During the most recent Y Combinator boot batch, peakflo stood out at businesskinda.com. The company’s simple pitch – Bill.com for Southeast Asia – fitted right in with the broader story of the world increasingly digitizing its workflows and the generally hot market we’d seen for fintech companies.
At the time, we noted that “huge revenue can be found in helping businesses spend and receive money,” adding that Peakflo was probably “ready to raise money” as it already has $13,000 in monthly recurring revenue (MRR).
So when Peakflo reached out with fundraising news, we took the call. I spoke to co-founder and CEO Saurabh Chauhan about Peakflo’s fundraising, historic growth, plans for its new capital and its revenue targets.
The World vs Excel
If I were to ask you which software product is most indispensable to the global economy, what would your answer be? My guess is that it’s Excel, the Microsoft spreadsheet app that’s been around longer than the modern web — and, let’s be clear, has been shipping longer than your writer has been alive.
Why? Because so many companies run business processes in Excel (or Spreadsheets these days), it’s basically a multi-tool for businesses. But as anyone who has actually tried using a multi-tool to, say, assemble something with more than one screw can attest, it’s often better to build something specific to a use case if you want to work faster.
Enter Peakflo into the Southeast Asian market, where it takes over the spreadsheet tools many companies use to record their payments and outgoing invoices. The CFO suite used to be a Microsoft Office license, I guess. Things have changed.
Chauhan estimates that 99% of his company’s customers come from Excel-like environments, meaning that as Peakflo grows, it essentially acts as a barometer of the pace of digital transformation in its target market.
Like Bill.com, Peakflo lets companies pay bills and send invoices. In product terms, Peakflo is a collection of services, by Chauhan, including accounts receivable (money in), accounts payable (money out), a payment layer, and an integration layer, linking the service with accounting software and some enterprise resource planning. It’s all work to build and maintain, meaning Peakflo – you guessed it – uses its newfound capital to hire.
How much money has the startup raised? Chauhan said it raised “nearly” $1 million when it was founded in 2021, and another $500,000 from Y Combinator during that period of its 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. By choosing from its investor list, in addition to its accelerator support, Peakflo has raised capital from Rebel Fund, Soma Capital, Amino Capital and others, including a handful of individually active investors known as angel investors.
Why are so many different investors investing in a startup building in an industry whose valuation profile has declined in recent months? Grow, I guess. According to Chauhan, Peakflo has added between 10 and 15 customers per month since the Y Combinator era, now more than 50. With a recently expanded sales function, the company aims to reach 100 in the next month and reach $1 million per year in recurring revenue (ARR). early 2023.
With fresh capital, a recruiting plan and a big market to attack, we’ve set a countdown to that ARR threshold.
gross margins
Before we go, a little more about pricing and margins. You may have noticed above that we mentioned a payment tier. If you’ve been looking at the SaaS market for the past few years, your ears should be pricking up a bit at that point. Will Peakflo grow not only through its software revenue, but also through transaction volume? After all, the model has been popular.
The answer, as far as I know, is: quite†According to the startup’s CEO, the company can achieve gross margins of about 85% on its software products, but slightly more than 40% in the payments space. Because Peakflo scales its software costs based on payment volume, it scales twice from more customer activity, but the gross margin difference reveals why software is such a valuable business category.
More when Peakflo reaches a seven-digit ARR.
Janice has been with businesskinda for 5 years, writing copy for client websites, blog posts, EDMs and other mediums to engage readers and encourage action. By collaborating with clients, our SEO manager and the wider businesskinda team, Janice seeks to understand an audience before creating memorable, persuasive copy.