How TerminusDB Doubled to $20K MRR and Raised at a $10.5M Pre-Money Valuation (Interview with Co-Founder Luke Feeney)

Introduction and Luke's Background

Nathan Latka

00:00Hey, folks. My guest today is Luke Feeney. He's the cofounder of terminusdb, the leading open source graph database. Before joining the business, Luke worked in the Irish foreign ministry for a number of years. He was Ireland's acting ambassador to Greece from 2016 to 2017. Luke, you ready to take us to the top?

Luke Feeney

00:15>> Born ready.

Nathan Latka

00:16Now your cool factor went up a ton over the past decade. You went from politician to SaaS founder.

Luke Feeney

00:21>> Well, that depends on your perspective, man.

Nathan Latka

00:25That's an accurate statement. Alright. Tell us tell us about terminus. Where'd you get the idea?

Origin Story: Trinity College Spinout

Luke Feeney

00:30>> So terminus is a spinout from university. We were my brother was a researcher, a PhD researcher in computer science in Trinity, and they had a idea around building a very collaborative sort of data structure database and spun out from there. It kind of came from this very big project called the Global History Data Bank, which is trying to record all of the social and political data sets from all of human history and then provide them in

00:58>> a machine readable format so people can do kind of predictive analytics on history. Interesting. So trying to look at the past and then get long jure trends into the future. So one of the big ones was the rise of political violence in The United States recently. So the Academic Lead made a prediction back in 2010 that there'd be a big uptick in political violence in The United States in 2020, 2021. So he kind of caught that

01:23>> trend pretty well. Now, didn't call the pandemic, but he was able to pick that stuff out from well structured, large data that you're able to run machine analytics on. And so when

Nathan Latka

01:34you say academic spinout, most people, they pooh pooh on academic spinouts because usually the university keeps a ridiculously high percentage relative to the value they're going to add to the company over the years. So, how did you manage the spinout? How much equity does the university still own?

University Equity Negotiation

Luke Feeney

01:45>> Yeah, so it's like and that's a big problem in Europe as compared to The United States. So, Stanford, for example, has gone very progressive on that. So they let them spin out and then expect them to give the money back just in terms of like, you know, you're a billion dollar company, give us a few million there for an endowment, whereas Europeans are much more, let's get our 10%. So we had a negotiation. We got them

02:08>> down to about 4%. About 2% now. That's fine. They still create value for us. We talk about our link to them. We run events on Trinity. You know, they're a big center of innovation. They help us in some international business developments as well, little bit here and there. So I think it's a good deal all around. Interesting. Okay, that sounds like a great mix.

Cap Table and the 2018 University Bridge Fund Round

Nathan Latka

02:29So the university is on the cap table on day one. You're on the cap table on day one, I think. Who else? Your brother?

Luke Feeney

02:36>> Yeah. So there's three founders, my brother and another PhD researcher who spun out, a guy called Gavin Mendel-Gleason, and he's the CTO. We took a seed round directly at a university at a bridge from a bridge fund. So it's specifically designed for softer terms for companies it's trying to called the University Bridge Fund.

Nathan Latka

02:56No. What year was that?

Luke Feeney

02:57>> Oh, that year was 2018. Sorry. Sorry, Nathan. Yeah, 2018. So, yeah, so they're like it's like softer terms to try and get companies to spin out. So the Irish government backs it with a bunch of other institutions. It's professionally managed by a VC called Atlantic Bridge, and they look for companies mostly, I'd say, in the med tech world, but also

Round Size and Pre-Money Terms

Nathan Latka

03:16how much how much did you raise in that round?

Luke Feeney

03:18>> We raised 1.25.

Nathan Latka

03:20Got it. Okay. And when you say like fluffy term, so 1.25 seed in The U. S, usually you're going sit at like a 6 to 10,000,000 cap on a convertible note. Is that kind what you got?

Luke Feeney

03:28>> No. No. No. I mean, fluffy for for for Ireland. I'm afraid. I see. I see.

Nathan Latka

03:37Okay. So what were the just generic high level terms in one point two five one one?

Luke Feeney

03:40>> So it's about like it's about evaluation by 3.5 of that or maybe a little bit more than that.

Nathan Latka

03:45Post money or pre?

Luke Feeney

03:47>> Yeah. That's pre. Yeah. So not not too bad. You know?

Nathan Latka

03:49Yeah. I mean, that way, you're selling 20% of business about.

Luke Feeney

03:52>> Exactly. So we were happy enough with that, given what we've seen elsewhere in Europe and, you know, our valuations and back then valuations weren't quite as heavy as they are now. And yeah, and certainly European valuations are a significant discount to to U. S.

Nathan Latka

04:08Oh, 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

04:32your 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

04:56get 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

05:18not 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

05:44going 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

06:06you 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

06:32interview. You've raised some more, but before we get your full funding story, let's take a step back just for a second. Tell me about the customers. Who who are you paying you right now to use the technology?

Target Customers: Bottom-Up Developer Strategy

Luke Feeney

06:40>> So we're focused on software developers. Like, we are developer tooling. So we're trying to go bottom up, we're trying to attract software engineers to use it to bring it into businesses, and there's a real range of different sorts of software engineers working in, you know, martech, ad tech, working in research, working in a bunch of different areas like that, but it's very, very much a bottom up strategy.

Nathan Latka

07:05So when you say bottom up, Luke, are you talking like average customer, average software developer paying like $20 to $30 bucks a month sort of deal?

Luke Feeney

07:10>> Yeah. Yeah.

Nathan Latka

07:11Exactly. I see.

Luke Feeney

07:12>> And then try and expand it into more seats, expand it into more usage, pay per usage models then.

Nathan Latka

07:18So at what point, like You know, I've interviewed maybe dozens is an accurate statement of of founders that decide to go bottoms up. And the biggest pain point I've heard, this surprises a lot of people, is the moment when there's four or five people in one organization that are personally paying for the software and you want to move it to one company credit card that the CTO is buying a seven seat license for. That's the hardest

07:39expense if I had this problem. Others have a problem. How do you think about that?

Luke Feeney

07:44>> Yeah, it is a big problem. And how do you join that altogether? I mean, it's kind of a nice problem to have because it's a growing pain. It shows that you're going relevant across the organization rather than just relevant to an individual. So like we try and do a sandwich strategy then. So then start approaching the CTO to say what the value is and then try and bring it through as being a more enterprise sale at

From Enterprise Installations to Open Source

Luke Feeney

08:08>> that point. Like when we came out of university first, we were very much an enterprise sort of company. We tried to do large scale graph installations to solve big enterprise problems like, you know, predicting how many how much stock you need to have in your physical warehouse. So we have enterprise sales chops. We just felt that it was going too slow. We weren't going to be able to get the growth targets that we were looking for

08:31>> going with that strategy. So we shifted to open source and bottom up just to try and give us that that potential runway to grow to be something really big rather than what was becoming a kind of consultancy, you know, case by case. And so we can do the enterprise sales and we can prove our value top down. We just needed the engineers to start using it to show the management, you know, why they should why they

08:56>> need it.

Nathan Latka

08:57And how many software developers are paying you today for the platform?

Cloud Users, Downloads, and Paying Customers

Luke Feeney

09:01>> So we have about 700 people up on the cloud version, but we have about 700,000 downloads of our open source version as well.

Nathan Latka

09:08That's Wait. A ton. 700 developers are paying you for the technology right now.

Luke Feeney

09:12>> Well, paying or, you know, a small amount. Some of them are paying. I'd say about 50% of those are paying customers and about 50% are on the free tier in the cloud.

Freemium Model and the Three-Seat Upgrade Trigger

Nathan Latka

09:21That's still great. Okay. So when do they have to upgrade? How much do you give away for free? What's the utility metric they hit where they go? I got to go start paying $20 a month.

Luke Feeney

09:29>> So it's the number of people using a team. So they basically hit three on the team and then you got to go up to pay.

Nathan Latka

09:37I see. Interesting. Okay.

Luke Feeney

09:38>> It's like a it's like a little bit of a Slack model there.

Nathan Latka

09:43Yeah. Okay. So just to repeat, you said you've got seven seven hundred thousand downloads of the open source platform, 700 folks using you actively, of which three fifty are paying. Yeah. Wow. How did you this whole model, I mean, you look at Citic, GitLab, and there's a couple other companies right now that started on top of open source projects then commercialized. They contribute back to the open source project to keep the community healthy and robust. Do

10:07you have to spend a lot of time thinking about not pissing off the community as you commercialize and charge for stuff?

Luke Feeney

10:13>> Not really. I mean, we're fully open source now. So basically, we we we sell a hosted version of the open source software. We don't have enterprise features that aren't available in the open source right now. Really, it's a matter of convenience for software developers. So it's usually like, hey, I'm already working for a big company. They're willing to pay for for software. Why would I go about, you know, containerizing a Docker, getting it up in the

10:39>> cloud, doing all that DevOps work when I can just get this endpoint and get the exact same results anyway? I see. People are very used to that sort of, you know, process, so it doesn't really it's not like we're competing one or the other. It's a choice that people can make. I mean, I think maybe if we get a bit bigger and we started layering on more enterprise features, that could become an issue. But again, it's

11:00>> a it's a nice problem to have.

Revenue and Year-Over-Year Growth

Nathan Latka

11:02Yeah, of course. Now can I back into your revenue? 350 customers, $20 a month. You're doing about seven k MRR today?

Luke Feeney

11:09>> Yeah. Something like that. Okay.

Nathan Latka

11:10And if you're there around there today, where were you about a year ago so we can calculate growth?

Luke Feeney

11:15>> Yeah, well, that's an interesting one because we're a little bit higher than seven k because we have a bunch of enterprise customers on top of that as well. So we do some individual enterprise installations, some of them are a hangover from our past direct enterprise sales. So, you know, we were about 10 ks and now we're about 20 ks, so we've done about 100%

Seed Round with Volta Ventures and Valuation

Nathan Latka

11:39That's great growth. Yeah, that's great growth. Very interesting. Okay. Now fill out the funding story for us. So you did the 1.25 pre seed at a 3.5 pre. Have you raised more since then or no?

Luke Feeney

11:50>> Yeah. So we did a seed then with Volta Ventures in the lead. They're a Dutch VC, and we raised about 3.5 total. A valuation of about 10 pre. Ten, ten point five pre.

Nathan Latka

12:05Okay. Got it. So just to be sorry, just to repeat that back to you, you raised 1.25, you raised 3.5 total to date, so you did 2,000,000 on a 10 pre recently.

Luke Feeney

12:13>> No. We did a further 3.5.

Nathan Latka

12:14Oh, another 3.5. Got it.

Luke Feeney

12:15>> Yeah. On a on a 10 pre. Right.

Nathan Latka

12:17That okay. Good. So you're selling mean, you're selling, what is that? 15 ish percent, 10% of the business?

Luke Feeney

12:23>> 15%. Yep.

Nathan Latka

12:24At 15%. Yeah. That's not horrible. Okay. So that's why I said the university.

Luke Feeney

12:27>> Never comfortable though, as you know. Never comfortable.

Nathan Latka

12:29I know. I mean, it's tough though. It's a balance. I mean, if you guys are gonna play a long term game, which it sounds like you've got the open source metrics to support, you know, the next GitLab sort of story, you know, you go for it. You know? It's managing dilution is a tough thing.

Luke Feeney

12:42>> Yeah. It really is. And I I agree wholeheartedly with that. You're kind of you know, how ambitious can we be? How ambitious do you feel that you can be versus, oh my god, I just love some revenue because it would allow me not to sell so much of the business.

Nathan Latka

12:57That's exactly right.

Luke Feeney

12:58>> If you try and, you know, if you try and goes too hard for revenue too early, it's you're just never going to get to the bigger dream.

Nathan Latka

13:05That's right. Yeah. And so much of it is a personal decision of the founder. I mean I mean, tons of founders that could go for the big thing, but they don't wanna take the time to raise capital. They're already doing 3,000,000 a year with 1,000,000 in profits, and they pay themselves all the profits. So, like, that's a pretty good life. You know? Yeah. Yeah.

Luke Feeney

13:20>> It's tough balance. It's good life.

Nathan Latka

13:21But you're you're playing the fundraising game, though, fairly well. Right? I mean, if you're doing $20k a month right now in revenue, what is that? That's, know, $240,000 a year. So what you're I mean, you guys got a pretty healthy multiple there through 14 post.

Luke Feeney

13:32>> Yeah. Yeah. Yeah. Yeah. I think I think we're doing okay. I mean, we we will be looking to raise a big chunk more if we're gonna grow the business in the way that we want to.

Series A Thinking and Platform Metrics

Nathan Latka

13:41What do you think you have to hit revenue wise before you do a formal series a?

Luke Feeney

13:45>> Well, that that's a really good question, you know, because we're we'd be more if you said to me, I could get an extra thousand developers up on the platform building really interesting things versus another 100 k in revenue, I chose the thousand thousand developers building on the platform because it shows that it's got real life to grow. It shows that people are trying to build new and exciting applications that they're then selling on. And I think

14:10>> that's when, you know, you get into that series A, can I just show potential for, you know, how much we could grow and how many people we have using the platform versus how much do I have to show that we've already done? Yeah. And that'll become a big question for us about which one of those we're we're really pushing as the metric for the series a round. And my hope is that I'd be saying, you know,

14:36>> you know, it's it's it's it's a no brainer because we've got 10,000 people building on the platform. And those 10,000 people, even if only 10% of them hit real value, we're we're gonna be, you know, huge.

Nathan Latka

14:50How many individual people Yeah. How many I'm trying to quantify that. How many individual developers contributed at least one line of code in the past thirty days?

Luke Feeney

15:00>> So in the open source, we not that many.

Nathan Latka

15:03Doesn't so

Luke Feeney

15:05>> it's as a data platform that people are really contributing, they're hosting their data on the platform, they're using it, they're opening their databases on a minute by minute basis, hour by hour basis, they're building applications that are solving real business challenges out in the world, And that's really what we want to see is that they're using the platform as a backend for whatever they're building.

Team Size and Dublin Engineering Costs

Nathan Latka

15:24I see. How many folks are full time on the team today?

Luke Feeney

15:27>> Twelve, thirteen.

Nathan Latka

15:28And how many engineers?

Luke Feeney

15:31>> Almost all engineers. So there's 11

Nathan Latka

15:33Oh, wow. And you're in Dublin. Out of curiosity, what's the what's the senior developer going for these days in in Dublin?

Luke Feeney

15:38>> Yeah. Well, until you guys sent Stripe over to us, it was a lot cheaper. I mean, I I see on these boards on Reddit that Stripe are paying 350 k for mid range engineers. Mean, that's madness in Ireland. And so, you know, yeah, it's expensive, but you can definitely pick up real value out there as long as you're, you know, pick you know, you're you're shopping in a different market in a sense because you are talking

16:03>> to people that want to do something more than just, you know, be a cubicle within meta. They want to give something back. They want to contribute to open source. They want to dream of a better future. And really, as long as you can pay enough, so, you know, paying 100 ks, that sort of thing, then you can do it.

Famous Five Rapid Fire Questions

Nathan Latka

16:25Luke, on that note, let's wrap up here with the famous five. Number one, what's your favorite business book?

Luke Feeney

16:31>> My favorite business book is

16:35>> Crossing the Chasm.

Nathan Latka

16:37That's a good one. Number two, is there a CEO you're following or studying?

Luke Feeney

16:42>> Yes, there is a CEO that I'm following or studying. I I I suppose I'd say I'll say Bill Gates.

Nathan Latka

16:48Okay. Fair enough.

Luke Feeney

16:49>> Number two is that what's your favorite online tool for building terminus?

16:54>> Oh, our favorite online tool for building terminus is well, we use Notion a lot.

Nathan Latka

16:59Okay. Fair. Number four, how many hours of sleep do you get every night?

Luke Feeney

17:02>> I get eight hours. I'm sorry.

Nathan Latka

17:05Very good. Did you get more did you get more sleep as a politician or more sleep as a software founder?

Luke Feeney

17:09>> Software. Because I I because I started to read about everybody's obsession with sleep and realized that I should be getting more.

Nathan Latka

17:14That's hysterical.

Luke Feeney

17:15>> I have four kids as well, Nathan. So eight hours is amazing.

Nathan Latka

17:19Wow. Okay. That's what I was going to ask you. So four so you're married with four kids?

Luke Feeney

17:24>> Yeah.

Nathan Latka

17:25And how old are you?

Luke Feeney

17:26>> I'm 42.

Nathan Latka

17:27Four. Wow. Okay. Last question. Something you wish you knew when you were 20.

Luke Feeney

17:31>> Something I wish I knew I was 20. Jesus, so much. The share price of Apple.

Closing Recap: The Numbers

Nathan Latka

17:36Guys, there we have it. Luke Feeney with terminusdb, politician turned SaaS founder. They launched back in, call it, 2018 with a $1,250,000 seed round of 3.5 pre money valuation. They've since grown revenue from $10,000 a month about a year ago to 20,000 a month today. A combination of bottoms up approach plus some enterprise deals. Over 700,000 downloads of their open source protocol, 700 actively using it, three fifty are paying $20 a month on average. Just raised

17:59a 3.5 seed round at a 10.5 pre money valuation. 13 on the team over there in Dublin as they look to continue to scale. Luke, thanks for taking us to the top.

Luke Feeney

18:07>> Cheers.

Nathan Latka

18:09One 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 alive. It is fun to watch every Thursday one

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