How this Tirupur founder's bootstrapped cloud tech startup was acquired by L&T Infotech for over Rs 100 Cr
Bengaluru-based PowerupCloud Technologies, a tech startup focused on cloud technologies, was acquired by Larsen & Tubro Infotech this October.
Siva S from Tirupur in Tamil Nadu used newspapers to bind his school books as his family could not afford to buy the brown paper. He also designed his own labels for the books. Impressed with his artwork, his classmates started paying him money for these labels.
The seeds of entrepreneurship were very much there in Siva right from his childhood, which eventually led to an exciting journey for the engineering graduate.
Siva's four-year-old bootstrapped technology startup PowerupCloud was acquired by Larsen & Toubro Infotech (LTI) for $15 million (approx Rs 105 crore) in October this year. The startup had grown without any external funding.
Filings made with stock exchange reveal that PowerupCloud registered a revenue of $3.5 million for FY 2018-19, which gives the startup almost five-time valuation on its topline.
“My parents did not want me to start anything on my own since they wanted me to secure a job in a well-known MNC or go abroad,” says Siva.
Call it by design or destiny, there were other plans for Siva. Though he did work with a couple of large technology companies, which were cushy and well-paid jobs, he eventually did start out on his own. While working Siva realised that Cloud was going to be the next big thing in the area of technology with companies like Amazon Web Services entering India. He worked with a couple of smaller companies engaged with cloud technology to get a first-hand feel of this segment.
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In early 2015, Siva founded PowerupCloud along with Ankit Garg, his former colleague, to offer an array of services around cloud technology like consulting, migration, native applications, development, and managed services. And the founders were very clear about how they would run their enterprise - by just focusing on the fundamentals.
In fact, during the initial days, Siva’s mother had pawned her jewellery to fund the startup, and the founders’ spouses had the responsibility of managing their entire household expenditure through their earnings.
“As a thumb rule, we decided that the salary of our employees should be paid through the annual maintenance contract that we sign with our customers,” says Siva. So, from day one, PowerupCloud was obsessed about customer service, and this resulted in the company always being cash positive.
The company started out from a two-BHK apartment, and did not have any furniture to begin with. In fact, when its first customer wanted to visit the office, they had to run to a shop nearby to pick up furniture.
Focus on fundamentals
To keep their costs low, PowerupCloud hired fresh engineering graduates as they could not afford experienced engineers, who anyway were not willing to work for the startup either. This turned out to be a blessing in disguise as many of their early employees remained loyal and grew with the company, says Siva.
According to Siva, he and his co-founder also made certain personal lifestyle changes. “We, as founders, decided there will be no buying of new cars or jewellery, and there was a ban on foreign trips,” he says.
This also extended to their professional lives as the founders decided they would not increase their own salaries for a while. Any extra money the startup made would be invested in acquiring new talent. “Until we got acquired, I was the 25th highest paid employee in the company,” remarks Siva.
The business focus of PowerupCloud was very clear - it wanted to be a strong partner with all the three major cloud platforms – Amazon, Microsoft, and Google. In fact, in a very short period, the startup claims it became the preferred partner for all the three cloud technology providers.
There are enough number of partners for the trio of cloud service providers, which are also a competition for PowerupCloud. The startup enters into different agreements with the customers, ranging from AMC, consulting, and managed services, etc.
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Despite being engaged with all three competing cloud service providers, PowerupCloud managed to have good equations with both its partners and clients, which it says was primarily because of its integrity and openness in its relationship with both the customers and partners.
This also paid rich dividends for PowerupCloud as within two years it reached a team size of around 80 people, with customers in India and overseas. The startup's revenue was $0.96 million for FY17, which touched $1.7 million in FY18, and rose rapidly to $3.5 million in the FY19.
The rapid growth in the first two years also brought its own set of challenges as it had hit a ceiling and needed a rework on the strategies.
“Luckily for us, we had valuable inputs from two mentors who helped us to orbit towards the next level both from a strategy and financial point of view,” says Siva.
From services to products
PowerupCloud realised that if it had to grow, it could not rely on service offerings alone and had to build products. This led the startup to come out with three products, which were powered by artificial intelligence (AI) in areas like cloud governance and management. The product portfolio gave it a better edge in a hyper competitive marketplace.
“The products gave us the edge, a better valuation, and a good exit. Exit or valuation was not on top of our minds. We were consumed with the thought of how to keep our customers interested and keep them coming back to us,” says Siva.
Along its journey, PowerupCloud also managed to touch many lives. The startup made a conscious decision of identifying talent in Tier II and beyond engineering colleges. In fact, it has had many success stories of people coming from very modest backgrounds like pizza delivery boys and mechanics, who have made it big at the startup purely due to their passion for cloud technology.
The big buyout offer
In October this year, PowerupCloud got its big offer after LTI announced its acquisition. “We did have acquisition or acquihire offers in the nine months of starting our company, but the valuation was not right. With LTI, we found the right fit in terms of culture and interpersonal relationships, and they were ready to pay the right valuation,” says Siva.
For PowerupCloud, it was also the time when they needed to be a part of a bigger organisation where they could tap into large customers, and take advantage of the exposure the team gets in terms of technology.
Siva says, “If we had exited earlier, we would have seen some money, but not our employees. So, we waited for the right opportunity.”
Speaking about learnings in their four-year entrepreneurial journey, Siva says, “Customers are always your investors. Once you have them, one does not need external money.” He says, if one is building something where customers are willing to pay, then any startup will survive. “Do not worry about funding as customers will always be there to help you,” remarks Siva.
Besides, he says, the other key ingredients for a startup’s growth are having the right set of mentors and integrity. “It is better to be always honest in your transaction, otherwise it will come back and hit you one day,” says Siva.
The founder of PowerupCloud has many other dreams for the future, which include helping entrepreneurs from Tier II locations in the country, and starting social enterprises as a means of giving back to the society.
(Edited by Megha Reddy)