Trulioo Revenue, Valuation & Funding (2024)

hey folks my guest today is steve munford he has nearly two decades of executive leadership experience in the technology industry and currently serves as a ceo of truly used software a leader in digital identity previously he'll leadership and board positions with a number of public and private software companies in north america and europe he holds a ba in economics from the university of western ontario and an mba from queens university steve you're ready to take us from the top sure thing nathan all right digital identity is hot metaverse we have we have jumeo on blockchain we've got all these tools up traditional players like ping identity how do you fit into the space yeah so we are involved with the onboarding process so think about yourself if you're a neobank or an online trading platform and you're trying to onboard customers and comply with different regulations or build trust uh you need a digital identity service to do that and that's what we are and the thing that makes us unique is that we we do it not only here in canada the us but we do it across 195 countries which makes it hard and makes what we do quite special so when i just bought recently on my tesla and had to show them proof of insurance and ownership via the app one of the things they had me do was effectively go through a third party and verify my identity was like a face picture with some algorithm thing plus my a picture of my passport are you powering those sorts of things yeah yeah so uh you know so it could be a marketplace it could be a shop it could be a you know an online trading platform those are all use cases for us and uh you know typically we get involved with you know high high growth digital first disruptors that are expanding globally and and really power them and tell me about how you price right so are you charging like per identity verified per kyc filing like how do you verify her as a consumption base we we we do it based on per check so every time someone comes to do us comes to us with a check we charge a a a fee on that i see sort of like a flat p we're talking like five cents or something no no no this is uh this could be you know it could be in the sense it could be in the dollars depending on the country comparing the complexity because not only do we do individuals we also do companies so whether it's a large company or think about a sole proprietor signing up to do some kind of rideshare programming or assault proprietor going on to a platform to sell their their goods around their houses those are all kind of different you know different versions of the same workflow if you will just to steve simplify my questions can i assume for the average though is maybe around a dollar sometimes it's two dollars sometimes it's five cents yep yep that's good okay tell me about the back story here what got you into this uh well one is um it's a the founder who founded truly was based here in vancouver i knew some of the investors i got to know him over the years and really started with conversations about the next stage of growth for the company and you know he was considering a lot of options like many founders you know should i you know try to scale the business myself should i take on new investors should i sell the business and what was context how much had he raised and was he the sole founder he no there's two founders but he was the only founder still in the business um he had raised i don't have the exotic figures but think about in the tens and twenties millions of dollars and uh and the company at the time was doing i don't call it 20 or 30 million dollars and uh he was trying to decide whether to try to scale to the 100 plus million dollar company 2017. this is 20. i began the conversations with them about in 2017 2018 i took over running the uh the company back in early 2020. so along the way he decided that three year conversation steve that's a lot of patience uh yeah there's a lot of patience but um listen it was a great chance to get to know him get to know the business and uh to build a relationship and listen the conversation started with you know just one one guy trying to be helpful to an entrepreneur and it turned out to be you know it's a great fit you know the identity problem is huge the market um you can't ask for a bigger market more important mark than identity today it's a hard problem it hasn't been solved and the need for it as everything goes digital just increases so he had a desire to you know stay involved the company but pass off the baton to running the company we went about uh doing another round of financing then allowed to take some secondary to you know take a step back and you know pass it off to this new guy and and kind of take some money off the table and it's worked out really well so steve just to back up the story here because yeah i mean when you say you you're underselling a bit your most recent round i'll let you tell tell the story but what was the size of the most recent series d it was us dollars 394 million um 150 primary and the rest was secondary and just a lot of founders don't understand you can get liquidity for yourself early investors and early employees without ipo'ing or exiting 100 just quickly explain how a secondary works yeah and and actually just just full context that was a pre-money valuation 4.6 billion so um post post post two million post 2 billion basically well because 150 primary so post 1.75 us but i think this is really important point nathan i i i think um for a long time you know i don't think investors had a lot of appetite to give founders or ceos or early uh investors liquidity before they got their liquidity or before there was an ipo and i think that that was fundamentally misaligning um risk and and interest and and i would say for the last four or five founders i've worked with a key ingredient to them feeling comfortable to allow the company to take more risk to grow to go longer was the ability for them to take some secondary and take some chips off the tables to do risks because for most founders their chips are on one company and and whereas investors they spread across you know five or ten companies so the risk kind of appetite for an investor could be very different to a founder and i i think if you by allowing some liquidity along the way it's just um it's just there and it's good and and this you know liquidity event that we had jesus employees here that have been here six or seven years and were able to pay down mortgages or even pay off mortgages uh the founder was able to take some money off the table some very early investors angel investors were as well and quite frankly there was more appetite to buy shares and there were sellers of shares in this round and and i think that's you know looking across i think probably 40 or 50 employees that were able to get some kind of liquidity that's fantastic and and now they're they're still engaged they still got a they got a lot to play for but but they're able to kind of take some rewards along the way i think it's nice you guys are listening right now going well steve they have a lot of skill i mean they broke 25 million in revenue in 2017. well i don't have that much revenue yet i can't do a secondary i will tell you we're seeing secondaries very early i'm seeing series a companies take secondary so just because steve is much larger than maybe you guys are listening still take this advice on secondaries to heart if you're thinking about it you know seed or series a steve would you agree i completely agree because a lot of those same investors with good companies also could get complete liquidity they wanted there's a lot of m a appetite going out here so this is it's really just an option of hey some secondary i'm still going along and that's absolutely a conversation you can have if you're the right profile company and the risk the flip side to this the reason firms like tcp will do this uh steve i'm sure you are as well but you know i'm an investor in a bunch of vc funds and the vc funds get so bummed when founders sell too early because they want personal net worth whereas they would have stuck with the business if they could extract some personal wealth ahead of time and have a long-term horizon so that's what tcp is fighting against absolutely and it's not just a founder think about the founder generally has a family and that that that person's been working 24 hours a day the family's generally made a lot of sacrifices he's been building the company and at some point you need to come home and say hey we don't have a mortgage anymore or you know we we're going to be in good shape and i love my company to go longer but we've been able to toast celebrate a milestone along the way and it doesn't make the founder any less hungry it just actually means it has a longer time horizon i i think it's a really important ingredient to uh to building a company over the long term so just to sum that up 394 million total around 150 million went on the balance sheet of the business 244 million of it went to early employees early angel investors the founder liquidity it was a 1.7 post money evaluation and steve about what revenue run rate today uh so i think we're pretty public about this where we're approaching right around 100 million dollars u.s so that begs the question right why do a secondary you could have maybe i mean you really need to have like 120 140 an ar to have a you know good ipo these days but why not ipo instead of doing the secondary with tcb yeah i mean absolutely when when you're the rule i think we're world 120 so oh wow nice so we are not a company that need the money to fund operations we're profitable high growth company and an ipo yes absolutely that was uh we could have done that um but i tell you we we we see the opportunity to build a company that is you know really the platform for identity which really it's it's a multi-multi-billion dollar company and the ability to to listen there's a lot of private capital available and ability to operate the company not under the scrutiny of a public market not to be a sub on a sub-scale public market company you get a lot more latitude to focus on the business versus focus on a lot of other investors and it's a lot easier to run a company if you have a couple investors that sharing your thesis and are working alongside you than to have all the overhead of running a public company run a couple of public companies and and it is very very different than you know having one smart investor that wakes up every day and cares as much as your business that you do is very different than having you know 20 to 30 40 or thousands of public company investors and guys you hear this a lot when i interview founders doing between 80 and 200 million bucks in ar they'll talk about rule of 40 and just to remind everyone what that is effectively your last 12 month growth rate plus uh profitability right so if you grew 100 and you also had 20 profitable you'd be 120. steve i imagine you guys are not profitable but you're growing much larger than 120 percent year-over-year possible you are you're profitable wow okay yeah yeah break that down break that 120 down for me then how much profit how much growth well it's called 100 percent growth and it's anywhere between five and twenty percent even though so me listen i'm rounding the numbers here but it's all good numbers that's incredible so if you're doing about 100 million run rate today where were you about a year ago uh we've been growing a hundred percent so 50 million yeah that's great okay very cool take me back to the series c obviously you're managing a story line between the series c and 2019 now you join you joined right before the series c or after uh after oh you joined it right after okay so maybe you don't i mean and probably probably know this though so the 50 it was 70 cad 55 million usd what valuation was that at uh i don't think we went public in that one but it was relatively small okay most folks on a serious team and you're selling 10 to 15 percent of the business would you say you're probably not standard range or you did something unique uh yeah it's not sure right yeah i'm not gonna i'm not gonna let you fare it down to get to an answer i wanna i wanna see how much the valuation grew over the past 12 months since revenue grew 100 can you speak to that at all a lot a lot and there's two things one is um our growth rate certainly accelerated um we we really skilled the leadership team and geographic presence our new logo acquisition really ramped up and um and and also the market dynamics just went in our way elsa and identity became the most important enabler for online commerce and and that you know pre pandemic it was a trend coming you know post pandemic when we saw the democratization of financial products everybody wanting to open an account trade online those products going global you know the payment infrastructure all changing everything being digital also identity became the gating factor for companies expanding and growing which was a tailbone for us so it was a combination of yes the company's metrics have greatly improved but also just the recognition that this is a huge business seemed to come about the same time which just the multiples that people are getting in our space have just um expanded considerably and you mentioned local acquisition how many customers today uh about 450. okay 450 that's great and then talk to me a little bit you mentioned building out the team how many folks are full-time on the team today oh we're just over 300 okay and how many engineers uh about 100 very heavy and and do you love that shred financing up there in canada or what i shred financing listen i've been in this business you mentioned my gray hairs a long time i think it is a great asset for canadians i i think it is such a good program that the government runs and runs very efficiently i'm a big fan and i think it is a it's something that really helps out companies um here yeah now there's a reason that we uh that we have a significant amount of our actually 50 of our employees up there in canada as well we we love that um talk to me see if i do have a question for you so there are some people that might argue with current market dynamics a 1.7 post money valuation growing 100 year over year 100 million that's a 17x multiple it's actually much less than like a 35 40 a 40x multiple that like you know manny and outreach got or gong is getting or click up just got why why why are you i mean why is your valuation multiple almost half of some of those guys in your opinion so so i'm coordinating today's numbers which is really six months on or seven months on from the value from when we did the financing so so so they were they weren't that at the time so the i think the the multiples was mid 20s to 30s back then so um yeah listen i and listen today i think our growth rate accelerated even even since then so today we're certainly worth a lot more than what the last finance was at talking about net dollar retention real quick before we wrap up where are you guys at today uh we're approaching we always range between 150 and 200 and and we we that's world class yeah yeah and that's what makes us profitable right so back to the point you said how can you even uh profitable we acquire customers and in any given quarter the majority of our revenue comes from existing customers it's a uses based pricing right so we land a customer and then we land generally winning platforms that are expanding organically and and expanding geographically so if you take care of those customers you solve the problem and you're relentless with the focus on their success you know you can't help but have great network dollar retention in our space so steve just to peel the onion on that dollar retention you have gross revenue churn and obviously expansion are you guys gross turn like 10 in expansion 80 to get the 170 or something like that yeah or growth dollar retention is negligible like it's single digits yeah [Music] and and we'll be fine as we get people on the platform and they can be small because they're an early company and they can stay smaller go away but if they grow once they get growing as a company then we never lose them yep interesting uh wrap us up here uh before the famous five what are you gonna spend the 150 on uh like the inorganic growth okay and so um there's a lot of folks growing very fast right now by if they can raise from vcs at a 17x multiple but they'll buy other companies on a 10x multiple you do that all day long inorganic growth financial engineering caught what you want is that what you mean yeah i actually yes those that math makes sense but it really is for us all the product right we we we are not i'm not looking for top line growth i'm not i'm looking for product to extend our platform and with the right product we we have a customer base that is enviable if we broaden our product suite we can we can sell more to them and provide more of a whole whole solution for them so it really is about product and the team and the tech not so much i'll pay whatever multiple i need to get the right asset it's all about the product the team in the tech name a product category that's right next to digital identity that you're very interested in i think there there's a lot of there is uh for opportunities and fraud a lot of areas for opportunity in things like biometrics um there's there's you know parts of the orchestration of how you orchestrate multiple different steps in an identity journey all these things we have either part of the solution or building solutions that we may want we may be able to accelerate or grow through mna very cool all right famous five number one favorite business book uh my favorite business book um can we come back to that one yeah number two is there a ceo you're following or studying give me a canadian founder i i i'm a big elon musk fan sorry all right i don't know if he has any canadian in him but we'll see numbers he went to queens by the way oh okay there you go fair enough number three what's your favorite online what's your favorite online tools team for building trulio uh for building truly you um because i thought i was going to say snapchat for keeping in touch with my my kids yeah i listen we are a big user of black and and i think it's just a great tool for us number four how many hours of sleep to get every night i'm about a six-hour guy that's good if i have a hard work if i have a hard workout maybe seven but generally a six-hour guy in situations steve married single kiddos uh married with three uh wonderful kids wow busy guy and how many uh how old are you i am 55. take us home something you wishing you when you were 20. wish i knew when i was 20. um that my philosophy degree would have so much value [Laughter] trulio.com guys one of the unicorns in the digital identity space steve came in a couple years ago to drive expansion in the platform the company has grown over 100 percent here every year from 50 million they are 100 million in ar 450 enterprise customers today they just raised 394 million bucks in capital 151 on the balance sheet 244 to provide liquidity to early backers of the business employees and founders 1.75 billion evaluation as they look to continue to scale steve thanks for taking us to the top yeah thank you nathan all the best 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 fun to watch every thursday 1 pm central additionally remember these recorded founder interviews go live we release 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