upekkha Customer Count (2026)

[00:00] So what if I told you that 85% of the SaaS startups that start out do not cross a million dollar in ARR? This is statistics from Nathan's [00:14] database that he puts together where he tracks the entire SaaS universe. There are about 32,499 startups as of yesterday. And out of them, about 4,766 startups are beyond a million dollar in ARR. That's roughly about 15 out of 100. Now out of those 400 4,766 startups, 2,700 odd startups are above 2 10,000,000 in ARR. 2,687 startups are above 10,000,000 ARR, which means one out of two that have crossed a million also crosses 10. Now anybody in [00:56] the SaaS industry knows that if you cross about 10,000,000 ARR, then you are almost immortal. It's very, very hard to kill that particular startup, unless, of course, you do something very stupid. Maybe you got caught in a rave party or you invested in Silicon Valley Bank just before March 10. I know two founder friends who did that. So other than that, you are pretty much immortal. Now some of you who are very data centric, you're like, [01:23] no, you're just taking a snapshot of the stats here. You should look at the time series. Fair enough. I looked at this data at Crunchbase. Crunchbase says that as of yesterday, 24,700 startups are there in the world. Now Nathan tracks bootstrap startups as well. That's why you see the numbers are different. But out of that, 3,000 startups are the ones that have crossed about a million dollar in a era. Five years ago, I looked at the [01:51] statistics because I was writing a blog post for comparing the number of startups between India, Israel, US, UK, and Australia. And at that time, there were 17,700 SaaS startups, out of which, again, about 2,700 odd startups were above a million dollar in ARR. And I work very closely with Indian SaaS startups. And in 2018, the number was there were seven eighty three SaaS startups, out of which 72 had crossed a million. So you can slice and [02:17] dice them differently. You take snapshots in different years. And you could even go back to 2011 when Jason Lemkin was tracking. The number ranges between ten percent to fifteen percent. Zero to one stage of the startup is where the highest amount of mortality rate is. And me and my co founder, Prasanna, we've been thinking about this for a while. Why is it that in the zero to one stage, the highest amount of mortality rate is there? [02:41] He was working at Microsoft, me at Intuit, and we ran accelerators inside in our organization and outside. And we were trying to improve the odds of the zero to one mortality rate. [02:54] We looked at lot of frameworks. We looked at Lean Sheen startup or whatever was the fashion of the day, like whatever is the fashion of today. We were looking at frameworks and we said, can we use it? And we would get very elated. We would say, this is something that looks like that you can solve the problem. And then a few months later, you would realize that it was only being used by people who are selling [03:13] frameworks. It doesn't really, really help. And out of all the frameworks that we have looked at, the one that I'm the most disappointed with is this whole idea of product market fit. It's not even a framework. It's just a phrase. Some people like to call it a mental model. And I think, you know, it is a fraud mental model. I have not found a single entrepreneur who could look at the definition of product market fit and [03:40] say, hey, this is how I reach product market fit. It has not been actionable at all. This mental model is only used by investors that's what I've seen in the last ten years to decide whether they should further do follow on funding or not. It doesn't help in making progress in an actionable way for founders. So I run a SaaS accelerator called upekha, and I work with about 108 startups as of our last cohort, which is [04:06] the eleventh cohort. And in our first cohort in 2017, we had 10 startups that joined us. Eight out of the 10 have crossed about $1,000,000 in ARR. Ninth took a small exit. And then the tenth one is the one that did not cross the $1,000,000 ARR mark. They are roughly at about 40 ks of MRR. Now through these trials and iterations, there is some method to this madness of going from zero to one where the odds [04:32] are more than 15% that we've seen. And in that experience, what we've come to frame this as is we call it as building a SaaS flywheel. Now, when you're building a SaaS product, you are, of course, going to do engineering. You're going to do building. You're going to create your product. You're going to do some marketing. You're going to do some sales. And you're going to set up your customer success. All of this is going to [04:56] happen. But underneath that, you're going to actually do fundamental choices, fundamental blocks. And that we call as the inner flywheel. And this inner flywheel is nothing but a set of six choices that you make. And the reason we call this as a flywheel is all these choices are interrelated with each other. You change one of the choices. You have to come back and look at all the choices and reevaluate them and maybe change them if you [05:23] change one of these choices. [05:26] Now, when Nathan reached out to Prasanna, he said, hey, look, now you need to give a talk. And then we were like, yeah, sure. But then I told Prasanna, look, we spent six months working with founders on working on these six choices. How is it that I'm going be able to do this in twenty minutes? And he said, no, go figure. And then Nathan connected us to Mandy. And Mandy was like, look, if you don't finish [05:49] this in twenty minutes, we are going to yank the speaker out of the stage. Well, fair enough. But then I love when a conference is so tightly well produced. So good job, Mandy and Nathan, on making sure that the conference is running really, really tightly. But then what I'm going to do is I'm not going to cover 108 slides. I'm only going to talk about four of these six choices and very limited aspects of those four [06:15] of these choices. All right. So let me start with the first one. And this is my favorite one. How many of you in the audience are developer? Raise hands. [06:27] Okay. I expected a little bit more. I mean, 15% to 20%. [06:33] I hated to break it to you guys that I was a developer myself. Most of us think that pushing code is as equal to product. I'm sorry. Pushing code is not equal to product. A product is a problem that you're solving for a group of people. Often, group is called a fancy name is given to it, called as the ideal customer persona. Just you group them a certain way. And then you refer to that using a [07:01] shorthand name. Often, shorthand name is called as a category. But of course, if you're designing a chair or you're building a product like a chair, you're not going to say, hey, what problem does a chair solve? You're going to be like, yeah, this is chair. I want ergonomic chair, or I want a chair with a wheel. But imagine the day when chair was getting designed for the first time ever. At that particular point in time, we [07:26] did not have the common mental model of the word called chair. We were perhaps having this conversation about, Okay, we're trying to make sure that we are able to elevate someone a certain feet above the ground. And when you're building your software, when you're building your SaaS company today, you're perhaps at the same point in time when chair was getting built for the first time. So therefore, it pays for you to think about this in terms [07:49] of the problem that you're solving and in terms of the group of people that you're focusing on. And you want to make sure that you are solving a high value problem. And you want to make sure that you are deliberately thinking about the group of people to whom you want to target this. And you want to make sure that if you are building SaaS, you are at least thinking about solving a problem which is at least [08:12] worth $3,000. The cost of problem is at least $3,000 or more. Let me illustrate this with an example. IMOCA was part of the first cohort at upekha, And they were a skill assessment platform company. If doing hiring, then IMOCA is relevant to you. What they do is they make the entire prescreening of the hiring process automated. They send out tests to candidates. They get evaluated, and the dashboard of that is presented to the hiring manager. They [08:45] being founders, they were targeting other founders, and they were selling $1,000 ACV in a year. And they had flat revenue for quite some time. They were good at sales. They would complete the sale. But then three months later, the startup founder that had signed up will churn out. They changed their approach a little bit. Instead of focusing on founders, they went to large companies, have at least about 10,000 people in their organization, at least 200 people [09:12] in their HR organization. And then they said they took the same piece of code and then gave it to them. Now these folks who are in in large organization, they spend their entire day in sending all these service. So sending all these skill assessment tests. Now, for a founder, what happens is he may do hiring once, twice, maybe thrice a week. He's not going to do this use case on a daily basis. But when it is [09:39] adjusted to another HR manager or a HR person, they have to live in a tool like this. So when they found a tool like this, the few minutes that they were able to save for each of the time they sent and when they got it added up in their entire day, that was transformational for them. The code did not change. It's just the persona changed. And where they were struggling to sell for $1,000 a year, here [10:02] it became very, very easy for them to sell it at $6,000 a year. And that brings me to my next point, which is choose your geography very carefully. Here, I have to tell you my experience of working with Intuit. I was the head of product for QuickBooks outside of The US market, which is India, Malaysia, and Singapore. And we spent a lot of time in these markets. And one thing we realized, it is very, very hard [10:28] to sell software. And was I talking to Greg about this during lunch. Very, very hard to sell software in a market like India. And initially, I thought, you know, it is maybe because software is an experienced product. It is an intangible product. You don't get to touch and feel it. And I thought, like, you know, in a low trust environment, low trust society, if people can't touch and feel it, then maybe it's very hard to sell [10:52] a product like this. But then then, like, you know, something else happened. And I saw that, you know, people were able to sell religion, were able to sell devotion, devotional songs. All these are intangible. They were selling. So intangible was not the reason software was not selling. Then it took me a couple of years to figure out that it is rooted in culture. Countries like India, Malaysia, and Singapore, they find time to be really, really abundant. [11:22] Developed markets, they find time to be really, really scarce. So if you are selling a product like QuickBooks, or pretty much every SaaS company, which is just a variation of save time, if you are selling save time to a country where they already have this in abundance, they are not going to buy it. So there are some geographies which are time rich but money poor. And if you sell save time there, it's not going to work. [11:49] But some geographies which are money rich and time poor, then save time value proposition and messaging is going to work. So the Indian founders had a variation of this. And this is something that we help and work out and make it practical for a lot of the Indian founders is that they have come to a maxim now saying that, you know, if you're selling from India, it is easy to earn a dollar than to earn a [12:14] rupee. Now if you are from a country which is outside of US, ask yourself this question that in the cultural context of that place, what do they relate with in terms of time? Is it in abundance, or is it scarce? Then you go and pitch a save time messaging there. Oh, yeah. I can actually illustrate this with the example of again. IMOCA, if you see the place where it is highlighted, first, they were able to get [12:42] out of their flatness after they changed their ICP and the problem value. And then they decided to shift from India to The US. Now, it takes some courage to do something like this because the traditional advice that people will get is is like solve problems for people around you. So they had to go against the grain, and they had seen a dip in their revenue, and they had to actually weather that and then move forward. But [13:03] then that set the foundation for the next level of the s growth. [13:09] Let me talk about the fourth choice. The fourth choice is about positioning. You want to be very, very deliberate about positioning. This is something, again, developers struggle with. This is one of those things which once you see it, then you cannot see it. Because when you change the way you look at the things, then the things that you look at, they change. Positioning is criminally underrated. Position what happens is we as humans, we make sense of [13:39] the world by having boxes and containers in our head. When you are looking at me, you're asking this question, are you a developer? Are you a product manager? Are you an investor? Are you a founder? And you're going to ask this question saying, is this a CRM when it comes to products, or is it a customer experience management? CXN. So oftentimes, see that founders come back and say, hey, sales is not working. Sales is not closing. [14:04] Sales is often a symptom. It's not the root cause. The root cause could be that you've not done the positioning right. You've not allowed the customer to have the conversation raised in the right box in their head. So whenever having a positioning conversation, I say, think about x axis and y axis. Plot a graph like this. Like when thinking about positioning, remember this phrase, association and differentiation. First association, then differentiation. Association is what is that x [14:36] axis? What is that category name? If you don't have a category name, find a good analogy. What is that analogy that people already understand around which you can hang the explanation about your product? And then what is it that you will do to differentiate? Not only do you want to make sure that you are in the right container in customer's head, but you want to make sure that your product is the one that gets placed in [14:58] the container. So you have to think about differentiation. So associate and differentiate. Now you could say, existing blogs, or you could say, existing blog with a certain height. Don't do that. Say chair on the x axis or say CRM. And then on the differentiation, you could say, hey, this is a CRM that is integrated with social, and it is 10 times better than any other CRM. So for those customers who are looking for that, you are [15:24] the winner. You want to place your x axis axis and y axis in such a way that your product comes out on the right hand top as the winner there. Well, let me illustrate this again with another example, right? So Neurotags is a company of ours, and they were initially focusing on making sure a QR code gets placed on all branded item, let's say an LG product that is getting sold on Amazon. But what happens is [15:44] that LG doesn't have the end user's data. So they help you put a QR code, which the end user, when he receives it, he registers through it, and then he gets warranty support. Now using that, they get the data back. For a while, for an entire year, what they did was they just focused on the code aspect of it. Now they did this positioning exercise. Then they realized the x axis that they should be talking about [16:06] is post sales experience. And they realize that their differentiation is one click, one click post sales experience. This led them to even change the name from neurotags to direct, allowing brands like LG to have direct connection with their end users. And earlier, they were struggling with $2,000 ACV conversation, and this repositioning helped them close deals at $30,000 ACV. [16:32] Bonus fifth choice on pricing. I'm going to go really quick on this. This is even though I said four, but the fifth one is that founders are afraid of raising prices. Right? And this is a big one. Let me quickly talk about another startup called Social Pilot. I worked with two companies like Social Pilot, one which got to 300 ks, 500 customers, but had to sell off because the founder was afraid of increasing the price, spent [16:58] four years building their business. But Social Pilot crossed 6,000,000 ARR last year. And the key thing that I would attribute is that they were not afraid to raise pricing. It was not easy. It was difficult with them. Prasanna, my co founder, threatened to throw them out of the cohort. If they don't increase the pricing, they went ahead and did that. And then they saw that the revenue did not dip. There was a little bit of a [17:17] churn. And then they become encouraged by that. So then they continue to increase the pricing, and that led them to double the growth every year. So to summarize, use a SaaS flywheel as the mental model for you to actually charge your path out of the zero to one. And within that, the three most important and the powerful levers are solve a high value problem, make sure that you are positioning in an existing category, and be very [17:44] deliberate about the pricing. Sorry, deliberate about the positioning and make sure that you increase pricing. Thank you, guys.

[00:00] Upekkha. They've backed over 110 or helped over a 110 SaaS companies. They've written checks into 47. They put a $100,000 check-in in exchange for 5% of the business. That company, they can then go raise another equity round, and then they don't have to pay back any capital. Or if they wanna say, you know what? I don't need more money. That founder will then is required to start paying back at one year between three [00:19] and five 37% of their monthly revenues, paying back a three x cap on the $100k investment from Upekkha to buy back 4% of the equity. Upekkha will still keep one percent for that long road. Hey, folks. My guest today is Prasana. He's with a group called Upekha based out of Bangalore. They're helping b to b SaaS startups grow faster, and he's a very humble guy from that intro. They're really behind some of the most the fastest [00:38] growing startups in India. And India really right now is a hotbed of some of the smartest founders, whether that's Sarvana, the old Netcore crew, the Freshworks crew, you name it. They're in India. Something special is happening. So we're very privileged to have Persona on the show today. Persona, you ready to take us to the top? [00:55] >> Absolutely. [00:56] Alright. What what why why am I seeing SaaS founders coming out of India that they just seem to be all of them are, like, $10,000,000 in revenue bootstrapped. It's like, what's going on in India? [01:06] >> Yeah. I think it's something in the water here. Right? The analogy that I give everybody is that, you know, in 1992, there were 200 IT services companies doing $100,000,000 of exports. And in 2002, there were 8,000 IT services companies doing $12,000,000,000 of IT services exports. So it's the same thing that's happening right now with SaaS. The things that we're good at in India are we have a lot of developers, there are probably a million or more [01:36] >> developers just in Bangalore. So if I throw a stone outside, I'm more likely to hit a software developer than a crow. Right? And we know English, so we can make software for folks who are speaking English. Right? And I think the last word in SaaS is service. And so if anybody wants to implement a SaaS product, if they're mid market or an enterprise customer, they need integrations, they need migrations, they need training, they need data transformation, [02:04] >> all of that stuff. And most of that stuff, you can't just do it off the shelf, right? There has to be somebody who looks at your data, how that data has to look in the system and figure out how to get it there. Right? So when you put all these things together, you know, it I think and the water, it all starts working. [02:24] It's amazing. I remember one of our first conversations. I figured it was with you or the the the crew there at Apekha, but it was November 2021. And you guys said, Nathan, you know, we're really targeting 60 startups at a 100 k checks each in 2022. We've now finished 2022. How'd you guys do? How many startups did you help? [02:43] >> So we worked with about 40 startups, and I think we did a total of 47 or 48 checks. [02:50] Wow. Okay. A 100 k. And is it always a 100 k? [02:53] >> Yeah. [02:54] Okay. So walk me through that model. Folks might be listening going, wait. What's the investment model here? Is it like YC? Is it like Indie.vc? What's it like? [03:02] >> Right. So the $100k is Indie.vc. [03:06] And so explain some folks who know what that is. Right? So explain what they explain what it'd be. [03:10] >> Sure. Sure. Right. Yeah. Yeah. So what we want is for founders to be in control of their destiny. So we want to make sure that we're able to work with founders, not only founders who are expecting to get a hyperscale kind of an outcome, but we also want to be working with founders who want to be founder forever or want to take a strategic exit. Right? So what that means is we don't want to lock them [03:32] >> into chasing funding every eighteen months. We want to make sure that, hey, if you're building a business, if you can get to 5,000,000 and you're cash flow positive and you're making, let's say, 2,000,000 net, then you can return to us at a good multiple. Yeah, it's a great business, right? Yeah. So I literally have one of our first cohort startups. I won't tell you who, but they're at 6,000,000 in ARR and they have 2,500,000 in cash [03:56] >> in the bank every year. Right? [03:57] Incredible. [03:58] >> And they don't want to raise money. [04:01] >> They don't wanna get into the rat race, and they're growing 50% year on year. [04:06] Well, so how do you guys make money? Right? Most most VC firms will say, listen. We're printing a 100 k checks. We need one or two to, return the fund and become a billion dollar company. So when you say the fund, the money you invested, 47 checks at a 100 k up off. So 5,000,000 deployed in 2022 as a BDC. What do you mean by that? What's your return profile? [04:21] >> Right. So what we're so out of the first 10 startups that we worked with, Nathan, we now have six startups over $1,000,000 in ARR. Out of that six, there are three that have crossed a $5,000,000 ARR. Right? So think about this from a fund perspective, right? We are investing in something like a 2,500,000 kind of a valuation. If they get to a 5,000,000, and even in today's time, let's say they're at a five x kind of [04:47] >> a multiple, they're at a 25,000,000 valuation. Right? So we have a 10 x in a valuation jump in about 30% of our companies. Mhmm. So that takes care of a lot of the return. [04:58] But the the culturally, these are founders that don't wanna exit. Right? They love cash flow. They're not searching for growth at all costs. So how do you actually turn those paper gains into real yield? Or do you not need to do that because it's a BDC? [05:12] >> Right. So two ways. Right? One is so so we are not like we are not holding that equity forever. If that's the question, right? We do have to return. And the two ways that we return is one, if they are never raising any capital, then they can buy back just like in the Indie.vc model. Right? Number two, we are finding that there are funds now who are coming in and saying, hey, we'll just pick up secondaries [05:35] >> from these founders or from us. Right? And they're not looking at a primary infusion or a small primary infusion. And they would love to pick up equity in a SaaS company that's actually profitable and growing. [05:47] 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 [06:10] 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 [06:35] 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 [06:57] 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 [07:22] 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. All right. We're gonna go back to the YouTube video here in a second. But [07:44] if 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 [08:11] the interview. I mean, are you seeing Sequoia in India, Accel in India? Are they are they approaching you and saying, hey. We'd love to buy out that 5% you own in that $5,000,000 SaaS company? [08:22] >> No. No. Not yet. Right? Because they are more than the traditional model of, hey. Show me a billion dollar TAM. Show me how you can get to a billion dollar IPO and stuff like that. But there are so many search firms and so many PEs and mini PEs in The US who are now like, if it's a SaaS company, they're like throwing an email at it. And all of our founders who cross certain level, they have [08:46] >> like an email a week in their inbox saying, hey, can we talk to you? [08:50] Yep. Yep. Now you mentioned there's two ways to return. Buying a secondary is what you just described. You said, but the first was founders can buy back the equity. Now do they have the option to buy it back or are they forced to buy it back at a certain time level? [09:03] >> Right. So the individual we are using the straight individual term sheet, the exact same thing. Right? So in that, founders, if they do not raise any further capital, they start buying back with a percentage of their revenue every month or every quarter after [09:19] If they if they don't raise equity in what a period of when, like, when does that buyback have to start? One, you know, one year, two years, [09:24] >> Two years. [09:25] One year. Yeah. [09:26] >> One one year plus. Right? But it's on a month on month basis. It's not all at once. [09:30] So so if you wrote a check into nathansaascompanyinc.com today for a 100 k, and I grow to a million dollar run rate in a year, I am forced once I hit a year, I am forced at a year to start paying and buying back Upekkha equity. [09:47] >> Correct. [09:47] At at what most portion of your revenue. [09:50] >> Three x. [09:52] Okay. So if you put in a 100 k check for you said 5% is pretty typical? [09:57] >> Yeah. [09:58] Can I buy back? Am I forced to buy back your entire 5% portion or do you hold one Okay. Yeah. So it's the same model. It's the same model as Indie.vc. The reason I'm asking is there's a reason Indie.vc shut down. [10:11] >> Yeah. Yeah. Of course. [10:13] I'm trying to see if you've made edits on the model that you think will be more sustainable for both investors and the founders because one of the big negatives was that founders don't wanna pay back $300,000 on a $100,000 investment starting and they're forced to do it starting at one year. Have you built anything into your contracts to give founders more more flexibility, more control? [10:33] >> Yeah. Yeah. Yeah. We we are looking at doing that. Right? So we do want to give founders more optionality in terms of choosing to do that buyback. Mhmm. Right? So if we can delay the payments, we can prorate the payments, do stuff like that. [10:46] Is there ever a world where you wouldn't force the founders to pay it back? Because I mean, this is effectively, in my opinion, really expensive debt. Right? It's a $100,000 up front, and then you're gonna make 300,000 on it over a three year period. That's pretty darn expensive when you do an effective interest rate. [11:02] >> Sure. But when they're coming to us, they're not coming to us at the level that you are getting them in, which is at a 20 k MRR out of 50 k MRR. They're coming to us at practically no revenue. Right? Yep. So when they're coming to us at no revenue, then equity is the only risk capital that they can get because they can't get debt cap debt capital that you provide because they don't have any revenue [11:22] >> yet. Yep. Right? So then what what choice is there? Right? Because we are also taking a risk because as you well know, for somebody to go from a 10 ks MRR to a 30 ks MRR is a different risk profile. For somebody to go from a 30 ks MRR to a 80 ks MRR is a different risk profile. For somebody to go from a one k MRR to a 30 ks MRR is a very, very, very [11:43] >> different profile, right? Yeah. So we are on the early end of that risk profile. I think you are a little later on the end, a little bit ahead of us on the risk profile. So we'd love for our startups to then come to you and say, hey, you look, we now have revenue, we now have customers, the revenue is good quality, we have good margins. Can we take more money from you, right? Because many of our [12:03] >> colleagues don't equity. Get [12:04] That's the problem, right? We're boring. We're boring non dilutive debt, right? You will always have 1% equity no matter what, but I get your point. You're coming in much earlier than we are. There's more risk for you. So I understand that. [12:16] >> Right. And we also do a lot of handholding in terms of getting them their first customers. We're working with them to change their positioning, change their website, change how they talk to customers. [12:26] We literally Well, you have an incredible community too. I mean, you look at who's on stage at SaaSBoomi. You look at your website and the partners you're bringing in. You have really an incredible network you've built around these founders, which is what helps them get to a million, 3,000,000, 5,000,000 in ARR. That's right. What is the percent of monthly revenues that they have to start paying back after year one? [12:47] >> Right. So that's between five to 7%. [12:49] Between 57% per month? That's right. Until a three x cap is paid back? [12:54] >> Yes. [12:55] Okay. What if that takes a founder twenty years? Like, does it is it all due at some point, or could it take them twenty years? [13:00] >> No. Yeah. It's it's okay. [13:03] I see. Okay. So there's no recourse. In other words, if a company goes bankrupt or they can't pay you, there's no way you just keep your 5% equity. [13:10] >> Yeah. Well, there's not nothing. [13:11] You just keep your equity. [13:13] >> Yeah. Yeah. I mean, there's no recourse is what I meant. [13:16] >> Yeah. Yeah. Yeah. I just it's find it fascinating because that's reversed whatever everyone you know, everyone else says it double, triple down your winners. But your winners, you're forcing them to pay you back. So it's jamming down your equity, and that's where your big returns are gonna come from. [13:28] You're okay with that, though? [13:30] >> I think you're modeling this as a single turn game versus we model it as a multi turn game. So what happens is that in our winners, right, they're typically raising more capital, so it gets converted into equity. [13:45] Does that make sense? [13:46] >> In our Somebody who's [13:48] somebody who's winning in your portfolio has the cash flows per month to pay you back, And they can pay 300 k, three x cap to buy back 4% [13:57] >> essentially is raise more capital. Right? Because the folks who are really growing way beyond expectation. Right? They actually want to raise some capital. And when they raise capital, we stay on as equity. [14:12] Did that make sense? [14:13] >> So so you the top 1% of all companies. [14:16] So you delete the you delete the you delete the part of your initial contract that says they have to start paying you back at one year if they go raise a bunch of equity? [14:25] >> That's right. It's in it's the same. Indie.vc has the same model, actually. [14:29] Well, again, but Indie.vc is dead. [14:31] >> They raise capital. [14:32] There's a reason there there's a reason why I shouldn't be [14:34] >> But I should be restarting. [14:36] Well, in a very in a in a a pretty different format. Right? If you and and if you if you interview some of the LPs in that fund and you interview some of the founders, there just was not alignment there. I just wanna make sure I understand you correctly, though. If somebody raises money from you today and they grow to a million dollar a year run rate in a year, they go raise a bunch of equity, [14:52] they are forced to keep your 5%. They but is that your choice or their choice? Because it are they forced to keep your 5% equity? [15:02] >> Yes. [15:03] Oh, they can't pay you that? [15:04] >> Like if there is a convertible debt for 100 k. [15:06] That's why. Oh, I see. I see. I see. I see. I see. Interesting. Very interesting. Okay. And these are all b two b SaaS. [15:12] >> Right? Think of the top 2%. Yeah. They're only b two b SaaS. Right? So think of the top 2% of companies. They're going to get hit a million and then raise 2,000,000 or 3,000,000 or whatever it is. Right? And so those folks will we will stay as equity. [15:26] Mhmm. Mhmm. Yeah. You're you're either staying as equity if they decide to raise, or if they don't raise, they're forced to start paying you back after one year of three to five three to 7% of their monthly revenues. That's Interesting. So, I mean, so so I mean, I I thought you guys were really representing that founder that wants to bootstrap and not raise. Right, not give up equity and go to 5,000,000 in revenue and profit 2,000,000 [15:50] >> a year and build a great business. [15:51] That sounds to me that, like, that that's that kind of founder would not be a good fit for you because they'd be forced to either raise money to get rid of the payback, or they'd be forced to start paying you back at at one year. [16:02] >> I mean, if you're taking money, I'm I'm I'm assuming, Nathan, that when you give money out to people, you want a return to. The terms are the terms. Right? So [16:13] >> we are saying Well, no. [16:14] We get no equity. We take no equity. Right? Our whole our whole our whole model is we wanna support founders that understand that giving up equity can be a very a big detriment to the business for a variety of ways. [16:25] >> Right. Right. And if you talk to any of our founders and if even a single one of our founders tells you that giving equity to Upekha and having Upekha as a partner in their long term journey was not a good thing, then, you know, we'd change our terms. But that's not the case. The kind of support that we are providing to our founders, they can't get anywhere in India and maybe not even anywhere in The US. [16:47] >> Right? Mhmm. Because we are taking founders who have sold only in India, who never even gone outside of India. We are helping them build a business that's global and get revenue that's global. So many of them, it's literally we are a partner who's helping them do things that they cannot do before. We're not dumb money, right? We're literally handholding them to change their website, the language on their website to sound more global, for example. Right? So [17:10] >> those are the kind of things which I believe. Right? And, you know, you you can correct me if you think otherwise. We're literally changing the DNA of the business. Right? So we have folks who have India revenue but have struggled to get global revenue, and we are helping them make that first dollar of global revenue. Is that worth the equity or is that not worth the equity? Right? I think that's the question that founders need to [17:31] >> ask themselves. Right? So I have folks who have built services business. They've tried to build product businesses and they've struggled to build product businesses because when you're trying to build a product business, you need to make different decisions than when you're building a services business. And so somebody has to literally sit with them and tell them, look, this is how you're making decisions and this decision was okay in a services business, but this decision is not [17:54] >> okay in a product business and you need to rethink how you do that. You may have made the wrong hire because the person you hired as a developer in a services business that was okay, but the same person is functioning in a product business in a way that will is detrimental to the long term health of that product business, right? So that's the granularity at which we work with founders and to transform their business, right? [18:14] So when I'm helping Now you're you sound much more like a venture studio. I mean, when when I bring on folks that are building venture studios like Turtles, which popped out with Phil Libin. I mean, you sound way more like a studio than you do a VC fund. [18:28] >> Right. So we we spend literally, you know, dozens to almost a hundred hours per founder from our from me and my team. Right? To help them cross that kind of an initial [18:43] And when was just put this on a timeline for us because folks might be new they might be learning about you for the first time here on the show. When did you guys write your first check? What year? [18:53] >> Just one and a half years ago. So 2021 is when we wrote our first check. [18:57] Okay. 2021. [18:57] >> Before that, we were only an accelerator. We were only helping folks with actually building the business. So only once we proved out that we could help folks to build a business without any capital, we said some of the startups need some capital at the early stage because otherwise everybody is working on fumes because they're going getting some revenue coming back spending it, going getting some revenue coming back spending it. Then we decided to add a layer [19:20] >> of capital after we proved that yes, we can take startups that are at near zero, help them get to scale, right? So as an example, right, one of the startups that came to us, they were at literally $1,500 MRR, 2,000 MRR. Today, they're at $60,000 MRR. Right? And if you talk to them, their website, their copy, their emails, their marketing strategies, their positioning, what features are in the product, what they're selling, the values, all of that [19:48] >> was stuff that they worked with us. [19:51] That makes sense. I understand. So the first check was in 2021. You already told us numbers from 2022. What are you what are you guys targeting in 2023? [20:01] >> This year, we are hoping to write about 60 checks. [20:03] Okay. 60 checks. Interesting. And all still India focused? [20:08] >> So almost all our startups are selling globally. They may be headquartered in Delaware or they may be hot headquartered in India, but most of them are actually Delaware headquarters with subsidiaries in India. [20:18] Okay. Great. And and remind us again, sorry, you're guys a source of capital. Obviously, you and I both have to raise money to then give out to founders. Right? Where are you raising money from? [20:28] >> So most of our investors are actually SaaS founders. [20:31] Yep. Yep. Yep. [20:32] >> Have one large anchor LP called WestBridge. [20:35] Okay. Very cool. Are you Are you did you raise a new fund last year? Are you still operating out of fund one from back in 2021? [20:43] >> This is a rolling fund. [20:44] Ah, okay. [20:45] >> This is an angel is rolling fund. So that's the model that we're still on. [20:49] And how do you how do you those investors, how do you pay them out? Is it a fixed, like, payment every three months, or do they wait until like, it's like DPI, like a regular VC firm. Yeah. They wait for exits. Yeah. Okay. So they don't get any like, when founders have to start paying you back at one year, you don't distribute any of that money back to to [21:06] >> We can, but we don't need to. [21:08] Oh, I see. So you can reinvest into new checks. The 60 you wanna do this year? [21:11] >> That's right. [21:12] I see. I see. Any exits so far? [21:15] >> We've had four exits so far. Most of them have been strategic acquirers, not too large. [21:21] Okay. Okay. But you're you've got a couple you're excited about that you think can more than return the fund. [21:27] >> Think so. Because one of them just doubled last year with very little capital raise. Actually, three of them like I said, right, three of them crossed $5,000,000 Yep. In ARR. Out of that, two of them have not raised a single dollar. We are the only only outside equity holder. Right? So we have another [21:43] I'm sorry. Three out of how many how many many total com portfolio companies today? [21:48] >> So we have a total of 110 companies, but I would only look at the first 20 companies because that's the ones that have been around for three years. Right? Because the others are like, last year and year. Yeah. [21:58] But you've written checks into a 110 companies since you started SaaS companies? [22:02] >> No. No. That's the accelerator. [22:04] Okay. How many have you written a 100 check into? [22:07] >> About 47. [22:08] 47. Okay. Interesting. Interesting. Well, we're rooting for you, Prasanna. If people wanna learn more about this, where can they find you? [22:15] >> Upekkha.io, and I'm very active on LinkedIn and Twitter. [22:19] Guys, that's u p e k k h a dot io. And, Prasanna, what are the next two events you're going to if people wanna meet you in person? [22:27] >> We'll be doing our own events. So we'll be putting that on Twitter. I'll also be at SaaSBoomi in March. [22:33] SaaSBoomi in March. And what city is that in? [22:37] >> That's in Chennai. [22:38] Chennai. Guys, there we have it. Upekkha. They've backed over 110 or helped over a 110 SaaS companies. They've written checks into 47. They put a $100,000 check-in in exchange for 5% of the business. That company, they they can then go raise another equity round, and then they don't have to pay back any capital. Or if they wanna say, know what? I don't need more money. That founder will then is required to start paying back [22:57] at one year between five and 7% of their monthly revenues, paying back a three x cap on a $100k investment from Upekkha to buy back 4% of the equity. Apekha will still keep one for that long road with the founder. Persona, thanks for taking us to the top. [23:11] >> Thanks, Nathan. [23:13] 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 [23:38] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. 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