At Excelsoft, I raised very little VC Money in the first round, this was in the year 2000, and valuations were not good. I was naive and gave away 33% OF EQUITY plus OCCRPS, for a 1.5 Cr. investment. We were starting an Edutech business, and that time it was new and investors were skeptical. After 7 years and a lot of pressure from Investors, we gave them a fantastic exit in 2007. They did a secondary sale and exited by making whopping 123 crores. Not Bad!
They sold to a bigger American PE, and as usual it is about growth and exits. The pressure was immense. We even paid quarterly dividends, and at that point in time the DDT (DIVIDEND DISTRIBUTION TAX) was on the company.
Taking out surplus we were planning to invest back in growth, soon went out as dividends. And then the pressure of EXIT.
I, as promoter decided to exit the investors fully out of retained earnings plus leverage.
How nice it would be if the investors understand the promoter, the team, the product, the opportunities; However, I was told by one of our Directors when we were passionately discussing opportunities and growth plans. For a VC or PE, Investment is Money, product is money, working capital is Money, sales is Money, Profit is Money, and the exit is ROI….Money again! One of the directors’ on the board from the VC said, you could even be manufacturing bricks (he saw a brick kiln at a distance) as long as you deliver growth, profits and returns. That was a insensitive remark. While Entrepreneurs are the passionate types, such “ideas” can really hurt.
I eventually put together a strategy to exit the completely using our Companies retained earning, and my savings, plus leverage. But I have 100% of the Company now, and the freedom to think alongside my team with “freedom thought” to built products and services that are best-in-class in the Edutech space, and also great schools of our own
I, now own my Company, freedom of thought is back, agility in responding to business opportunities is agile.
I realised there are two kinds of companies : “Quick to sell”, and “Built to last. Two schools of thought. If I have a portfolio of investments, I like to build a couple of Business that are “built to last”, and may be couple of hyper-valued “quick to sell” hyper-valued startups!
I have the satisfaction of building it with “freedom of thought and not constrained, driven, or chased to deliver numbers quarter on quarter.
I have heard strategic investors can make a lot of qualitative difference in their investments. Haven’t yet tried that one.