SaaS Interviews with CEOs, Startups, Founders
Almabase Hits $1.1m Revenue Helping Universities Manage Alumni Donations
18 Nov 2020
Chapter 1: What is the main topic discussed in this episode?
So, I mean, it ranges between, you know, I would say $4,000 a year for some of our products to somewhere like $15,000, $20,000 a year for some of our products. But if I had to like just take an average across all of our customers, all of our paying customers right now, I would say it's between $6,000 to $7,000 a year. You are listening to Conversations with Nathan Latka.
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My guest today is Kalyan Navarma. He strongly believes that technology should work towards improving human relationships instead of replacing them. The ability to bring communities together and benefit all stakeholders is what drives us. He's been personally impacted by the lack of scholarships. And with AlmaBase now, he's helping institutions make their education more accessible.
Kalyan, you ready to take us to the top? Let's do it. All right. So what is AlmaBase? So which school did you go to, Nathan? Virginia Tech. OK, how many times did you get asked for a donation after that, after you graduated? I put them on my spam folder. There you go. That's the story of like so many of us. So that's what we really help improve.
I think the big issue here is that universities don't do a good job of maintaining a good relationship with their alumni. It's always one way traffic. Just ask for donations all the time once you graduate. But obviously, you know, student debt is increasing. You know, donations are going down, which is a huge problem for universities. That's what we help solve.
So we help universities build really strong, lifelong, you know, give and take, you know, very strong relationships with their alumni. And the value prop is obviously that we help them increase alumni participation. So more and more alumni give back to the university. Are you taking a cut of donations done through your platform or is it just a SaaS model?
It's a SaaS model primarily, but we've been recently over the last, I would say, 12 months or so, we've started making some revenue out of the cut of the donations as well. So we'll come back to that in a second. If we just focus on the SaaS side for now, what's the average university paying you per month or per year to use the tech?
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Chapter 2: What is the main focus of Almabase?
That's been an idea that I've had forever. And have you bootstrapped AmoBase? That's an interesting story. I do say we are bootstrap, but we did raise a little bit of money up front, you know, between that 2014 and 2017 phase where we weren't really sure of what we were doing.
We did raise some money from angel investors, again, alumni of my own album matter, as well as 500 startups, the accelerator program in the Bay Area. How much? We did raise a little bit of money. The total money we've raised is about 500K during that time. But what's interesting is during that whole three years where we raised 500K, we didn't really add a lot in terms of ARR.
But then we've been bootstrapped since then. We raised a little bit of debt in the last couple of years from Leiter Capital. We raised, I think, 250K in debt so far from Leiter Capital. And when did you raise that debt? So we raised 100K in 2018 and then 150K during like December of 2019 or like closed in Jan 2020. So about six months ago. You're from Goldman.
So I'm expecting you to be able to explain this very clearly so that anyone can understand it. How does a lighter capital RBF revenue based financing work? It's pretty simple, actually. I mean, in the sense that you don't need to put any collateral upfront. It's revenue-based financing.
So they give you a certain amount of money based on how much revenue you have and what are the projections, et cetera.
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Chapter 3: How does Almabase improve alumni relationships?
So it's a fairly safe bet from their side as well. So we are doing it at 40% over three years. So for example, if we raise 100K, we're repaying 140K. And the way the repayment works is it's a cut or it's a percentage of monthly cash receipt. So if you, let's say in a certain month, let's say we get 100K in cash, We pay 9K, 10K, something like that.
And then it goes down over a period of time in terms of the percentage of the cash flow, etc. So it's a fairly straightforward instrument. Folks, as you know, 2020 continues to deliver surprise after surprise after surprise. We're not sure where we're living. We're not sure where we're going back to work.
Everything's sort of up in the air, which means getting things done digitally is what's most important. In fact, we're very excited. We're launching a new podcast based of our dealer bust format. And I needed a quick way to get some designs done for the logo. So I used Fiverr. And the reason I use Fiverr is because it's not worth it for me to pay a full-time designer three or 4,000 bucks a month
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Again, that's Fiverr.com, code TOP. What determines if it goes from 9% of gross monthly receipts down to 5% of gross monthly receipts? I think they basically put a cap in terms of for the first, I think, million dollars per year in cash receipts. It's about 9%, if I remember correctly. And then between from anywhere over 1 million to I think 1.5 or 2 million, it's 5%.
And then if it goes beyond 2 million, then it's like 0.1% or something like that. Got it. So just to summarize, again, I've heard of terms I've interviewed many people that I've raised from lighter, but there's essentially a repayment cap, which is usually between 1.4 and 2x the total loan. You said you're at about 1.4, it sounds like.
So if you raise $250,000 total, what you're going to pay back total over time is about $350,000 or 1.4x the $250,000. And the way that you pay that back is going to be right now about 9% of your gross monthly receipts. And that could drop if you grow pretty quickly. Yeah, I don't quite recall if 9% is accurate, but somewhere around that range.
How do you compare that to just regular debt where it's just a flat, simple to understand interest rate? In other words, if I asked you, what's the interest on this money? How would you try and calculate that? Yeah, it's not that straightforward.
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Chapter 4: What is the pricing model for universities using Almabase?
So that's what we went with. And what's your monthly recurring revenue today? So in terms of ARR, we're about 1.1, close to 1.1 million. So 91, 92, something like that in terms of MRR. Yeah. So, so lighter can usually go up to like three, four X of your MRR, which is exactly what it looks like. It sounds like here, if you want to continue scaling the company and using debt, right.
So that you and your founders keep owning a hundred percent of the equity, where would you go or how would you think about a bigger debt deal? What do you mean? Would we be raising more debt or would we be doing equity? Is that your question? Yeah. I mean, there's two types of founders.
Founders that want headlines and want to go for a billion-dollar win, which is high risk, and those that want to keep as much of their company as possible and build it to a $10 million profitable thing that they can get rich off of. Which are you? I'm the second one. I mean, we call that value SaaS, actually. I don't know if you've heard that before, but what we mean by value SaaS is...
creating value for every stakeholder. So like founders for sure, but employees, customers, making sure everybody has value in this equation is what we built for. So yeah, we're certainly not going to be type A, which is like raise tons of money and hopefully get there. But yeah, we're more of, I mean, at this point, money is not really our bottleneck.
There's a few things that we're solving for, but whenever money is a bottleneck, I think we will raise a little bit of debt to keep us going. What's the bottleneck? I think marketing for me is, I think, the key bottleneck from a brand story. I think we just haven't really done that well. I mean, so far we've been focused on outbound sales, right? So we've done SDR, AEs.
We go outbound, reach out to every single university and high school, you know, see if they're interested in what we're doing. But from a marketing perspective, inbound, demand gen, et cetera, we haven't really done a lot. And so that's really the next few months for me in terms of focus. Interesting. What's the team size today? How many folks? So we're 25 people totally. And how many engineers?
Five, six engineers, uh, two product managers. Yeah. And do you have, is this price point a price point where you can put sales people on it with quota? Do you have any quota carrying sales folks? Yeah, we have quota carrying sales folks. We have three account executives and three SDRs. All of them have quotas, obviously top of the funnel, bottom of the funnel, et cetera. Um,
And yeah, so it works out for us, you know, because some of our people are in India and some of our people are in the US and we do some of us shuttle back and forth as well. And I mean, if I were to build this team entirely in, let's say, the San Francisco Bay Area, it's never going to work out with that kind of price point.
But yeah, we do have an advantage in being able to, you know, hire people from lower cost locations. You wouldn't have raised the debt if you didn't see a way to reinvest to drive growth, which probably means you're burning a little bit of capital per month right now. About how much are you burning? But actually not at this point.
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Chapter 5: When was Almabase founded and what inspired its creation?
So it comes out to about between $3,500 to $4,000 to essentially bring in a new customer. So yeah, the payback that we look at is somewhere between six to nine months in terms of payback. Very good. All right, Kalan, let's wrap up here with the famous five. Number one, favorite business book. I read a lot of biographies.
I don't know if I have a favorite business book, but I would probably pick Never Split the Difference by Chris Watts. What's your favorite bio? Elon Musk. I loved that. Number two, is there a CEO you're following or studying? Yeah, Girish Madhubutham from Freshworks. Yep. When are they going to IPO? I couldn't tell you, but I love him for his storytelling abilities.
I mean, that's one thing that I'm trying to learn from him. Number three, what's your favorite online tool for building Amavase? I love Asana. It's been something that we've used right from the beginning. Number four, how many hours of sleep do you get every night? About six hours. Okay. And situation, married, single, kids? Married, I'm 33 years old, one kid. She's one year old.
Oh, that's exciting. Okay, last question here, Kalyan. What do you wish your 20-year-old self knew? I keep telling this to myself all the time. Do less and get more done. Guys, AlmaBase, helping alumni programs have a better relationship with their alumni communities and ideally raise more capital.
They've got several hundred schools on the platform doing about 1.1 million in terms of run rate right now. 240 customers or schools. They've raised $500,000 to do this. They're cash flow positive, about $20,000 a month. 25 on the team, six engineers. They look to continue to scale, spending $4,000 to get a new $500 a month customer. So six to nine month payback period.
Kalyan, we're rooting for you, man. Thanks for taking us to the top. Thanks, Nathan. Have a good one.
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