How Arka 360 CEO Siddharth Gangal grew to $767.2K revenue and 380 customers in 2024.

hello everyone my guest today is siddharth gangal he is building a tool that helps with autocad and salesforce installation for solar installers at thesolarlabs.com he loves solar and technology and started this business when he was a senior in college his vision is to help solar installers scale their businesses and thereby make solar more accessible to the world he'll do this by installing better engineering solar system siddharth you're ready to take it to the top yep that's okay so just be clear is this the piece of software you're selling yes it's a subscription software for solar installers which helps them design and engineer solar pv systems so you can engineer how a solar system would go up on your rooftop and it helps the installers create sales proposals that ultimately help them close deals and what do they pay you per month on average to use the technology uh so we have a couple of plans so our cheapest plan is for 70 dollars per month and our most expensive plan goes up to one fifty dollars per month and siddharth you started this as a senior in college what year was that when did you launch uh so that was back in 2017 um 2017 yeah and how did you get i mean how many customers are you serving today uh so uh today we have around 380 uh solar installers using us wow how did you get the first 10 okay great great question uh so the first uh i guess the first five came in through uh so these were the customers that you know we were already working with while we were you know developing the product so we took a lot of user feedback from them oh no but siddharth but how did you what do you mean i mean how did you get your first five connections oh okay so we just uh picked up a list uh on on google maps um and uh like solar websites and just cold called okay so hold on take me into that story so what did you search specifically in google maps um solar installers near me and where were you uh so i was in um so interestingly like we were in delhi sorry i was still a senior in college when we did this uh these initial user interviews um so we had traveled around 200 kilometers to delhi and we did all these interviews over there um what we search for is just you know we ended up at at a hotel uh search for solar installers near me um in delhi though you were in delhi though correct that's great and how many showed up what was the total list how many sorry how many showed up when you did that search how many showed up on google maps uh so in delhi there were about 300 installers so so we had a list of 300 to call from we managed to get around 40 interviews done in a space of three months so got 40 interviews done and then five of them converted to customers yeah five of them converted like within one month of launching and uh approximately i guess 30 of them would be our current customers uh 30 of the universal 300 on the list yep and can we do the maths at our 380 customers times 70 bucks a month you're doing at least 26 000 a month right now in revenue right we are and where were you about a year ago so we can calculate growth rate all right so a year ago we were at so a year ago we were approximately at around 50 customers so we've had a pretty steep growth rate during 2020. so 50 customers and what does that mean about how much in revenue per month so we were approximately at 3 000 to 3 500 per month yeah so that's a lot of growth how did you grow so fast during coba did you just keep just using google maps to find lists and cold calling no so we added a couple of more we added three more channels so first was cold calling and outbound uh due to which we scaled up to about 100 and after that we got into channel partnerships with the solar manufacturers uh through which they introduced us to their dealers and you know people they sold to and use those connections to scale to the rest and how many channel partners do you work with today uh today we were a bit too okay and how much do they must incentivize them somehow do you pay them a commission yes yes we do and is it like a 50 50 sort of split or how do you structure that agreement uh so it's it's more uh thirty percent uh to the you know to the introduct introduction and seventy percent to us thirty percent over what period of time uh so that's for the first year and uh then we pay around five to ten percent for the second and third years and uh after that it's our customer oh that's great now do customers stick with you that long what does your churn rate look like um right uh so we have lost about uh um so we've lost about uh maybe 25 percent annually okay and that's on a revenue basis 25 revenue churn yes yes and now this software obviously i imagine these folks you're selling to have a lot of budget do you upsell them anything or just 70 bucks a month is the only opportunity right so that's that's an area we're struggling with right now we're trying to figure out more ways of upselling so one access for us for upselling is selling them more seats right so if you have more designers or more engineers you buy more seats so that's one access the second is we're also building out new features uh like you know that further enhance the in either the engineering capabilities or the sales capabilities so that then you know has add on certain add-ons which take that 70 dollars to around 150 dollars yeah you upsell based off number of projects residential projects you upsell based off number of commercial projects and you're looking now to sort of invent new things for you to be able to upsell against right that's right do you have a second or third sort of product that you upsell or is it all just the solar installation software right uh as of now it's the solar installation software uh but we're looking again you know we're building more um so the next thing for us to do is to go into more customer facing applications so for example uh tools that allow the installer to send a proposal that the end user can interact with so you know stuff like uh e-signing stuff like viewing you know um 3d models right with the customer so that they can talk over a design uh that's that's the things that we're building so again these will be and sid are have you bootstrapped this or raised capital we raised a small seed round of about two hundred thousand dollars back in 2018 and uh since then we have sort of a broken even month over month congratulations that's great thanks thanks do you have any plans to raise capital now um yes we do we do we're looking to raise around 1 to 1.5 million dollars in the next six months so as of now not actively fundraising but uh we will be in the market soon and what valuation do you hope to raise 1.5 million on so we are hoping to push around a six million dollar valuation and how are you feeling about that i'm trying to get a read but you're a very calm cool and collected guy right um so i i think it's it's a reasonable ask the sector is is you know it's very fast growing and uh there there's interest um there's also like you know market trends like uh with joe biden becoming the us president for one um he has a great you know green initiative a green jobs plan which would spur solar in the us and uh you know the u.s is sort of the leader in in terms of policy uh so like many countries copy what their policies are so we expect that to have a trickle-down effect on the rest of the world as well so that will lead to more solar hopefully yeah yeah now what does your team look like today siddharth so we are a team of 20 people um around nine across engineering and uh around seven in business operations how many how many quarter carrying sales reps do you have we have three three quota carrying sales reps and what quota do you assign to them so each of each person is supposed to bring in um around i'm sorry i'm having to sometimes convert inr to usd so sorry for that take your time around uh six thousand sorry no it would be five thousand dollars per month got it so they need to bring in something like sixty thousand dollars of new monthly recurring revenue per year or about eight hundred grand in new arr right something like that interesting okay very cool and um where else would you so let's say you go do raise this 1.5 million where would you spend the money where do you think you can drive growth so um right now much of our uh current users so we're even though we're across we're active across seven countries where we have customers um 95 percent of our customers are in india so we would use around 50 to 60 of the capital for marketing and uh you know like international expansion and around 40 on new products and building strongly on the product we have i love that what's it costing you right now on a fully weighted basis to acquire a new customer that pays 70 a month um it costs us around so our cac is approximately sort of a little hard to calculate i would take it at about 35 35 to 40 percent of acv of of the first year revenue yeah so that would be something like between 250 and 350 or something like that yeah yeah okay and where are you spending that money are you advertising or how's marketing so we have a um so we have a percentage that goes as incentive to our quota carrying reps right and approximately on top of that is our marketing costs but where do you spend those costs is it facebook ads linkedin somewhere else all right so some of our investment is on seo and uh some of google ads google x and and and we actually spend most of our money on content and longer term initiatives makes a lot of sense we're rooting for you siddharth let's wrap up with the famous five number one favorite business book um never split the difference number two is there a ceo you're following or studying uh jeff bezos number three what's your favorite online tool for building the business um and number four how many hours of sleep to get every night around seven and a half and what's your situation uh siddhartha married single kids um nathan i'm 25 i hope to be single for a few more years all right not married no kids 25 take us back five years what something you wishing you knew when you were 20 20 20 that uh don't worry too much and as i was at college at the time don't worry too much guys he builds software that helps solar installers install the panels more effectively and at a lower cost he launched in 2017 while in college cold called solar installers from a google maps listing landed that's why i got his first five customers now today doing about twenty six thousand dollars a month in revenue significant growth during covet 380 customers on just 200 000 raised looking at potentially doing a 1.5 million dollar round here at a 6 million valuation in the next six months watch out for this guy he's on to something siddharth thanks for taking us to the top thank you nathan pleasure being here 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 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