The Economic Times Startup Awards Ask the Expert had Rishi Das, Co-Founder and Chairman of IndiQube, India’s leading workspace partner, specializing in offering workspace solutions to enterprises, unicorn startups, offshore development centers, and even solopreneurs, as a guest, in conversation with Suresh Venkat.
Talking about getting the first funding for his business, Das said that for his first-ever venture, Career Net, he and his brother Anshuman started with three principles beginning with less capital, filling in a gap in the market to grow and using their core competency to leverage. “In 1999, the Y2K boom was happening and people needed to go abroad to work and study. In an age devoid of social media, we networked with potential customers and started our work with a rented computer.”
Career Net managed to make Rs 100 crore bottom line with 2500 employees and no data equity funding. Talking about working without venture capital funding, Das said, “Our first 7 or 8 customers were our biggest bet. I believe that young startups can look at funding at first in their initial customers as they don’t mind paying slightly extra when they are satisfied with what you are offering.”
Das agrees that a lot of startups today are missing the big trick that the best and the most sustainable way to fund a venture is to rely on your customers. “You don’t have somebody giving you a mandate to grow too fast or too slow or change your product. It can eventually help to scale up the business as well. If you have a happy satisfied customer who is willing to pay for your work, investors will come.”
Das believes that in the last decade, a narrative was built that without funding, one cannot have a startup. “In Western Europe, Germany, etc. there are so many family businesses which have never raised a single penny in venture capital or private equity. But they are extremely successful multinational-status businesses. In India, thankfully there has been some correction happening in this regard over the past few months. About 15-20 years down the line, India is going to see the change. You exist because of your customers. We have to see the value in that.”
Das believes in the old-school method of taking a long view of business building. He said that for any founder his company is like a child. “Having said that, if an opportunity or an offer comes, I believe in looking at certain parameters such as upholding the company’s core values, responsibility towards the environment, governance, work culture and treatment of employees, and sustainable growth. It is not just about money. I think the key thing that all founders need to understand is that you cannot create a company to sell. You need to ensure that even if you do sell, the values and character remain in that organization.”
Talking about his company IndiQube, Das, who is not native to Bengaluru where his company is based, said that geography plays an important role in any venture. “Bengaluru is my karm bhoomi. It has a character and that has not changed over time. There are pressures and distractions but as long as we choose to do the right thing, we are good.”
Das believes that saying no is as important as saying yes. “If we don’t see a value system match, we refuse and save both the parties. It is very important to choose the right kind of people you want to work with.”
For Das and his partners, brother Anshuman and wife Meghna, it all ultimately comes down to values. He believes in keeping these values alive in his organization to grow and sustain. “The best and easiest way to keep values alive is to practice them. So humility, mutual respect, integrity, etc need to be practiced. Today, all your moves in a company are on display. You cannot say one thing and do another.”
Though Das believes in the concept of customer funding, he managed to raise $45 million for IndiQube. Talking about it, Das said that 40% is the funding came from their reserves. “We believe in conserving our cap table as much as possible. The rest of the money came from Westbridge Capital and other investors including our angel investor Ashish Gupta. When we started in 2015, we used our own money to get the company up to a certain level. When we were ready to go beyond that level, it went beyond our means. So we calculated the risks and opted for investor funding. This money predominantly went into funding technology, brand promotion, geographical expansion, and trying out new verticals or business lines.”
Das advised young entrepreneurs to look at a healthy combination of debt and equity in a venture, with risky and newer aspects funded through equity, and other cash flow requirements, orders, or customer deliveries funded through debt funding. On diluting the first fundraising equity, Das said that institutional investors go for minority shareholder rights of about 25% or so while angel investors are flexible with numbers. “But one needs to be careful. Many businesses get destroyed because of amateur angel investors, especially in tier 2 markets.”
Talking about their competitors WeWork and the homegrown Office, Das said that there was a David vs Goliath situation before COVID-19. “Covid hit and the markets changed drastically. India is a large complex market. Companies raise a lot of money to bring a Western model to India which does not work here. How many UB City or Indiabulls kind of buildings can you have? Average people cannot afford it. Meanwhile, we take a Grade B real estate, renovate and upgrade it, work within our cultural sensitivities, and provide a Grade A experience. We personalize benefits and work with nuances. This is our strength.”
Giving an example of successful companies like the Rameshwaram Cafe in Bengaluru, Das affirmed that ultimately, one needs to stay true to their core promise and customer. “Thousands of businesses across the country work even without equity because they hold up their core values. For us, our customer is the employee of the company who uses the space. It is important to recognize your end customer and work on their needs and unit economics. Startups are not about flamboyance but frugality, doing more with less without destroying your cap tables or values.”
Das agreed that the IIT-IIM phenomenon has hijacked the entrepreneurship story in this country. “It is unfortunate. But some correction is happening.”
Talking about technology being overrated, Das asserted that not every business is a tech business. “An apparel business is about fit, color, style, and fashion, tech here is simply a support system. We need to differentiate between core tech and consumer tech. There is no point getting into a tech war with your competitors when you do not have adoption by your customers. Adoption is a key parameter. Secondly, technology today is a luxury that should be consumed responsibly. It is just an enabler.”
Das also confirmed that it is high time to de-glamorize the startup game. “Entrepreneurship is not a new thing and has become fashionable over the last few years. A good entrepreneur just holds up his core values and does the right thing. Building a good business is a marathon not a 100 metres sprint.” Talking about holding on to high talent, Das said that treating employees like family and being true to one’s ethics and values is the way to hold on to them for a long time.
Das ends the conversation with a philosophical thought. “I have family (wife and brother) at the core of my business. Right from my father’s time, it has been about having a continuum for our family through the power of compounding. I want to give the future generation the legacy of this continuum. Ultimately, I would like our grandchildren to be born in a developed India, not a developing India.”
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Disclaimer: Content Produced by ET Grey Cell