Lessons from the tumultuous funding journey of iXiGO
iXiGO is an online travel search engine that was founded in 2006 and being true to the sector it is in, iXiGO has had quite a journey itself. Meeting co-founder Aloke Bajpai at their remarkably creative looking office in Gurgaon, I was exposed to a lot of aspects of business in the space. One striking and a juicy thing for a journalist (and probably everyone else) was the funding bit. iXiGO has been in existence for close to 7 years and in this time, has seen a lot of action with respect to funding.
The initial days
Co-founded by IIT Kanpur batchmates of 2001, Aloke Bajpai (CEO) and Rajnish Kumar (CTO), iXiGO set foot into the travel space with flights in 2006 as those were the days when many new airlines were coming up. “We had been in travel space in our previous companies as well and starting up was always on the cards. Combining the two, we launched iXiGO,” says Aloke.
The traction was good and they reached 100k users in the first 6 months. “We were looking to raise money for the first whole year of operations from investors in India but no one was willing to put in money in spite of the traction,” says Aloke. They persevered but things didn’t really work out and the situation was looking murky financially. Aloke started to look at other avenues and got in touch with William Klippgen (BAF Spectrum) via the INSEAD network. William had sold his company to Yahoo! for half billion dollars and had shifted base to Singapore to invest in startups.
“The vision aligned and the whole deal was closed within a week!” says Aloke. Surely a lesson in how a broader vision helps and one should not restrict when looking out for something. You never know where the money would come from.
iXiGO now had decent cash and expanded the team size from about 6 people to 20 people. Traffic had grown to 200k unique visitors a month and they had enough money to last a year and a half. “We decided to spend the money slowly over 18 months in development and marketing but we saw a lot of inbound investment offerings,” says Alok. A well reputed fund offered a $5 million series A round and the temptation was hard to resist. iXiGO accepted the offer and modulated its plans aiming for a rocket growth instead of a steady one.
We upped the ante and spent more on marketing. The traffic was surging and things were going good but the investment took time in coming. After more than 4 months of confirming the offer and the everlasting ‘due diligence’, the firm withdrew the offer. “We were in a shock. Everything was fine in terms of the product but this was a huge setback in term of our planning,” says Aloke. Things needed to be rethought and iXiGO learnt that the money hasn’t been raised till it is sitting in the bank.
In iXiGO’s case, the angels stood true to their name and agreed to put in a bridge round. “They knew we hadn’t blown away the money and trusted us with another round which gave us the much needed support but along with this, another phenomenal thing happened,” says Aloke.
The Startup Spirit
Times were tough and layoffs were necessary. They downsized the team to an extent but then all the employees came to a unanimous decision-
All the employees decided to work for half their pays till the times improved
“The founders came down to zero and all employees took a 50% cut and this continued for 9 months!” says Aloke. This act of unity brought iXiGO together and is a moment what binds them till date. Aloke believes that act to be the turning point in iXiGO’s journey.
The time was 2011 by now and the ship had steadied. iXiGO was now skeptical of talking to investors in India but they had to move on. “Our traffic had gone over a million users a month and we were again seeing rising investor interest. We treaded carefully and finally decided to go ahead with SAIF partners and MakeMyTrip,” says Aloke.
SAIF Partners and MakeMyTrip invested $18.5 million into iXiGO in 2011 with SAIF Partners taking 56.7% stake and MakeMyTrip taking 20% stake in the company.
iXiGO has grown to 1.3 million unique visitors a month now and has expanded the horizon to becoming a travel knowledge engine helping people right from the time they’re seeking inspiration to travel to the point they decide to transact.
- Don’t spend more than 20% of your time in raising funds: Everyone tells you that focus only on the product and investment will run after you but when you’re in the dump, you know how hard it is. You need optimize time and make sure that you’re not spending more than 20% of your time on raising funds. That much should be sufficient.
- Monitor marketing spends: If you have a consumer product and if the traffic is growing organizally at a rate of 5-6%, then only market. Otherwise, you can be pretty much sure that the product is not being accepted.
- Team comes first: Customer is the king but even before it comes the team. If the team is not happy, customers can never be happy. Looking at it from a fundings perspective or any other area, a founder should always think about the team first.