In the latest Y Combinator starter batch, Peakflo stood out from TechCrunch. The company’s simple pitch – Bill.com for Southeast Asia – fits perfectly into the larger narrative of the world increasingly digitizing its workflows and the generally hot market we had seen for fintech companies.
At the time, we noted that “there is huge revenue to be found helping companies spend and receive money,” adding that Peakflo was likely “ready to raise,” having already hit 13 $000 in Monthly Recurring Revenue (MRR).
So when Peakflo came to us with fundraising information, we answered the call. I spoke with the co-founder and CEO Saurabh Chauhan on Peakflo’s fundraising, historical growth, plans for new capital and revenue goals.
The world against Excel
If I asked you which software product is most essential to the global economy, what would your answer be? My hunch is that this is Excel, the Microsoft spreadsheet application that’s been around longer than the modern internet – and, let’s be clear, it’s been shipping longer than your scribe has been around. life.
Why? Because so many companies run business processes in Excel (or Sheets, these days) that it’s actually a business multi-tool. But as anyone who has tried using a multi-tool to, say, put anything together with more than one screw can attest, it’s often better to build something specific to a use case. if you want to go faster.
Enter Peakflo in the Southeast Asian market, where it adopts the spreadsheet tools that many businesses use to record their outgoing payments and invoices. The CFO suite used to be a Microsoft Office license I guess. Things have changed.
Chauhan estimated that 99% of his company’s customers come from Excel-like environments, which means that as Peakflo grows, it essentially acts as a barometer of the pace of digital transformation in its target market.
Like Bill.com, Peakflo allows businesses to pay and send invoices. In product terms, Peakflo is a set of services, according to Chauhan, including accounts receivable (money in), accounts payable (money out), a payment layer and an integration layer, linking the service accounting software and enterprise resource planning. All of this takes labor to build and maintain, which means Peakflo is using – you guessed it – its new found capital to hire.
How much money did the startup raise? Chauhan said he raised “almost” $1 million when he was founded in 2021, and another $500,000 from Y Combinator during this time in his life. The rest of the $4.1 million Peakflow has raised so far came later, in a round that ended a few weeks ago. Choosing from its roster of investors, in addition to supporting the accelerator, Peakflo has attracted capital from Rebel Fund, Soma Capital, Amino Capital and others, including a handful of individually active investors, aka angel investors. .
Why are so many different investors putting capital into a startup building in an industry that has seen its valuation profile shrink in recent months? Growth, I think. According to Chauhan, since its Y Combinator era, Peakflo has added between 10 and 15 customers per month, now numbering more than 50. With a recently expanded sales function, the company aims to hit 100 next month and hit $1 million in revenue. annual. recurring revenue (ARR) in early 2023.
With fresh capital, a hiring plan, and a large market to attack, we set a countdown to that ARR threshold.
Before leaving, a little more about prices and margins. You may have noticed above that we mentioned a payment layer. If you’ve watched the SaaS market over the past few years, your ears should have perked up a bit at that time. Should Peakflo grow not only through software revenue, but also through trading volume? The model was popular after all.
The answer, as far as I know, is somehow. According to the startup’s CEO, the company can generate gross margins of around 85% on its software products, but something closer to 40% in the payments space. While Peakflo scales its software cost based on payment volume, it doubles customer business, but its gross margin differential shows why software is such a valuable business category.
More when Peakflo hits seven-digit ARR.