I look back on my investment in Maximojo on this week’s Flashback Friday and go over why I invested in them, the risks involved, and my learnings fro my 8-year investment.Continue reading
In 2012, I invested in Squeakee Media Pvt Ltd. Here are some of my learnings from my investment…Continue reading
Triggero was an enterprise rewards and recognition services platform. Triggero worked on a SAAS model and was a provider of an enterprise social recognition platform designed to encourage the culture of appreciation. The company’s enterprise social recognition platform was easy to use. A powerful workflow engine that helped in employer could be custom moduled and self-managed, enabling leaders to drive culture and manage change in the organization.
Triggero was instrumental in creating a productive & motivated workforce, energize sales & distribution eco-system. Triggero had partnered with some of the prominent organizations across industries like Telecom, BPO, BFSI, White Goods & IT.
|Founder:||Paras Arora & Abhishek Singh||Total funding raised||USD 75,000/-|
|2020 status:||Shutdown||Number of rounds||1|
Why did you invest in Triggero?
Triggero was a powerful B2B SaaS platform in the HRMS space, looking at creating a rewards and recognition platform for in-house employees. One must remember that Triggero predated the entry of Yammer, Slack, or Microsoft Teams in India, platforms that most of us have made an integral part of our work lives today.
Triggero also provided managers the ability to reward employees by giving them points that could get redeemed at the Triggero store for gifts. It was a unique offering.
What were the risks involved with the investment in Triggero?
I know now (but I did not know when I made this investment) that rewards & recognitions platforms make the best sense for companies that house large teams managed by a well-established HR department. Therefore selling to medium to larger-sized companies carried its own set of risks like:
- Long-tail sales cycles
- Larger budgets to hire experienced B2B sales reps
- They are competing against legacy systems and high switchover costs.
In 2012 employee rewards and recognition were unknown. Even employees associated HR with ‘Holidays and Rangoli,’ and business owners looked at HR as a cost center. Therefore, I realize (now) that Triggero was probably too early for the Indian market. The company should have raised a much larger round of funding to buy itself time, which unfortunately at the time (and possibly even today) was not available.
What was the primary reason behind dead pooling Triggero’s investment?
There were a couple of factors that affected this decision. Triggero lost a major client shortly after we put in the first tranche of investment. The company started to hemorrhage money due to the loss of revenues. This investment also enlightened me on the considerable time lag between billed revenues and banked revenues in a post-paid B2B revenue model.
The founders’ plans to scale fast took a severe hit, and they could not afford the capacity that they had acquired to build their platform. Considering all the issues that the company faced, it did not make sense to continue investing in the company, and I wrote off the investment.
What mistakes did Triggero make, and what was your learning as an investor?
Triggero’s biggest mistake was that they tried achieving B2C growth as a B2B company. Therefore, instead of waiting for purchase orders to build development and delivery capacity, they made capacity and then tried chasing sales – a dangerously desperate situation that any B2B founder should not find themselves in. Therefore, a lot of the expenses got frontloaded before revenues flowed in.
Secondly, I firmly believe that they didn’t raise enough capital. Triggero’s angel round did not give them enough runway to experiment, and (with the benefits afforded to me by hindsight), the founders and the angels should have decided against investing the money. Instead, we could have waited until Triggero could raise a more substantial round to give Triggero the runway to become a significant player.
Third I learned the importance of tranche-based investing. It is an essential method of risk mitigation for early-stage investors in cases where the venture doesn’t go down the desired path.
Would you invest in a similar startup today?
I believe that the world has moved on from R&R platforms, and Triggero would have a tough time finding a niche in the corporate domains where Slack, Teams, WhatsApp, and Yammer dominate communications.
It had the potential to be an Indian version of Yammer (that Yammer/Microsoft could eventually acquire), but alas, we did not get the required scale and adoption.
BookMyCab is an on-demand taxi service with options to rent metered city taxis as well as from their own fleet of cabs. Their taxis are equipped with real-time tracking technology to ensure complete passenger safety. They follow a stringent process of recruitment of taxi drivers and taxis. They also own exclusive rights to advertise on the taxis, i.e., on doors, and inside the taxis.
BookMyCab was founded in 2012 in Mumbai and operated with taxi licenses from state governments and approved taxi drivers only. They acquired CabOnClick, a Hyderabad based online taxi booking provider in Nov 2014.
|Founder:||Avinash Chandra Gupta||Total funding raised||USD 910,000|
|2020 status:||Acquired by Wings Travel Management||Number of rounds||2|
|Co-investors:||Yournest, Centerac Technologies, Mumbai Angels|
Why did you invest in BookMyCab?
It might be hard to remember, but hailing cabs in 2012 was a challenge, especially if you wanted to travel a short distance. BookMyCab offered mobility solutions to a growing target audience of people using smartphones and provided additional income for taxi drivers. The taxi drivers preferred long-range rides since they make more money on those, whereas getting a cab for 2-3 km was quite the task for the consumer. Their platform enabled taxi drivers to find passengers without having to stand in line and wait. Consumers could book a cab which would pick them up, an idea which is standard today. Investing in BookMyCab at the time was a no-brainer since they solved problems for both markets.
What was your competitive analysis for BookMyCab? As per reports, Ola had already raised 4 Million US dollars from Tiger Global when you invested in BookMyCab.
The most significant moat that BookMyCab had was being the licensed booking service for Mumbai. While Ola was utilizing tourist taxis for local travel (technically not allowed at the time), BookMyCab got the local ‘kali peeli’ taxis, licensed by the RTO. The license gave them a considerable competitive advantage in 2012, before the loosening of regulations that allowed Ola and Uber to expand aggressively. While the other platforms were working in a grey area, I thought this competitive advantage would be critical in fighting off the competition. BookMyCab had a fleet of close to 100,000 taxis they could onboard very quickly. In contrast, the competition had to spend copious amounts of capital to acquire drivers and give massive bonuses to keep them sticky.
What did you like about Avinash? Did his IIT Mumbai tag play a significant role in the selection?
More than the IIT tag (I’m not much of a believer in tags), what excited me about working with Avinash was that he was willing to get into the nitty-gritty. He was a part of Financial Technologies with Jignesh Shah, so he had a history of working in intrapreneurial positions. Convincing cab drivers to accept digital cash as payment was a big deal. I appreciated that he was willing to get his hands dirty.
The taxi market in cities like Mumbai and Kolkata is still fragmented (Yellow taxi in Kolkata and Kali peeli in Mumbai). Would you invest in a similar startup today if they are looking to consolidate the pending fragmented market?
Consumer preferences have changed today, and there already clear market leaders in this category. People would prefer to either book an Uber or an Ola due to the standardization of services, timely drivers, the cars are in better condition, and well, air conditioning. I wouldn’t change my decision to back BookMyCab in the past, but today, the market is very different from what it was in 2012. The cream-of-the-crop drivers are already on competitor platforms like Ola and Uber. By the way, both platforms also let you book kali peelis.
What were your learnings from your investment in BookMyCab?
Whenever you invest in an early-stage startup, they must become a market leader to cement their position. 80% of the investment, visibility, and revenue goes to the top two market leaders. Here are the learnings from my investment with BookMyCab:
- Push them to be more aggressive in acquiring drivers. This is not to say that Avinash was not aggressive; I should have encouraged him to be more aggressive.
- Early on, I focussed more on growth over profitability.
- Not to depend on permits as a competitive advantage. I had (too much) faith that the government would protect the license, and the competition operating in grey areas would ultimately be shut down. Public good consistently trumps legislation. I applied this learning in our investment in LenDenClub, which is doing exceptionally well.
- I learned a harsh lesson when Ola offered to acquire us, but the board declined the offer. Ola’s offer value grew by almost 15x over the next 2-3 years. If I had taken the deal, BookMyCab would be the biggest winner in our portfolio, but the lesson was learned. Therefore, if consolidation cements the number one position, then take the offer.
BrandIdea is a business intelligence tool for marketing and sales information. They offer a SaaS-based business intelligence enterprise tool that helps companies analyze their markets & last-mile sales data. It Integrates and models data from a multitude of sources and client’s internal data to provide analytics to gain insights & maximize the ROI of marketing campaigns.
Using advanced Data Science techniques, they generate visually enriched granular analytics streams that are dynamic, deep, and point to precise directions that help companies to make the right decisions. Critically, these analytics are granular – at the micro-market level, thus creating a bottom-up, aggregating impact of customized marketing actions. So not only can the companies re-visit their decisions at short intervals to course-correct or shift priorities periodically, they can do so at every geo-location, creating the bedrock for growth.
|Founder:||Suresh Pillai||Total funding raised||INR 2.25 Crores|
|2020 status:||Operational in Chennai||Number of rounds||2|
Why did you invest in BrandIdea?
In a market as broad and diverse as (pre-digitalized) India, information at the last mile was always challenging to collect, and the data that existed was inaccurate. BrandIdea provided a solution using which large brands could gather granular and in-depth information about that last mile. This information not only helped the brands with their marketing efforts but also their inventory and other aspects of their business.
BrandIdea was the first enterprise tech company that I invested in. The decision was driven by the fact that their enterprise clients had massive marketing budgets and teams that would be willing to pay for that level of granular data.
What were the risks involved with an investment in BrandIdea?
As with any B2B SaaS play, there are a few issues we knew we would face.
- One of them is the long decision-making timelines that large conglomerates like Colgate, Tide, HUL, Unilever, etc. have. However, it is worth being said that once the partnership is complete, these partnerships can be very lucrative.
- Enterprises have long gestation periods to make a decision; therefore, another risk with Enterprise SaaS is the sales-cycles are going to be extended. You need to maintain firm control on the burn and accommodate for completing those decision cycles.
- Another risk is that Enterprise SaaS companies can become profitable but not scalable. This could turn it into a lifestyle business, where the founder makes enough money to live comfortably but doesn’t grow, and as a VC investor, you’re stuck. B2B SaaS plays need to move quickly towards $1M per year in revenue before they can be considered a moderate success. The longer it takes to get there, the lesser the chances of it getting further VC interest.
What are your learnings from your investment in BrandIdea?
As I mentioned earlier, there are long gestation periods, and it’s a lot of relationship-building with enterprise SaaS companies. It takes a while to get a lot of clients, and the slower that process is, the worse it is for a VC investor.
This was also the first time we invested in a family-operated business, by Suresh and his daughter, and his daughter eventually left the company.
We learned how to evaluate such companies better. If a company gets into a lifestyle-business model, how do you, as an investor, get your money back; or get good enough dividends. We are still learning that.
Would you invest in a ‘BrandIdea’ if it came to you today?
When it comes to enterprise SaaS, we’ve learned that it’s a long process to build a company, and as traditional investors, our IRR expectations are upwards of 75% per year. While BrandIdea didn’t burn too much capital, they didn’t grow fast enough for our liking. Therefore, we don’t think that we are the right investors for them, and they aren’t the right investments for us.
What are the exit opportunities that can be foreseen for BrandIdea now?
The possible exit opportunities would either be a founder/company buyback, or the business gets rolled up into a large company offering a suite of products to similar enterprises.
Rolocule Games is a game development studio creating realistic, casual, and social video games for tablets and smartphones. They design games using emerging technologies such as AR, VR, IoT, and AI. From designing award-winning Rolomotion™ technology for Apple to the recent Eagle Eye, which was an SXSW 2019 Innovation Awards finalist, Rolocule is emerging as amongst the leaders in leveraging cutting-edge technology in game design and experiences.
Rolocule created the official Australian open Tennis VR game in association with Australian open and Infosys. Their impeccable business ethic about being nimble and flexible has got them rapidly developing multiple games and pivoting, as industry change has become a case study at the world’s top business schools, Harvard and IIM-B.
|Founder:||Rohit Gupta||Total funding raised||INR 6 Crores|
|2020 status:||Operational in Pune||Number of rounds||4|
|Co-investors:||Blume Ventures, Mumbai Angels, CIIE|
- Why did you invest in Rolocule Games?
Other than being intrigued by the gaming sector, Rolocule had a fantastic team. What swung my decision was when they were trying to create a game which would utilize your smartphone as a gaming paddle, similar to how the Wii Remote functions. Their game Super Badminton for the iPhone was a huge hit – big enough that they were invited to Cupertino by Apple in 2013.
- What were the risks involved with an investment in Rolocule Games?
Like with any gaming company, it’s a zero-one risk; it’s either a success or a failure. Rolocule was going to be a success and a fantastic winner in our portfolio, or they were going to shut down. Creating, publishing, and promoting a game is an expensive proposition, and funding would only give them a few chances to succeed. It was also possible that the games would not be received well, and if there were 2-3 failures in a row, it considerably reduces the chances of following games being a success.
- Where do you place your investment in Rolocule Games when you see the success of games like FIFA, PokémonGo, etc.?
In my opinion, the two aren’t comparable. Apart from the difference in budgets, games like the FIFA series are licensed brand names from the organizations and backed by AAA game studios like EA Sports. PokémonGo has Nintendo’s name behind it, and Pokémon is a sensation on its own. Just these reasons are enough to set them apart, overlooking the fact that games like FIFA are updated and released annually. Rolocule exists in a different gaming space where they’ve integrated the technology in smartphones to software, allowing players to use it as a racquet or a paddle, like the Wii Remote.
- What are your learnings from your investment in Rolocule Games?
It taught me to be more realistic about zero-one plays, where you need to know when it’s not working and stop pumping more money into it. Initial success is not a guarantor for long-term success. It also taught me that not everything could be gets written off as simply; Rolocule went from becoming a game developer and publisher to just a developer of games. I’ve also learned that the defensibility of games is lower than usual. Similar to how most movies have a shelf life of 4-6 months, you have to reap everything you can in that window of opportunity.
- Would you invest in a similar startup today?
Yes, but with some caveats. As an investor, I would want better control. With the experience of backing a zero-one style business, I have a much better understanding of the space, and I would invest in an entrepreneur like Rohit again. Still, in terms of the venture, I would be more careful about the valuation and evaluate success, keeping in mind that initial success is not a guarantor of long-term viability.
Exotel is a cloud telephony (IVR, missed call management, etc.) service provider offering various products for a hassle-free experience. Service includes Voice for a loud and clear experience, SMS for improving the customer experience, OTP based authentication, and VoIP based app to app calling for small and medium enterprises in India.
Exotel helps in building a reliable and efficient business communication system.
Exotel currently handles over 11 million customer conversations every day on an average. Last year, they were dealing with nearly 5-6 million calls a day, which has doubled now. Exotel has thus far acquired two companies - Voyce, a platform that allows businesses to gather customer feedback, and Singaporean voice-based social media startup Croak.it. Exotel had a revenue of more than 120 crores in the last financial year.
|Founders||Total funding raised||
INR 4 crore
|Number of rounds||
|Co-investors:||Mumbai Angels & Blume Ventures|
- Why did you invest in Exotel?
Freshly back from my professional & entrepreneurial stint in the US. Exotel reminded me of a vEPABX service that we utilized the customer service & operations team. It improved our efficiency and service delivery quality. Therefore, it was a surprise for me (circa 2012) that Indian SMEs didn’t have access to this critical technology that would reduce their communication costs.
Therefore Exotel, was a no-brainer investment for me as I knew that they would become the backbone for many businesses in India.
- What were the risks involved with an investment in Exotel?
The most significant risk was the excessive regulations that controlled VoIP calling at the time. Exotel wasn’t allowed to directly purchase minutes from Indian telecom operators, and unfortunately, they tried to bully the company through complicated pricing plans.
Despite all the difficulties, the team worked dutifully in securing the necessary licenses and offering such great value for business owners & startups.
- What were the possible avenues of an exit when you evaluated the investment opportunity at Exotel? I believed (at the time) that a telecom operator would see the stickiness of an Exotel customer and their excellent margins on non-voice revenues to snap them up. Unfortunately, most of the telecom operators have concentrated on the B2C customer with a step–motherly treatment for business owners – despite the knowledge that businesspeople are willing to pay more for better service.
- What are your learnings from investment in Exotel?
Shivakumar Ganesan, aka Shivku, is a second–time founder, an alumnus of BITS-Pilani, Yahoo, and Flipkart. To find a founder with such an impressive resume was a rarity in those times. Therefore, as an investor, we had to learn how to support someone like Shivku. Another significant learning for us was how to invest in startups that operate in highly regulated areas. Exotel along with United Mobile Apps gave me (and my team) a wealth of experience that helped in later investments like BookMyCab, LenDenClub, Confirmtkt, Rapido, Tala and Karza Technologies (to name a few)
- Would you invest in a similar startup today?
Yes, I would. However, I would structure part of my investment as debt or as payment via dividends. Companies like Exotel threw out a lot of cash, which can be daunting for traditional VC funds to evaluate for future funding rounds.
As I approach my personal goal of personally investing in 100 startups within 10 years, it was time to reminisce. Each new investment gave me a new experience, sometimes good, sometimes bad and sometimes ugly. Last week I wrote about my first angel investment, United Mobile Apps. This week is its investment #2!
CarveNiche is an innovative EdTech startup. They developed advanced EdTech products such as beGalileo (India’s largest personalized after school math learning program for K-12 education), Wisdom Leap (free online source for K-12 education), and Concept Tutors (personalized 1:1 tutoring focussed on the international market).
CarveNiche created a niche in the EdTech space. It is the first to develop a product using the latest technology, such as Artificial Intelligence (AI), to teach a subject like Maths. The flagship brand, beGalileo, recently became India’s first after school Math learning program to be available as a Windows App.
At present, they have over 750 women entrepreneurs who are running their centers through CarveNiche. The renewal rates exceed 90 percent, which shows the value they provide to the students and parents.
|Founder:||Avneet Makkar||Total funding raised||INR 5.5 crore|
|2020 status:||Operational with HQ in Bengaluru||Number of rounds||3|
|Co-investors:||Lead Angels, Mumbai Angels, Calcutta Angels|
- Why did we invest in CarveNiche?
CarveNiche’s initial business model was to deliver a superior classroom experience for the school students by utilizing the latest digital hardware with a customized software platform. The platform provided instructors the ability to track the progress of each student and personalize the student’s teaching plan based on how well the student grasped the subject. The platform also offered a messaging service to connect parents & teachers so that they could track the progress of their students at school & home.
I liked the founders. It was a known fact that Indian schools lacked modern equipment to upgrade the delivery of instruction in the classroom. Looking at the massive size of the market, I decided to invest based on the broad target market, solid team, and their clear understanding of the problem and its solution.
- What were the risks involved with an investment in CarveNiche?
The risks presented themselves in three ways.
- Long sales cycles: The company had a tiny window to sell its offering to school administrators, their boards, and their trustees. Next, their team must negotiate contracts, find financing to help the school purchase the required equipment. After that, CarveNiche would implement the solution and train the instructors on how to use their platform. If the company could not complete all these steps before the start of the school (academic) year, the sales decision, the invoicing, and the revenues from it would get postponed to the following year. The company must continue to fund its sales team for long periods before they could see the results of their efforts or get feedback to innovate on the product.
- Providing subprime debt: Most Indian schools do not have a profitable business model. They must regularly fundraise to meet their budgetary needs. Therefore, most schools could not afford the hardware for CarveNiche’s solution – unless provided with equipment financing.
With most of these schools running operating deficits funded by government grants, donations, and trustees, these schools had an inferior debt profile.
To survive, the company had to come up with an equipment leasing/purchasing plan, and they approached us for that financing. We gave subprime debt to a few schools to evaluate their ability to repay, but most of the schools defaulted on their obligations to CarveNiche and us. That experience burned a severe hole in CarveNiche’s bank account, forcing them to abandon this product offering and the selling to schools’ business model.
- Founder risk: In a first (for us), one of the cofounders (Saraswathy) quit a year after we had funded the company, which overloaded the sole cofounder, i.e., Avneet. She wrote about her challenging experience in an article in 2016.
- How long did you plan to invest in CarveNiche?
At the time of the investment, it seemed like CarveNiche would scale quickly and get acquired by a larger player like Educomp. However, our investment coincided with the start of the demise of Educomp, and even though the company raised a couple of follow-on funding rounds, they had to (thankfully) pivot to a B2C business model.
- Would you invest in a similar startup today?
I learned from CarveNiche’s experience that trying to build a massive business that sells to institutions that possess inherently unprofitable business models is like living in a fool’s paradise. The Modi government invests 4.6% of GDP in education, so I know there is money to be made in EdTech.
However, I find that the B2C plays must spend a lot to acquire a customer, and their LTV / CAC ratios stay <1.
In B2B, I have not found a group of founders that understand the pain that CarveNiche went through and have developed a business model that addresses those issues; therefore, we have cautiously stayed out of this space.
CarveNiche’s new business model providing online tutoring has promised, even if it was a bit niche. However, it has scaled beautifully in the COVID19 era. The company has turned around and raised a new round to aid its growth. Avneet has stayed the course despite several setbacks, so she deserves every bit of the luck that comes her way.
In conclusion, I would not invest in the original CarveNiche business model – but I would invest in Avneet.
- What are your learnings from the pivots that CarveNiche has made over the years?
CarveNiche was my 2nd angel investment, and it taught me many lessons that continue to guide me today. I’ll share a couple of them:
- Follow-the-money: It is essential to understand how long it will take a business to convert billed revenue into money in its bank account. If the path to getting the money is long and fuzzy – avoid that business model. As a founder or an investor.
- Avoid investments in long working capital plays: If it takes a long time to close a sale, then a long time for to invoice for sale, and an even longer wait to get the money from that invoice into your bank account – what is getting utilized to keep the lights on today?
If the answer is venture capital, then I would not invest in that business.
United Mobile Apps (UMA) developed and published mobile applications software. The company issued software products for mobile devices with a focus on connection management, device management, and data synchronization. UMA marketed its products and services to original device manufacturers throughout India.
UMA had a vision of enabling access to all the User’s data ‘Everything – Everywhere.’ To implement this vision, UMA worked on a cross-platform software called Unify (U5) which had the following modules:
- USync: Synchronize data from mobile device / laptop / PC
- UManage: Manage the device remotely
- UShare: Share the backed-up data
|Year of Investment:||2012||Total funding raised||USD 1.2 Million|
|2020 status:||Shutdown||Number of rounds||2|
|Co-investors:||Blume Ventures, India Venture Partners & Mumbai Angels|
Anirudh A Damani (aD) gives his insight behind this investment.
- Why did we invest in UMA?
aD: UMA was trying to optimize the mobile telephony infrastructure by utilizing the correct cellular network bands based on the type of data getting transmitted. So, their solution allows the network operator to use 4G for rich data applications, 3G for emails, 2G for voice calls, and GSM for SMS. The solution also allowed a seamless offloading to wi-fi for data sapping applications.
It was the perfect solution for an infrastructure challenged market like India with its notoriously poor network quality. I also liked the founding team, the right mix of engineers, and businesspeople for a complex infrastructure play.
- What were the risks involved with an investment in UMA?
aD: There were a couple of significant risks. First, the company must invest a considerable amount of money on R&D, an expense that it could not stop even if sales were slow – which was the second risk. The company had a long sales cycle and relied on the correct alignment of several external factors for its success.
- How long did you plan to invest in UMA?
aD: For a long time, I had a conviction that UMA would be my first unicorn. I had planned to hold onto it forever as UMA’s business model would make it a cash cow. Unfortunately, unfavorable market conditions dashed my expectations.
- What was the primary reason behind dead pooling UMA’s investment?
aD: As I had said earlier, the company relied on external factors for its success, e.g., the quick rollout of 4G networks to be a viable solution for network operators. The network operators would then ask handset makers to install UMA’s chip in the handset and pay a royalty to UMA per device per month.
However, the 2G spectrum allocation scam in India led to a slow 4G rollout in India. Though unconnected to India, different regions around the world also witnessed a slowdown in rolling out 4G. This stalled the company in its tracks. The company tried pivoting to a new business line, which met with moderate success, and it needed additional rounds of capital to survive the delays but failed at raising a new round.
- Are you satisfied with the efforts of the founders?
aD: Absolutely! I believe that the founders gave it their all, and factors beyond their control led to their eventual demise. I continue to have a ton of respect for the founders, and I look forward to investing in them once again!
- What mistakes did UMA make, and what was your learning as an investor?
aD: It would be incorrect to blame the founders for making mistakes for situations beyond their control. The most significant learning for me was to ensure that the founders held (at least) 60% equity before raising a Series A round.
- Would you invest in a similar startup today?