Solvpath recorded $435,627 in 2022 revenue, up more than 150% year over year. Until now, the company has been completely bootstrapped and now has 65 brands currently using the Solvpath software. Its current valuation is $8 million. At an 18.4x revenue multiple, I believe that Solvpath is reasonably priced, particularly for a software company (which typically have higher multiples to begin with).

The U.S. customer service software market is decently sized at about $3.8 billion. Solvpath has a clearly differentiated product that I strongly believe will have the potential to become a market leader in the customer support space. Given how quickly the company has grown already in just two years, I believe that there is serious potential for investors to get a 10x return from investing in its current round on Republic.

Solvpath CEO Carl D’Agostino has done a phenomenal job of growing the company thus far and has a strong background in e-commerce and digital marketing. Co-founder Jordan Kapelner has a deep background developing software in the energy space. While that experience is not necessarily directly translatable to customer service software, he has clearly managed to get a quality product to market with Solvpath and has guided the product’s back-end into a well-functioning product that customers love. Additionally, we love to see co-founders with complementary skill sets, and Carl and Jordan have just that. 

Beyond the founders, the company has full-time user experience/user interface designers and will be using part of the funds from its current raise to expand its design team to continue building high-quality and visually appealing customer support journeys. The company also has three full-time engineers, six customer success specialists, and a project manager. 

Solvpath’s value proposition is offering a highly customized drag-and-drop solution that focuses on photo/video visualization. While there are quite a lot of customer service softwares out there, Solvpath is the only company that offers this specific type of customer experience journey customization. Using Solvpath’s software, clients have found that 75% of customers can fix any issues by themselves. This is quite an impressive statistic that demonstrates the effectiveness of the software in providing a smooth and effective customer support journey.

Solvpath has seen the hockey stick revenue growth that we love to see in startups, particularly within the first couple years. And the fact that the company has bootstrapped its way to this position is highly impressive. While the company still has a long road ahead to becoming a $100 million company (which investors would need to get a 10x return with dilution), I believe that the company has the right team in place to continue growing at a very fast rate.

While Solvpath has a very differentiated offering, it is still playing in a highly saturated market with many large players. Its main competitors are AI chatbots and call centers (although Solvpath’s ability to handle complex support requests makes it a complementary solution rather than a direct competitor to call centers). Large companies like Five9, NICE, and LivePerson offer call centers and live chat services. So disrupting an industry as entrenched as customer support will be a significant undertaking.

I believe that Solvpath’s offering is differentiated enough to carve out a nice chunk of the market that will make the company an attractive acquisition target for one of the legacy players. 

And let’s not forget another important piece of the puzzle: The company is profitable. Even with the growth figures we see with Solvpath, it has managed to turn a profit as a two-year-old startup. While profitability at the expense of high growth is never good for startups, Solvpath continues to show triple-digit growth and looks set to continue to do so. The company projects $14 million in annual recurring revenue within the next two years, which I believe is attainable.

Solvpath is a high-quality software startup that has shown remarkable growth on a shoestring budget. With this raise, the company will be able to continue expanding its sales and development efforts and moving toward double- and triple-digit growth. And with an $8 million valuation, investors have a chance to invest in a profitable company with high upside at a good price. 

Report written by KingsCrowd Senior Investment Analyst Teddy Lyons on April 20, 2023.