SaaS Interviews with CEOs, Startups, Founders
Compliance Tool For Banks Hits $15k in MRR, Raises $500k Seed
11 Dec 2021
Chapter 1: What is the main topic discussed in this episode?
Okay, so you're more like 60,000 a month in revenue, something like that? I'd say it's closer to, I'd say, what was the number? So it's about like 15,000 right now. 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. Hey, folks. My guest today is Siam Chowdhury.
He's building Pliance.io, a Stockholm-based founder with background from Facebook, Acast, and many fintech companies. His core focus and interest now is around product management, but he's grown to learn and enjoy sales during the startup journey at Pliance, where he's helping combat financial crime. Sam, you ready to taste the top? Yeah. Thanks for inviting me. Who'd you build this for?
Who are your customers today? Our customers are primarily regulated financial companies. So companies that fall under anti-money laundering legislation with a risk for financial crime and money laundering. You're talking like KYC, all this kind of stuff? Yeah, exactly. So knowing your customer, transaction monitoring, those kind of things. Interesting. Okay.
And what are customers paying you on average per month to use this technology? Excuse me? What are customers paying per month on average to use the technology? It's quite varied. Our model is a sort of SaaS volume-based model. So it can go from a few hundred dollars a month to sort of thousands of dollars per year. And what are you pricing off of? Active users.
So active end consumers that need to be screened against, for example, sanctions list or sort of KYC or that need to be done on transaction monitoring. So how do you, okay, let's say that a bank uses you, right? And they have a thousand new customers sign up in October.
They obviously have to pay you to scan those thousand people one time, but then next month, they don't have to scan those thousand people again. So how do you deal with churn? So actually for the legislation, you kind of, as an institution, need to do continuous screening on your customer base.
So as long as you have an active business relationship with a bank, for example, then they need to know this information about you. So for us, we basically, as long as a customer is active within a bank, we monitor them and have that as part of our pricing model, which is why we sort of refer to it as an active customer instead of each screening. I see. I see. I see. Okay.
And what do you, I'm sure the seat price varies with volume, but on average, what do you pay per active or what do you charge per active customer?
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Chapter 2: What is the core focus of Pliance.io and its mission?
For active customers, I'd say it's about maybe 50 cents, but then we can also scale that as the volumes grow. Where it's a very low volume, we also have pay as you go models. Yep. Fair enough. What's the largest customer that you're working with today? How many scans or customer checks are they doing per month?
doing about 250 50k uh some active customers per month that's great and am i right with it's mainly banks It's mainly financial institutions. So we kind of focus on the SMB to mid-market segment within banking and finance, also within gambling and insurance. But I'd say the SMB to mid-market is our sort of key customer segment. Okay, interesting.
And I imagine if someone's doing that many scans per month, they're able to get a discount from 50 cents per customer, right? Yeah. So that's where we have sort of a volume-based stair step, where as they go up to higher volumes, the pricing scales with them, allowing us to grow with them, but they can also make sure that their margins improve and they can sort of scale as well.
And Sam, how low can that price per scan or price per customer go? I mean, I'm talking like 10 cents? It can. It really depends on what those volumes look like. Well, that's why I'm curious. With the volume example you just gave, at that volume, can it be $0.10 a scan? It'd have to be higher to get to that level.
Chapter 3: Who are the primary customers of Pliance.io?
Why is that? It's basically so that we can get a better discount on the volumes that we process, and we still have scaling effects on the sources that we manage to get these kind of information. Okay. So that biggest customer, then they're paying more than 10 cents per active customer per month. You need more volume in order to give them a bigger discount. Yeah. I see. Okay.
Give me the backstory here. When did you start writing code for this platform? I actually never did. So it was more of a product. manager and my two co-founders started. But I think the first line of code was around late 2018.
That was when we really validated the product, the customer base, and we felt that we had something to offer more fintech or techie finance customers that wanted an API-focused solution. Did you guys just split equity evenly? Yeah. Yo, you're nice to each other. Yeah.
Well, we kind of saw each other's strengths and realized that, hey, if we want to do this really well, we all need to be equally incentivized to sort of put everything into this. Now, did you guys raise capital or bootstrap? We bootstrapped the first three years. And also just recently this year, end of April, sort of took in our first seed round.
Chapter 4: How does Pliance.io structure its pricing model?
And how much was that for? That was, I think, in dollars, just $500,000 or something around that. And why did you need that? Why couldn't you keep bootstrapping?
For us, we wanted to wait with raising funds to show that we have a business that we know how to sell and we can recreate all the steps of it and then show that with funding, we can scale faster and go into other markets and show that there's a model that we can scale in terms of sales, in terms of outreach. versus experimenting, like being like, oh, we're trying to figure this out.
We don't know yet. And at that stage, we felt that we could take it to the next level. We could sort of staff up and sort of go into other markets. And Sam, obviously you want to grow to other markets, but obviously you need to take care of current customers as well. How many current customers are you working with? We have about 30 current customers.
And what market are you excited about moving into? At the moment, it's to move outside of Sweden, which is where we have most of our customers. We also have customers in all of the Nordic countries and out in Europe. So our sort of next focus is on being more proactive in our outreach in the Nordic countries and in the European countries. I see. I see.
And what would you say of those 30 customers, on average, how many customer checks are they doing per month, would you say? On average, I think it'll be about 15,000, 20,000. It varies quite a lot from our smallest, which maybe has a few handfuls, a few hundred, to, as I mentioned, the largest one, which is around 250,000. Do you guys care about valuation right now, specifically your valuation?
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Again, both plural founderpath.com forward slash products forward slash valuations. But if you're doing, I mean, 15,000 scans per month and you get a little discount off the 50 cents per scan, let's say it's 30 cents per scan. These are like enterprise customers, right? That's like $4,500 a month for you in terms of revenue, right? Yeah, it can be. Yeah.
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Chapter 5: What strategies does Pliance.io use to manage customer churn?
Yeah. Interesting. Very cool. Okay. That makes a lot of sense. So you're looking to expand. You mentioned your three co-founders. What's the rest of the team look like today? How many people? So we're six people today, and then excluding a couple of interns, but the team structures basically are my two co-founders who are developers.
We have a designer, a product designer, and a salesperson, and are now adding another couple of salespeople and another developer. And then we have additional help within market, PR, and interns within sales and prospecting. And it sounds like you guys are with that. I mean, it sounds like you have a small team relative to the larger amount of revenue that you're doing.
Can we take 30 active customers times 4,000 to 5,000 a month? You're doing about 130,000 a month in revenue right now. We're not quite there yet. I think we're still activating customers.
We kind of get them sort of signed up and they kind of, depending on when they receive their license to go live, that's when they sort of start paying when they actually have active live customers in the platform. How many of the 30 are active? About half of them. Oh, I see. I see. I see. Okay. So you're more like $60,000 a month in revenue, something like that?
I'd say it's closer to, I'd say, what was the number? So it's about like $15,000 right now. How much? $15,000. $15,000. Okay. Got it. So where do you think most of your growth is going to come from? Is it getting current customers to do more customer checks per month? Or have you already penetrated your current base at like 100%? No, so it's basically around getting new customers.
We're in a sort of a niche market, but it's a quite big niche with sort of, as I mentioned, banking and finance customers, insurance, gambling, and our product is sort of internationally viable. So we have customers from outside of Sweden as well. And it's also looking at customers that we can grow.
So some of our customers are already small, but as they're scaling and they're growing, we have another opportunity to grow with them. So it's sort of a two-prong for us. We want to have new customers, but we also see ourselves growing with our existing customers. And speaking of growth, if you're at $15,000 today in revenue, where were you exactly a year ago? Do you remember?
A year ago, we were maybe in less than a thousand. That was a really sort of early stage for us. We'd just figured out that, okay, the product works, people are willing to pay for it. We just need to learn how to reach out to customers and sell it. So we had three customers, I'd say by beginning of 2020 and end of 2020, we had 15. Yeah. well, end of 2020, he had 15.
You said he had 15 active customers right now. Yeah, so those were signed customers. And then sort of the actives are essentially just sort of catching up and... How many new, so sorry, I think you just said you have 15 active customers today, but then you also said you had 15, you know, 12 months ago. So have you had no growth the past 12 months? No. So we had 15 signed customers by end of 2020.
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