The following interview is a conversation we had with Siddharth Sridharan, CEO & Co-Founder of Spendflo, on our podcast Category Visionaries. You can view the full episode here: $15.4 Million Raised to Build the Future of SaaS Spend Management
Brett
Welcome to Category Visionaries, the show dedicated to exploring exciting visions for the future from the founders who are on the front lines building it. In each episode, we’ll speak with a visionary Founder who’s building a new category or reimagining an existing one. We’ll learn about the problem they solve, how their technology works, and unpack their vision for the future. I’m your host, Brett Stapper, CEO of Front Lines Media. Now let’s dive right in today’s episode. Hey everyone, and welcome back to Category Visionaries. Today we’re speaking with Sid, CEO and Co-Founder of Spendflo, a SaaS spend management platform that’s raised 15.4 million in funding. Sid, welcome to the show.
Siddharth Sridharan
Thanks, Brett. Thanks for having me.
Brett
No problem. Super excited for this. Let’s go ahead and jump right in and talk to us about what you’re building there at Spendflo.
Siddharth Sridharan
For sure, it’s been flow. We’re a SaaS procurement and spend management solution. So inside a lot of companies, you use hundreds of different software tools. You constantly get auto renewed. You have no idea what your contracts are. The procurement process is completely decentralized, so we help automate a lot of that procurement process as well. But the unique thing is we actually act like your virtual software procurement team as well. We buy, negotiate and renew all your software for you and we provide a guaranteed savings on it as well. That way we’re always budget neutral and we’re actually delivering the outcome rather than just giving you the software and asking you to figure it out.
Brett
I talked to more and more companies who are doing something similar in totally different verticals, but there’s a lot of chatter that’s like the future of SaaS is going to be that layer of services and building in that service layer. Do you think that’s true? Is that going to be the future of SaaS and where we go from here?
Siddharth Sridharan
Well, it’s going to be the future of SaaS for a certain section of the customer base. Right. Like a lot of SMBs, for example, like bookkeeping is a very clear example, kind of is already happening over there. There’s a very good mix of software and services there. But like, as you were in the mid market, like where we kind of handle with handle procurement, it’s a mid market problem. Nothing truly an enterprise problem yet. So I think every section there’s going to be certain places where this makes a lot of sense, and for certain companies it makes a lot of sense. But would you say it’s universal? I would say no. Because you’re still going to have, for example, you could kind of apply this to recruiting, you can apply this to BDR or sales work.
Siddharth Sridharan
You can apply this to a lot of repeatable activity as well. It’s definitely possible, but not for every customer and not universally. So SaaS is still there to stay. I think it’s not going to go away anytime soon.
Brett
For founders who are listening in and they’re thinking about potentially pursuing this model, what should they think about? What should be top of mind before they make that decision?
Siddharth Sridharan
I think that first thing to keep in mind is one which customer profile does this model really work for? You can’t necessarily apply this with most general software players. You can kind of cut them up as SMB, mid market, enterprise kind of models, and then you say, hey, I’ll be the best CRM for like the mid market, for example, as an example. Right? So, but with this type of a model, you need to be even more specific. You need to say, hey, what’s the revenue type? What’s the financial structure of that company? What’s the type of Persona who will buy this? At which stage of the company’s life cycle does this actually makes sense? Because you need to, like, really dial in on the ICP and where it actually makes sense. That’s the most important piece of this model.
Siddharth Sridharan
The rest of it kind of will fall in place because, like, think of it’s a no brainer, right? Like we kind of own the outcome that you want. We guarantee the outcome that you want. So the best part about this model is it’s outcome based, was you don’t have issues with, you know, like traditional issues that you have with software, which is there’s no adoption, there’s no implementation fails. A lot of those traditional challenges of just selling software kind of go away with this model, which is, what is the pro. But the con is that you need to be really specific in which type of account you’re actually going after.
Brett
Take us back to December 2020 and the founding of the company. So first off, pretty interesting time to found a company. What? Yeah, six months into the pandemic. Talk to us about the timing and, yeah, take us back to those early days.
Siddharth Sridharan
Yeah, for sure. So kind of registered the company in December 2020. But Covid is actually a blessing for us, primarily because SaaS spend was kind of blowing up everywhere. Everybody was kind of buying SaaS. So what started happening was the entire idea came out because I used to work for a couple of high growth startups before and the previous owner that I worked for, went from series a to IPo in a very quick time span. But my CFO and I never got long because I spent too much money on software. She used to walk up to me every quarter with an Excel sheet and say, this keeps going up, this number keeps going up. Go figure out what it is and go cut it by half. Right. And SaaS spin was one of the top two top three spans.
Siddharth Sridharan
And then I used to create an excel sheet. Nobody use it. Nobody followed any processes, nobody have any idea where the contracts are. It just kept repeating itself. Right. Nobody’s job was to actually manage this entire process or manage the vendors. So it fell on me and I didn’t have good way to solve for it. So at December 2020, my ex CFO hit me up and said, sid, you signed this contract a while ago on LinkedIn. She hit me up on LinkedIn and said, where the hell is this? Can you help me with this? And by that time, id left the company. Its only been a year. Shes hitting me up a year later about a contract that I signed two years ago. And then I realized, oh, wow, she really needs help. So then I offered to help.
Siddharth Sridharan
And that’s when the idea kind of struck where this is a problem that a lot of CFO’s face. So that’s when the idea struck. We started in kind of December 2020 with an ideation. We started with a couple of pocs, but we signed our first customer in like in the first two months of the business. Very lucky, I remember. And I got married in February 2021, and I was negotiating our first contract on my first night.
Brett
It’s amazing. Now take us back to those early days. What were your thoughts when it comes to the market category? Was it SaaS spend management from day one? Did that evolve? What was the thinking there when it comes to the category early on? And how has that evolved?
Siddharth Sridharan
Yeah, I mean, personally, it’s still a struggle that we face because a lot of people think where SaaS management that’s existed for a while. A lot of us think we’re spend management. Everybody would kind of put us in like procurement software and all of that. Right. So we’re in a very unique place where we kind of cross all of these chasms. What we figured out is traditionally there’s a SaaS management category, which is the soft, which is like, you know, traditionally single sign on login and you kind of get discovered. All your shadow id connects to your ERP and gives you spend against your SaaS tools. But that’s about it’s not tied to procurement or it’s not tied to you don’t get any pricing intelligence, you don’t and its not tied to any renewal management or contracts or when a procurement is actually happening.
Siddharth Sridharan
So the insight that we had was wed actually have to marry SaaS management, spend management and procurement management into one single place because we serve the mid market which is say 100 to 2000 employees or 200 to 2000 employees. Thats a sweet spot for us and technology first company. So for those types of companies, a lot of their spend is SAS spend. They don’t necessarily have procurement software and they don’t really have spend management as well. So we’ve kind of had to vary all three into one. And that’s when SAS spend management as a category even came up. And it became a category only in 2022, I would say or 2021. 2022 ish.
Brett
When we think about growth and just marketing in general, what are you doing from a marketing perspective? To grow?
Siddharth Sridharan
Yeah, so I think I can give you like two parts of the journey. For the first million of revenue, it was broadly referrals and a lot of cold outbound for the next phase of our growth. My Co-Founder Rajiv, and our head of marketing divas, they used to run a lot of the event marketing channels at freshworks. So when they came over to us, they doubled down on that and it worked really well because as were coming out of COVID in 2022, people wanted to be in person. They were craving some in person time to be social in late 2022 and early 2023 onwards. So a lot of our marketing today is event marketing as well as a lot of intent based outbound. So we’ve combined both event marketing intent based outbound and orchestrated it with an account based marketing model across the board.
Siddharth Sridharan
So we’ve become a lot more sophisticated as we’ve grown. But the first version of this is me and Rajiv, like showing up to events and then hosting dinners ourselves with nobody showing up. And now we have waitlist for our events. So it’s evolved quite a bit of.
Brett
What’S the key to getting events right. I feel like right now everyone in B2B wants to do events they see on LinkedIn. It’s working for others, but they’re hard, they’re expensive, they take up a lot of time and energy. Can you unpack the event strategy for us?
Siddharth Sridharan
Yeah, for sure. There’s different things that you need to get right for events. So one is just make sure that, you know, you’re hosting an event around potential prospects, like prospects in your ideal customer profile, in your account. Listen, for example, first thing you need to do is have an account list of accounts that you think really matter to you and are your ideal customer profile. And you map them across different cities or countries, for example. And then you kind of map out your events for the quarter. When you map out events for the quarter, you need to either do them in partnership with. We partner with a lot of communities, finance communities, procurement communities, as well as other SaaS companies that kind of sell to the same icpenna. That’s to bring down the cost.
Siddharth Sridharan
It’s like you’re sharing the cost, but you’re also like getting lead volumes from both ends. So this is second strategy of it. The third is you need to make sure that your SDR team and your marketing team are driving signups to that event and creating that excitement for that event. The events format also matters. So event format matters depending on, hey, do we want controllers to be there? We want vps of finance. Do you want business system leaders? Like, who is the Persona, what is exciting and what’s the most in demand thing? So you can’t necessarily run the same thing every quarter. You need to be always on your toes. Like for example, we threw a pickleball event in San Francisco last Friday because like, I mean, pickleball is like the hottest thing ever right now.
Siddharth Sridharan
So you need to be in that trend as well so that you can actually get them to come show up. And then the most important piece is the follow up. Whoever is attending the event, either be your sales teams, your founders executives, and if their executives there, then you make sure that your executive team is also there. So that means a lot of flying for your executive teams and a lot of flying for your founders. But that’s what it takes to build genuine relationships with these customers. And you can’t expect immediate ROI. It’s long term, it’s relationship building. And you need to make sure that your tag team with like an SDR who’s kind of like providing value to them, even post the event. Right. Like once they’re in your funnel.
Brett
I’ll be expecting an invite to the next pickleball in assets.
Siddharth Sridharan
You’ve got it.
Brett
What about from a marketing perspective that you’ve tried and it didn’t work or anything, from a marketing perspective that you were doing and have since said, like, no more waste of time, waste of money?
Siddharth Sridharan
A lot, to say the least. We pride ourselves in running multiple experiments. One thing that we’ve tried, and it hasn’t necessarily worked, is actually cold outbound. We tried really hard to build out that team and put everything in place, all the systems, and it’s a lot of investment that you need to actually put in to make cold outbound work. We realized it doesn’t, at least for, because of the, hey. With Google and Microsoft changing their email kind of spam rules, with phone numbers getting harder to collect, it’s just become really hard to make that work. So we realized that it’s not something that we really want to. We tried, we gave it a shot for like 14 months and it didn’t work. So we’ve kind of shut it down.
Brett
What about analyst relations? What are your views when it comes to working with firms like Gartner and Forster?
Siddharth Sridharan
Good question. Right? Like, funnily enough, Gartner and Forrester don’t really reckon, like, we have adjacent categories that we can be part of. And I think it makes sense, but only if you serve the enterprise. I don’t think it necessarily makes sense if you serve the mid market because the mid market buyer is trying to solve a genuine problem and he doesn’t have the nearly necessarily the time or the resources to go figure out what Gartner is saying about that particular category versus in the enterprise. You might get fired if you’re not on that quadrant at all. So for us, it actually makes a lot of sense for us to just do a lot of the review sites like G two and like Captera and all of them and not necessarily the analyst relationships over there makes sense.
Brett
I just like G two. I like the idea of it being more of like a peer review system, you know, kind of more similar to Yelp and those platforms that we have in the consumer world. It just feels like a more honest way to buy just for my gut, putting myself in the buyer’s shoes. That’s how I think about it, at least. Now, what about fundraising? As I mentioned in the intro, 15.4 million raised to date. I’m sure that’s been a journey. What have you learned about fundraising throughout the journey?
Siddharth Sridharan
Yeah, what I’ve realized is, at least in the seed stage per se, it comes down to how you can one convince some early design partners and some good logos and smart buyers to buy you right, and pay you money for it. Some form of early traction is necessary, in my belief. And the second thing is team, right. Like, thats what really matters. And then the third is you have a sense of what and how big this could potentially become. What is that vision that you’re selling right over there? I think a combination of those three for us, at least in our journey, we actually went through the Accel Atoms program, which is like Excel did like this. It was kind of like an accelerator, were one of the first batches of it.
Siddharth Sridharan
They do a 250k uncapped safe, and then they do like demo day at the end of it. Right. So for us, we got lucky in that were one of the first companies to go through it. We had an incredible experience there. And then we had a demo day right after. So were able to raise our seed round on the back of the demo day. We had incredible operator fund, like together fund and Axel kind of doubled down on our seed round. So the process was actually fairly quick because it was structured in that particular manner. And it helped that we hit all three, which is we had a good team, we had early traction. And third, the vision was kind of compelling. And then the series a kind of happened.
Siddharth Sridharan
It was during like, I think the c drawn happened when the Ukraine war broke out. And then I think our series a happened when the funding winter kind of started early 2023. So we’ve been lucky even through those journeys to get like a series a from Naspers, process ventures and excel. And it was back of traction, right? It was the back of traction ability to attract talent, the next level of talent as well. And you’re now going to get it right all the time. But it definitely helps to have a very supportive cap table while encouraging you to push for the right things. Right. Like, if my seed investors didn’t push me or didn’t push us to say, hey, focus on growth and focus on this, we would have remained building product for a very long time. Right.
Siddharth Sridharan
We could have just done that and not sold anything. So they said, no, traction matters. So go get some customers. So that’s what they really believed in it. And we all decided that’s what’s important. Our series A investors come here and said, hey, listen, how do we build a really large company, right? Like, how do we build something at scale? So you need to get customers for that. You need to drive larger and larger acvs, long term agreements, just different thought process over there. So that’s a little bit of story about how we’ve raised capital, but it’s mostly been around a function of traction team and vision.
Brett
Yeah, traction is everything, right? Traction, all the other stuff almost doesn’t matter. It seems like.
Siddharth Sridharan
True.
Brett
Reflecting on the journey, I’m sure you’ve made a number of good decisions, probably a few bad decisions, but let’s focus on the good decisions, like, what’s been the most impactful, go to market decision that you’ve made to date.
Siddharth Sridharan
So about four quarters ago, we made a strategic decision to, like, every quarter we’ve tuned our ICP right, we’ve fine tuned it even more right. So as we’ve tuned it over the last four quarters, we’ve gotten to a stage where. I know, and it’ll keep evolving. Like, that’s the thing that I truly believe, is that your ICP is always kind of, you’re always tweaking it and you’re nurturing it even more. As we’ve seen, like, different Personas that we worked with, different stages of companies that we sign up, we gotten better over there. So one of the things that we made a decision on was to actually say no to a section of the customers that don’t work for us. And we’ve said yes, and we said, hey, we will do everything in our power to acquire a certain type of customer.
Siddharth Sridharan
So where we prioritize our time and where we prioritize our dollars, from a GTM standpoint, has become a lot more robust. So our entire team kind of understands why it’s important and how it’s important to do it, because in the early stages, you just want customers, you want logos, right? You’re assigning everybody and anybody who comes through the door, but that’s not the right thing to do as you scale.
Brett
Final question for you. Let’s zoom out three to five years into the future. What’s the big picture vision look like?
Siddharth Sridharan
Yeah. So it’s fairly simple, right? What we really want to make sure that every customer that we have, or every customer who works with Penflow, our goal is to make every dollar count for them. We want to make sure that they’re buying the right thing at the right time and in the right way inside an organization, and they have the insights to do that in the right way and the team to support them to do it. So a couple of years down the line, we want to become one of the largest, if not the largest, SaaS buyers in the world. And along with the fact that the platform automates, a lot of that work for you as a customer. So we want to own that mid market customer base and make them really successful and making sure every dollar counts for them. Amazing.
Brett
I love the vision. We’re up on time, so we’ll wrap here. Before we do, if there’s any founders that are listening in or want to follow along with you, where should we send them? Where should they go?
Siddharth Sridharan
Yeah, I’m very active on LinkedIn, so I’m Siddharth Sridharan on LinkedIn, you could just say Siddharth and Spendflo. You search for it and you probably find me fairly active there. And I like to talk and write about our journey at Spendflo and all the different things that we’re learning and doing along the way. It’s somewhat of recent initiative that I’ve started doing so you can follow along there.
Brett
Amazing. Thanks so much for taking time. It’s been a lot of fun.
Siddharth Sridharan
Awesome. Thank you so much, red.
Brett
This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B Founder looking for help launching and growing your own podcast, visit frontlines.io podcasts and for the latest episode, search for category visioners on your podcast platform of choice. Thanks for listening and we’ll catch you on the next episode.
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