“In India, acquisitions are hard to come by,” says Entrepreneur-turned-Angel Pallav Nadhani
Pallav Nadhani burst into the entrepreneurial scene from Kolkata and was a trailblazer with Fusion Charts hitting global scale. Before Obama became the US President, he has used Fusion Charts services for his presentation during the presidential campaign. Even otherwise, Fusion Charts now has 20,000 customers all over the globe and importantly it’s a bootstrapped company. After tasting success as an entrepreneur, Pallav is turning an angel helping the ecosystem and acting as a spring board of success for several aspiring entrepreneurs. YourStory.in caught up with Pallav to find out about his angel undertaking.Pallav feels the ecosystem is improving and his idea as an angel is to make people take to entrepreneurship if they can be helped with seed funding. He still feels there is a lot to improve in terms of pre-revenue funding in India. Failure is bad in Indian culture and people don’t join startups, again a cultural issue in India. Pallav has a lot more to say. Read on…
What we’re seeing right now is that a lot of first generation entrepreneurs like yourself are becoming active angel investors. Do you see more of that happening in India?
Absolutely. The ecosystem is moving. People are understanding what angel investment is. They’re seeing some success stories evolving. In addition, support is available from the ecosystem in terms of legal support. There are investments happening, and people are forming angel groups. What people do is first enter some groups, figure out the logistics, and then move on to become individual investors. Some of the companies, in India, are getting listed or acquired, creating a lot of wealth for early employees or founders. I personally know about 8-10 people who have interests in angel investing. These are not only entrepreneurs but also senior/early employees who have made some money and now they want to invest back into companies and want to make more money.
Before you started investing via Seeders, have you been part of any other funds?
No. We did not plan Seeders to be an angel investment venture. We started off in Kolkata because we saw a huge lack of ecosystem in Kolkata. We wanted to help entrepreneurs in Kolkata. But we eventually figured out that the entrepreneurial ecosystem is very weak there. There were not enough companies that we can look at. Then once I came to Bangalore, we decided to make it pan-India. And, we’ve made about 10 investments so far across India.
What is the typical deal size that you look at?
Anywhere between INR 5 Lacs to INR 50 Lacs.
How many more investments do you plan to do in 2012?
It’s hard to say. This quarter and early next quarter, we’re taking it slow, unless some very good company comes around that excites us.
So, what excites you when you look at a startup?
Software products excite me because of its non-linear growth path. Most software products can be sold over the internet to a global audience without a huge sales network requirement. My next focus area is mobile applications, although we haven’t made any investments in this area yet. I think there’s huge potential, more so in the upcoming platforms like Windows 8, Android, Kindle, and new devices coming up.
As an entrepreneur you haven’t gone ahead and raised external funds. You’ve bootstrapped Fusion Charts. So what triggered you to start a fund?
Multiple reasons. One was lack of funds in East India and very good people were not willing to jump out of their careers to bootstrap a company so we thought that was an opportunity. But eventually we figured that East India was not as good in terms of good companies or great ideas back then. It is better now. We saw that a lot of people are not getting seed funding in India. So what some of the VCs in the US do is that they invest in the ideation or pre-revenue stage and this was not happening in India. Here, VCs need some sort of traction to get impressed. Because there was an opportunity in terms of doing what a VC in the US does, but by giving a smaller amount of money to get them started.Further, in the next round, they could get funded by a VC or bootstrap; so it’s the initial push that we can get these guys in the form of some amount of money who would not have otherwise taken the entrepreneurial route.
The media perception that funded companies get from a non-funded company is very different. People feel that if a company is non-funded, it might not be very good. Have you faced that problem during your early days at Fusion Charts?
In terms of Fusion Charts, no. In fact we’ve always been more appreciated as a non-funded company than a funded company. A few global examples. 37 Signals who never raised money and is insanely profitable with a global distribution and millions of customers. Anything is possible with a small team for a non-funded company with a great product. The only focus is the product and the only people that we have to look up to or report to for our delivery platform are the customers. The entire focus becomes delivering great products as opposed to quarter on quarter returns or half yearly returns and thereon. So eventually, your product gets better and better and your customers keep increasing.
Since you have started investing, you’ve been talking to a lot of early stage companies. What according to you are the major challenges that they face at that stage?
It’s very hard to say. It’s vague. Tech guys don’t have much knowledge about the business part. Whereas business guys are unable to get the tech part right. Marketing and distribution is always a challenge because there are no proven models for startups selling to global companies at a large scale.
Hiring is a problem because nobody wants to work for a startup in the Indian cultural scenario. Then again getting your first customer is a problem. If you’re selling locally, the domestic market is not very conducive to buying from startups because they think it’s a big risk. So you have to sell it outside India in most cases.
You’ve been around for the past 10 years. How did you see the ecosystem evolving in India?
It has evolved tremendously. People have understood and have started taking startups seriously. Compared to 10 years ago, a lot more people are joining startups. I would love to have these numbers even up. The number of VCs has increased, the amount of money in the ecosystem has increased. There are other things that need to improve, if you’re a startup in the US you can even get acquired for a small sum. In India, acquisitions are hard to come by, the flipover is very hard. Another thing is failure is not taken very well in India. The amount of incubators, mentors and advisors have increased. They bring a lot of experience.
As an entrepreneur, if you have to give advice, would you ask them to fund raise or bootstrap?
It depends. If it’s a capital-intensive business, you have to fund raise, if you need a lot of people, a lot of machinery, a lot of sales force. If you’re a bunch of tech guys building a software that can be delivered over the Internet then you don’t need to because the cost of starting a company has come down drastically over the last 10 years. There are facilities like Cloud computing, virtual phones, and you can get company registered. You can get hires over the Internet who can work part time for you. You can get your mechanical work done and all sorts of other services. What would have costed you a million dollars in 1995, a $100,000 in 2005 but probably costs $20,000 right now. So there’s no simple answer. The longer you can delay raising funds, the better the valuation. And I think more money is always dangerous than less money because it tends to deviate you from shipping dates or release dates because you always want to do that something extra before going and getting money from the customers, which is the most important aspect of a startup.
So what’s the way ahead for you as far as Fusion Charts is concerned?
We’re constantly working our products. We crossed 20,000 customers last month; we’re delivering over a billion charts per month right now and we’re expanding our team. We opened an office in Bangalore last year. Our idea is to stay focused on data visualization as a domain, but spread out to platforms such as iOS, PowerPoint, on the web, on devices. Wherever you see beautiful charts, we want it to be powered by our product.
Why did you move from Kolkata? Because of hiring?
Primarily yes. It’s a great place but its very hard to find senior people because there’s not much traction there in terms of product companies and even good work around products by most of these major companies. Its very hard to find senior product managers or director of marketing or sales, etc. We have very senior talent in our Bangalore office.
Three pieces of advice for very early stage entrepreneurs
1. Most important feature in your product is shipping.
2. The best money that you can ever get is money from the customer.
3. Rather than doing too many things, focus on one thing you’re best at because that is your core value proposition or MVP that we call and will eventually decide what your company does.
We at YourStory.in thank Pallav for his time and valuable inputs. If you are an early stage startup, the do visit http://www.seeders.in/