Veem Revenue & Funding (2024)

hey folks my guest today is marwan forzle he's the co-founder and ceo of veeam a next generation global payment provider that enables businesses to quickly and securely send and receive payments in local currency marwan are you ready to take the top all right thank you thanks for having me you bet so did you have a local currency crisis a couple years ago and this is what made you get the business going or what oh you know i i have a lot of uh businesses in my family uh and and it's been quite painful watching smbs deal with payments all day because they're busy selling what they do best selling their products and they're looking for ways to simplify paying getting paid and i i'm amazed about the the number of things they do that are what i could call old-fashioned processes so like cutting checks sending wires uh creating paper invoices and we wanted to rip that whole thing up and provide something simpler to the user so that they can pay and get paid without having to think about it kind of becomes natural and second hand that's why we created veeam so that we help them do it in domestic markets as well as cross-border international it's one login that gets you to do payments payables receivables domestic and cross-border under the same service interesting and and so help me understand i mean i'm not quite sure what the right question is here but you'll guide me how many small businesses use you guys sent at least a dollar via veeam last month yeah we have uh about 300 000 accounts on the platform we're in 110 countries we have 70 plus currencies that we support we've been doing this since 2014 and customers use us to pay suppliers pay labor some customers use us to you know move money between their own bank accounts some customers use us to collect payments on invoices they either create on the system or they have a an invoice already created they send it out and collect payments on it and so i guess what was total you'd maybe call it like gmv through your platform in august yeah we generally don't disclose that data but i mean this is a scalable platform that is designed to simplify payments for smbs and we're not talking about we're like we're not powerpoint in early stage we're not a big company either like that's like very large company where i would call mid-market accounts in in the way that wall street describes companies yeah i won't push you hard here but i mean it would be helpful could you give a range you're comfortable with in terms of gm like are you over a billion individuals a month yeah we do billions annually okay billion have you passed have you had a billion dollar month yet i can't as well as that but i i like it's really billions a year that's where we can just got it my guess would be you're not billions a year like a month would be impressive so maybe you're not there yeah i mean but is it on the trajectory did you even get that like within the next 24 months a scalable system and we double the number of accounts pretty much every year uh you know we've been in existence and like every year the number of accounts on the platform at least doubles mm-hmm interesting tell me about how you're doing that so if you're 300 000 now you're 150 000 a year ago how are you signing up more smbs yeah so it comes in in three different buckets so um some of it comes through our own marketing programs we acquire customers directly uh some of it comes through partnerships we're plugged into quickbooks zero netsuite we're integrating with bank partners and most interesting the bulk of it like well you know over half of it comes from customers that are already on veeam so kind of like think of it like member get member and the reason why they do that they like the service they find it to be delightful it's a simple experience so they tell other customers that they have hey i'm going to use me to pay you or i'm going to use veeam to get paid from you and so that naturally brings other customers to the platform that actually is the the primary way of getting customers on the system existing customers bringing other customers do you measure that do you know what your power coefficient is oh yeah yeah yeah we're we're at every month that that passes by uh 65 of uh new accounts come in from uh customers are on the platform so that's true five percent of new signups come from referral links from current customers yes yeah interesting it's not the traditional refer friend model where you don't know if you've been referred or not this is in the transaction i send money to you you'll like it you say you know i'm going to use veeam to get somebody else to pay you or i'm going to use veeam to send money to somebody else so it's in the transaction flow yep yep so so one party might not use veeam yet but they get an invoice for me and they go what's this veeam thing maybe i should sign up and you get 65 of your growth comes from that it was amazing about that model is basically um in return for a delightful experience that you give to the customers customers become party to the growth they themselves introduce the concept to other customers that they have today this makes a ton of sense i want to try and like put a face i don't want to get lost in the 300 000 number i want to try and put a face to this smb so like can you name is there anyone you can cite we have so many of them uh we have a lot of startups retailers e-commerce can you name one though uh a specific one um i'm trying to there's so many to pick from there's so many to pick from like i i uh pick a startup a startup a smb startup um so um [Music] yeah he's searching through his hub spot his crm right now yeah like i have so many of them like this is one of the things about smbs unlike enterprise clients where you have you know big accounts that you know them by heart this is such a wide swath of businesses that use us not only businesses businesses accountants partners so uh you know it's it's just a large number of customers that well let me paint a picture and you tell me what's accurate i'm a new startup i need help invoicing i'm going to use veeam we're in a couple different countries i'm going to use veeam to do that i might put like what 10 000 through the platform each month something like that my first couple invoices yeah i mean that's a typical profile that's okay way of describing it um actually they start customers start either paying suppliers and they start with a couple of suppliers a month and then they like the system they start expanding on it and adding more suppliers to that platform and some customers start the other way around they start on the invoicing flow exactly what you said you have a couple of customers you want to collect on your invoice and so you send them the invoice or the request and you can like payment something that's a typical profile so let's stick to this exact story again i'm a new startup i did 10 000 through your system this month in september how do you guys make money on the 10 000 i use your system to collect yeah we make money on foreign exchange we make money of the payer paid with their credit card when we deposit funds real time to your debit card and we make money on capital programs a bunch of customers really like the idea of accessing capital lines from veeam so i have a bill i need to pay it but i'm kind of short on cash so what i do is i request the payment to be delayed essentially think of it like a pay later type program the npl right nbl that's exactly similar to that for businesses so these aren't the types of revenue we make what's interesting is there's no subscription fee there's no setup fee there's no transaction fees on hca's checks or debit cards they're all for free so we make money on what we call advanced features which is credit cards foreign exchange and capital program let me repeat these back to you quickly and just to make sure i got them so you just said three but so so deposit fund you said foreign exchange credit card fees deposit funds real time to the debit cards and then capital programs but really i can eliminate the deposit funds to real time to debt cards you really think foreign exchange credit card fees and capital programs yes okay and and and of those three is there like clearly a leader in terms of what your like core business model is or is it like 33 33 33 you know revenue split well historically foreign exchange is the leader because historically we come from cross-border payments market and over time we know there's just quite a lot of activity in domestic markets so we started adding other ways to monetize domestic so that's a newer revenue stream parts and capital but you know today there's more skew towards foreign exchange in the future it'll balance out i see okay so i mean is it fair to say that right now more than 70 percent of your revenue is foreign exchange but the other two ones are growing very quick because they're brand new it's not as high but yeah the growth rate on domestic is you know definitely high uh you know it's like high growth markets give us a prediction i mean a year and a half two years from now of these three lines which one do you think about thousands yeah they'll they'll divvy up like maybe if you're the third or third these are all different ways to monetize customers and these are all big trends in the market i mean credit card and b2b and card issuance and deposits these are all hot markets in the b2b space capital and like you said the mpl that's a hot market as well the foreign exchange is like the most painful thing to do and that's a known pain that everybody go through so that's a reliable uh a very good revenue stream that we're going to have for a long time is it like if so again i'm at startup with ten thousand i need to send it to like go through foreign exchange like how much might you make on a ten thousand that i'm processing through that channel it ranges from on the low end about quarter percent on the high end about two percent it varies depending on the payment method you choose on the currency firms on the countries you know there's a difference between sending payments to europe versus sending payments to vietnam like that just the cost structure is very different so there's a range of outcomes but it is very competitive ends up being like half the price compared to what you usually pay when you use a bank product and what about on credit card rates and depositing funds to your debit card real time how much can you make there we charge one percent on payments to a debit card that's real time payments instantly the money is deposited in your bank account that's linked to your debit card on paying with a card we charge 2.9 interesting okay see when i hear those like you're basically capped at two percent and 2.9 on those first two revenue streams the capital program that was very interesting because the buy now pay later stuff if you're if your cycle time on this is very tight you'll be able to recycle capital very quickly and you're charging like a two or three percent i don't know what it is but you're charging some percentage but the apr is through the roof you can like print money doing this yeah and on the apr that also that is also a range there's not necessarily a fixed amount that depends on the quality of the customer where you're located how long you've been on beam so there's a range of outcomes but in general what we try to do is make sure the experience is delightful it's simple and we're not going to milk it on the on the revenue side we're going to make sure that there's multiple products we can monetize and that's the key thing so marijuana again same use case i'm gonna start up 10k through your platform but let's say that that 10 000 is a bill that i'm paying to a vendor i've bought it and i want to pay it later i want to keep that 10k how much am i going to pay you fifth like how long how long can i push that payment off using veeam and what am i going to pay you at the end like how what's your cost you can push up to six months and generally you pay anywhere from about a percent to two percent a month on that schedule okay so 12 to 24 effective interest rate pretty fair pretty fair are you doing this off your balance sheet do you have debt on do you have a balance sheet we work with bank partners and and partners that have invested in veeam and we work through them we work with them on these programs interests so why haven't you ray i mean this again you want to own this in-house if you can why not go raise four or five percent cost of capital from a bank and do this off your own balance sheet you know it's it there's different ways of doing it generally we'd like to stick to the things we do well and outsource to partners that have their expertise so there are partners that we have that are in the balance sheet business and they're very good at scaling that you know my business is more payments related more customer uh experience and so i'd like to stick to the things i know and then hand it off to uh partners that this is their sweet spot that way it creates complementary offering and we are able to scale that program without having die ops to figuring out the raised capital over time yeah do you think you can do like 50 million on loans this year uh this is a new program that we have that we just launched like literally like a month ago oh wow okay i'm not sure where we at it's like a brand new program i i tell you though um capital access to capital is something that smbs won't like there's demand for it there's a reason why bmpl is a hot thing these days because there's a general demand in the market for these types of products yeah i mean we had gm on the co-founder of square on the show and and we got going into his pos business and his credit business and how the pos system allows their like buy now pay later stuff and it's one of their fastest growing arms i mean this is a very very very hot space you know what's interesting is if you like square is a really good interesting case square payments is the engine that was created first it's where capital landed seconds where capital now is a big thing and actually the whole concept of embedding capital to payments is a hot topic because if you look at where capital has scaled in the past is situations where it is embedded into something else payments isn't natural yeah yeah this is the same trend with paypal paypal and paypal credit you see the same thing with you know intuit so like there's um there's cases in the market where embedding capital into something else have done really well oh embedded finance is the future i mean that's why you launched the product and you're testing it so we'll see what happens i want to move on to more like your back story in the team here before we do that though so like we just learned about all your revenue streams your different products how you're helping these these smps so what will you make sort of on average per month from these guys it sounds like it's probably like 10 or 20 bucks right yeah it's it's it's smbs you're making yeah like 20 bucks a month is a good uh you know a good way to characterize it yep okay give me more of your backstory here so you launched it in 2014 i mean how did you get the first hundred customers oh no we i i started the company in late 2014. uh you know we are a regulated company meaning we're licensed in every single state in the us and we also have licenses in other parts of the world so it took us like two three years just like legal compliance licensing and in the u.s you can't just move money you got to have all the licenses in place before you do it so the actual selling of getting customers in did not really begin to later like 2017 time frame before you can really start adding customers and bringing customers at scale the initial set of customers i call it like friends and family it's like whoever we know between all of us that have access to customers we call them up it's like hey we built this thing you want to try it can you give it uh give it a shot and give us feedback so that's the initial group that came in that used the product that makes a lot of work once we have the first batch of customers in we got their feedback and so we we're very good at building quickly to whatever the customers you know whatever their customer feedback is we then started hiring sales and marketing teams to then get the next batch of customers and that's where you start going from the first hundred to the first thousand to the first ten thousand that becomes like sales on marketing efforts so sorry what year was that they got your first customer oh uh like we were doing i mean we got the first customer in like 2016 and then and then they trickle in because you're like you're not really like commercially available you're kind of doing it in states you have access to where you have licensing and you gotta get customers as sort of a parallel path as you get more licenses in different states you add customers so it takes a while to get the engine going because of the licensing schemes you have to have in place and marlin do you remember the first year you did a million dollars in revenue oh that was like 20 i don't i don't actually remember maybe 2017 that's a big moment that's a big year yeah it's it's it's a you know i i actually tell my friends when they start businesses the most important uh things in life when you're building a business is like first customer first hundred first thousand first ten thousand if you think of them like multiples of ten these are like amazing moments so like on the revenue side first million first 10 you know and it goes like that it's a good way of of measuring the milestones it's like you have kids you know they go through through stages same thing with startups yeah no i totally understand when did you guys pass the 10 million dollar run rate i i can this close oh you can't go past it you can just say just a million in 2017 that's as much as you can give me i i i put it this way it's it's scalable product with a scalable platform and you know what i can say is we pretty much double the number of accounts on the platform like every year no that's great um and people can do the math if you've doubled every year since 2017 obviously you can't double forever but that's a nice growth rate talk to me um you have chosen not to bootstrap you raise some capital how much total have you raised today about 120 million so far and why do you need to raise all that capital to build this obviously you're getting very diluted as you do that yeah i mean this is a very heavy infrastructure play you got to have licenses you gotta have fairly heavy-duty technology that you need to build to automate payment processing in multiple countries uh you gotta plug into accounting systems all around the world you gotta have fraud and risk and security so there's a big build here and that build is not cheap to do and so it requires infrastructure to and when you have infrastructure you're building out you've got to have capital your waste to do that when was the last round of capital uh we did that last year uh august uh last year what was that your series c seriously yeah interesting okay so 31 million raised their series c once you're on the venture track i mean you're basically making a funding announcement every 12 months do you want to tell us anything that's a really good question that a good segway we announced actually uh today uh a relationship with repay where we repay as a public company and we're teaming up with them to do cross-border payments for them and we're working with them on issuing cards and they decided to invest money in the company so strategics couldn't come in all the time and part of that there's investments so that's one that happened today since this is nice there we go so i'm breaking some breaking news that's good stuff now when you know when you're raising a series c most founders you're selling between call like sort of five and ten percent maybe sometimes fifteen percent of the business were you sort of in that range it's classical venture cycles in terms of dilution yeah and so why you know you made a very public decision to get in bed with goldman sachs right which decreases your ability to drive competition if you ever want to bring other capital partners to the table because goldman's a big elephant in the room why was that the right decision well goldman let my series be a strategic round they actually let it so they've been a partner with us for a long period of time and we work with them essentially the investment is strategic to them so that's the context of the relationship we have with them it's not specific to lending do you see them any data what's that do you feed them any data i imagine they were drooling over the datas that you sit on um we work with them on a variety of projects actually so it's not just to be clear the the the relationship with them is multifaceted as not necessarily way to lending mm-hmm interesting yeah yeah i mean this is a big question that anyone doing embedded finance that's partnering with a larger bank is gonna have to go through as a founder almost every bank will ask for like a like an api feed something behind the scenes that gives them really unique access to data and you have to decide where you want to draw the line you know part of the makeup of the business we have is rich data and so we make sure that we use the data to automate lending decisions that make payment experiences to make sure that you don't have to go through hoops to get what you want and then as part of that makeup we work with partners that kind of have the same mentality to servicing customers yep do you guys think you can break 20 million dollars this year in revenue or is that gonna have to wait till next year i uh i i just have to reiterate we're not in a in a position unfortunately disclose anything on the financials if i take numbers you've already given me 300 000 customers times we asked earlier you said yeah 20 bucks a month on each film sounds about right i mean we can sort of back in that i'll put you you're not this high but that'll put you at six million dollars a month in revenue um i i think you probably have a calculator somewhere ready to go you're very good with numbers so you people can do the math i can't i can't disclose oh no those but those those are those are just numbers you you gave i mean you said 300 000 customers and you said you make 20 per customer i mean obviously there's something there that's not adding up because that map doesn't work um there there are all kinds of customers on the platform some are active in a month some are not i see it's just not exactly straight math like that but you know you could i mean it's not i just repeat it's not a a platform that is small in size tell me more as we wrap up customers around the world yeah tell me more as we wrap up a little bit about your team so how many folks total these days um we're we're 160 almost folks in the company heavy and how many engineers i i can't dispose that but like i mean it's a technology product built so a good chunk of that is is engineering and product and that's like the way tech is built out it's heavy on engineering yeah i mean this is what some people say we're heavy engineering they have two engineers and i go you're full of right so so i mean are you talking like more than 50 percent of your team is engineer 60 70 engineers i i mean it's a good chunk of that it's not it's not it's not two people let's play this one do you do you use in terms of growing your base obviously like an outbound model high touch model doesn't seem like it would work because this is this is more like a high volume low rpo approach do you have any inside sales people that have a quota um we do and they're mainly the type of customers we acquire are inbound uh so the traditional model you were mentioning is more outbound or oriented that's better for enterprise customers for this market uh the type of customers come in are more inbound oriented and as we wrap up before the famous five here how does a founder like you think about churn where you're not it's not a sas fee where they stop paying it's more like a tracking how much gmv per month if they go up it's expansion if they do none then it's churn like how do you think about that yeah it's a different concept because this is transactional business models it's not like a subscription so i don't actually have churn and that i cancelled my service this month what we have is active and inactive customers and the active inactive ratios are a function of your invoice cycle so for example you know some customers are on a weekly invoice some cycles they pay every week some are on a monthly some on a quarterly some are like you know occasional so you gotta so that the system uh adapts to the invoicing cycles that happen between customers and their their their payees yep yep that makes a lot of sense interesting okay cool anything else about the business that you think we should chat about that i haven't asked about i think the market b2b is a really hot market that's going to be hot for a long period of time and this that's because this is an industry that have not seen innovation for such a long time that all these manual processes need to be completely reimagined and there's an opportunity to do that with a very different experience than when you get to that and that's why we created a thing yeah let's take off your founder hat for a second and just put on your you know your angel investor you're analyzing the market just fintech right now is just hot frothy hot totally irrational what do you think like companies uh that are like veeam right what revenue do you think they have to hit where they they could probably go get a billion dollar evaluation today i i'm assuming a very irrational answer here but i'm curious your thoughts it depends on what segment you're inside fintech there's a whole bunch of segments so let's do smb fintech embedded finance smb products i mean sort of like what you've built yeah generally it's multiple on revenue and growth is the combination of the two so if you have revenue but slow growth that you get lower sort of multiple if you have revenue and high growth you get higher multiples so to get to that billion range you gotta do like call it like you know depends on the growth rates but like somewhere 20 times 30 times multiples these days i mean some companies are like 50 times multiples on revenue but you know if you can hit the growth path really hard then you command multiples that are like fairly attractive these days how long this this is going to stay you know that's hard to tell that's just macro dynamics around the public markets and and the valuations we're seeing in the private markets are kind of in sync with public or getting there but i'd say this fintech is hot now it's going to be hot for a while and the reason why it's going to be hot for a while because this is a market that has not seen change for decades it's just it's been baking for a while and now it's a hot thing and a sexy thing but that's because there hasn't been a whole lot going on in the past 30 years 40 years so marwan would this be an accurate statement you sort of feel like companies that are maybe in your space fintech smb focus they probably need to be around like 30 40 million bucks in revenue growing 70 to 100 year over year to crack that billion dollar sort of valuation mark that's that's that's a good sort of uh a way to think of the market these days yeah so are you gonna be raising a billion dollar valuation next year we'll see you you'll find in that announcement all right guys marwan good stuff let's wrap up with the famous five number one favorite book um i have the innovator's dilemma number two is there a ceo you're following are studying i love what jeff bezos did with amazon number three what's your favorite online tool for building veeam aws it's been really good number four how many hours of sleep do you get for uh each night six hours okay and situation married single kids i'm married any kiddos and i have two kids nice how old are you i am 49 49 years young take us home your last question something you wish you knew when you were 20. something say again something you wish you knew back when you were 20 years old something i wish i knew about when i was 20 years old yeah like when you were 20 just something you wish you knew um i wish i knew how to uh code more efficiently because i would i would i would uh i would write a whole bunch of stuff that i think is really cool let's just like do it and and see what happens in the market i i find talent in that direction is super interesting guys marwan was frustrated in 2014 he launched veeam took him three years to break a million bucks in revenue but he did it in 2017 has basically been doubling ever since he's now got over 300 000 smbs that use his platform using three specific tools he's got foreign exchange they make point two five to two percent there they've got credit card fees and deposit funds real time to your debit card one percent to 2.9 percent there and then capital programs which he's pretty excited about obviously there's an apr there but it's all focused on helping smbs access capital move money fast for the second focus on doing what they love which is building their business he's doing this with a team of 160 people about 100 million bucks raised as he looks to continue to scale marwan thanks for taking us to the top thank you have a good day 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 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