Customer service platform Raffle.ai is only two years old and has raised $3.5 million across three rounds of angel investing and venture capital.
CEO Suzanne Lauritzen says, despite giving away 50% of the equity she shared with her co-founder, “I think this is amazing, because we’re going global with this now.”
Without venture backing, Raffle.ai wouldn’t have the opportunity to globalize its product’s reach, so less ownership is a worthy trade-off for Lauritzen.
Raffle.ai’s product line reduces a company’s customer service calls, live chats, and emails by 24%. The SaaS deploys intelligent customer service search tools that instantly predict correct answers for users. At the same time, it learns insights on consumer needs and employee satisfaction.
The company’s journey began when Lauritzen piloted two clients she found through Pier47, a former incubation space in Copenhagen. It currently has seven customers who pay an average of $35,000 per year.
With a growing team of 23, Lauritzen is a long way from manning the sales role herself. Along with 18 engineers, the company has a new sales team with five reps who stand to earn $75,000 in commission if they hit their annual quotas.
With the help of her team, Lauritzen aspires to grow to 20 customers by the end of 2020. To achieve that and surpass Raffle.ai’s run rate of $250,000, the CEO says she and her sales team have to close the deals in their pipeline.
Source: GetLatka
As she scales her team, Lauritzen tells Latka in an interview she burns $160,000 each month. Lauritzen’s budget includes ad spend to bring in more clients, but that data and customer acquisition metrics are still coming together.
“We’re just testing a lot of stuff, retargeting campaigns and all sorts of different campaigns,” she says.
However, those calculations will certainly come in handy as she works to achieve her lofty goal to raise $10 million in Series A funding in late 2021.
Before then, Raffle.ai needs to grow to earn $1.5 million in ARR, which she thinks is possible by October 2021 — since she grew her former company to $3 million in revenue before selling it to build Raffe.ai, reaching this goal won’t be a first.
What is Raffle.ai’s annual revenue?
In 2020, Raffle.ai will earn $250,000 in ARR.
Who is the CEO of Raffle.ai?
Suzanne Lauritzen, age 48, is the CEO and co-founder of Raffle.ai.
Transcript Excerpts
Be unafraid to break barriers in a developing space
“It’s AI, actually, as a SaaS. It’s pretty new in that sense. Scalable AI has not been possible before, but it is now — that’s what we’re into; making it possible.”
Pro-tip: Do the prep work before launching a business
“I sold another company just a year before I started Raffle. In that year, I actually just prepared everything: I prepared the business plan, I prepared investors, I prepared the team. Everything was set when we started out in August or in July. … We didn’t have any clients, of course. We didn’t have any product; we didn’t have anything. But we had the idea, and we had the right team.”
The quota structure of a growing SaaS sales team
“We just have a quota today that says one client a month. Then, that’s going up to two clients a month after three months. Then after six months, it’s three clients a month.”
Find the right kind of funding to support company goals
“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 get live and get out there. I think this is amazing because we’re going global with this now. We have the opportunity to go global because we have venture [funding]. We wouldn’t have had that opportunity [without it].”
Full Transcript Speaker 1: Hello, everyone. My guest today is Suzanne Lauritzen. She, in 2018, joined forces with a professor from DTU and founded a 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. Speaker 1: raffle reduces calls, live chats and emails by 24% and unlocks a constant relearning cycle. At the same time, employees save 80% of internal search time and get up to speed with new knowledge quickly. The company has raised €3.5 million in the first 24 months, and aims for a series A round late 2021. Speaker 1: Suzanne, you ready to take us to the top? Suzanne Lauritzen: Mm-hmm (affirmative). Speaker 1: Customer success and experience in automation is obviously very hot right now. When did you guys launch the company? Suzanne Lauritzen: In July, 2018, so we’re just two years old now. Speaker 1: Who owns more equity, you or the professor? Suzanne Lauritzen: We own the same. Speaker 1: Oh, very diplomatic of you, just right down the middle, 50/50. Suzanne Lauritzen: That’s Denmark. Speaker 1: I like that. I wish folks in the States were a little bit more like that. What’s the company do? Is it pure play SaaS? Suzanne Lauritzen: Sorry? Yeah. It’s AI, actually as a SaaS, as a service. So it’s pretty new in that sense. Scalable AI has not been possible before, but it is now. That’s what we’re into, making it possible. Speaker 1: Is your team super heavy on engineers? How many engineers on the team? Suzanne Lauritzen: Yes. We actually have 18 engineers and five in sales up until now. So yeah, it’s pretty heavy. Speaker 1: Okay. Those five folks in sales, do they all have a quota? Suzanne Lauritzen: Yes. Speaker 1: Okay. I’m- Suzanne Lauritzen: But- Speaker 1: Okay. Suzanne Lauritzen: Yeah. We just started the sales department actually just two months ago, so that’s pretty new. Up until then, it was just me selling. It’s pretty new. Yeah. Speaker 1: What’s your total team size today? Suzanne Lauritzen: It’s 23 employees. Speaker 1: Suzanne Lauritzen: Yeah, I think we were about eight. Speaker 1: Eight. Okay. Suzanne Lauritzen: Mm-hmm (affirmative). Speaker 1: It sounds like you guys raised capital right off the bat. How much have you raised to date? Suzanne Lauritzen: 3.5 million US. Speaker 1: Two rounds or one round? Suzanne Lauritzen: It was actually three rounds. The first two, one was angels, and then the second or the third one was venture. Speaker 1: What year was that angel round? Suzanne Lauritzen: The first angel round was when we started out, actually, three weeks after. Then the second one was in- Speaker 1: Which was what year? Suzanne Lauritzen: It was 2018. Speaker 1: ’18, okay. Suzanne Lauritzen: Then in the beginning of ’19, we had the second angel round. Then in the beginning of ’20, we had the venture round. Speaker 1: Can you break those down for me? The first angel round, in 2018, how much was that for? Suzanne Lauritzen: That was about 200,000. Speaker 1: What were you guys raising on? For a lot of SaaS founders, the first raise is the hardest with your angels. You have a deck. You’re trying to convince your family, your friends, angels to put money in. What were you guys selling at that point? What was the vision? Suzanne Lauritzen: Well, I have sold another company just a year before I started raffle. In that year, I actually just prepared everything. I prepared the business plan. I prepared investors. I prepared the team. So everything was set when we started out in August or in July. Suzanne Lauritzen: So in that sense, it wasn’t … I mean, yeah, I just sold the vision, I would say. We didn’t have any clients, of course. We didn’t have any product, basically. We didn’t have anything. But we had the idea and we had the right team, I guess. That was what they bought into. Speaker 1: If you look now at your customers today, on average, what are they paying you per month to use raffle? Suzanne Lauritzen: The average per year I would rather say. That’s 35,000 US. Speaker 1: Okay. So you’re very much in enterprise sales motion. Suzanne Lauritzen: Mm-hmm (affirmative), yeah. We are. Speaker 1: With that sort of motion, how do you … You just mentioned, you’re just now building out your first five folks on the sales team. How do you determine what to put their quota at to sell $35,000 a year plans? Suzanne Lauritzen: Yeah. Well, we just have a quota today that says one client a month. Then that’s going up to two clients a month after three months. Then after six months, it’s three clients a month. So it’s pretty straightforward in that sense. Speaker 1: Okay. But you don’t have any sales reps that are that old, that are closing four new $35,000 a year accounts yet, right? Suzanne Lauritzen: No. Well, no. No. Not yet. I’m the one selling … Well, we do have one, actually, that just sold last month. But yeah. But I’m the one selling the most right now still. Speaker 1: 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’s about 420,000, about half a million dollars? Suzanne Lauritzen: Mm-hmm (affirmative). Speaker 1: 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? Suzanne Lauritzen: Mm-hmm (affirmative). I’m not sure we have used any, to be honest. I was just … We’ve just been very pragmatic in that sense, and just sort of looked at what is actually realistic, what is possible. Speaker 1: Mm-hmm (affirmative). If you hired me, Suzanne, and I hit your quota over the first year, what would I make probably, base plus commission, total? Suzanne Lauritzen: You’d probably make about 150,000 US. Speaker 1: Okay. So my full OT for your sales team, your first sales hired, would be $150,000 base plus commission. What percent of the 150 is commission? Suzanne Lauritzen: It’s about half. Speaker 1: Okay, got it. That’s fair. About 50/50. And your ratios work. If my quota is half a million, and my [inaudible 00:06:13] earnings is 150 grand, that’s a three, four X, multiple. Those numbers work. Suzanne Lauritzen: Oh, yeah. [crosstalk 00:06:18]
Speaker 1: A lot of time, it doesn’t work. [inaudible 00:06:20] if you can scale the sales team. Speaker 1: Let’s go back to the second raise. You raised 200,000 to get things going, get your first sales. How much was the second angel raise for? Suzanne Lauritzen: That was about double the first one. Speaker 1: Okay. So 400,000. Suzanne Lauritzen: Then the rest one was actually venture. Yeah. Speaker 1: Then in this year, in 2020, you did what, a $2.9 million round? Suzanne Lauritzen: Yeah. Speaker 1: Okay. Walk me through some of the history here. You sell your first company, or 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? Suzanne Lauritzen: 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 an environment where there were lots of smaller and bigger corporations with incubators. Those two first clients we actually got from that space. Speaker 1: What was the incubator name? Where is it in the world? Suzanne Lauritzen: It was called Pier47. It was just in Copenhagen. But yeah. So yeah. Speaker 1: Very cool. Suzanne Lauritzen: It was a larger company. Yeah. Speaker 1: Okay. So you were in Pier47, 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? Suzanne Lauritzen: Mm-hmm (affirmative). Speaker 1: That’s remarkable. Suzanne Lauritzen: Yeah, well, yes and no. Because they are not today a client, but they did … At that point, they actually paid for that particular product. But we went out of that product space and made another product afterwards. That was only a pilot. Speaker 1: When did you make the new product? Suzanne Lauritzen: We launched our first product last summer, in 2019. Then the second product, we launched in February this year. Speaker 1: What was the product you launched this year? Suzanne Lauritzen: 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. Speaker 1: 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. Suzanne Lauritzen: Exactly. Yes. Speaker 1: I see. How many customers do you now have today? Suzanne Lauritzen: We have seven customers today. Speaker 1: Seven, but they’re all enterprise, so it’s high touch … Suzanne Lauritzen: They’re all enterprise. Yeah. Speaker 1: … high ACB. Suzanne Lauritzen: Yes. Speaker 1: Can I take those seven customers … Suzanne Lauritzen: Our plan is to get 20 this year. Yeah. Sorry? I think the Internet connection broke. Speaker 1: 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? Suzanne Lauritzen: Yes. Yep. Yeah. Speaker 1: How do you go from seven to 20 this year? Suzanne Lauritzen: Well, we have had a lot of pipeline that we just need to close off now, actually. That’s basically more or less me and another girl that’s going to close those. Then the rest of the salespeople are going to close from 1st of January. That’s our plan, anyway. Speaker 1: Mm-hmm (affirmative). Obviously, you just raised, from traditional venture capitalists, $2.9 million. Suzanne Lauritzen: Mm-hmm (affirmative). Speaker 1: I’m unfamiliar with how dilutive series A rounds are in Copenhagen. 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? Suzanne Lauritzen: We have given up almost 50%. Speaker 1: Okay. So across your angels and your series A folks, you’ve sold about 50% of the company. Suzanne Lauritzen: Yeah. Speaker 1: You and your professor co-founder each still own 25%? Suzanne Lauritzen: Yeah. Little more, 27% each, yeah. Speaker 1: Okay, each to co-founders. How does that make you feel? Does that feel fair? Suzanne Lauritzen: Well, I don’t … I’ve actually been thinking about that since your last talk. But 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. Suzanne Lauritzen: I think this is amazing, because we’re going global with this now. We have the opportunity to go global because we have venture. We wouldn’t have had that opportunity. Suzanne Lauritzen: The other company I sold was bootstrapped. I owned 50% of that with my co-founder. He also owned 50% of that. We were 13 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. That’s just the condition. Speaker 1: Suzanne, how much did you sell that company for in 2017? Suzanne Lauritzen: I can’t say. I’m sorry. Speaker 1: Okay. Can you share with me what you grew it to in terms of revenue, before you sold? Suzanne Lauritzen: Yes, it was around 3 million US. Speaker 1: Okay. So you have experience, obviously, doing this. You did it the hard way in bootstrapping. Now, the question is, can you take raffle and go from a quarter million run rate to three, four, five, $10 million run rate? Suzanne Lauritzen: Yeah. That’s the plan. Speaker 1: How are you managing burn today? You’ve raised 2.9 million. You’re scaling your team. How much burn are you comfortable with each month? Suzanne Lauritzen: Well, we’re burning … I actually just … Speaker 1: She has the numbers. I can tell by how she’s looking at her screen. I love this. Suzanne Lauritzen: Yeah. I do. I do have my numbers. I have 160,000 US in burn each month. Speaker 1: Total burn or net burn? Suzanne Lauritzen: That’s total burn. Speaker 1: Okay, got it. So add back about 20,000 in revenue. Your net burn’s about $140,000 a month. Suzanne Lauritzen: Yeah. Yes. Speaker 1: Based off how much cash you still have in the bank, what, you guys have 10 months or 11 months of runway? Suzanne Lauritzen: 12. Speaker 1: 12 months of runway. Got it. That would mean you guys have, what, about, what is that, 1.7 million in the bank? Something like that? Suzanne Lauritzen: Yes. And we are going for an A round in September next year. I would say the round of- Speaker 1: How much do you have to raise in the A round. Suzanne Lauritzen: Well, we would … I would like to raise about $7 million, but let’s see. Speaker 1: What do you think you have to get revenue to in order to raise 10 million at a valuation you want? Suzanne Lauritzen: Well, I would like to go to around $1.5 million annual recurring. I think that’s possible in October next year. Speaker 1: Okay. That’s great. When you look at what it’s costing you right now to get a new $35,000 a year contract, what’s your best guess at CAC currently? Suzanne Lauritzen: I haven’t actually calculated that. Speaker 1: Are you spending any money on ads? Suzanne Lauritzen: Yes we are, but we are still figuring out the metrics. We’re just testing a lot of stuff, retargeting campaigns and all sorts of different campaigns. But we don’t have the metrics ready yet. We’re planning to have the metrics ready about February next year, and then we’ll be able to tell you a lot more. It’s really difficult to say anything right now at this early stage. Speaker 1: Of course. Suzanne Lauritzen: We’re trying to figure it out. Speaker 1: Did you publish, Suzanne? I think people are going to want to learn how to raise, like you raised, 2.9 million recently. Did you publish your slide deck anywhere or no? Suzanne Lauritzen: No, we didn’t. Speaker 1: Are you opposed to publishing it in the show notes of this interview? Suzanne Lauritzen: Yeah, yes, of course. Yeah. Speaker 1: We can? Suzanne Lauritzen: We can do that. Yeah. Sure. Speaker 1: I think people will learn a lot from that. Suzanne Lauritzen: Yeah, okay. Speaker 1: All right. Let’s wrap up, Suzanne, here with the famous five for raffle.ai. Number one, what’s your favorite business book? Suzanne Lauritzen: That’s Think Slowly, Think … I don’t remember the … Speaker 1: Thinking Fast and Slow? Suzanne Lauritzen: Yeah, exactly, exactly, that one. Kahneman. Yeah. Speaker 1: Number two, is there a CEO you’re following or studying? Suzanne Lauritzen: No. Speaker 1: Number three, what’s your favorite online tool, Suzanne, for growing raffle, besides raffle. Suzanne Lauritzen: Well, I wouldn’t be the right one to say that actually, because I don’t have a clue. Ask my CTO. Speaker 1: What do you use mostly online? You use Slack, Trello, something else? Suzanne Lauritzen: Well, I use LinkedIn, but that’s old fashioned, I guess. Yeah. Speaker 1: No. LinkedIn’s hip and cool still. They just did nice redesign, right? I use it. Number four, Suzanne, how many hours of sleep do you get every night? Suzanne Lauritzen: I get seven hours, I think. Speaker 1: That’s great. What’s your situation? Married? Single? Kiddos? Suzanne Lauritzen: Married or … Well, what do you say? Fiance? Speaker 1: Fiance. Fair enough. Any kids? Suzanne Lauritzen: And kids. Yeah. Two kids. Speaker 1: How many kids? Suzanne Lauritzen: Two. Speaker 1: Two? When’s the wedding date? That’s exciting. Suzanne Lauritzen: No, no. I have been married before. Those are my kids from my first marriage. Speaker 1: Yeah, but now you’re engaged again, right? You said you have a fiance. Suzanne Lauritzen: Yes, I am, but it’s not … Yeah. I don’t know. Speaker 1: No marriage yet. Suzanne Lauritzen: The second marriage is always different. Speaker 1: You just stay in the nice, happy fiance mode for a couple years, right? Suzanne Lauritzen: Yeah, exactly. Speaker 1: Yeah. Okay. That’s great, Suzanne. Can I ask how old you are? Suzanne Lauritzen: I’m 48. Speaker 1: Suzanne Lauritzen: That it’s not that difficult. Speaker 1: Guys, there you have it. She sold her first company after bootstrapping it and growing it to about 3 million bucks in revenue. Used that cash to plow it into raffle.ai, which is playing in the customer support automation space. Speaker 1: 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 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 in 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. Speaker 1: Suzanne, thanks for taking us to the top. Suzanne Lauritzen: Thank you. Speaker 1: One more thing before you go. We have a brand new show every Thursday at 1:00 PM Central. It’s called Sharktank for SaaS. We call it Deal or Bust. One founder comes on. Three hungry buyers. They try and do a deal live. The founder shares backend dashboards, their expenses, their revenue, ARPU, CAC, LTV. You name it, they share it. The buyers try and make a deal live. It is fun to watch every Thursday, 1:00 PM Central. Speaker 1: Additionally, remember these recorded founder interviews go live. We release them here on YouTube every day at 2:00 PM Central. To make sure you don’t miss any of that, make sure you click the subscribe button below here on YouTube, the big red button, and then click the little bell notification to make sure you get notifications when we do go live. I wouldn’t want you to miss breaking news in the SaaS world, whether it’s an acquisition, a big fundraise, a big sale, a big profitability statement or something else. I don’t want you to miss it. Speaker 1: Additionally, if you want to take this conversation deeper and further, we have by far the largest private Slack community for B2B SaaS founders. You want to get in there. We’ve probably talked about your tool, if you’re running a company, or your firm, if you’re investing. 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