Sniffing money-trails, Excellence4U negotiates the financial maze for investors, startupsVishal Krishna
Bengaluru-based Excellence4U is helping Indian companies explore tie-ups globally with its forensic expertise by tracking and steering clear of money that could hurt credibility
To cite an oft-repeated cliché, as much as money makes the world go round, its trail is the most difficult to track. Then, there are data scientists and technologists who insist everything leaves a trail, as does the money.
With investors across the world seeking newer avenues to invest their cash for the maximum returns, questions like its legality and taxation are quick to emerge. A Bengaluru-based startup is unravelling the Grimm Brothers’ story of Hansel and Gretel, looking for the breadcrumbs and helping Indian companies explore transparent partnerships globally with its forensic expertise.
Founded by Madhusudan Rao and Suparna Rao in late 2011, Excellence4U has since been on a war path to uncover “dirty” money.
It has helped startup companies and venture capital firms figure out if their partners, and their accounts, have links with black money. The company can even tell investors how founders of a company encash money by providing bills that other than salaries.
While the company refuses to divulge its clients or its revenues, sources say its revenue is around $3 million.
Madhusudan and Suparna have spent 19 years in corporate accounting, training and sales. Excellence4U’s Managing Director Sathya Pramod for its flagship LightRay suite, spoke to YourStory on how the company offered a different perspective to other large consulting firms such as PwC, KPMG, Deloitte and EY.
“There are players who limit themselves to standard financial forensics and also provide sectoral information about geographies, verticals and funding activity basis customer needs,” says Sathya.
He adds the ‘Big Four’ accounting and consulting companies form one end of the spectrum with companies like EY, Deloitte, and PwC being the de-facto partners for due diligence reports for portfolio investments.
Then, for mergers and acquisitions, the due diligence is generally done by boutique advisory companies or law firms that have in-house expertise or outsource to the ‘Big Four’ or small consulting firms depending on the scale and complexity of the assignment.
However, with the open data movement gathering pace, several information service players like Zauba, Open Corporates, Probe, CIBIL, and MCA portals provide specific subscription services for specific information needed for due diligence.
Excellence4U’s business model is somewhat identical to subscription-based businesses. Information service providers work on pure subscription models, which are often annual. The ‘Big Four’ and smaller boutique players work on assignment-basis, and in some cases on a retainer if the scale of the coverage is consistent.
There are no industry standards on report formats, but credit risk and statutory compliance adherence at individual and company levels forms the fulcrum of the value provided.
What does E4U solve with its data tech?
“We see an untapped need arising out of changing business models, fluid interpretations of credit, market and operations risk parameters by audiences. More crucially, the intersection of business, financial and market parameters linked to the investor’s or bank’s business objectives behind making the investment (equity or debt across multiple product types) generates unique dark spots which are often the Achilles heel of most transactions – pre and post,” says Sanjay.
It is in this space that LightRay Acuity is looking to provide value. E4U’s technology platform has the unique ability to comb through zillions of structured and unstructured data sets linked with flexible parameters.
“We have the ability to go beyond the written brief and uncover insights which help both the investor and the funded companies to make quick directional corrections before the needle turns into the red zone,” says Sathya.
Investors have large portfolios to manage, even larger pipelines to evaluate, and companies have tough metrics to match, multiple players to please aside from competition, talent and technology issues.
Milestone-based metrics do not help in situations like these. What companies and investors need is quick, flexible, granular and intuitive insights on business, finance, and market forensics that can be used to take corrective action.
“Funded companies are worried about managing the investors the right way with minimal effort so that they focus on business fundamentals,” says Naganand Doraswamy, founder of IdeaSpring Capital. LightRay Acuity provides this value to founders and investors, with data and insights being actionable rather than prescriptive or pure forensic in nature.
How does E4U really help?
The company uncovers patterns, like if a majority of a company’s business development trips coincide with, say, the school holiday season. “We have seen investees advertise for talent with relevant years of experience greater than the technology age itself – should the investor be concerned with data points like these?” says Sathya.
Similarly, for investee companies, E4U uncovers if their finance function is akin to complex treasury operations and works to manipulate cash.
E4U works on a SaaS model, and the go-to-market strategy is word of mouth. “Forensics and due diligence cannot be marketed or pitched. You basically go to your first customer and do a great job,” says Mohandas Pai, MD of Aarin Capital.
The pricing strategy of E4U is either assignment-to-assignment based, or linked to a percentage of the capital invested and asked to monitor. The company’s invoice, however, the policy is different – if its report and recommendations do not generate value for the buyer of its service, it does not raise an invoice. “The DNA here is very simple - if my work did not generate value for you, your money does not create value for me,” says Sathya.
The company has several investors as well as clients and vendors but refused to name any due to non-disclosure agreements.
The E4U team is 125-strong and its technology platform, called DataHub, has the ability to run about 300 concurrent assignments of different scopes in a month. The entire delivery cycle is self-service for a customer, and it, thus, is no wonder that E4U is looking for an edge over traditional consulting as it sets its sight on a campaign against all things suspect in financial transactions.