Bootstrapping Using Services to a Fabulous Exit from Ohio: Gathi Analytics CEO Vamsi Kora (Part 4)

Sramana Mitra: There are some pedagogy that we have come to understand. As I told you, I’ve done thousands of case studies. I have a lot of insight into how people have played their hands. Because you have domain knowledge, a very common way is to verticalize and go after specific verticals.

Vamsi Kora: That’s exactly what we did. If you look at our customer base today, every one of them is in either insurance or banking. We are also very specific. I came to realize is that this blind belief that playing to your strength always appeals to me. Everybody has their strengths and weaknesses. Playing to your strength always gives you so much freedom and opportunity.

Sramana Mitra: There is a term that I use a lot – an unfair advantage. Playing to your strength is where you get your unfair advantage. What were your average deal sizes at this point?

Vamsi Kora: At least $1 million. The lifecycle of data modernization for a midsized bank runs from $50 million to $100 million over three years. We take some part of that. We are very diligent about signing up for stuff that we are really good at.

Sramana Mitra: What revenue level did you hit in 2019?

Vamsi Kora: We closed at $5 million.

Sramana Mitra: What about 2020?

Vamsi Kora: $8.7 million. We are closing at $26.5 million this year.

Sramana Mitra: Huge growth. You have now found the repeatable strategy of doing free POC’s and letting the customer try. So far, you were bootstrapping. Was there a financing event?

Vamsi Kora: Towards the end of 2018, I took $600K for 10% equity from one of my close friends at $6 million valuation.

Sramana Mitra: That’s it?

Vamsi Kora: Yes, that’s it.

Sramana Mitra: The only funding that has gone into the company is $600,000 and you are hitting $26.7 million in revenue in 2021.

Vamsi Kora: Yes.

Sramana Mitra: How many people do you have now?

Vamsi Kora: We just crossed 200.

Sramana Mitra: It’s still 50/50, or more in India now?

Vamsi Kora: We are slightly skewed towards US because a couple of our large customers insist that we have workforce in the US. Out of 200, 130 are in the US.

Sramana Mitra: In Columbus?

Vamsi Kora: Everywhere. We are growing rapidly in Texas. We have teams in Kansas too.

Sramana Mitra: What’s next?

Vamsi Kora: I just did something with the company three months ago.

Sramana Mitra: Tell me.

Vamsi Kora: By the beginning of 2020, we started getting calls from the investment community. I had spent a month thinking about being acquired by a large public company. That day, New York shut down. By the time I walked down, Manhattan was empty. I came home to a new reality. Because of that event, we didn’t go through. Pandemic helped me rethink.

It has always been my intention to be acquired by a large firm that has similar interests in building world-class data assets for enterprises. I had one more similar serious discussion with another company in Q4 last year that I walked out of. Then Infostretch called me in April.

Sramana Mitra: You finished the transaction already?

Vamsi Kora: We did.

Sramana Mitra: What kind of multiple did you get? What was the negotiation?

Vamsi Kora: A pretty healthy multiple of our margins.

Sramana Mitra: What kind of a company is Infostretch?

Vamsi Kora: Infostretch is a Santa Clara-based company. They are a 15-year-old company built by two founders. They made a name for themselves in building a very robust, best-in-class digital platform and application modernization aspect of it. They have close to about 70-plus customers. They’re very big in health and life sciences.

Sramana Mitra: How did you meet them?

Vamsi Kora: They called me.

Sramana Mitra: It sounds like the verticals are different. The delivery proposition is also different. They were looking for something complementary.

Vamsi Kora: Correct. If you are selling an entire digital modernization, your user experience, your infrastructure on the cloud, your digital platforms and tools, and integration are very important. One big piece that companies still struggle with is if your data is not predictable and ready to use. It becomes the garbage-in-garbage-out situation. Highly-regulated industries struggle with going as quick as retail because building that robust data asset that is predictable takes many years.

Sramana Mitra: You’re a very high-value acquisition for them.

Vamsi Kora: I want to believe so.

Sramana Mitra: It’s been a great pleasure talking to you. Thank you for your time.

This segment is part 4 in the series : Bootstrapping Using Services to a Fabulous Exit from Ohio: Gathi Analytics CEO Vamsi Kora
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