Bootstrapping a New Age AI Services Venture: Anji Maram, CEO of Critical River (Part 4)

Sramana Mitra: If you quantify what was happening in these accounts, you were landing the accounts with your ERP channel and partnership management expertise and then growing those accounts. So, when you landed those accounts, what were the deal sizes and what kind of deal sizes were you able to expand these accounts to?

Anji Maram: Deal sizes typically varied when it came to ERP. Sometimes the deal size was a million dollars, and other times it was $300K. It depended on the customer size. We didn’t focus on a particular deal size; instead, we aimed to expand into multiple accounts and provide multiple offerings. Once we started providing a second offering, it became another strong point, which we used to expand into other customers.

Sramana Mitra: So, once you develop expertise, you can land with that expertise as well.

Anji Maram: Yes, the synergies multiplied.

Sramana Mitra: Let me rephrase the question. How many customers and what kind of average deal size was your business settling into?

Anji Maram: The deal sizes varied between $250K to $1M. Putting an average doesn’t really help because we accepted deals ranging from $250K to $500K, and sometimes a million-dollar deal.

Sramana Mitra: Were these initial deals or long-term deals?

Anji Maram: I’m talking about initial deals.

Sramana Mitra: What were the deals growing to over time?

Anji Maram: Over time, the average deal size was around $500K.

Sramana Mitra: So, the deal sizes did not increase that much and continued to be in that ballpark. I’m trying to understand if you were expanding your footprint within customers to the point where they could become $10 million customers. Did you achieve that?

Anji Maram: Let me explain. Some of our customers generate $10 million a year in revenue. We are not doing one project for $10 million; we are doing multiple projects for that customer.

Sramana Mitra: I’m asking at a customer level because customer acquisition is expensive. Establishing trust within a customer is expensive. Once you accomplish those tasks, you get more projects and the deal sizes expand more easily. That’s what I’m trying to understand.

Anji Maram: Then you’re asking about customer revenue size, not the deal size. The highest customer revenue we are getting this year is around $14 million. Some customers are at $8 million, some at $4 million, and some at $1 million. When we started, the initial deals were between $250K and $500K.

Sramana Mitra: Sure, in the period of initial customers.

Anji Maram: Yes. Our business model works such that 80% of our revenue comes from existing customers. Let’s say we enter into a $250K deal with a customer; over time, we grow that revenue to $1 million, $2 million, or $10 million, depending on the customer size. Net new revenue generally accounts for 20% of our annual revenue.

Sramana Mitra: Okay.

Anji Maram: So that’s how it works.

Sramana Mitra: How many customers do you have currently?

Anji Maram: We currently have 25 high paying customers, but we have so far helped more than 60 customers.

Sramana Mitra: But 25 really big customers is your core trunk of the business.

Anji Maram: The core core is around 25 customers. Some of them are large, some of them are growing, some of them are a little smaller.

This segment is part 4 in the series : Bootstrapping a New Age AI Services Venture: Anji Maram, CEO of Critical River
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