Flashback Friday: BrandIdea Consultancy

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.

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Founder: Suresh Pillai Total funding raised INR 2.25 Crores
2020 status: Operational in Chennai Number of rounds 2
Co-investors: Mumbai Angels

 

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.

 

Unlocking of Behavioural Changes

Several founders wait with bated breath as the Indian economy reopens after a 76-day hibernation. Many of them wait in anticipation that there will be an outbreak of indulgence consumption or revenge buying that will flood the empty coffers of revenue starved companies. It is (however), not the time for founders to get complacent. There is a long road ahead once the dust settles and we will see the clear signs of permanent behavioral changes after this temporary hysteria fades away.

I believe that we will see permanent behavioral changes starting from the way we lead our lives to the products or services that we consume (and the way we consume them.) Although I agree with Fred Wilson that companies in telehealth, food delivery, and work from home would benefit from these behavioral changes, I would add a few more for those of us living in India.

One of them is online education. In the past, most online education platforms suffered as the instructors were camera-shy when providing instructions to an online audience. Many instructors also found the technology tools daunting and they avoided using them. However, I do not expect parents to enthusiastically send their children back to school. The lockdown provided an extended incubation period pushing instructors to overcome their fears and shortcomings. I believe that the imparting of education through online mediums will continue to expand. Vocational classes are next, then hobbies and even working out, creating great business opportunities. I have current and prospective investments that will benefit from this behavioral change.

Another one is neobanking. It is a travesty that our banks continue to function with 20th-century design and tech infrastructure. I had hope that the lockdowns would have forced them to take a relook at their online banking offerings and improve services for customers. However, our banks are too big to move quickly. This creates a great opportunity for neobanks that add a friendlier design and process layer over the old banking infrastructure. The next 18 months would be crucial for neobanks to scale massively before the traditional banks catchup. I have current and prospective investments that will benefit from this behavioral change.

Another one is multiplayer online gaming. Social distancing is disrupting the hospitality sector especially the nightlife industry with authorities in Japan going as far as demonizing nightlife districts. However, the human need for socializing is driving us online and onto apps like Ludo, Houseparty, and Tambola. Ludo King reported a 4x increase in DAUs with more than 50 million users interacting with their app daily. I believe that the joy of online gaming companies has just begun.

Like Fred mentioned in his post, the next 6-18 months will be an interesting period to study these behavioral changes. It is an important period for founders as they must navigate these uncertain waters, readjust, once again achieve product-market fit and then start scaling up again.

 

 

 

Flashback Friday: Rolocule Games

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

 

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

  1. 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.

 

 

Flashback Friday: Exotel  

Exotel is cloud telephony (IVR, missed call management, etc.service provider offering various products for 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 feedbackand Singaporean voice-based social media startup Croak.it. Exotel had a revenue of more than 120 crores in the last financial year.

 

Founders 

Shivakumar Ganesan 

Total funding raised  

INR 4 crore  

2020 status:  

Operational 

Number of rounds  

3 

Co-investors:   Mumbai Angels & Blume Ventures 

 

  1. 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 tthis 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.
  2. 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.

  3. 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 stepmotherly treatment for business owners – despite the knowledge that businesspeople are willing to pay more for better service.

  4. What are your learnings from investment in Exotel?

    Shivakumar Ganesan, aka Shivku, is a secondtime founder, an alumnus of BITS-Pilani, Yahoo, and Flipkart. To find a founder with such an impressive resume was rarity in those times. Therefore, as an investor, we had to learn how to support someone like ShivkuAnother 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 BookMyCabLenDenClub, ConfirmtktRapidoTala and Karza Technologies (to name a few)

  5. 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.