SaaS Interviews with CEOs, Startups, Founders
$13m ARR company gets $7m raise done on $40m Valuation for Customer Success SaaS
23 Jan 2023
Chapter 1: What event is being highlighted at the beginning of the episode?
Guys, SaaS Open is our next big event in New York City. March 16th and 17th, we'll have a thousand SaaS leaders all sharing how they built their companies. Our keynotes are Henry Shuck, Marie Martins from Tally.sao, Serby from Symbol, Christopher of DocHub, who had a big exit.
Again, hundreds of speakers, a thousand plus attendees, and we've got folks bringing their entire executive teams because we have stages for founders, heads of product, head of finance and BD, CMOs and CROs, and then people in HR stage. It's going to be special. Prices are increasing every week, so you don't want to wait.
Go to sasopen.com right now to see what the ticket price is and lock in your spot today. Again, that's sasopen.com, March 16th and 17th in New York City. Tickets are almost sold out. You are listening to Conversations with Nathan Latka, where I sit down and interview the top SaaS founders, like Eric Wan from Zoom. If you'd like to subscribe, go to getlatka.com.
We've published thousands of these interviews, and if you want to sort through them quickly by revenue or churn, CAC, valuation, or other metrics, the easiest way to do that is to go to getlatka.com and use our filtering tool. It's like a big Excel sheet for all of these podcast interviews. Check it out right now at getlatka.com. Guys, highplatform.com was launched in 2017.
The four co-founders owned 20% together and other investors from an earlier merger deal own the other 80%. Today, the company is doing $13 million in ARR up from $11.5 million about a year ago. They raised a $7 million round of funding their first outside funding last year at a $40 million valuation, which was about a 3x valuation multiple. And the co-founders have gotten smart.
They bought back a bunch of equity over the years. They now own 40% together, which is great as Marcello and team focus on growinghighplatform.com. Hey folks, my guest today is Marcelo Puglisi. He's been an entrepreneur since the early 2000s and participated in the launch of eight different startups.
Since 2017, he's been the CEO of High Platform, the largest customer experience SaaS platform in Brazil. He participated in fundraising operations, M&A, and mentoring processes. He's a fan of conscious capitalism, behavioral economics, and corporate culture. And he's a married father of one kid named Benjamin, graduated an MBA with a specialization in management and sales innovation.
Marcelo, are you ready to take us to the top?
Let's go, Nathan.
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Chapter 2: What is the story behind High Platform's founding and growth?
Oh, we actually had 20% of the company.
Okay, so other people, investors from the merch company, they own the other 80% and you guys split the 20% four ways, 5% each.
Yeah, yeah.
I see. Marcelo, why do that? You're like a talented executive. You're well-known in Brazil. Why get involved with something where you only own 5%? Why not go start your own thing and own 100%?
Yeah.
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Chapter 3: How did High Platform achieve its current annual recurring revenue (ARR)?
My wife asked me that. I'm not your wife, but I still think it's a good question. Yeah, it's a very good one. Nathan, to be really honest, I was so much into the business. I was so excited about the vision and the goal and of course the challenge. That really was into me and I've chosen the path, the difficult one, because we've doubled our participation in the last two years.
So we bought shares from other companies.
The four of you guys are now up to like 40%.
Yeah, that's it. But it was a tough challenge.
Where did you get the money to buy out earlier investors? Bonuses. But where did you get the money from?
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Chapter 4: What strategies did High Platform use to raise $7 million in funding?
Was it profits?
Yeah, bonuses from the company.
So you have earned bonuses from the company since 2017 and you used your personal money to buy out earlier investors based off your bonuses.
Yeah, that's it.
I see. If you're earning all those bonuses, though, how do you convince the early investors to sell at a price that you can actually purchase shares using your bonus dollars?
Why would they sell? We had some guys on the cap table that were on the company for a while. They were tired. They had a minority position, so they didn't vote and they didn't participate on the company. So they were not happy with this position. And to them, Even though we bought a little more cheap, they had a good return. So it was a good deal to everyone.
Yeah. Now, guys, I'm asking these questions because high has significant revenues. Marcel, when we last spoke back in June, I think it was of 2018 or 2019, you said something like you had 1,100 customers paying on average $1,000 USD a month. So you guys were doing $800,000 a month in revenue back then, right?
Yes, yes. What we are doing right now, we had 1.7 thousand different customers and we do have 1.1 million dollars in MRR.
Yep, yep. So 1,700 customers, you're doing 1.1 million in MRR, which is equivalent to about 13 million dollars of ARR, right? Yes, that's correct. And so why? I mean, look, that's good growth, but it's not fast growth, right? If you went from 9 million in 2018 to 13 million today, you're only adding about a million net new ARR per year. Why haven't you grown faster?
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Chapter 5: What challenges did the founders face in equity ownership?
We actually raised money last August. We raised $7 million. That was our goal. first round. So we had very little money.
We came all the way with... So you were, Marcel, just to be clear, between 2017 when you launched and the 7 million round, you guys were bootstrapped?
Yeah, that's it.
Okay. And what did you... The 7 million round, I mean, most people are raising, they're selling 15% of the company. Did you sell around 15%?
A little bit more.
Okay.
Okay, got it. So we're talking like a $35 million valuation, $40 million valuation, something like that?
Yeah, $40 million valuation.
Looking back, does that feel fair? Was that the right move?
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