The Ledger
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Capchase debt financing saves Blackthorn over $18M compared to equity dilution
“I think I did some rough math. I think over the next two and a half to three years, we're going to pay them upwards of two million. Whereas if we did a dilutive round now at exit, that dilution would be minimum, twenty million, like bare minimum.”
Federspiel: A software company cannot scale selling a $3,000 product
“So if you have to have a go to market cadence where you're selling a three K product, you can't scale your company.”
Blackthorn Reached $4.5M ARR With Only Two Outbound Deals Closed
“We're at four and a half million ARR. I think to date we've had two outbound deals, Close.”
Blackthorn acquired Texty for $3.25M using debt for the down payment
“So, we were at 550 K ARR. I said, hey, you know, what do you guys want to sell this thing for? They said six X, and I said, okay, that sounds fair. So it ended up being like three and a quarter million. And so we did 1.2 million down payment. We didn't have th…”
Blackthorn donated $120K to Stripe Climate before reaching profitability
“So we do one percent of our revenue goes to Stripe Climate. I think this goes into my own personal interest, but part of our building of our company culture. We've given away a 120 K to date, and for a company that's not yet even break even”
Blackthorn closed a $1M annual contract, 10x its previous historical maximum
“Our payments app is now two and a half times more expensive, but the biggest customer we had for the longest time was a hundred K a year. We recently sold one that's a million a year for a really, really big deployment doing mobile payments.”
Federspiel: Treat SaaS partnerships like hiring and cut underperformers quickly
“There's like the hire, slow, fire, fast kind of thing. For people, it is the same thing for partnerships.”
Blackthorn pays 15 percent of its licensing fees back to Salesforce
“The curse side is we pay 15% of our licensing fees back to back to the dragon.”
Acquirers pay 18x to 22x multiples on payment gateway revenue share
“I've heard the multiple they give on, on, Gateway revenue share volume is 18 to 22 X, which is, you know, obviously enormous.”
Software vendors driving payment gateway volume receive revenue share agreements
“So when you have volume going through any gateway, basically every company has some agreement with the gateway to get some kind of mutual funding that goes back and forth, like authorized.net has one. Braintree has one. PayPal has one. They all have one. So ev…”
Blackthorn employees invested $180,000 of their own money in late 2019
“Well, we had an employee round and they bought like another 180 K.”
Federspiel: Blackthorn has reached approximately $14M in ARR
“So, we're at about fourteen million ARR now.”
Federspiel: Blackthorn took $18M in debt, no VC, and has no board
“We have a big, well, I guess it's all relative, eighteen million debt facility, 14 of which we've drawn so far, but we have no board, it's just me, ah, we have no VC, and we plan to be breakeven, well, 23 is not, it's the end of twenty-twenty-two, it's our fis…”
Blackthorn shifted focus to $50K+ enterprise subscriptions over smaller deals
“So we didn't want to sell two, three, four, five K subscriptions. We wanted to do 50 K, hundred K plus space subscriptions.”
Blackthorn funded its first 10 employees with $1M in services revenue
“You can see over the first few years, we were doing about a million a year of ProServe. That was paying for about 10 of us to work there”
Blackthorn acquired PCI-Fi at $130K ARR for $850K paid over time
“They were a 130 K ARR. We agreed on eight 50 K purchase price. We did a down payment. We paid over two and a half years.”
Blackthorn paid Texty's $2M acquisition balance over 24 months from cash flow
“The other two million were to be paid over 24 months, which we paid over our own cash flow. And they were going to be incrementing payments. So they started small, and then they grew with the size of our company, and they agreed with that.”
Federspiel: Blackthorn makes roughly $1M annually from its Stripe revenue share
“And now we're making somewhere in the vicinity of like a million a year off of that partnership, where our customers don't get charged.”
Federspiel: System integrators drive 75% of Blackthorn's leads
“They actually bring us the deals. That's, like, 75% of our leads that we have now.”
Blackthorn increased its events app average ARR from $12K to $45K
“Our events app is now four times more expensive, but our average ARR was about 12 K for the longest time. It's now up around 45 K because we started to land a lot bigger accounts”
Federspiel created 930 unique custom prices in Stripe for early Blackthorn customers
“I had 930 different prices that I looked in my Stripe product price book over the first three years. I had a unique price for every single customer.”
Federspiel: Blackthorn has 630 customers and processed $3B in transaction volume
“We have about 630 customers. We've processed about three billion bucks through the app, and we sent thirty-one million SMS messages, which is Twilio is the underlying technology here.”
Blackthorn expects to hit $5 million in ARR next month
“Four and a half, but we have a couple of things going. So I think we'll be at five by the end of next month.”
Blackthorn ended 2020 at $3.6M ARR and targets $7.2M for 2021
“I think it was 3.6. And I think our goal for end of this year is 7.2. Cause we're trying to do a hundred percent year over year.”
Tony Robbins uses Blackthorn to process event registration payments
“Tony Robbins uses us. You call them up to do an event registration, but the payment goes through our payments app.”
Blackthorn expects to reach $1B in cumulative payment volume in 2021
“We might hit a billion in aggregate this year from inception.”
Blackthorn survived 2018 with just $7,000 in the bank and seven employees
“At the end of 2018, we almost died. We had like seven came the bank account. We had seven people. I think people took voluntary Pay deductions.”
Blackthorn killed five parallel products in 2018 to focus purely on events
“And at the time we were building five other products, all of which we killed at one time and decided to focus on events as a layer that would sit on top of payments.”
Blackthorn gave 6% equity to LAUNCH Accelerator for a $100K investment
“Their agreement is pretty standard. They're six percent for a hundred K.”
Blackthorn was rejected by roughly 100 investors during early fundraising
“Yeah, I pitched something like a hundred investors and every single one of them said no, partly because I'm not very good at sales, partly because our vision wasn't nailed down.”
Blackthorn's monthly expenses are approximately $450,000 to $490,000
“Our monthly expense now is like four 5490 K.”
Blackthorn's Capchase financing agreement features a 12-month payback period
“No, it's still a 12 month payback.”
Blackthorn received loose acquisition inquiries ranging from $45M to $50M
“If I had to guess I had loose inquiries coming around 45 to 50, but”
Blackthorn targets $35M ARR by June 2024 through 100% YoY growth
“See, I gave the team a goal of hitting 35 ARR by June, 20, 24, which gives three years of a hundred percent year over year.”
Blackthorn reports gross revenue retention between 89 and 92 percent
“The GRR is anywhere from 89 to 92.”
Federspiel: Blackthorn expanded to nine apps before pruning back to two
“We went from two to nine apps and back to two, so just be weary of chasing shiny things.”
Blackthorn integrates exclusively with Salesforce as its system of record
“Salesforce is our system of record and the only database we integrate with.”
Blackthorn reached $700K ARR in mid-2019 after fixing its sales process
“We brought on Cesar DeVoto who fixed our sales process. So we had 700 K ARR then. In mid 2019.”