Zomentum Revenue, Valuation & Funding (2023)

[00:00] Zomentum doing $35,000 a month a year ago, now doing $250,000 a month with their two sided network, helping you grow faster with partner programs. They've got over they've got over 2,800 partners on one side of their marketplace, and SaaS companies bring in another 1,200. So over 4,000 partners on their platform as they look to scale. Again, a two sided marketplace here, 13,000,000 series a at a little under a 100,000,000 valuation last year. 75 on the team, [00:22] 38 engineers as she looks to scale with her four person sales team based out of Bangalore with 300,000 to $500,000 quota target. Hey, folks. My guest today is Shruti Ghatge. She is the CEO of zomentum, a revenue platform to help partners and partner programs scale. The platform fuels technology sales over 800,000,000 today. She was an investor investing in seed in series a SaaS stars before jumping into the business and was named CRN Women of the channel [00:46] 2022. Zomentum was awarded great place to work under her leadership. She's now looking to scale. Alright. Shruti, ready to take us to the top? [00:54] >> Yes. Very excited to be here. [00:57] Very cool. Okay. So how does zomentum work? What does it mean to platform? What does it mean to help people scale partner revenue? [01:03] >> Oh, well, partner programs and partner revenue has been a black box for most SaaS companies usually and the reason it exists is because SaaS companies and partners are trying to go to market together but they live in their own silos. What we do as a platform is get both of them together on a single platform where they can come to get deals done. Right? Like that's how we look at it. [01:25] Mhmm. Now, who would you sort of put in your space? I mean, Crossbeam comes to mind. Is that the biggest one or who else? [01:31] >> Well, Crossbeam is an is step one. It helps you identify what are the opportunities are. We come after that, that once you've identified the opportunities, how do you work together to drive them to closure. [01:43] Interesting. Okay. And and how do you think about pricing your technology? What's the average customer pay you per month on average? [01:51] >> An average customer is a very per partner fee, which which is a sliding scale and on the SaaS company side, but we also have a motion where we add partners by ourselves and who are paying anywhere between 100 to $200 per month to use the tool. [02:04] And and why would someone maybe pay, you know, more than that? $300, $400 bucks a month? What are you upselling against? [02:11] >> On the partner side, like, it's a two sided network. So we attract both partners on one side and SaaS companies on the other. The partners pay for additional functionality like the basics of the sales tool that is built for partners is what the price I'm quoting for, but beyond that, we do billing reconciliation separately. We do assessments. We help them integrate with a bunch of SaaS vendors. So all of that is at an additional cost for [02:36] >> the partners. [02:37] And what do the SaaS companies pay? Or is it free for them? [02:41] >> No. The SaaS companies pay for the partners that they manage. Our partners pay us directly. The SaaS companies pay for the connection that you're enabling. Right? Like, you're getting these two siloed entities on one platform and that's what they pay for, which is the per partner fee. And of course, we do billing reconciliation, payout management. [02:59] Shruti, what is the per part so what's the average SaaS company pay you per month? [03:02] >> It can go as low as $30 per partner per month. [03:06] But what what's the big like, what's your don't name the company, obviously, but what's your biggest SaaS company customer paying you per year per month? [03:13] >> I'd say around a 100 k contract. [03:15] Oh, wow. Okay. So if I'm if I'm a SaaS company paying you a $100,000 per year, what am I getting? Like hundreds of partners? [03:22] >> You're getting to manage your partners. So it's a tool to manage your partners and a network that we come with ourselves. So it's a handshake in some sense. [03:30] And very interesting. Okay. Very interesting. Now before I get more of your backstory and how you launched and grew, help me understand. So this year, if you if you look at a 100% of your revenue, what percent will come from partners versus SaaS companies? [03:45] >> I wanna say the SaaS company led motion is a few quarters old, so fairly new like that. So partner driven motion is two years old, so I want to say 60% comes from partners today. [03:56] Okay. Wow. But but still 40% from SaaS companies considering how new it is is pretty impressive. [04:00] >> Because it's an accelerated way of go go to market because every SaaS company adds to the network their own partners. Right? [04:08] Very interesting. Okay. Give me more of your backstory. What year did you launch the company? [04:13] >> We launched in 2018, later half of twenty eighteen. So it's been four years now. [04:18] Who is we? Do you have cofounders or you're a sole founder? [04:21] >> I have a cofounder for tech and product. I take care of everything business. [04:25] Very cool. Do you guys just play nice and split fifty fifty at the beginning or what? [04:30] >> I don't think it's playing nice like that. I think it is a very equitable distribution between us, and we brought skill sets to the table which were very complementary. [04:40] 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 [05:04] 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 [05:28] 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 [05:50] not built off random data. Again, you guys hear these interviews on YouTube. All these datas are built from real time valuation data points founders 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 [06:15] 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. Alright. We're gonna go back to the YouTube video here in a second, but if [06:38] 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 the [07:04] interview. How did you negotiate that though? I mean, this is a very hard thing for a lot of early teams to negotiate. Anything other than fifty fifty tends to generate create some friction. How did you go through that process? [07:15] >> Oh, well, my cofounder I mean, he's an engineer by background, worked at Twitter and Drew Brecken, but had worked very closely with partner teams. So he had a business sense and very strong on product. He was just a techie by profession, but I think he's more strong product person and I think product and business go very hand in hand. And I think them think of them as an equal distribution. Only tech maybe would have thought very [07:37] >> differently. [07:38] Okay. So you would I mean, it is fair to say you could just put it fifty fifty then if you consider both those equal at the beginning. [07:42] >> Correct. Which is why we did it. Right? [07:44] Ah, okay. Okay. So you did split fifty fifty. Okay. Cool. Now have you guys I I don't think you have bootstrapped. Think you've raised. But have you bootstrapped or raised capital? [07:52] >> We have raised capital. [07:53] Yeah. So so tell me fill out the funding story a little bit. First off, when when did you do the first round and why was it important for you to get that first round done? [08:01] >> Oh, I think like we didn't raise immediately. Most of the initial, I wouldn't say like nine months went in customer research. We're not from the industry. It was a very thesis driven startup for us. I I mean, some context is I used to work at Accel before investing in a lot of SaaS companies and we saw this problem and wanted to solve for it. But spend the next six-nine months just figuring out our wedge into the [08:24] >> market, right? Like one, it's a two sided network so we had to solve for chicken and egg. But which side would we solve for, how would we penetrate with such a sharp value prop inside is what we spent time. So we didn't write a single line of code, want to say at least 12 into the company, right? Which is just being sure that hey, we are committed to this. We've figured an entry point and that's when [08:44] >> we raised our initial seed round. [08:46] And how much was that for in what year? [08:48] >> It was 4,000,000 in seed and then we raised series a last year. [08:53] Okay. So 4,000,000 seat. And then I think I can't I don't wanna skip over this. It's really, really, really important. You saw probably a lot of marketplaces at Accel, and then you went in and launched your own. You had to decide what side do you wanna go after first and what's your mousetrap? What decision did you make? What side did you go after first? [09:07] >> We went after the partners first. So SaaS companies on one side, partners on the other for us. So what we, even as a company, very strongly believe in today is that we have to invest in partner success. And if they are successful, that just means they're selling more SaaS. Means by design, the SaaS company is going to be successful. So we've solved for partner first. [09:25] Yeah. That makes sense. Okay. So staying on that theme, how many partners pay you at least a dollar per month today? [09:32] >> We have around 4,000 partners in the network. And and I want to say 70% of them pay us to use the product. [09:39] How did you get I mean, that's a huge conversion rate, right, even for b two b SaaS centers. How'd you get 70% to pay you per I mean, to be clear out of 4,000, that'd be 2,800 are paying per month. [09:49] >> And that's the partners that we acquired. The others are also paid for on behalf of the saascom. The SaaS companies pay for them. So there is no way to get in free here. [09:57] Oh, I see. I see. Got it. Got it. Okay. So 2,800 paying an average of $200 a month. I mean, isn't it? That's like $560,000 a month right there in revenue. Right? [10:08] >> Yeah. I mean, there is baggage of pricing where we started very low at 39, increased it to $49.99, and now we have increased prices. So there's some grandfathering effect there. But I wanna say like because of compounding then it's not as high. Yeah. [10:23] I see. I see. So so moving forward, new partners you're signing up are paying on average 200. But historically, the average was maybe something more like, you know, $60, $70, $80, something like that. [10:32] >> Yeah. Yeah. Yeah. Because we [10:33] Okay. [10:34] >> Like respected those prices for them. [10:35] Of course, which is very nice of you, by the way. [10:39] >> I mean, I think it's only fair for them to take a punt on us early on. Right? [10:42] Fair enough. Fair enough. Okay. So 2,800 partners to fix this math. 2,800 partners paying a lower average per month of like $70 a month is more like a $190,000 a month in revenue from that part of the business. Is that more in the range of where you are? [10:55] >> Yes. Yes. [10:56] Fair enough. And if that's where you're at today, where were you one year ago so we can sort of understand your growth? [11:01] >> We've scaled eight x in the last twelve months. [11:04] Okay. [11:05] So you're gonna make me do the math. So a $190,000 a month is from partners and partners are 60% of your revenue. So increasing another 40% on top of that means you're getting [11:12] >> like Actually, also is only two quarters old. Like, the other 40% is a chunk of that is it's yeah. [11:20] Okay. So maybe total MRR today is around $200,000 and that's eight times higher than you were a year ago. Is that fair? [11:27] >> Maybe slightly more, but yes. [11:28] Okay. Fair enough. Fair enough. Fair enough. Okay. Cool. But but still really impressive growth. Right? I mean, $250,000 a month divided by eight. Wait. So that's like 31,000 a year ago. Right? How have you gotten all this growth? Is it more partners or or more partners per SaaS company? [11:43] >> Oh, I think the partner love is real, right? Like for us a demo to a paid sign up conversion is upwards of 55, it's it's between 55, 60%, right? Like and those are numbers I hadn't seen myself when I was working at Accel. So I think that's what's working for us. Like the product really works at a partner site. The churn numbers are the sub point 5% monthly, but the conversion rates are really high, right? [12:09] Mhmm. Mhmm. Let me ask you a question. I mean, if you last year, if you've grown 8x $250,000 a month today and you were that would mean you're at like $34, $35,000 a month exactly a year ago. But you closed a 13,000,000 series a. How did you close a $13,000,000 series a with just $35,000 a month in revenue? [12:25] >> I think like it's a network company. I want I want to say it's a SaaS driven network company and the network's more valuable. We have not or don't intend to milk the network upfront. Like like one parallel I like to draw here is LinkedIn. Right? Like it has all job seekers and job providers on the other hand but like lots of business models have emerged like ads and navigator and recruiter and whatnot. So once the network [12:47] >> is in place and we become the de facto place for all SaaS companies to grow and manage and launch partner programs, then that's the moat we are working towards. Right? And so network is the North Star metric here. [12:58] That makes sense. And then in terms of obviously, look, you raised, you're an ex VC, managing dilution is really important. Most folks raising last year in a series a were selling between ten and fifteen percent of their business. Were you sort of in that same range? [13:10] >> Yes. [13:11] Okay. So that means you're raising mean, you'd broke a $100,000,000 valuation then post money. [13:16] >> I was slightly lower than that, but in that negotiation ballpark. Yes. [13:20] Yeah. Okay. Fascinating. I mean, now fast forward to markets today, does that really high valuation you got in terms of revenue multiple now make now worry you a little bit? [13:29] >> I mean, I I think like we fundamentally believe in the network really ourselves. Like we, our network touches more than a million and a half business and then that's the demand aggregation that we have today. So actually it's become more lucrative to the SaaS companies, I'm realizing because now they are looking for efficient channels of growth and partners happen to be the efficient way to grow businesses. So our networks become more valuable to SaaS companies. And [13:53] >> and I'll see how that pans out over the next year, but at least on paper, this is what's what we're hearing. [13:58] Talk to me more about how you've built this, your people. How many folks are full time today? [14:03] >> Roughly 75 of them. [14:05] And how many engineers? [14:08] >> A good 50% is engineering. [14:10] Wow. Okay. So call it 38, 39 are engineers. What about the rest of the team? What are they focused on? [14:15] >> That's divided between sales, support, customer success, marketing, majorly. [14:21] Do you have any quota carrying sales reps today? And if so, how many? [14:25] >> We have four quota carrying sales reps today. [14:28] Okay. Come on. Teach us. Teach us here. I have audience members going, I wanna hire my first quota carrying rep, but I don't know what quota to set. I don't know what ramp time to give them. I don't know what OTE to quota ratio should be. How did you set that up for your first four? [14:39] >> I don't know either. Like, the the first the the ones who joined us in the zero to one, which is after I was doing the sales, we figured it out with them and we've been like, okay. In the first few quarters, when we are new to market, we are going to reward you on the effort versus the outcome because you don't have control over it. But once we figure that out, we move it to a very [14:57] >> outcome based. Also, it's a very inside sales led motion, I don't know if my numbers are going to mix, are going to be the same for say US sales reps. Right? Like all our sales happen out of India. [15:09] Very cool. Which which country or sorry, which city? [15:13] >> Bangalore. Oh, I mean, very at this point, they're all over the country, but when we started, we were in Bangalore. [15:18] That's amazing. And so what is the quota for those reps in Bangalore? Annual quota? [15:25] >> 10 times what their income is. Once [15:29] Okay. So what is that? Like, 100 k, 400 k annual quota, something like that? [15:33] >> Mhmm. Mhmm. [15:34] Interesting. Very cool. Can those reps close deals with US partners? [15:40] >> Oh, very much. The partner driven is more inbound for us, so those that's that quota is very different. I'm talking about the SaaS company side of it, right? Which is still like the longer sales cycle and but even those deals we close out of India. [15:53] There's a lot of founders even in India. I mean, I talked to Girish at Freshworks, Saravana, Rajesh at Netcore, some of these folks that say, we can't get our India our our sales reps in India to sell to US customers. They're trying to launch sales teams in The US which are way more expensive. You haven't run into this problem. [16:09] >> I think like I mean, I work very closely with Freshworks as part of Accel, but I think like five years back the story was very different, but they've learned, they've trained themselves and the really good ones have have figured it out. And of course that pool is much smaller than what you'd like it to be. But it's still much cheaper than having a US Rep. Right? [16:28] Yeah. Fair enough. And you mentioned earlier your your gross revenue churn per month I think was about point 5%. When you add back expansion on top of that, is your net dollar retention above a 100%? [16:38] >> Yes. On the partner side, though there are not more avenues, which is like what we've known for a while because it's only the seat increase and some add ons here and there, but still above 100%. On the SaaS company side, of course, there is more expansion potential because they add partners themselves and we get benefit of it. [16:53] Last question as we wrap up here. How are you getting more SaaS companies on the platform? What is your growth strategy there? [17:00] >> Honestly, I wish I had a better answer, but it's slightly heavy on outbound today as we are creating awareness that of our own existence. And also like we are the only ones sort of doing this two sided network in the channel space. So to articulate that value prop takes some time and that's something we are working on on our positioning itself. But it's fairly events and outbound heavy today. [17:24] Alright. Shruti, on that note, let's wrap up here with the famous five. Number one, what's your favorite book? [17:29] >> Play Bigger. [17:32] Number two, is there a CEO that you're following or studying? [17:37] >> I follow a lot of them and I don't want to put them on a pedestal because then it's like, I try to humanize them because it helps me do my job better. So I don't want to take a name. [17:48] Fair enough. [17:49] Number three, what's your favorite online tool for building zomentum? [17:53] >> I I used to do a lot of InVision mocking early on. Now the team uses a lot of things, but I like InVision when I sold a product without having one. [18:01] Fair enough. Number four, how many hours of sleep do you get every night? [18:04] >> Oh, I sleep a good seven, eight hours. [18:06] And situation, married, single, kids? [18:08] >> Single. [18:09] Okay. And can I ask how old you are? [18:12] >> I'm 32. 31. Turning 32. [18:14] 31. Very good. Last question. Something you wish you knew when you were 20. [18:20] >> Oh, that I'd be fine. Like, I I I used to be I wanted to do things very quickly in life, but I I think it turned out fine. [18:28] Guys, there you have it. Zomentum doing $35,000 a month a year ago, now doing $250,000 a month with their two sided network, helping you grow faster with partner programs. They've got over they've got over 2,800 partners on one side of their marketplace, and SaaS companies bring in another 1,200. So over 4,000 partners on their platform as they look to scale. Again, a two sided marketplace here, 13,000,000 series a at a little under a 100,000,000 valuation last [18:50] year. 75 on the team, 38 engineers as she looks to scale with her four person sales team based out of Bangalore with 300,000 to $500,000 quota target. We'll see what happens next. Shruti, thanks for taking us to the top. [19:01] >> Thank you very much. [19:04] 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 [19:29] Central. Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2PM Central. To make sure you don't miss any of that, make sure you click the subscribe button below here on YouTube, the big red button and then click the little bell notification to make sure you get notifications when we do go live. I wouldn't want you to miss breaking news in the SaaS world, whether it's an acquisition, a big [19:52] fundraise, a big sale, a big profitability statement or something else. I don't want you to miss it. Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We've probably talked about your tool if you're running a company or your firm if you're investing. You can go in there and quickly search and see what people are saying. Sign [20:13] up for that at nathanlatka.com/slack. In the meantime, I'm hanging out with you here on YouTube. I'll be in the comments for the next thirty minutes. Feel free to let me know what you thought about this episode. And if you enjoyed it, click the thumbs up. We get a lot of haters that are mad at how aggressive I am on these shows, I do it so that we can all learn. We have to counter those people. We [20:33] got to push them away. Click the thumbs up below to counter them and know that I appreciate your guys'support. Alright, I'll be in the comments. See you.