1Mby1M Virtual Accelerator Investor Forum: With Anirudh Damani, Managing Partner at Artha Venture Fund (Part 5)

Sramana Mitra: Those examples that you gave of a B2C venture out of India that is doing global business, how common is that across your portfolio?

Anirudh Damani: One out of five businesses on the B2C side is either looking overseas or getting inbound interest from overseas.

Sramana Mitra: Is that primarily in EdTech? Is there a category trend?

Anirudh Damani: What’s helping is the Indian diaspora across the world has helped many of these platforms scale overseas. If you look at HobSpace, the Indian parents are very comfortable because most of the tutors are Indians. The Indian people are using it and they’re usually influential people in their part of the world. There are also South Asians using it.

Sramana Mitra: What are some of your experiences in B2B SaaS?

Anirudh Damani: A leading investment in B2B SaaS today is called exotel, a cloud telephony provider. They are the Twilio of India. This is a company where we are a seed investor since 2012. This also was a company I chose simply because there was a personal pain point.

Setting up a PBX ecosystem in 2012 was very complicated and expensive. exotel would provide you with a virtual number and create the logic flow for your communication strategy in less than a day. That was a game changer, especially for early-stage startups that didn’t have the bandwidth, time, and money to be able to set up a physical phone infrastructure.

This is the first company that allowed you to receive phone calls to your cell phone directly. It would record the call and start adding logic on top. This company also reminded me of the cloud telephony provider I was using when I was an entrepreneur in the US. It was a very quick understanding of what the company could do. I got closely associated with the entrepreneur and helped pitch this to other startups. It took seven years to raise a follow-on round.

They were solving such a huge market need on the B2B SaaS side that they didn’t need copious amounts of capital to run operations. They only raised something like $300,000. They didn’t raise money for seven years after that. Now they’re valued at close to $350 million.

What’s very exciting is the founder, even at this valuation, owns close to 45% to 50% of the company. He’s been able to grow by using customer capital versus venture capital. He has built a very sustainable and profitable business. They are almost a hundred million ARR companies today. They’re a market leader. They then grew that business and took it to Southeast Asia and provide their cloud telephony service in Indonesia and UAE. We always compare other B2B businesses and how to scale that with the way exotel has scaled over the last decade.

Sramana Mitra: How much penetration of Indian companies into Southeast Asia do you see? Indonesia is a big market.

Anirudh Damani: SaaS gets there before B2C gets there. If you take a 30-minute flight in India, by the time you land, you see a change in the way people dress and talk. When you’re building a B2B SaaS platform for India, you’re not building it for one country; you’re building it for 30-odd countries. Even the way we write changes from state to state. When a platform like that scales across India, it gets very robust. It has to be dynamic enough to cater to the local audience and also the operator that is managing that software. It becomes very robust scaling across India.

This segment is part 5 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Anirudh Damani, Managing Partner at Artha Venture Fund
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