RAISING OUR FIRST VENTURE

CAPITAL
When Pawan and I started Wheebox.Com we had clear
target to make our business an enviable brand. We had
two clear goals in our mind, one to make our product
distinctively clean from other assessment vendors and
other to work with selected few customers and make
them super happy for first two years then replicate and
scale.

Both of us had one goal missing and that was Financial

Goal. None of us any point of time thought, “How much
revenue shall we clock from the first year of operations?”
While we were working with some of the best Tech and
Sales interns, somehow both of us were lost in our focus
of making money. (Principal of any successful business
to run)

By the end of the year we could build three properties, a

clean product, 2 great IPs and 4 paying customers. And
how the year passed by, neither Pawan nor I could keep a
track, because each day and each hour was spent either
with Product teams or clients meetings.

By first quarter of 2011 our board (Which comprised 2 of

us and our two advisors Ujjwal and Sandeep) had figured
that to scale and to enter specific markets we need capital.
(I have to admit that it was Ujjwal who pointed this out
and we reluctantly agreed to raise capital). Thus we
agreed to excite investors and raise capital after closing
financial year of 2011-2012.
 Making Investment Proposal Draft

By second week of April, 2012, it was the first time we

sat down to write an Investor Proposal (I did most of the
reading from Internet and Websites of VC), Out of us it
was Ujjwal who was a part of his previous organization to
raise capital from a large VC and knew at-least more than
any of us. We somehow could copy and paste the
available models and circulated amongst ourselves to
review, interestingly we could figure out 5 things that
awakened us.

1. India stand-alone will have over 200 million (Unique

Users: Single Instance) online test takers by 2016-2017.
And our target market (BRICS) will have 900 million
(Unique Users: Single Instance) by 2019-2020. Each user
will minimum undertake 3-5 online such assessments for
Study, Jobs, Admission and Test Practice and thus 4.5
billion users per annum will exist and even with 2 dollars
per test it will comprise of 9 billion dollars business only
from BRICS.
2. Only 30% of test takers will move from Pen and Paper to
Online by 2017-2018. Hence a huge opportunity for
Online movers. (Calculated over 100 billion market
globally by 2025) will exist for next 20 years.
3. There are 10 odd serious online players in BRICS that we
have to compete in next 6 years.
4. Government will be the major spenders of this business.
5. Content may not play the only distinction in the next
revolution, the major splash of revenue will come from
best technology companies who can give scale,
robustness and huge insights of analytics.

Identifying Venture Capital Firms

Once we were ready with our proposal our job was to

identify a few investors and we thought to seek help from
a friend Anindya from Corporate Knowledge partners
who had some experience in raising capital for a few
start-ups. I asked Anindya if he could provide some
consultancy to review our proposal and also if he can get
us a few echo walls (Investors/VCs who jump at all
opportunities to dig more for their portfolios) and my
guide-lines were clear to Anindya, seek investors who
have invested in Assessment Companies as they will be
eager to dig more information from any new start-up and
ask us right questions and thus correcting our presentation
for the right set of investors).

We met 2 such echo walls and both the meetings were

hurting (Though we were prepared but still I had some
ego as all entrepreneurs possess). Both were critical of
our model, inexperienced team, inaccurate and business
planning. But both of them had good feedback for Pawan
and me and our product nonetheless the meetings
prepared us enough for actual presentations.

By the time with enough preparedness (We thought so),

We sent our initial set of presentation (20 Slides) versus
industry norms of sending not more than 8-10 slides to 4
PE/VCs, instantly we received conformations from 3 of
them asking us to wait for their responses.

Meeting Investors

And then within a fortnight we had 3 one-on-one

meetings lined up with either the decision makers or the
influencers, As I was the only person in our set-up, who
could interface and I had no experience in raising capital
or meeting these set of business specialists. I knew actual
meetings are very different from the staged meetings we
had done earlier with other 2 VC firms, as there my
intention was not to get funded from them but to get
feedback for real meetings.

My first date with Lumis Partners

We met Aditya one of the partners at Lumis and had a

small but very interesting discussion. The half an hour
discussion with no formal presentations revolved only
around Education Industry, Team and my personal
strengths. Interestingly no discussion around Business
Plan, Projections, Industry Observations, Market
Penetrations, nor was on Burn Rate, Capital required or
even our immediate and long term goals.

The meeting ended with a commitment to meet shortly.

My immediate feedback was mixed to my team, as it
ended well but no concrete discussions were done.

Meeting SEED FUND:

I had done some home work on SEED FUND and

influenced by videos of Mahesh Murthy and I was
excited to meet them as they were one of the investors of
REDBUS.IN and I knew that the team could give me
scale, bring best practices of Internet Business in a jiffy
rather than I do it myself. My meeting with Shailesh was
short at our office. He looked somewhat lost and in a
hurry and thus was to the point. But this time my
feedback to the team was clear, we would not go ahead
with them because for me we both have like each other
before even talking about business. (Even SEED FUND
did not connect us further).

Meeting Indus Balaji Private Equity Education Fund

Meeting Indus Balaji was a good feeling, as the managing

partner Ashish was my senior at NIIT and I was sure that
it could help in initial ice breaking. And it did, as we
could start conversation instantly. Meeting went of very
well with IB presenting themselves and their plans and
we presented ourselves in a very professional manner, but
I could figure out that they were interested in majority
stakes and some changes in the business model. As the
meeting aroused enough positive feeling inside me hence
for the time being the equity and the other issues were not
intruding factors in my mind.

We both parted with a next meeting date.

Meeting Sequoia Capital

In last week of April we got an email from Sequoia

Capital asking us to meet. We were thrilled to see their
presentation and their portfolio companies attached with
the email.

They set up a formal meeting at their Delhi Office, It was

love at first sight with Sequoia, The lady at reception
knew me and made me comfortable in their meeting
room, the office boy addressed by my name and asked for
tea/coffee. I have never been exposed at such
professionalism during my 15 years of working
experience in India and abroad. I understood why people
love working with them, and it was a feeling of being
loved.
Meeting their Analyst, Ishaan was equally a good feeling
and again it was a personal discussion not business
specific with a deadline to meet shortly with the real
presentation.

Within next 3 days the next date was fixed with

Managing Director of Sequoia, G.V.Ravishankar (Known
as G.V), though it was on Video Conference where
Ishaan and I joined from Delhi and G.V joined in from
Bangalore, but the hour spent was very enriching.

This time it was all business and it ended with G.V asking
us if Sequoia can introduce us to their partners or
Investees. As promised they instantly did that, but
somehow by that time we had moved to the next round
with Lumis and Indus Balaji and we excused ourselves.

But with my little experience with investors, I can vouch

Sequoia guys were one the best of the lot we had met.
They know how to love entrepreneurs and build
relationships.
Getting Terms Sheets

We had 2 rounds of meeting with Sandeep (M.D of

Lumis) and I found both the times he had given valuable
inputs to build Assessment Businesses. But both the
meeting did not give me any clue of investments. And
then in May first week Lumis introduced me to Pankaj
from PeopleStrong (One of the investee companies of
Lumis).

Meeting Pankaj was the same feeling as meeting Sequoia

guys. I found Pankaj to be genuine, ambitious and sharing
the same passion as we were driving in ourselves. Post
meeting Pankaj my feedback to the team was, possibly
we have found the right investor.

Next day Pankaj made me meet Co-Founder and COO,

Shelly and the executive team, I could make out the
whole team at PeopleStrong is reflection of Pankaj and
Shelly, each of them are passionate bunch of
professionals, high in energy and genuine to the core.
And no wonder this could be the first reason today
PeopleStrong is one the leading RPO of the country and a
very successful venture within 6 years of operations.

Pankaj and Shelly flew down to London and met Pawan

and instantly they liked each other. We were somewhat
clear that we could close the transaction with them and
look forward to a Term Sheet.

Interestingly in that week itself we received the Term

Sheet from Indus Balaji with 15 days of closure period.
Pawan and I were thrilled to receive the term sheet
because of our valuations over the period. And most
importantly, it was the first time we had seen something
like this and proud of building something in a year where
people could value and put their money as an investment.
Now the problem was to get the Term Sheet from
PeopleStrong and map both the offerings.

I had no choice but to speak to Pankaj to get us the Term

Sheet as we need to close the transaction and to my
surprise he called an immediate meeting and asked me to
meet his set of Advisors (Some heavy names of the
industry) to get their feedback and close the transaction.
Ground rule is you cannot force an investor to rush
through an investment, but being an entrepreneur himself
understood my position and assured us.

On one hand I had to meet 3 advisors within next 10 days

as all of them were busy professionals and on the other
hand each day passing by is a danger of losing Indus
Balaji, Hence we thought of meeting some advisor of this
industry and get a feedback of signing the term sheet with
Indus Balaji or wait for PeopleStrong’s Feedback.

I met Paul Shoker, Serial Entrepreneur and Founder of

Benefitsplus; Paul was about to launch his venture capital
fund venturefund.com with heavy stalwarts like Rajan
Anandan (M.D of Google India) and Ashok Kurien
(Promoter of Zee Enterprise and Dish TV). Paul floored
me within 30 minutes and I found he knows the
investment game pretty well. He asked me if he could
interact with Indus Balaji and in the meantime I could get
the ball rolling in PeopleStrong.

In the meantime, I also spoke to Dr. Suresh Nanda, who

was M.D and CEO of Signature Capital, Dubai and
sought his advice. Both Paul and Dr. Nanda advised me
to keep speaking to both of them and get term sheets and
then evaluate.

Finally the term sheet arrived in the last week of May

2012 from PeopleStrong. But now the real question was
to evaluate both proposition and write confirmation mail
to one of them.
Evaluating Term Sheets

Till now it was a strive for getting investors and exciting

them in our venture but now the position was different,
As Pankaj and Rajesh (CFO of PeopleStrong) had
released the Term Sheet on the Target Date, It was really
tough to evaluate.

Nonetheless, I again spoke to Paul and Dr. Nanda to

apprise them with the Terms in the Term Sheet. (I had to
narrate them the main points as one of the point in the
Term Sheet was the document shall not sent to outsiders).

However I was sure the call has to be taken by me, as I

was the major stakeholder and I will be responsible for
any wrong move. It is always hard to evaluate two very
distinctive offers in the term sheets. Also I must know
and decipher the legal words and sentences because host
of these words moves to final agreement copies.

One of the term sheets valued us 100 times of our

revenue and the other 30 times. One of them asked for a
full majority while the other asked for a small equity.

One of them asked us to get paid a super annual

remuneration apart from sale of stakes while the other
assured us the revenue maximization.

One of them stated to dilute us further in case of

additional investments in the company while the other
stated they would dilute themselves along with us in next
round of investments.

Two things came out distinctively; one will make us

instant rich (By our rationale) and other will create wealth
over a period.

One is made to sell the property in next 3 years and the

other is to build a property as a brand.
We chose the one which will help us in building an
enviable company, a respectable brand and proud to be
associated with.

I wrote a thanking letter to one (Because they valued me

and our company) when we needed them and entrusted
me in particular.

Following day, I signed the term sheet with PeopleStrong.

Never Say No.

The same week we got calls from 2 leading Angel
Investor Groups, asking us to present in their forums.
While I always avoid doing group presentations for
raising investments but I said I will connect them shortly
with our presentations.

I know after positioning us in one market and adding

some more customers I have to scale in a disruptive way
and I have to meet new set of investors for the next round
of investments, Hence I shall never say no to anyone.

But I also know that next set of fund raising will be

equally challenging and exciting because now, I will be
asked new set of questions and hence will have to be
prepared with new set of answers.

I learnt two lessons from the first set of fund raising:

1. Investors may not fund only Ideas, Product or

Market. They primarily fund Entrepreneur who
will execute.
2. In order to get funded they (Investors) have to like
you as a person and you have to like them.

Next: Life after Term Sheet

nirmal.singh@wheebox.com
www.wheebox.com