During Y Combinator’s most recent startup, Picflow Featured by TechCrunch. The company’s simple offering – Bill.com for Southeast Asia – fits neatly into the broader narrative of an increasingly digitized world and hot market in general that we’ve seen for fintech companies.
At the time, we noted that “there is huge revenue to be found in helping companies spend and receive money,” adding that Peakflo was likely “ready to collect,” having already hit $13,000 in monthly recurring revenue (MRR).
So when Peakflo reached out to some fundraising news, we took the call. I spoke with the co-founder and CEO Saurabh Chauhan About fundraising, historical growth, Peakflo’s plans for its new capital and revenue goals.
World vs Excel
If I asked you what software product is indispensable to the global economy, what would your answer be? My hunch is that it’s Excel, Microsoft’s spreadsheet application that’s been around longer than the modern internet — and let’s be clear, it’s shipped longer than your writer has been alive.
why? Since many companies implement business processes within Excel (or Sheets, these days) it is an effectively versatile tool for business. But as anyone who has already tried to use a multi-purpose tool, for example, assembling anything with more than one screw, can attest, it is often better to build something specific to the use case if you want to move more quickly.
Enter Peakflo in the Southeast Asian market, using spreadsheet tools that many companies use to record their outgoing payments and invoices. The CFO group used to be the license for Microsoft Office, I suppose. 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 gauge of the pace of digital transformation in its target market.
Like Bill.com, Peakflo allows businesses to pay bills and send bills. In terms of product, Peakflo is a suite of services, per Chauhan, including accounts receivable (money in), accounts payable (money out), payment tier and integration tier, linking the service to accounting software and some ERP. All it takes is construction and maintenance work, which means Peakflo is – you guessed it – using its new capital to hire.
How much money did the startup raise? Chauhan said she raised “nearly” $1 million when she founded in 2021, and another $500,000 from Y Combinator during that period of her life. The rest of the $4.1 million that Peakflow has raised so far came later, in a round that closed a few weeks ago. Choosing from a list of investors, apart from its accelerator support, Peakflo has attracted capital from Rebel Fund, Soma Capital, Amino Capital and others, including a handful of individually active investors, also known as angel investors.
Why are so many different investors putting capital into a startup that is building in a sector that has seen its valuation profile dwindle in recent months? growth, I think. According to Chauhan, since the Y Combinator era, Peakflo has added 10 to 15 customers per month, now numbering over 50. With a recently expanded sales job, the company wants to hit 100 next month and reach $1 million per year in recurring revenue (ARR) In early 2023.
With new capital, a hiring plan, and a large market to attack, we’ve set a countdown to the ARR threshold.
Before we go, more on pricing and margins. You may have noticed above that we mentioned a payment tier. If you’ve been keeping an eye on the SaaS market over the past few years, your ears should have picked up a bit at that point. Is Peakflo set to grow not only on the income of its software but also because of the volume of transactions? The model was popular after all.
The answer, as best I can tell, is kinda. According to the startup’s CEO, the company can generate gross margins of about 85% on its software products, but something closer to 40% in the payments space. Because Peakflo measures the cost of its software based on the size of payments, it’s twice as low as customer activity, but its gross margin difference explains why software is such a valuable business class.
More when Peakflo hits seven digits ARR.