How Zeliot Connected Services Reached Just Under $1M ARR with 100 Enterprise Customers in 2022 (Interview with CEO Anup Naik)

Introduction and Company Overview

Nathan Latka

00:00Hey, folks. My guest today is Anup Naik. He, along with his partners, cofounded Zeliot in April 2018. He comes with experience of working with a founder very closely in his previous stint as an IoT startup called Cookie. He's been fairly successful in embedding his philosophy of running a startup with a hybrid thought process, I. E. Bringing revenue from customers by delivering value from day one, and also look to raise money from a good investor, but the

00:21money raised should be mainly used for bringing a new innovative product to market. Zeliot offers connected mobility platform to enterprises and OEMs. Anup, you're ready to take us to the top?

Anup Naik

00:32>> Yes. Absolutely, Nathan. Good to go.

OEM and Enterprise Customers

Nathan Latka

00:34Alright. So what kinds of OEMs and enterprises are paying for your technology today?

Anup Naik

00:40>> So Nathan, as I mean, you already read out, connected mobility platform is something which vehicles use, right? It could be any kind of vehicles. It could be a car or a bus or a truck or a two wheeler, whatever it is, right? So the typical OEMs who pay for us are the ones who manufacture this. The enterprises segment falls under the people who use it for their own business. Let's say logistic companies, right? Logistics companies have

01:04>> the entire business model revolves around vehicles. So those are the typical enterprises who pay us for using our software and on the OEM side who manufacture these vehicles, let's say the likes of Royal Enfield for bikes, right? Indian major Indian two wheeler famous globally as well. Maruti Suzuki, you might have heard of it, right? So these kind of companies who, you know, kind of typically use our connected mobility platform as part of their core offering.

Nathan Latka

01:31Got it. So vehicle manufacturers pay for your technology so they can add connected mobility to their vehicles?

Pricing Model: Per Vehicle Per Month

Anup Naik

01:38>> Yes, they can And what do they pay

Nathan Latka

01:39you per month on average to use your technology?

Anup Naik

01:42>> So that is something which differs from a customer to customer. There is no standard rates, right? It depends on the kind of model that they work with us. Typical SaaS costing is somewhere around a dollar or so, but you can't really hold on to that.

Nathan Latka

01:56A dollar or so per what? Per vehicle per month?

Anup Naik

01:58>> Per vehicle per month. Right. Okay. But now that differs very, very significantly based on the kind of customers that we onboard and the kind of offerings that they want to offer to their customers.

Nathan Latka

02:08So Anup, do they keep paying a dollar even after they manufactured it if that car is still driving or they only pay a dollar the month they manufacture the car?

Subscription Structure and Vehicle Lifecycle

Anup Naik

02:16>> Absolutely. The subscription starts the day the vehicle goes to the customer. Right? And they pay for the life of the vehicle.

Nathan Latka

02:24I see. Okay, do they pay for the life upfront or they pay each month?

Anup Naik

02:28>> They pay each month. Again, as I said, it depends, it really depends on the kind of engagement that we enter into. Typically, they pay each month as and when the vehicle is used.

Nathan Latka

02:38And how many cars today are out there on the roads using your OEM technology or your mobility technology?

Scale: 100,000 Vehicles on Platform

Anup Naik

02:43>> So see, we come from India, right? Zeliot predominantly operates in India where connected mobility is yet to take off. So currently roughly about a 100,000 devices are using this. Right. But the actual significant numbers will only rise as we go ahead. This next couple of years is very, very, very important for connected mobility.

Nathan Latka

03:06And so just to be clear, you have with Zeliot installed a 100,000 vehicles on the road today?

Anup Naik

03:12>> See, 100,000 vehicles are using our software.

Monthly Revenue and Growth Rate

Nathan Latka

03:15And you and you charge and you charge a dollar per vehicle per month. So you're doing about a $100,000 in revenue per month?

Anup Naik

03:22>> Yes. The average revenue run rate has been close to $100,000 per month.

Nathan Latka

03:28What do you mean the average over what period of time?

Anup Naik

03:31>> So see, this is a subscription revenue, right? So when we started the last year, we started roughly, you know, some $60,000 to $70,000 mark. And by end of the year, we were able to close it at about a little over a $100,000 a month.

Nathan Latka

03:46So just to be clear, in December 2021, this last December, you hit about a 100,000 month in revenue.

Anup Naik

03:51>> So yes, again, a small change. Indian financial year is March twenty twenty one, twenty twenty two rather. Right? So we operate from April to March.

Nathan Latka

04:02Oh, what's going on there, YouTube? Good to see you guys. Now imagine this. You love watching these interviews with SaaS founders, but imagine if we took all of the valuation data out from over 2,807 interviews I've done manually. Saves you a lot of time. Well, we've done this. We've built it into the beautiful interface inside of Founderpath. Check this out. I'll show you how you can access this in a second, but you log in, you connect

04:25your Stripe account, you see your valuation real time. You can see what it changed over the past eighty eight days and even set goals for valuation this year. Now the secret evaluation is there's many different ways to value a SaaS business. So the reason you're gonna see three or four different valuations inside of your Founderpath dashboard, this is all free by the way, is because depending on who's doing the buying of your SaaS company, you're gonna

04:49get a different valuation. A VC is gonna pay a different valuation. Private equity firm is different. If you're gonna do a minority sale, that's different. And if you sell the whole business, that's a different valuation. You can see all those when I hover over here, Right? So the teal is what a VC would pay. Yellow is what private equity and red is if you sold the whole thing outright. Now what's cool about this is this is

05:11not 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

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06:25interview. So you just did $100,000 a month in revenue up from $60,000 a month a year ago.

Anup Naik

06:31>> Yeah, kind of. Yes.

Nathan Latka

06:33Why kind of? Why not? Yes.

Anup Naik

06:36>> So the exact figures vary, right? That's the reason kind of. Let's say it could be somewhere around 45,000, 48,000. Right? Today, could be somewhere around 103,000, 104,000. So I'm not giving you exact figures. I'm giving you the average figures.

Nathan Latka

06:51Well, it's not an average. You're sure giving me a range, right? So you did somewhere around $48,000 a month in revenue a year ago. Now you're over 100,000. So more than a 100% year over year growth. Have you done all this bootstrapped or did you raise capital?

Seed Round with Robert Bosch and Debt Financing

Anup Naik

07:04>> So we very, very recently closed a seed round with Bosch in March. Till then we were bootstrapped. We have raised some debt funding, debt funding of close to $150,000 Right. So recently we closed a kind of a seed round with Robert Bosch.

Nathan Latka

07:23How much did you raise?

Anup Naik

07:24>> So around $500,000 we raised.

Nathan Latka

07:27And most folks in their seed round are selling 10% to 20% of the business. What valuation did you raise at?

Anup Naik

07:32>> So we sold around 14% of the business.

Nathan Latka

07:35Okay, around 14%. So that means your valuation was around 4,500,000?

Anup Naik

07:39>> Yes, 4,500,000. Correct.

Nathan Latka

07:414.5. Okay. Got it. And why did you decide to raise equity? It sounds like you already are familiar with debt. Why not keep using debt?

Anup Naik

07:48>> Okay, so one of the predominant reasons, the kind of company from whom we raised the funding, right? We being mobility startup, we being autonomous vehicle related startup, Bosch plays a significant role in the roadmap of the company. So Bosch is a global player, probably the best known name in the automotive industry, right? Having them on your cap table, having them as your partners gives you many much more strategic value than just money. That's the reason the

08:14>> valuation is a little lesser than probably what we would have anticipated. But it's a fair bargain because the kind of the thought process and the strategic value Bosch brings to the table.

iTriangle Partnership and Debt Terms

Nathan Latka

08:25And when you raise the debt financing, you raised that last year?

Anup Naik

08:31>> Over the period of three years.

Nathan Latka

08:33Okay, so when did you launch the company? What year?

Anup Naik

08:35>> Twenty eighteen, April when we launched, right, we have taken small amount of debt every time whenever we needed it, right? We have a partner company called iTriangle, who, you know, kind of supplies the telematics device or the IoT devices. So kind of we raised entire debt from them. We did not go outside of them.

Nathan Latka

08:54What collateral are they lending against? The physical installation of the OEM hardware or your software revenue?

Anup Naik

09:00>> No, no, there is no collateral. There is an interest rate that we pay them because the money has been borrowed in small instances or small, let's say intervals every time that we have never given them any collateral against us. Right? We have paid interest over what we have raised.

Nathan Latka

09:15What's the interest?

Anup Naik

09:16>> Yes. So roughly around seven to 9% interest.

Nathan Latka

09:20Seven to 9% interest rate. And I guess it's I find it hard to believe you didn't give any collateral because even in The United States, you couldn't get an interest rate that low without pledging collateral.

Anup Naik

09:31>> If I go to a typical lender, let's say a bank or a NBFC, right? Non banking financial corporation, I have to give them collateral.

Nathan Latka

09:41Did iTriangle take warrants?

Anup Naik

09:43>> No, because this was a partner company who we were doing business with. It's kind of a partner company wherein I buy hardware from them. I use it for my business. I pay them hardware instead of I'm giving them business along with taking money upfront for my other business. Right?

Nathan Latka

09:59So Yeah. So so just to be clear, Anup, your your collateral is the invoice with iTriangle. That that's that is the that

Anup Naik

10:07>> is Maybe you can say that. Yes.

Nathan Latka

10:08No. No. No. Is the that is the collateral. They're willing to give you a 7 to 9% interest rate because you're you're their customer. You're they're just forwarding their invoice factoring effectively.

Anup Naik

10:17>> And they are also our customer. Right? They are also using our software for their hardware business.

Customer Count and Enterprise Examples

Nathan Latka

10:21How many customers do you have today?

Anup Naik

10:25>> Over a 100 enterprise customers, small to large.

Nathan Latka

10:29Got it. And all of those are manufacturers of cars, buses, trucks? No. How many are manufacturers?

Anup Naik

10:37>> Manufacturers roughly 10% of them.

Nathan Latka

10:41Okay, and so then everyone else or people like iTriangle?

Anup Naik

10:44>> Enterprises, yeah. Enterprises like, let's say, I'll give you an example of a company you might have heard, I don't know, have you heard of Tata? Tata, T A T A, large Indian conglomerate, right? Indian oil corporation, a large Indian conglomerate again.

Nathan Latka

11:01And why would the oil corporation pay you?

Anup Naik

11:04>> So they have their own fleet for logistics purpose. Say transportation of oil, transportation of their employees and whatnot. So for those vehicles.

Nathan Latka

11:13So they use you to install all their devices so they can track all their cars, trucks, shipments, ships, whatever.

Anup Naik

11:18>> Yes. Yes. Not ships, Not ships.

Nathan Latka

11:21Okay.

Anup Naik

11:22>> Cars, trucks, bikes, stuff like Okay.

Nathan Latka

11:24So you have about a 100 customers paying on average 1,000 a month. So a $100,000 a month, you're recurring revenue. You've just raised additional capital. You have a little bit of debt. What's the team size look like today? How many people?

Anup Naik

11:35>> So as of today, we are around 49. So we are onboarding our fiftieth employee, I guess Monday, coming Monday.

Nathan Latka

11:42And how many engineers?

Anup Naik

11:44>> So around 35 are engineers.

Nathan Latka

11:46Where are you guys? Are they based in Pune, Chennai, Bangalore? Bangalore. Yeah. Okay. What's a junior developer charge go for these days in Bangalore? What do have to pay them salary wise?

Anup Naik

11:57>> This value is increasing too high, but I know if I have to give an average figure out of that, 5 lakh would be somewhere around 10 to 15 thousand dollars a year.

Nathan Latka

12:11Okay, got it. It's about 12, 15, 20 thousand dollars Yeah. Yeah, 1,200 a month, something like that. Okay, interesting. So 35 engineers, do you have any sales reps that carry a quota or no?

Sales Team and Deal Cycle

Anup Naik

12:24>> So we have a small team of four people, right? Four to five sales team, salespeople team. The reason we have small team because we rely on large accounts which take, let's say four or five months to convert. These auto OEMs or these large enterprises, they don't close in a matter of days. You have to do POCs, have to do a lot of stuff behind the screen. So it takes roughly about four to five months to close.

12:50>> So we need more of engineers and program managers, product managers than sales. So sales team just opens account, transfers it to internal teams to manage and close.

Nathan Latka

13:01Understood. And you mentioned large accounts. What's your largest customer paying you per month right now?

Anup Naik

13:07>> Around 20 lakhs would be around $30,000 So about

Nathan Latka

13:1330% of your total Yeah,

Anup Naik

13:16>> 25%. 25 to $30,000 Yeah.

Nathan Latka

13:19Interesting. And is that just because they're managing a lot of vehicles on your platform?

Anup Naik

13:24>> So what happens is some of the customers have very, very long vision, right? So they kind of manage a huge load of vehicles and the kind of analytics they use from our platform is also very, very high, right? That is where they end up paying a larger sum of money. That means the per asset cost for them will be much higher than the average of $1 And

Nathan Latka

13:46that's great. I mean, obviously you need those big customers. How are you managing as you think about debt and equity? How are you managing your own equity? Do you have co founders or are you sole founder?

Co-Founders and Equity Structure

Anup Naik

13:55>> So I have other two co founders with me who are younger to me, Sudip and Sugum. I guess I've mentioned their names in the as well. Right? So in the bio.

Nathan Latka

14:04Did you guys split equity 30% each at the beginning or no?

Anup Naik

14:08>> Kind of we, you know, hold equal kind of equity. I have a little more than them, but almost the same.

Nathan Latka

14:16So how much do you still own today?

Anup Naik

14:18>> Around 35 I

14:19>> guess I cannot give you that figure right now, Nathan, because we are under some clauses where the entire financial transaction financial details cannot be given out.

Nathan Latka

14:27Who cares? It's your business. You own it. What you mean? Who would ever be able to control what you're able to say on a podcast or to any press outlet?

Anup Naik

14:37>> No, no, it's not that simple. See, what happens is not all the financial transactions are given out to the public yet. Right? So half of it is already given out, like the amount of money we have raised, the kind of percentage we have given. The cap table of all the people is not given out.

Nathan Latka

14:53Because of Of course, that's why I have a podcast. That's why I ask questions. You think I wanna have you on and ask you questions you've already answered all day long? That would be zero. That'd be zero amount of interesting. So you mentioned at the beginning, you had a little more equity. So it's something like 40%, 30%, 30%, something like that.

Anup Naik

15:09>> Yes. See, as I've already already told you, we have given out about 14%. Right? So let's say the remaining equity is divided among us and I have 10% more than the others together. All right.

Nathan Latka

15:22Okay. Got it. So what I'm trying to understand Anup is not what you're I'm trying not asking what your equity is today. I'm asking what your equity was when you started. Right? So when you started, you're saying you had 10% more than the other two combined?

Anup Naik

15:32>> Yes.

Nathan Latka

15:33Okay. So something like sixty, forty, something like that, or 55, 45, something like that.

Anup Naik

15:37>> Yeah. Yeah. You can have some Okay.

Nathan Latka

15:38Got it. And then you raised some extra capital and sold 14%.

15:40So you're little diluted.

Anup Naik

15:41>> Diluted.

Nathan Latka

15:42True.

15:43Yeah. So I was getting there. So you're a little diluted now. So you're around 50 ish percent right now, 49, 50 something like that.

Anup Naik

15:49>> Lesser than that.

Nathan Latka

15:50But you're saying it was worth the dilution because Bosch is a strategic partner that's going to help you grow faster.

Anup Naik

15:55>> True.

Nathan Latka

15:56Interesting. Okay. Very cool. Any plans to raise capital later this year or you think you're good for a while?

Expansion Plans and Series A Outlook

Anup Naik

16:03>> So we are planning to raise the capital as we expand. See, we have a very, very small business in Africa, right? As we expand geographies, we will need more capital to onboard more customers. Right? So we are going to raise the capital by end of the year that will either be pre series A or series A kind of a deal based on the growth that we are showing this year. So we are supposed to grow about

16:26>> 4x on the revenue side, right? We have closed the year just short of a million dollars. Right? So this year the projection is we are supposed to hit around $4,000,000 So once we do that or once we are on the roadmap to do that, we are planning to raise the capital.

Famous Five Rapid Fire

Nathan Latka

16:44Very good. Let's wrap we're out of time. Let's wrap up with the famous five. Number one, favorite book?

Anup Naik

16:50>> Steve Jobs.

Nathan Latka

16:51Number two, is there a CEO you're following or studying?

Anup Naik

16:54>> So I follow Elon Musk.

Nathan Latka

16:56Number four, how many hours of sleep or number three, what's your favorite online tool for building, Zeliot?

Anup Naik

17:02>> Jira. Typical answer.

Nathan Latka

17:04Number four, how many hours of sleep do you get every night?

Anup Naik

17:08>> No. I'm I'm a little comfortable on that. Let's say about seven hours roughly.

17:12>> Seven to Okay.

Nathan Latka

17:13Seven And what's your situation? Are you married? Single kids?

Anup Naik

17:16>> I am married. I have a 10 old kid now.

Nathan Latka

17:19Oh, wow. Young one. Congrats. And how old are you?

Anup Naik

17:22>> So I'm about 31.

17:23>> 31.

Nathan Latka

17:24Last question. Something you wish you knew when you were 20.

Anup Naik

17:30>> Very difficult question because I've been in this for a long time. But yeah, the kind of hybrid philosophy that I'm following now. If I knew it, let's say five years back, things would have been much more different.

Nathan Latka

17:42What do you mean by that?

Anup Naik

17:43>> The hybrid philosophy, which I have already mentioned in my details, right?

Nathan Latka

17:48You describe it again.

Hybrid Philosophy: Revenue from Day One

Anup Naik

17:50>> So you kind of manage, kind of focus on revenue from day one of your company. Don't let it slip. If I knew this, let's say four or five years back, things would have been slightly different.

Nathan Latka

18:00Guys, there I have it, Zeliot. In launched in 2018. They create a little device which manufacturers, car manufacturers, managers of big fleets like trucks and cars can use their device to track their whole fleet. So connected mobility connections, long term data plays, etcetera. They've got about a 100,000 vehicles or assets that have their technology embedded today. They make a dollar per asset that's active. So they're doing about a $100,000 a month in revenue, up from $48,000

18:25a month just a year ago. So a 100% year over year growth. They just raised $500,000 at about a 4,500,000, sold 14% of the business with their team of 49, working on their fiftieth on Monday as Anup looks to scale and look at a series A later this year. We'll see what happens. Anup, thanks for taking us to the top.

Anup Naik

18:40>> Thank you, Nathan. Thank you for the discussion. Thank you.

Nathan Latka

18:45One 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 one

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