SaaS Interviews with CEOs, Startups, Founders
Raffle.ai Raises $3.4m for Customer Support Automation, 7 Enterprise Customers $35k ACV's
03 Nov 2020
Chapter 1: What is Raffle.ai and how does it enhance customer support?
And I think this is amazing because we're going global with this now and we have the opportunity to go global because we have venture. You are listening to Conversations with Nathan Latke. Now, if you're hearing this, it means you're not currently on our subscriber feed. To subscribe, go to getlatke.com. When you subscribe, you won't hear ads like this one. You'll get the full interviews.
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Now look, I never want money to be the reason you can't listen to episodes. On the checkout page, you'll see an option to request free access. I grant 100% of those requests, no questions asked. Hello, everyone. My guest today is Suzanne Lauritsen.
She, in 2018, joined forces with a professor from DTU and founded Raffle.ai, which deploys intelligent search tools for customer service that gives instant correct answers to your customers and employees while picking up great insights on consumer needs and employee satisfaction. Raffle reduces calls, live chats, and emails by 24% and unlocks a constant relearning cycle.
At the same time, employees save 80% of the internal search time and get up to speed with new knowledge quickly. The company has raised 3.5 million euros in the first 24 months and aims for a Series A round late 2021. Suzanne, you ready to take us to the top? Mm-hmm. Customer success and experience and automation is obviously very hot right now. When did you guys launch the company? In July 2018.
So we are just two years old now. And who owns more equity, you or the professor? We own the same. Oh, very diplomatic of you. Just right down the middle, 50-50. That's Denmark. I like that. I wish folks in the States were a little bit more like that. So what's the company do? Is it Pure Place Ass? Uh, sorry. Yeah, it's pure. Yeah. It's AI actually as a SAS as, as a service.
So it's, um, it's pretty new in that sense. Scalable AI has not been possible before, but it is now. So that's what we're sort of into. So is your team super heavy on engineers? How many engineers on the team? Yes, we actually have, uh, 18 engineers and five in sales up until now. So it's, um, yeah. And those five folks in sales, do they all have a quota? Yes. Okay, so I'm going to come. Okay.
Yeah, we just, I mean, we just started the sales department, actually, just two months ago. So that's pretty new. And up until then, it was just me selling. So it's pretty new. Yeah. And what's your total team size today? It's 23 employees. 23. Okay. And how's that compared to a year ago? Do you remember? Oh, yeah, I think we were about eight employees. Eight, okay.
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Chapter 2: How much funding has Raffle.ai raised and what are their future plans?
But yeah, but I'm the one selling the most right now still. So is it fair to say if you expect new salespeople to close one new $35,000 account annually each month over a 12-month period, that annual quota is about $420,000, about half a million dollars?
And one of the things that people always struggle with when they hire their first salesperson is what the ratio of the quota to the full on-target earnings should be. What ratio have you used? I'm not sure we have used any, to be honest. We've just been very pragmatic in that sense and just sort of looked at what is actually realistic, what is possible.
If you hired me, Suzanne, and I hit your quota over the first year, what would I make probably, base plus commission total? You'd probably make about... 150,000 US. Okay. So my full OT for your sales team, your first sales hire should be $150,000 base plus commission. What percent of the 150 is commission? It's about half. Okay, got it. So that's fair, about 50-50. And your ratios work.
If my quota is half a million and my full on-turn earnings is 150 grand, that's a three, four X multiple. Those numbers work. So a lot of time, a lot of time it doesn't work. So that, I mean, great to see if you can scale the sales team. Let's go back to the second race. So you raised $200,000 to get things going, get your first sales. How much was the second angel race for?
That was about double the first one. Okay, so $400,000. And then the rest one was actually venture. Yeah. And then this year in 2020, you did what, a $2.9 million round? Yeah. Yeah. Okay. Walk me through some of the history here. So you sell your first company or a sell a company in 2017. You then go to plan. You start planning and blueprinting Raffle AI.
Walk me through getting your first customer. Who was it? Where'd you get them? Well, actually, we started out piloting with two customers. We got them because they were sitting in the same space as we were. They had some incubators from larger companies. We were in sort of, you know, in an environment where there were lots of smaller and bigger corporations with incubators.
And those two first clients, we actually got from that. What was the incubator name? And where is it in the world? It was called Pier 47. It was just in Copenhagen. But yeah, so yeah, it was a larger company. Yeah. Okay, so you were in Pier 47, which is an incubation space in Copenhagen. Because you were there, you had two corporate clients that you piloted this with.
Did both of them convert into a paid account after the pilot? Mm-hmm. That's remarkable. Yes and no. Because they're not today a client, but at that point, they actually paid for that particular product. But we went out of that product space and made another product afterwards. When did you make a new product?
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Chapter 3: What is the current team structure at Raffle.ai?
We launched our first product last summer in 2019. And then the second product we launched in February this year. And what was the product you launched this year? That was the Autopilot. which is the one funding the customers and taking first line and zero line support off the back of customer service employees so that you can have self-service on your website, basically.
It's like a customer comes to your website. They ask a question in the chat. You now, using Autopilot from Raffle, can suggest some answers and try and avoid them sending in an email ticket or a phone call. Exactly. I see. And so how many customers do you now have today? We have seven customers today. Seven, but they're all enterprise. So it's high touch, high ACV. Yes.
Can I take those seven customers? Our plan is to get 20 this year. Yeah. Sorry, I think the internet connection broke. You're fine. I was just saying, can I take those seven customers times 35,000 a year? You're doing about a quarter million per year in terms of run rate. Yep. Yeah. And how do you go from seven to 20 this year?
Well, we have had a lot of pipeline that we just need to close off now, actually. So that's basically more or less me and another girl that's going to close those. And then the rest of the salespeople are going to close from 1st of January. That's our plan anyway, so... And are you obviously just raised from traditional venture capitalists, $2.9 million.
I'm unfamiliar with how dilutive series A rounds are in Copenhagen. Like I'm in the United States. You don't have to tell me how much equity you gave up, but generally speaking in a series A, how much are you giving up for the amount that you raised in Copenhagen? We have given up almost 50%. Okay. So across your angels and your series A folks, you've sold about 50% of the company. Yeah.
And you and your professor co-founder each still own 25%. Yeah, a little more, 27% each, yeah. Okay, each to co-founders. And how does that make you feel? Does that feel fair? Well, I don't, I've actually been thinking about that since your last talk, but I don't, I'm not in it for the money in particular.
Of course, that's nice and everything, but I'm actually more in it to see a product that I invented on a piece of paper actually gets live and gets out there. And I think this is amazing because we're going global with this now and we have the opportunity to go global because we have venture. So we wouldn't have had that opportunity. The other company I sold was Bootstrapped.
So I owned 50% of that with my co-founder. He also owned 50% of that. We were 30 employees when we sold it. We got 50-50 each. It was a pure cash sale and that was beautiful. But this is just completely different. It took a long time to build that company because it was bootstrapped. So now I wanted to do something that was venture-backed, goes quickly. We can go global quickly.
And that's just the condition. Suzanne, how much did you sell that company for in 2017? I can't say. I'm sorry. Can you share with me what you grew it to in terms of revenue before you sold? I guess it was around 3 million US. Okay. So you have experience obviously doing this. You did it the hard way in bootstrapping.
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Chapter 4: How does Raffle.ai determine sales quotas for their team?
You just sort of stay in sort of a nice, happy fiance mode for a couple of years, right? Yeah, exactly. Yeah. Okay. That's great, Suzanne. And can I ask how old you are? I'm 48. 48. Take us home here. Last question. What's something you wish you knew when you were 20? Um, that's not that difficult. Guys, there you have it.
She sold her first company after bootstrapping it and growing it to about 3 million bucks in revenue. Use that cash to plow it into Raffle AI, which is playing in the customer support automation space. They've just passed seven enterprise accounts paying $35,000 annually on average. So about a quarter million dollars in terms of run rate. They've raised $2.9 million to do it.
They sold about 50% of the company to do it, hoping to grow revenue to about 1.5 million in ARR and Q1, Q2, Q3 next year, and then go out and do a series B raise of around 10 million bucks. They're burning $140,000 in net burn per month right now with $1.8 million in the bank. So plenty of runway to figure it out as they scale their team up to 23, including 18 engineers.
Suzanne, thanks for taking us to the top. Thank you.