Bathe Austin: $50K Revenue Financing After a $3.5M SBA Deal Fell Through

Nathan: I was shocked today when I met this couple who launched Bathe here in Austin, Texas. They sell a monthly subscription for their sauna and their cold plunges and the revenue shocked me. Danyl: Bath houses are so profitable. Bath houses run with 40% margins. Lisa: On January 8th, we got our permit set from the city of Austin approved. Biggest high of our lives. Danyl: And then the next day, our SBA debt partner, they dropped a bunch of deals — ours included. So the $3.5 million of funding falls through. What now? Nathan: I usually would not be interested in backing a founder who came up with an idea while they were on LSD, but these guys are a little bit different. Lisa: We manifested the bath house at Burning Man doing sex magic. Nathan: What is sex magic? Lisa: Are you sure you’re ready to go down that rabbit hole? Nathan: Hey, how are you guys? Lisa: Hi. Nathan: I’m Nathan. Lisa: Nice to meet you. Lisa. Danyl: Danyl, it’s so good to meet you. Nathan: Really good to meet you. You are in Bathe’s soaking garden right now. Lisa: This is where people come to plunge, sweat, soak, connect. We have magnesium mineral tubs, different temperature cold plunges, and three different types of saunas. Nathan: How did you guys meet? How did you get the idea? Danyl: My friends invited me to a psychedelic mastermind where it’s like, create your dream. On one side of the whiteboard I said create a bath house, and on the other side find a muse — a partner. And I met Lisa one month later. Nathan: What were you doing before this, Lisa? Lisa: I was a lawyer and I was living a very regular existence. My mom passed away and that was when I realized that none of this matters and it can all be gone in a moment’s notice. So I dropped everything and moved into a camper van, traveled around the country and the world for a few years, and then flew to Austin looking for purpose. That night I ran into Danyl. He told me about the psychedelic dream container that he was in and the bath house. I just knew that this was my mission. Nathan: Are you guys business partners or partners in life? Lisa: We’re business partners. Danyl: Business partners exclusively. Nathan: I always meet woo-woo people on these YouTube videos and they’re broke as hell. So I hope that I’m meeting woo-woo people right now and in 10 minutes you’re going to tell me this thing is printing money. Are you comfortable sharing what salary you gave up, Danyl? Danyl: Sure. I cashed out my retirement, a lifetime’s worth of savings in tech, and I gave up a salary that was about $200,000 a year. Nathan: Lisa? Lisa: I had been living off of Airbnbs. I sold all those properties. That’s about a million dollars worth of real estate that I sold to come in on this project. Nathan: Putting a million dollars in based off words on a whiteboard is a big risk. Did you do any research between the LSD container and signing a lease? Danyl: We lived here for 8 months while we were doing the design of the bath house. Nathan: You were leasing this building? Danyl: It’s a 15-year lease with a right of first refusal to buy it. We wanted to build a full service bath house inside. So that whole 8 months we spent doing all the work required to submit to the city. Nathan: 2025 has been a bit of a plot twist. Danyl: On January 8th, we got our 140-page permit set from the city of Austin approved. Biggest high of our lives. And then the next day, our SBA debt partner, they had a change in leadership and they dropped a bunch of deals, ours included. Nathan: What was the amount of that deal? Danyl: 3.5. Nathan: So the $3.5 million of funding falls through. It’s January 2025. The permit is approved. What now? Danyl: Uh, we experienced all the feelings. Nathan: Did you go back into an LSD container? Lisa: We did. And then I was like, okay, well, let’s build this thing outside now so it could be ready for South by Southwest. Maybe having this outside would help us get more funding. Danyl: This was a parking lot. We turfed it and fenced it and turned it into a 3,000 sq ft outdoor soaking garden — Austin’s first bath house. Nathan: Tell me about this Nordstream Springs contraption. Danyl: It was $50,000. Nathan: $50,000? Danyl: It’s handbuilt in Austin, custom. There’s no glue. This is all pressurized to connect the wood. The wood-fired sauna is the most popular sauna because you don’t really get real fire anywhere else in the city. It gets like 240. Nathan: 240. How long will people sit in there? Danyl: The crazy ones, 30 minutes. You should be in there like 15. Nathan: When you package all of this together, what is the revenue model? Lisa: If you’re a member, it’s $20 for 60 minutes. If you’re a non-member, it’s $30 for 60 minutes. Nathan: And what does membership cost all in? Lisa: Our membership right now is $199 a month, and it includes unlimited soaks. People can come multiple times a day. They get two free guest passes per month. Nathan: Which revenue stream do you feel is the longer term vision? Danyl: Definitely the soak passes. Especially when the full buildout — that’s where you make most of your revenue, the daily visitors. Nathan: How many paying people do you have today on the membership model? Lisa: We have about 150. Nathan: When did you open? Danyl: We opened during South by Southwest. So March 2025. Nathan: If you really got fully opened in March, are you comfortable sharing total monthly revenue today? Lisa: Right now we hit about 42,000 and it keeps going up. We’re going to double it very soon, because we also barely have a booking platform. Our website is terrible. We opened before we even had a couch. Danyl: The only saving grace is we have a really strong social media following. We have like 27,000 organic followers. Nathan: What does churn look like? Lisa: Really small. We had one member try to quit three times and she’s like, never mind, I don’t want to leave. Nathan: Where do you think you can be revenue-wise in December of 2026? Lisa: That’s a different business model because if we have the full bath house, you’re talking millions. Nathan: Can you build the full bath experience in the next 12 months? Danyl: It will take 10 months and the construction team is all ready to go. Nathan: What’s the minimum amount of capital that you would need to get the construction done? Danyl: 3 million. Nathan: Why does this cost so much? I built a pool in my backyard, it was 80 grand. Danyl: A commercial pool would cost about half a million. Nathan: Can this be a profitable business? Danyl: Bath houses are so profitable. Bath houses run with 40% margins. Nathan: What’s the most profitable bath house in the US? Lisa: Probably Bathhouse in New York City. They have two locations. Their EBITDA was $82 million last year running at like 50% margins, but probably 45. Nathan: If you were going to sell the business today or pitch this to investors, what would you value the business at? Lisa: We are about to do a Reg CF and we had an $18 million valuation, based on other bath houses in the market. For a cornerstone investor, we were doing a little bit lower — 7 to 8 million valuation cap. Nathan: 42 grand a month annualized comes out to something like $500 to $600,000 a year. So a $30 million or $18 million valuation — that’s a serious multiple. Lisa: The 40 grand a month is not the business model of what we’re raising money for. The bath house makes hundreds of thousands of dollars a month at full buildout. Nathan: The difference is, you’re already making 42 grand a month on the outdoor side. The other thing is a projection. Nathan: I’m not comfortable knowing you guys for just an hour and a half writing a million-dollar check. But would you guys be open to a deal structure where I lent against your current revenues? So it was a debt deal that you paid back over time, but I’d also have the opportunity to invest up to a million on whoever leads the next round. Whatever terms they set. Lisa: Yeah, definitely. We’re very open to debt and equity. Danyl: It’s going to be a combination of things. Nathan: If I was looking at this just as a debt deal, you don’t want to overlever a business. So here’s my offer. The offer I’ll make today is a $50,000 check, structured as debt, as a way to learn more about each other and get closer. I obviously want to make money on that 50K — I’m not a charity. The way I’d get a return is I’d ask for a 10% take rate, which means you’d pay back 10% of your monthly revenues until I’m paid back something like $57,000. That might take 16 to 24 months. Nathan: And then what that allows us to do is I’d put a little addendum in the paperwork. I’d like the opportunity to put up to a million on the same terms — at the valuation you guys agree on with your cornerstone investor for the big equity deal. Nathan: What’s your reaction to that? Lisa: I think it’s a good way to get your feet wet. Danyl: I feel like as we show you more and more, you’re just going to see how expansive this opportunity is. Nathan: Danyl, do we have a deal? Danyl: We have a deal. Nathan: Lisa, how are you feeling? Lisa: I feel great. Nathan: You’re in too? Lisa: All right, let’s do it. Nathan: If you guys liked that deal, remember, new episodes drop every Wednesday. Click here to subscribe so you don’t miss out. Also, want to see more deals like this one? Click here to see the next deal immediately.