In the contemporary startup ecosystem, it is not unusual for entrepreneurs to focus more on the products and services they offer. Limited budgets often lead them to outsource matters like finance and accounts to professionals, as setting up in-house teams for financial solutions can be expensive. Also, a lot of time, which could be better spent focussing on their core competencies, is wasted in understanding complex regulatory issues.
Incorporated in 2010, Aristotle Consultancy is a SSAE 16 Type II verified organisation that provides end-to-end accounting, financial, and advisory services, and often functions as an outsourced finance department for startups. Currently operating out of Delhi/NCR, Bengaluru and Chennai, Aristotle Consultancy offers services such as Accounts Outsourcing, Virtual CFO, Payroll Services, Advisory Services, and Services for MNCs across several verticals to startups, SMEs, MNCs entering India, and Equity Investors.
When Deepak Dhamija, an IIM Calcutta graduate, was working as an Investment Manager for VenturEast Tenet Fund II (VET), he interacted with many startup founders, most of whom were looking for someone to manage their company’s finances and accounts. Deepak, who has also completed the the venture capital development programme at ISB, Hyderabad, noticed that there was a huge gap with the kind of services CA firms provided and the support the startups were seeking. He saw an opportunity to fill this gap.
Deepak, who previously led a team at Infosys, offering business solutions to Daimler Chrysler, says, “During my interactions with various founders, I found that startups faced a lot of problems when it came to basic financial and legal matters. At the same time, startups can’t afford costly services, at least in the initial stages.”
Sanjeev Lamba, who is the co-founder of Aristotle Consultancy, heads the accounting and finance services at the firm.
Started with a seed capital of Rs.3 lakh, Aristotle Consultancy has been bootstrapped so far. The initial capital has been utilised to set up a delivery office in Delhi and hire manpower. Deepak says that they have been cash positive since their inception, and are therefore not looking to participate in the fundraising race.
Highlighting the challenges they faced in the initial days, Deepak says,
Companies are not very sure when it comes to sharing financials and outsourcing bookkeeping. So building trust with the client is quite important. Also, companies often face issues related to bad bookkeeping through ad hoc accounting practices. So it’s challenging to clean the backlog and historical data, not only from a statutory perspective, but also from the point of view of getting visibility on internal business performances.
21-day Mobilisation Process
Startups need experienced people and correct advisory, but these services are either not available or are very costly. The founders of most startups generally end up wasting a lot of their valuable time managing such services and fire-fighting regulatory, taxation, and compliance issues.
Aristotle brings to the table its vast experience in handling and nurturing startups. The ’21-day mobilisation process’ is a special activity carried out by Aristotle during client on-boarding, where an expert team rigorously studies the client’s existing processes.
Packages for Startups
Aristotle offers a comprehensive package named Virtual CFO, which takes care of finance and accounting needs of a company.
Hiring a full-time professional CFO and maintaining an in-house finance team may not be in the budget of a small enterprise. Deepak points out that startups and SMEs often don’t even need a full-time finance team, but they do need quality service. Today, there is no dearth of demand for such services, but there is a dearth of talent.
Often, it is arduous for startups to get a quality CA who understands their needs and matches their speed. Mentoring at a value-for -money price is something startup founders always scout for.
Aristotle works on a shared resource model, where the cost-saving benefits are passed on to clients. One can save 25-30 per cent of operational expenses incurred by clients by leveraging their services. Costs vary from Rs. 40,000 per month to Rs. 15 lakh per month depending on the volume and complexity of work.
The idea behind the Aristotle model is that the large corporates should not be the only companies that benefit from experienced finance professionals. Current market offerings in the finance and accounting domain are either geared towards servicing corporates and are very expensive, or offerings are in the form of one-time solutions without any ongoing advice and support. Aristotle is here to fill that gap.
Initially, Aristotle Consultancy started off with Royal Bank of Scotland and India Hospitality Corporation. Today, they have expanded operations to geographies like Delhi-NCR, Bangalore and Chennai, handling 40 clients including Jabong, Fabfurnish, FoodPanda, Tolexo (IndiaMart), GoJavas, Printvenue, and Xerox. It also has a couple of overseas clients, mostly in the Middle East.
Currently, Aristotle has a team of around 100 people, 20 per cent of whom are CAs. They also have in-house team for Payroll and Secretarial services, who operate from Aristotle's office. For Finance and Accounts, based on client requirements and specifications, they build an in-house team that works from the client location.
Deepak says, “We charge the client strictly basis the resources deployed against the assignments. We have very competitive rack-rates and clients are billed accordingly. We recently introduced a “Start Up Booster” pack for non-funded startups. The purpose is to make our Services affordable to new startups so that they can focus on their core business.”
According to Deepak, over the last three quarters, Aristotle Consultancy has been doubling their revenue and witnessing a sharp rise in business by bagging quite a few fresh tech startups. In the last fiscal year, the company achieved a revenue of Rs. 4 crore. They are targeting revenues of Rs. 6 crore in the next fiscal.