SaaS Interviews with CEOs, Startups, Founders
LimeChat Goes $0 to $30k MRR in 12 Months, Raising at $20m Valuation Now
30 Nov 2021
Chapter 1: How did LimeChat grow from $3,000 to $30,000 MRR in one year?
Now, can we take 60 customers today paying $500 a month? You guys are doing about $30,000 a month in revenue. Is that right?
Yes, that's about right.
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 Aniket Bajpai.
Chapter 2: What is the pricing model for LimeChat's services?
He's the co-founder and head of growth at LimeChat, the leading provider of customer support automation and conversational commerce for e-commerce brands. Aniket, are you ready to take us to the top?
Yeah, I guess so.
All right. So the website is limechat.ai. Tell me about who you're selling to.
Yeah. So we basically target mid and large size e-commerce brands globally. So these are brands which have their own website on Shopify and we help them kind of give their visitors a very guided buying experience on their website and also leverage conversational channels like WhatsApp, Messenger, iMessage to give a complete end-to-end buying journey.
And Aniket, when you sign these customers up, what are they paying you on average per month to use your technology?
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Chapter 3: Who are LimeChat's target customers and what do they need?
They pay around $1,000 a month, $500 to $1,000, depending on their size. Of course, it is pay-as-you-go based on the usage that they do, but that is a typical amount that we pay.
How do you measure usage?
So we charge on the basis of number of conversations that happen on our platform, right? Since we give a guided buying experience, which is essentially a conversation with their users. So we charge on the basis of number of conversations that we have.
I see. And how many customers are you now working with today?
We're working with 60 brands now, currently.
Six zero? Yes. And when did you guys launch? When did you get your first customer?
We launched just around a year back in September 2020. We started in March and we got our first customer in September.
Who was the first customer? Do you remember?
Yes, it is a brand called Bella Vita Organic. We're very happy to be working with them right now as well. And we're constantly in touch with them.
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Chapter 4: What acquisition strategies is LimeChat using to attract customers?
They have actually also grown more than 10X in the past one year because the e-commerce brand space has been booming, but it has been an absolute pleasure.
Now, can we take 60 customers today paying 500 a month? You guys are doing about $30,000 a month in revenue. Is that right?
Yes, that's about right.
And where were you doing exactly a year ago in November of 2020?
In November of 2020, we just had four to five customers with whom we were working very closely to build our product to achieve product market share. So in terms of revenue, we were at roughly $2,000 or $3,000 a month.
That's incredible. Yeah. So you guys are obviously growing really nicely here now up to 60 customers. Have you done all this and I get bootstrapped or did you decide to raise?
We did raise a convertible note last year. Uh, so yeah, we are not bootstrapped, uh, in this particular startup. All right. We actually got selected into Y Combinator as well, but we, uh, so we raised from there and we were able to raise a convertible loan after that. So that is what has gotten us going. We didn't dilute too much in this entire process.
And so when you, how much did you raise in your pre-seed last year?
Right.
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Chapter 5: How did LimeChat secure funding and what was the valuation?
So we raised around 750K. USD. And we raised it as a convertible note at an uncapped valuation and a discount of 20% to the next round's valuation.
When do you think you might be doing a next round so we know what that actually becomes worth equity-wise?
Yes, yes. We will be doing the next round very soon in the next one or two months.
Oh, okay. So you're basically raising now then. How much do you want to raise? Yes, yes.
We're raising around $4 to $5 million at around a $20 million valuation because we want to grow really, really fast. We feel that we have a cheap product market fit and we just want to push the pedal. So yeah, we're actively looking to raise.
Do you have a lead investor yet?
Yeah, we're in talks with several people.
I see. And do you think you'll be able to get a $20 million valuation doing 360,000 a year right now in revenue? That's a fairly substantial revenue multiple.
Yes, yes. I believe that since we have a very good growth rate, we're growing at 30% to 40% month-to-month since the past six to seven months.
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Chapter 6: What challenges did LimeChat face in its early stages?
And we can kind of take a forward multiple. When the round will actually close, it will already be three months. And our revenue will double at least. So we're kind of taking a multiple on that. And that is how we are kind of justifying the valuation.
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Again, both plural founderpath.com forward slash products forward slash valuations. Tell me more about the strategy you guys are using. You have a very specific niche you're targeting, these e-commerce brands. How are you going from five customers last year to 60 today and to 600 next year, hopefully?
Yes, yes. So we have two major acquisition channels. One is through Shopify and the Shopify ecosystem, which is a group of communities and blogs and...
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Chapter 7: What is LimeChat's team structure and where are they based?
Basically, word of mouth, because the Shopify ecosystem is super connected. And of course, you kind of get some inbound leads to Shopify. So that is one major source of leads for us.
How many miles do you get per month from Shopify?
We've just started a Shopify approach, so we get around 5 to 10 leads per month. The majority of our leads actually come through our outbound approach. We get around 30 leads per month at least through that. And that is through sending outbound messages on email, LinkedIn, stuff like that.
What job titles do you target on LinkedIn?
We sell to the VP of marketing and the VP of customer support, right? Because we have two products now internally. One is a remarketing product and one is a customer support automation bot. So for these, we target these two personas.
Okay. And what's that first message sound like? Give me a flavor of it.
Sure. So let me tell you, if I talk about the customer support automation product, it basically, it says that Customer support, giving good customer support, being in touch with your customers is important. And if you actually want to do that, you no longer need to put 10 to 15 agents and pay them $50,000 a year to do that.
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Chapter 8: What advice does the founder have for aspiring entrepreneurs?
You can just have one human and you can put line chart spot and you can get incredible, you can give consistent, incredible support to all of your customers and improve your retention. And this is being used by a lot of top eight and nine figure brands in the world, like Mama or 12th and Saints. So if this sounds interesting to you, please jump on and call and let's move ahead.
That feels like a really long message to send as a cold message on LinkedIn. Is that really what you send? It's a lot of texts like that?
Of course, the message is... This had a lot of points, which is actually sent in the first three messages. The main thing we focus on is the value and the claims that we have in just two to three lines. So the copywriting is obviously much better there. But yeah, the one-liner is that you can give great customer support experience and spend no additional amount. I see.
Aniket, take me back to when you guys got going. Is it just you or how many founders do you have?
Yes, we have. I have another founder. There are two founders, both of us.
Two founders. And did you guys split equity 50-50 at the start? Yes, yes. And so today, obviously, you still own 50-50 because the 750K you raised hasn't converted to equity yet, right? Yes, yes.
Yeah, but you anticipate... We do have an ESOP code, right? So that is one part, which is... How big is that?
Okay.
We allocated 10% as an ESOP pool because we wanted to give our employees a much bigger share in the ownership, and we have around 20 employees now. Oh, wow.
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