SaaS Interviews with CEOs, Startups, Founders
Productfy Sells 10-20% in $16m Series A To Help Anyone Launch a Credit Union in Under a Week
14 Jan 2022
Chapter 1: What is the main topic discussed in this episode?
Yeah. I mean, look, what we can do is, I mean, you said between $5,000 and $100,000, right? So assuming your minimum five customers at $1,000 a month minimum, you're doing more than $5,000 a month in revenue. I think you're doing much more than that. But we can conservatively, that's what you're choosing to show us.
I could say we're definitely doing quite a $5,000 a month in revenue.
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 Yui Vo.
He started ProductFi with the thesis that financial services is moving to the edge where the user experience is. He's a product leader having spent much of his career at FinTechs and InsurTechs and is deeply passionate about financial services because he believes that the sector is both huge, mass opportunity, and a tremendous moral obligation to do societal good.
And it's largely failed our most vulnerable populations. He believes the democratization of financial products and is committed to changing the way financial products are built for good. Yui, you ready to take us to the top?
Yes, sir. Really appreciate the opportunity to be here, Nathan.
You bet. Okay, so tell us about the product. Describe your customer. Who are you selling to?
Yeah, so maybe I can give a little bit of a context before that about the fundamental problem that we're trying to solve for is that right now, financial services is a zero-sum game. I take money from you. I lend it to your neighbor. I make as much money as I can in between. That's how I earn my living.
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Chapter 2: How does ProductFi aim to democratize financial services?
Yeah, I mean, again, I want to make sure I align with our commercial team on what our broader messaging is. We just historically haven't named specific clients on these calls, and we just talk about use cases that we try to solve for them.
Okay, cool. Yeah, it's way more effective to talk about an actual customer using it than sort of general high-level use cases, which is why I'm digging there. So if you can't talk about a specific customer, that's fine. We can talk about more of the backstory.
Okay.
Yeah, I mean, we, you know, we, like, I can tell one of our customers, they're creating a card that's optimized for people who travel a lot, right? Creating the right travel experience.
And so they're using us, they're basically using our card rails, launching first with debit card, and then eventually in Q1, they're going to be launching with a secure credit card and eventually unsecure credit card. So right now they're live transacting our system. We offer wires, deposit accounts, ACH, and... and debit cards.
Okay, got it. Very interesting. And so what does a customer like that pay you to use the technology?
Yeah. So we try to be very, very startup friendly. So we're talking very, very minimal program management fees in the hundreds of dollars until you go live and it's the low thousands. And then per month. And then we charge on ACH, on KYC, on wires. And then we split the interchange on revenue. We split the interchange rev share.
Okay. So again, usually like all this fintech, there's like generally 300 bips up for grabs really anytime money moves hands and everyone sort of approaches it a different way, right? So when you say you make money on ACH, explain to me how that might work.
Yeah. So on ACH, we charge a flat fee.
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Chapter 3: Who are ProductFi's primary customers and how do they use the platform?
Oh, interesting. Okay, so super small. And then, obviously, scale is down with volume. Which one of these is your most used tool, by the way? ACH, KYC, wires, general change?
So... I think when you say most use, right? I want to make sure that we're talking about the same thing because if you think about it, you cannot open a card until you do KYC, right? So technically, KYC is the gateway to everything. So nothing is possible without KYC.
So how do you make money there since that's the first step?
Right. So we offer... we have a BSAML department that does checks, but then we have the full suite of automation around KBA questionnaires and around document verification. So every time you use one of those tools, we charge you a small fee.
Flat fee one time?
Flat fee one time, yes.
Like a dollar or under a dollar?
It depends on where in the water flow you end up, right? If you, right off the bat, we... you know, we have very clear indication. If we know who you are, then you don't have to go down further step. But if like, hey, you know, maybe, you know, there's not sufficient information here. We have to go pull additional data. We have to have you upload your driver license.
Then that's additional steps in the waterfall.
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Chapter 4: What pricing structure does ProductFi offer to its customers?
Do you have to hire like inbound sales folks to onboard some of these financial institutions, fintechs?
So financial institutions are different. Financial institutions are handled by our bank partnerships and financial operations team. The onboarding of our clients is handled by our servicing team. And then the actual commercial team is what you would expect from a sales organization. So three different areas of responsibility.
I see. I see. Okay, cool. And then talk to me a little bit more about, but you've chosen, I think, to raise capital and keep pouring fuel on the fire. What happened after the 280K seed?
We raised our seed round 2.35 back in August. Oh, 2.3. Yeah, 2.35 back in, what is it, August of 2020. And then we did a $16 million Series A back in April of this year. And we're going to be out fundraising sometime next year for a Series B. Okay.
Most folks, obviously, when they're doing that series A, you know, in today's market, it's kind of crazy, but it's selling between 10 and 20% of the business. Were you sort of in that standard range or did you do something crazy?
I would say, you know, that range is in the ballpark. Yeah.
Okay, cool. Some founders who maybe have not raised VC in the past and it scarred them might say, you know what, I'm only raising a 60 million Series A if 80% of it is secondary for early employees or do some sort of crazy stuff. Do you have any of those historical experiences where you've changed the model and you've thought differently about how to raise?
No, I don't. I mean, I don't think we did anything crazy. I don't think we did anything crazy.
No, no, I'm asking. I don't know. That's why I'm asking.
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Chapter 5: How does ProductFi's KYC process work and what are the fees involved?
to kind of come up with these kinds of projections.
Well, what was the big sales pitch in the Series A? Again, I mean, mostly Series A, depending on whatever, 2, 3 million in revenue, 40X multiples, you've got to have some of these bets in those decks. What were the bets in the Series A deck?
Yeah. So what we're able to focus on is the early traction that we had, the usage numbers that we had, and the client- Which usage numbers though?
What numbers?
The number of accounts that were linked on our site, the ACHs that were executed on it, and then the beginning of the roadmap around card issuance, which we launched back in July, was the launch of our debit card program. So those things allowed us to get a Series A.
Can you share any of those three numbers? So maybe not connected accounts, maybe ACH volume to the platform?
I don't know if we shared the ACH volume, but I think the number we shared was between on the TechCrunch article was I think between January and August, I think it was like 150,000 production users got added to our system. And then I think that was a number that we shared on the TechCrunch article.
Yeah, but again, I don't want people to listen to this episode and go, man, that was a big waste of time. I could have read that in a TechCrunch article. So I don't want you to just cite things you've already said. Is there anything you can share that you haven't already shared? Otherwise, we wouldn't do the interview.
Yeah, I'm hesitant to... I understand that.
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