going back one year, you're saying you were doing about 2,000,000 a month in revenue? [11:32] >> Probably the beginning of the year. I don't remember exactly, but maybe it was even, like, 700,000 in the beginning. I mean, they did [11:41] The beginning of twenty the beginning of twenty twenty one? Yeah. Interesting. Okay. Okay. So really, really good growth here. Guess, to take and people are gonna hear this and go, what do mean they had troubles in 2018? They're they've got 4 50,000,000 run rate almost. So I guess, do you remember what revenue was back in 2018? [11:57] >> I remember in 2019, it was about 1,000,000. But in 2018, I don't remember. [12:04] Okay. But it was less than 1,000,000. Right? [12:06] >> Yeah. [12:07] So you've gone from a million dollar run rate to $50,000,000 run rate over the past thirty six months. [12:16] >> Yeah. I guess that's correct. [12:19] I mean, Vyacheslav, that's look. We have a lot of data on SaaS companies. I mean, you understand how impressive that is. Mean, that puts you in the top, like, 2% of fastest growing SaaS private SaaS companies in the world. [12:30] >> Yeah. We're pretty happy in what we're doing. [12:34] Alright. So I guess you raised 6,000,000 seed in 2020. Okay. What valuation was that at? Do you remember? [12:43] >> 18 post money. [12:46] Okay. So so it's 12 pre 18 post and all all of the 6,000,000 was secondary? [12:52] >> No. No. 3,000,000 went to company and 3,000,000 went to secondary. [12:56] 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. [13:05] >> I mean, I'm I'm a CTO, so probably do you think I'm the best person actually to explain. [13:10] Well, let me ask you. Did you did you sell some shares personally? [13:13] >> 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 they did those shares. [13:23] Okay. So employees, co founders didn't sell any equity? [13:26] >> No. No. [13:27] Oh, I see. Okay. So so the 50% secondary was to buy out the pre seed guys that put in 500? [13:32] >> Yeah. Yeah. [13:34] Oh, I see. Okay. This makes a lot of sense. So you're doing I I guess the the last thing I'll ask is if you were doing, you know, $700,000 in monthly recurring revenue back in when you did that seed round, right? That would've that would I mean, that that's effectively an 8,400,000 run rate. Right? Why do you think you only got a valuation of, like, two x revenue? [13:55] >> I don't know. Because we had, I think, lots of dependency on ICO back in the day, and it was kind of a little bit unstable, I think. So we didn't get a very good multiplicator, to be honest. Interesting. [14:08] What do you mean by your dependent on ICO? On, like, token offerings? [14:12] >> Yeah. Yeah. So we were doing really a little bit of KYC for some crypto projects, so to say. Yeah. So that's I see. Yeah. That's why I guess. [14:24] I see. Okay. So I guess, any plans to raise today or gonna keep bootstrapping? [14:30] >> Yeah. Exactly. We want to actually raise series b. [14:35] And [14:35] >> that's why also partially why we're talking, I guess, and we're also talking to a couple of funds 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 [14:51] How much Vyacheslav do you profit per month? Do you know? [14:54] >> Bit is about 10 to 20%. [14:57] Okay. Well, 10% of 3,700,000 in MRR, I mean, that means you're taking about $400,000 in cash profit per month. Right? [15:05] >> Yeah. Around about that. [15:07] 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? [15:13] >> I mean, initially, like, we'll look at what, like, similar companies like we are raised. So we're thinking about 80 to 100,000,000, but at the same time for us, now is more important as strategic partnership because we want to expand to new markets to land new offices in different regions. We have some interesting M and A opportunities and of course we are product oriented company and actually we were focusing on product too much, like we were not [15:42] >> 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 and marketing. [15:54] Mhmm. I love this. Okay. So you're thinking about raising 80 to 100,000,000 in your series b? [16:00] >> Yeah. [16:01] Okay. And what valuation would make you guys really happy? Like a range is fine. Obviously, don't you wanna say something specific, but what's a range? [16:09] >> Actually, don't know. Like, before this podcast, like, was asking our financial guys or, like, guys that are responsible for, you know, talking to the funds. Like, you give me an estimate and they say, no. No. No. We're not ready at this point yet. So probably I won't tell you. And I just am afraid to to lie right now because if I calculate it and multiply something, then probably won't be a right number. But [16:33] 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 of 45,000,000, you were seeing companies like with your growth, incredible growth, over a 100% year over year, your [16:51] scale is impressive. 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. I still think you could probably get a 30 X multiple, which would mean you'd be raising 80,000,000 or a 100,000,000 on a $1,300,000,000 valuation. You're talking in Bs, does that make you feel like, woah. We're worth 1,300,000,000. I didn't expect that. [17:13] >> Yeah. Sometimes, like, I have these creative thoughts, but I prefer, like, to focus on product, 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 of this fundraising and, like, revenue, whatever. [17:36] That's probably the smart way to do it. Let's go back to talking about products. Since you're CTO, how many verifications monthly are you processing right now? [17:44] >> It's from half a million to 1,000,000. [17:47] From how much? [17:48] >> Half a [17:48] million to a million? [17:50] >> Yeah. I should have prepared much better actually to this question, but wrong about that. [17:56] 500,000 to a million. That's across all your Yeah. [18:00] >> Yeah. I mean, there are different kinds of checks though, because I don't have a breakdown. Some of them are very easy to, like, let's say AML screening. Some of them are super complicated. Some of them are Most of them are actually classical IDV identity verification. It's basically some sort of ID document plus itself. [18:18] And and why would you say you've been able to grow so fast, 25 to 50,000,000 revenue without a sales team? I mean, would you say it's because you price against number of verifications so people upsell themselves? [18:30] >> There there is, of course, sales and marketing team. I mean, it's just How many? I would say, poof, marketing, like, sales made twenty, thirty. [18:39] Okay. [18:40] >> Twenty, thirty. But I I mean, honestly, probably it's not in the very good shape right now. That's, again, like, why we want to, like, hire like super senior people that can bring the order to this process but most of the like revenue actually comes from the new clients right and those clients that actually coming from our competitors and is one of the differentiators that we have, we work very well globally, like in emerging markets. And I [19:09] >> know that many guys out there tell the same thing, but also the quality that what matters. And we know how to work with those complicated regions. And when such clients come to us one particular region complicated region they AB test us they see that we perform and they say okay can you do Brazil right now yes we yes of course they try Brazil and they see again that we perform and that's how they really put some [19:33] >> 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 That's this makes sense. [19:42] What's the total team size today? How many people? [19:45] >> About 300, a little bit more. [19:48] 300 people. Wow. And how many engineers? [19:51] >> Engineers, I would say fifty, sixty, and plus maybe twenty, thirty, like, QA and, like, engineering managers. [19:59] 60. Well, is a heck of a story. I'm I'm really excited to see what you guys do over the next quarter. In the meantime, though, let's wrap up here with the famous five. One, favorite business book. [20:11] >> 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 it 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 and things like that. [20:34] Number two, is there a CEO you're following or studying? [20:38] >> CEO. [20:41] >> Not re not not really. I'm also not a CEO. Although, like, sometimes, like, I'm doing things, like, also open to the customers. But I guess it's a Founder job. Right? It's not CTO job, but also. [20:54] Number three, what's your favorite online tool, technical tool that you use to release code at sumsub? [20:59] >> I mean, I admire, like, JetBrains product. They they develop the IDs, the development environments for the for the developers. [21:09] So What's their URL? [21:12] >> Jetbrains.com. [21:15] Jetbrains.com. Okay. Number four, how many hours of sleep do you get every night? [21:20] >> Now I get much more than your guess. 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 Matt Walker, I think, the guy who wrote the book, Why We Sleep, and then I kind of changed my head a little [21:41] That's amazing. You're a big podcast guy. Have you heard did you did you listen to our show before you came on? Were you ready for it? [21:48] >> I listened to to a couple of shows. Yeah. But actually, like, one week ago and 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 half a month ago. [22:06] I know, guys. Before the show, Vyacheslav goes, Nathan, please don't kill me. I said, I'm not gonna kill you. I think this is gonna be a great story, and you've it's been a great episode. So last two questions here. Married, single, kids. What's your situation? [22:17] >> Married, one daughter, playing crutch, going ice skating, enjoying Oh, amazing. [22:23] How old are you? [22:25] >> 36. [22:26] 36. Last question. [22:27] >> Something you wish you knew when you were 20. [22:31] >> Not new. I I was thinking about this question, and probably I would question myself whether I should be doing PhD. If [22:41] it's worth it. Right? [22:42] >> Yeah. Yeah. [22:44] Alright. I [22:44] >> mean, it was yeah. It was fun, but nonetheless, who knows? Anyway. [22:49] Guys, sumsub.com launched in 2012. They raised a 500 ks seed back in 2015. They pivoted in 2018 to AML and KYC verification processes. Now serving over a thousand customers paying on average $10,000 per year. They're doing $3,700,000 in MRR, up from 2,000,000 a year ago in 2021 and up from 700 k in MRR in late twenty twenty. So about a $45,000,000 run rate today, very capital efficient, only 6,500,000 raised. Looking at doing their series B this year. [23:19] We'll see what happens. They're looking to raise 80 to 100,000,000. 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, the investors. Go get them. Go reach out. We'll see what happens. But Vyacheslav. Thanks for taking us to the top. [23:32] >> Yeah. Thank thank you. [23:35] 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 [24:01] 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 [24:23] fundraise, a big sale, a big profitability statement or something 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 [24:44] up for that @nathanlatka.comslashslack. 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. 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, I do it so that we can all learn. We have to counter those people. We got to [25:04] 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.