During the most recent Y Combinator startup batch, Peakflo stood out to TechCrunch. The company's simple pitch -- Bill.com for Southeast Asia -- fit neatly into the broader narrative of the world increasingly digitizing its workflows and the generally hot market we'd seen for fintech companies.
At the time, we noted that "there are huge revenues to be found in helping companies spend and receive money," adding that Peakflo was likely "ready to raise," having already reached $13,000 worth of monthly recurring revenue (MRR).
So when Peakflo reached out with some fundraising news, we took the call. I spoke with co-founder and CEO Saurabh Chauhan about Peakflo's fundraising, historical growth, plans for its new capital and its revenue targets.
The world versus Excel
If I asked you what software product is the most indispensable to the global economy, what would your answer be? My hunch is that it's Excel, the Microsoft spreadsheet app that has been around longer than the modern internet -- and, let's be clear, has been shipping longer than your scribe has been alive.
Why? Because so very many companies execute business processes inside of Excel (or Sheets, these days) that it's effectively a multitool for business. But as anyone who has actually tried to use a multi-ool to, say, put together anything with more than one screw can attest, it's often better to build something use-case-specific if you want to move more quickly.
Enter Peakflo in the Southeast Asian market, where it is taking on the spreadsheet tools that many businesses use to record their payments and outgoing invoices. The CFO suite used to be a Microsoft Office license, I suppose. Things have changed.
Chauhan estimated that 99% of his company's customers come from Excel-like environments, meaning that as Peakflo grows, it essentially acts as a barometer for 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, per Chauhan, including accounts receivable (money in), accounts payable (money out), a payment layer and an integration layer, linking the service to accounting software and some enterprise resource planning. All that takes work to build and maintain, meaning that Peakflo is -- you guessed it -- using its new capital to hire.
How much money has the startup raised? Chauhan said it raised "almost" $1 million back 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 to date came later, in a round that closed a few weeks back. Picking from its investor list, apart from its accelerator backing, 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 that is building in a sector that has seen its valuation profile diminished in recent months? Growth, I reckon. According to Chauhan, since its Y Combinator era, Peakflo has added between 10 and 15 customers per month, now counting more than 50. With a recently expanded sales function, the company wants to hit 100 in the next month and reach $1 million in annual recurring revenue (ARR) in early 2023.
With fresh capital, a hiring plan, and a big market to attack, we have set a countdown to that ARR threshold.
Before we go, a little bit more on pricing and margins. You may have noted above that we mentioned a payment layer. If you have been watching the SaaS market over the last few years, your ears should have perked up a bit at that point. Is Peakflo set to grow not only on its software incomes but also due to transaction volume? The model has been popular after all.
The answer, as best as I can tell, is kinda. Per the startup's CEO, the company can drive gross margins of around 85% on its software products, but something more akin to 40% in the payments space. As Peakflo scales its software cost based on payment volume, it scales twice off of more customer activity, but its gross margin differential lays bare why software is such a valuable business category.
More when Peakflo hits seven-figure ARR.