# Lago Financial Model

Open-source billing and metering infrastructure ("The Open Revenue Hub") for software companies, with a cloud-hosted premium tier.

- Canonical: https://finamodel.com/startups/lago
- Excel download: https://finamodel.com/startup-models/lago.xlsx
- Category: Dev Tools
- Model type: SaaS ARR / Valuation
- Funding round: Seed
- Funding: $7M
- Founded: 2023
- Geography: US-headquartered; revenue base is global - EU 31% of revenue, US 27% of revenue [DECK series-a-12]. Hiring in Europe and NYC [DECK series-a-19].
- Customer: B2B

## About the company

Lago is open-source billing and metering infrastructure for software companies with complex pricing. It ingests event streams, calculates usage, supports subscription and consumption models, and provides both business-facing UI and developer APIs through self-hosted and cloud deployment options.

The company monetizes Cloud Premium subscriptions and paid Self-hosted Premium licenses, while OSS remains free. It grew through developer communities rather than a sales team, with more than 4,800 GitHub stars and a substantial Slack community supporting its product-led funnel.

The model is an open-core SaaS ARR build. OSS adoption, cloud or premium conversion, contract minimums, account expansion, and churn create recurring revenue across hosted and self-managed products. Developer acquisition, cloud costs, enterprise security requirements, support, and net retention are the principal drivers.

## What's included

- 5-year monthly revenue build with stage-appropriate growth assumptions
- Full P&L, headcount plan, and operating-expense schedule
- Cash-flow statement, runway, and burn-rate tracking
- Valuation via exit multiple with a DCF cross-check
- Returns analysis with MOIC and IRR
- Unit economics including CAC, LTV, payback, and cohort retention

## Product & value proposition

- Core product (Series A positioning): Lago is an open-source billing engine that ingests raw event streams at scale (100K events/sec), converts them into billable data, and supports complex pricing models - metered, subscription, graduated, percentage, prepaid credits, prorated.
- Surfaces: (a) intuitive UI for finance/business users; (b) backend API for engineers.
- Delivery modes: self-hosted OSS (free), self-hosted premium (paid), cloud-hosted premium (paid). No free cloud tier.
- Key integrations: Salesforce 2-way sync, Stripe, Braintree, Clickhouse (real-time), plus invoicing and payment collection.
- Earlier positioning (seed deck): Fintech "product growth" platform - customer data modeling, audience segmentation, and campaign orchestration sync to CRMs/ad tools (Salesforce, HubSpot, Intercom, Mailchimp, Amplitude). The team pivoted away from this after YC S21.

## Revenue model

- Open-core model: OSS is free (self-hosted). Revenue comes from:
  1. **Lago Cloud Premium** - hosted SaaS subscription with premium features.
  2. **Lago Self-hosted Premium** - paid license for premium features on self-managed infrastructure.
- ACV stated as "$XX K / year of minimum spend (only software, no service)" - the exact figure is redacted in the deck.
- 100% inbound lead generation through developer communities (Hacker News, Product Hunt, GitHub, Slack) - no sales or marketing team at time of Series A deck.
- Product still in Beta at time of Series A deck.

## Traction & metrics

**Community / developer traction:**
- 4,800+ GitHub stars (chart shows ~4.0k at cut-off, July 2022 launch to ~Oct 2023)
- 1,000 Slack community members (largest billing community)
- 1,200+ Product Managers (Product Hunt #1 Product of the Month)

**Revenue:**
- Recurring revenue chart shows hockey-stick growth from November 2022 to October 2023. No y-axis values are labeled - absolute revenue figures are not disclosed.
- EU: 31% of recurring revenue; US: 27% of recurring revenue

**Customers:**
- Named customer wins: Mistral AI (displaced Stripe Billing), Swan.io (displaced Chargebee)
- Use case: displacing both home-grown systems and incumbent billing platforms

**Hacker News (content/SEO flywheel):**
- "Billing systems are a nightmare for engineers" - 777 points, 359 comments
- "Why doesn't Stripe use Stripe Billing?" - 336 points, 186 comments
- "Stripe's real pricing: a primer" - 417 points, 216 comments
- "Open Source does not win by being cheaper" - 425 points, 274 comments

**Previous company benchmark:**
- Qonto (co-founders' prior employer): $100M+ ARR, 150K+ B2B customers, $5B valuation at Series D

**Funding / runway:**
- "N years of runway at current burn" - placeholder, not a real figure
- Untouched capital from latest raise

## Unit economics

- CAC: effectively $0 at time of Series A - 100% inbound, no sales/marketing spend
- ACV minimum: redacted ("$XX K / year")

## Competition / moat

**Competitive displacement:**
- Displacing Stripe Billing (Mistral AI win), Chargebee (Swan.io win), and home-grown systems

**Moat / differentiation:**
1. Open source builds trust - engineers can inspect/test before buying, shortens sales cycle
2. Extensibility - easier to build on top of; competes directly with home-grown solutions
3. Connectivity ("land and expand") - works alongside existing back-office/finance stacks
- Only open-source billing solution at this scale; claims "leading" position
- Deep fintech billing domain expertise (built Qonto's system from scratch)

## Team & funding ask / use of funds

**Team:**
- 10 FTEs total; engineering/product-heavy (all except CEO Anh-Tho)
- 8 early Qonto employees; team stayed together through hard pivot to billing in 2022
- Fully founder-led GTM to date

**Founders:**
- Anh-Tho Chuong (Co-founder, CEO) - 1st employee / ex-VP Growth at Qonto
- Raffi Sarkissian (Co-founder) - ex-Head of Growth & Data Ops at Qonto

**Existing investors:**
- US: SignalFire, Lee Fixel's Addition, Y Combinator
- EU: New Wave
- Angels: Hugging Face CEO (Clément Delangue), MongoDB 1st GTM hire, OpenAI Head of DevRel, Elena Verna (ex-Reforge), various fintech operators

**Funding ask / use of funds:**
- GTM plan post-raise: hire Sales (SDR/BDR, AEs, Solution Engineers, BizOps) and Marketing (content, SEO, product marketing, community) in Europe and NYC

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## Recommended financial model

- **Archetype + why:** Open-core SaaS ARR model. Revenue splits into two streams - (1) Lago Cloud Premium (SaaS subscription, hosting included) and (2) Self-hosted Premium licenses. Both are ACV/ARR-based with annual contracts at a minimum spend threshold. This is a classic PLG open-core motion: free OSS drives top-of-funnel, paid conversion is the key efficiency metric. No marketplace GMV, no transaction revenue, no insurance mechanics.

- **Forecast horizon & granularity:** 3 years (Year 1–3), monthly granularity for Year 1, quarterly for Years 2–3. Monetization started Nov 2022; the Series A deck cuts off ~Oct 2023 - so Year 1 of the model should begin at the first meaningful ARR month.

- **Key drivers & assumptions:**

| Driver | Value |
| -- | -- |
| Starting ARR (Month 1) | $0 (curve starts flat Nov 2022) |
| ACV / minimum spend per customer | $XX K/year - redacted |
| ACV proxy for modelling | $30K/year |
| OSS-to-paid conversion rate (Month 1) | 2% of active OSS users/leads |
| New paid logos per month (seed) | 2–4/month |
| New paid logos per month (post-hire) | 8–15/month |
| Revenue split: Cloud vs Self-hosted Premium | 60% / 40% |
| Geographic split | EU 31%, US 27%, RoW 42% |
| Gross margin | 70–80% |
| Annual churn (logo) | 10% |
| Net Revenue Retention | 115% |
| Headcount at Series A | 10 FTEs |
| Planned GTM hires (Year 1 post-raise) | ~6–10 (SDR, AE, SE, Marketing) |
| Avg fully-loaded cost per hire | $120K/year |
| Burn rate (pre-raise) | Low - untouched capital |
| Runway | "N years" - not quantified |

- **Scenarios (Base / Bull / Bear - which variables flex):**
  - **Base:** Inbound conversion at 2%, ACV $30K, logo churn 10%, NRR 115%, GTM hires ramp over 6 months post-raise.
  - **Bull:** ACV $50K (larger enterprise deals similar to Swan/Mistral profile), NRR 130% (strong usage expansion), conversion 3%, hires fully ramped in Q1.
  - **Bear:** ACV $20K (more SMB/mid-market), churn 15%, OSS community growth stalls post-2023 peak, GTM hires delayed 9 months.
  - Primary flex variables: ACV, logo churn / NRR, inbound-to-paid conversion, GTM ramp speed.

- **Required sheets / outputs:**
  1. **Assumptions** - all drivers in one pane; scenario toggle (Base/Bull/Bear)
  2. **ARR Build** - monthly new ARR, expansion ARR, churned ARR, ending ARR; split Cloud vs Self-hosted Premium
  3. **Customer Cohort** - logo count by cohort, NRR waterfall
  4. **P&L** - Revenue, COGS (hosting/infra), Gross Profit, OpEx (R&D, S&M, G&A), EBITDA, Net loss
  5. **Headcount Plan** - by function (Eng, Product, Sales, Marketing, G&A); links to OpEx
  6. **Cash & Runway** - monthly burn, cash balance, implied raise timing
  7. **KPI Dashboard** - ARR, MoM growth %, logo count, ACV, NRR, CAC payback (once S&M spend begins), LTV/CAC

## Frequently asked questions

### Is the Lago financial model free?

Yes. The Lago model is a free Excel download with live formulas.

### Can I change the assumptions?

Yes. The workbook is editable and its live formulas recalculate when assumptions change.