India is becoming the world’s fastest-growing startup ecosystem with over 60+ Unicorn Startups, out of which 25+ have gained their Unicorn status in 2021 itself.

One of the youngest amongst them is headed by the guest of our today’s episode, Amrit Acharya, Co-founder & CEO, Zetwerk.

Zetwerk started in 2018, with the idea to help manufacturing managers with managing several suppliers with ease using a dashboard, as previously the role had been very “manual and prone to errors”.

The product was great, but when they reached out to potential customers, they didn’t get a very optimistic response. Instead, these customers wanted a marketplace solution where they could discover and connect with new suppliers. And that’s what led to Zetwerk’s pivot within 6 months of starting up.

Currently, Zetwerk helps its customers reduce costs, optimize suppliers and execute production faster.

Some stats relating to its current scale –

# 15+ Countries – North American, Indo-Pacific & Middle Eastern regions

# 25+ Industries – Oil & Gas, Aerospace, Automotive, Construction, Mining & more

# 100+ Retained happy customers

# 1000+ projects

During the episode, Amrit talks in-depth about the nitty-gritty of the manufacturing sector, what are some of the key focus points for customers, and much more.

Notes –

01:29 – Revenue and scale at Zetwerk

04:26 – Solving for market access & capital expenditures for small manufactures

05:31 – Zetwerk’s revenue model

10:15 – Time v/s Quality in manufacturing

18:30 – Nature of retained customers

20:47 – Order size from $1000 to $30 Mn

24:32 – Creating a catalogue for the uncatalogued market

36:15 – Approach as an entrepreneur during fundraising

 

Read the full transcript here:

 

 

 

Siddhartha Ahluwalia 00:00

Hi, this is Siddhartha Ahluwalia. Welcome to the 100x entrepreneur podcast. Today I have with me Amrit Acharya, cofounder and CEO Zetwerk. Amrit, welcome to the podcast.

 

Amrit Acharya 00:12

Thank. thanks so much for having me.

 

Siddhartha Ahluwalia 00:15

I would love to know from you in layman’s language, what is zetwerk? And how does it operate?

 

Amrit Acharya 00:23

Yeah, I mean, zetwerk fundamentally is a contract manufacturing company, we work with large, mid to large companies who have products they want to make. And we start the partnership with them at the design stage when that product design is there on a piece of paper or some software. And what we have built over the last few years is that infrastructure that can convert that digital design into a physical product. We do this largely through our asset-light marketplace model where we partner with lots of small manufacturers on the supply side. The role we play is three things. One is matchmaking with the right small manufacturer, we solve for pricing. Since these are custom products, there is no inventory. And lasting is also fulfillment, which is mostly logistics, shipping the product from supplier to buyer, and we give the buyer complete visibility from Day Zero today whatever 60-90, manufacturing takes time on what is the real-time status of their order at any given point in time.

 

Siddhartha Ahluwalia 01:22

If possible if you could share some ballpark metrics, like what would be the revenues at zetwerk today, and how is it grown over the last three years? And the number of suppliers manufacturers you work with?

 

Amrit Acharya 01:35

So, you know, we just finished our audited numbers, so I’m happy to share those. So last year, we did in the year 2020, we did close to 900 crores of revenue, the prior year we had done close to 300 crores of revenue, so the business grew almost 3x in the pandemic. Today, on the customer side, we work with close to 500 odd customers, on the supply side as of September, we transact with around 3000 suppliers every month. So that’s a rough scale of the business, the nature of products can be very diverse, we work with industrial companies to make steel pipes, we also work with same industry companies to make aircraft engine components. So, you know there is one range of complexity, a steel pipe is a simpler product to make, an aircraft engine, of course, is a very complex product to make 85% of our business is industrials, 15% of our business is consumer products. So, we work with a lot of brands, eCommerce companies, consumer brands, again, the pitch to these brands is to look at you focus on building your brand, we are your back-end execution partner, we can make that product for you. So we work with apparel companies, we work with electronics companies, we work with kitchen appliances companies, very diverse range of customers.

 

Siddhartha Ahluwalia 02:56

And currently, is only a marketplace model which exists or you have built your own set of factories also?

 

Amrit Acharya 03:07

Yeah, we haven’t done that yet we have done it at a very tactical level. So, we do operate like one or two factories where for various tactical reasons, but as a business model, you know, our, our thesis is there’s a lot of depth in Indian manufacturing, there is a lot of small manufacturers who have capabilities, they have done this, they have been able to kind of solve for quality, timely deliveries, etc. But market access is an issue. And also like these small manufacturers don’t have the scale to operate their business in a capital-efficient manner. So, that’s why we’ve been able to kind of very go horizontal. So, we operate to largely solve these two problems we solve for market access, how can we give more demand to the same set of small manufacturers in a recurring business. Not just give a demand for one time, but give them demand every month, every quarter. The second is how do we help these small manufacturers actually reduce their cost of manufacturing. Whether it is centralizing logistics, spend access to working capital, helping them buy raw material, you know, the lot of issues a small manufacturer in India faces. So, we largely exist to solve these problems.

 

Siddhartha Ahluwalia 04:21

And what’s the current revenue model across these 3000 small manufacturers?

 

Amrit Acharya 04:28

I mean, it’s a very simple business. So, we have gmv which is the total value of the transactions that get executed on the platform. We have certain take rates, which is you know, the delta between the cost of manufacturing and what customers pay. And then we have, you know, our costs to service that model So, very simple business model. There’s nothing complex, we are adding more and more layers to some of these things but at a high level Well you know we operate in a very like any other market this business.

 

Siddhartha Ahluwalia 05:04

So, so for example for roughly every 100 rupees spent on manufacturing that zetwerk would earn between 10 to 25 rupees on every 100 rupees order?

 

Amrit Acharya 05:14

somewhere in that range so and then we have our costs below and two months back we announced that we are EBITDA positive as well. So, we started generating cash from the business which of course we will keep on reinvesting back into the business

 

Siddhartha Ahluwalia 05:33

awesome. Currently, you said like in 2021 March you closed 900 crores of yearly revenue which is huge that means you must have done almost half a billion dollars of GMV?

 

Amrit Acharya 05:46

yeah. no, in our case gmv is equal to revenue just to clarify because the way we operate the businesses, to the customer we are there So, we call us as a managed market so, to the customer we are their point of contact We Are their master supplier so to speak, we in turn operate a marketplace internally so where we have we distribute an order to five suppliers, six suppliers sometimes 10 suppliers so but we don’t expose the customer to that necessarily because the customer cares about getting the product on time getting the product delivered with the highest set of quality and some of these things we were not able to influence as a pure marketplace because as a pure marketplace you just connect demand and supply and you move on but what we discovered was the there is a lot of depth to what needs to be solved on the supply side and hence operating a peer marketplace you will be able to do it but it will just take a long time and if we want to add the full stack approach is what we realized was the need of the hour and that’s where we pivoted our business from a pure marketplace business to like a more managed marketplace model and hence in our case gmv is equal to revenue

 

Siddhartha Ahluwalia 07:11

and when did this pivot happened from pure marketplace to manage marketplace?

 

Amrit Acharya 07:17

Yeah, it happened to post our series A actually so in terms of our journey, we started the company three years ago in May 2018. our origins were actually back then was a software company we wanted to build software to help large companies manage their supply chains better from a custom manufacturing point of view. we raised a seed round of capital with that thesis that look there is a big void in this of the market and we built our product also and then we went back to our customers who are kind of guided us that this is what they needed. And what we realized was the kind of brick wall of enterprise sales cycle like there is these all our all the people were talking to were the operations people, they loved our product, but the moment we had to convert that excitement to a sale, they said look, you have to talk to my ITs and for a lot of these companies like GE, etc. These ITs are based out of Singapore Switzerland and not based out of India. And that’s when we realized that look, it’s going to take a massive amount of time to drive that digital transformation for a lot of these companies. And but at the same time, all of these people were asking us Can I use your software to discover new suppliers and that’s where we were lucky that we could have listened well, to what our customers were saying. We made our first pivot just after we raised our seed to a marketplace business. And then the marketplace business scale really well we were able to introduce lots of new suppliers for demand and for a while, it looked like it was working really well. And we also raised our series A with that kind of mindset that the business had scaled from one crore a month to like 10 cr a month in barely six months. So, but we realize that post our series A was when we realized that while we were taking a lot of orders, the execution was the issue. And the reputational risk was coming on to us, our customers were telling us, you know, you’ve given us a bad supplier. And there’s nothing we could do. And we said look sorry, we’ll make it up next time. And that’s when we realized that to actually make a big dent, you have to go deeper on the supplier side. And that’s when we made our second pivot from a pure marketplace to managed marketplace, which is what we do today.

 

Siddhartha Ahluwalia 09:43

But how do you ensure that let’s see if you’re getting an order fulfilled from five different manufacturers, right, the quality is the same, what is the technology that you use today. That makes sure that the end customer of yours, which is the enterprise feels that it is the same homogeneous quality?

 

Amrit Acharya 10:09

Yeah, no, it’s a very important question and the heart of our business. So, the two things we solve for we solve for time and we solve for quality. Now, quality is important. But time is actually a bigger problem, like what happens in manufacturing is, you get an estimate, and your estimates are off by almost 2x-3x, it’s very similar to if anyone has experience in building a house, they will know this that to you theoretically, may think that it takes three months to build a house or six months to build a house, but will take a year. And that’s because there are a lot of steps in between that determine the overall outcome. And even if one step is off, it kind of holds everything behind. So, the first two years, we will largely focus on solving a time problem that if a customer wants 100 pieces in 30 days, how do we make sure we get the 100 pieces in 30 days, and that’s when this whole concept of parallel manufacturing actually came from there. it feels very simple. But it’s actually an innovation we introduced to the industry, a lot of these guys are used to working one is to one because there’s a lot of administrative overhead to manage, you know, six suppliers, as you mentioned, or 10, suppliers, whatever that number is. But for us, because we’re solving for industry-wide liquidity, we can work with as many suppliers as possible. And working with six suppliers or 10 suppliers actually de-risk time by 6x-10x, because one out of six may fail, but very rarely six out of six will fail. So, a lot of the technology, we built was how do we run 1000s of factories in a distributed way unified by software. So that was the first set of tools we built. Now over a period of time. Today, our on-time deliveries are significantly higher than any individual supplier or the industry. And that’s why we get a lot of customer love. Over a period of time, we started solving for quality as well. Now, what happens is in this parallel manufacturing model, quality is also derisked structurally, because again, one out of six may have quality issues, but very rarely will all of them have if you underwrite the supplier well, and in manufacturing, at least quality is very black and white, they will say that I want a pipe of so and so diameters painted blue. So, it’s not left to interpretation, which is what can happen in some more traditional industries. So, but overall, today, we have a lot of transaction history, we rate every transaction on time and quality. We have a lot of apps for people project managers to inspect for quality, we have the most common issues which come up for different types of products. And you know that very highly targeted check on what other things can go wrong, the basis is what has historically gone wrong. So, the business gets better over time, because as we get more and more transactions, we use that to inform the operational interventions that we need to solve as a company.

 

Siddhartha Ahluwalia 13:09

And currently, you’re serving in India and have started exploring other markets. How’s the customer distribution look like?

 

Amrit Acharya 13:20

yeah, it’s you know, we’re even today largely an India-focused business and we think there is a lot of depth in India, and in a way what we’re solving some of these problems have largely been solved in Western markets. But that being said, what happened last year, especially during COVID, we started getting a lot of inbound from customers outside of India, largely the US, they were hit by two big things at the same time. One was, of course, disruptions due to COVID. The second was this whole trade war going on between like the US and China, the cost of manufacturing overnight has shot up to 30% and we capitalize on that opportunity today almost 20% of our revenue comes from international markets largely US-focused, where the demand is coming from those countries supplies largely India. So, this is real GDP addition. these are customers who have never bought from India before, they always wanted to explore India, but they struggled to work with a single small manufacturer because the size of the average manufacturer in India is lower than the average manufacturer in China or US or wherever. So, you have to work with a lot of them, which if you think in India is painful, just imagine a US customer having to get 10 manufacturers in India. So, they were waiting for a company like us in a way and second is this also cultural context like everyone does not speak English in India. And some of these things are you know, again intermediary like us solves for that so and the average US buyer is also way more technology savvy like when we give them real-time updates on email, we give a visual update that this is you give an order on whatever, 10 September, on 20 September This is the progress. It’s an unbelievable experience for them because for any customer once they’re given an order to a supplier it’s a black box, you have no idea what’s going on, you are at the mercy of the supplier and here you have a very different way of thinking where you reverse the script. And we find a lot of buying, especially in international markets.

 

Siddhartha Ahluwalia 15:40

and help me understand. So currently, zetwerk is valued at more than $1 billion in a span of three years. So, do you think there is a problem huge probability of becoming a $100 billion company in the next five years? Because just the sheer size of the market and the sheer size of the problem?

 

Amrit Acharya 16:02

yeah, 100 million, 5 years. Sounds very ambitious but I definitely think they’re sitting on that large of an opportunity. I don’t know about timing because I think again valuation is subject to a lot of external things as well as internal things, I think what we can say that you know, we are very much on track to cross the billion dollars of revenue may be in the next six months and I see us having a very strong runway to do even $10 billion of revenue at the end of next you know, five years and of the time-to-time horizon. So, the market depth is very large. As I said, this is doing only industrials, today, we work with all the largest consumer brands in India, and we are kind of their back-end manufacturing partner. And we are only exploring more and more pieces of the market where the offering we have is relevant. So, I would say we are still very early in where we are put in terms of timing, as you said, we are only three years old as a company. And second in terms of how much of the market we have really explored. So, you know, we are in this for the long run, you know, valuation aside, I think we really enjoy what we do. So, I think the a huge potential ahead. And we are in the, in the what we call the golden age of Indian manufacturing.

 

Siddhartha Ahluwalia 17:32

And those manufacturers who get their industrial parts for manufacturing supplied by you for let’s say assembling a factory that mostly a one-time use case unless and until they are, you know, building new factories to how does repeat user work for you?

 

Amrit Acharya 17:51

Yeah, I mean, so it’s very important. Very interesting question. So, you’re right, the bulk of what we do is what we call one of purchase, structurally, the same product that the same customer may not need or the same customer needed simply in different geography. So, what happens is a repeat for us is that the customer level for the same product in the same geography that combination that repeats is unlikely because as you said, somebody has built a factory, but that same company, maybe building a factory in a different geography or if not a building a factory, there is some part of the machine which has worn down and they need replacement. So, there is always that mix of demand. In fact, if you look at the last 10 years of India, there’s been very little new infrastructure has come up, most of what we do is some form of replacement of something that is already broken, or they want to upgrade, you know, to meet the latest pollution norms or some regulatory-driven trend. And you know that will continue to be the baseline demand for which we operate. Anything new is all incremental demand, which is you know, what is have changed in the last one year especially taking the last one year, we see a lot of new investments in infrastructure given by public spent a lot of private companies who had slowed down on CAPEX spending because of COVID are now back in action, a lot of consumer companies are moving all of their manufacturing. They used to buy everything from China, they’re now starting to make move their manufacturing to India, US companies which previously buy from China and now buying from India. So, a lot of the new parts of the market are opening up which, you know, we had not seen in the first two years of our existence, and some of them may be short term, but a lot of them definitely feel like a 10-year long trend. And hence they’ll always be like a lot of repeats from the same set of customers.

 

Siddhartha Ahluwalia 19:47

And could you please share what has been the minimum in terms of your revenue or GMV, the minimum order size, and what has been the maximum order size?

 

Amrit Acharya 19:59

here that minimum order size is like $1,000. Yeah, so, you know, small prototypes of a part or for one of our customers, we make these utensils. So, like these stainless-steel plates and things. So those will be all in the sub $1,000 range, the largest order we have got would be in the 20 to $30 million range, the single largest order. And, again, it is, I would say we’re still discovering what that peak looks like, I think there are potentially going to be opportunities where we may get even 100-million-dollar orders, it’s not impossible for us but largely we are still early in the journey

 

Siddhartha Ahluwalia 20:49

but isn’t a large part of the business being a service-oriented rather than product-oriented, where you’re servicing each order and making sure though, you’re building you know, a large amount of data across these manufacturers, but every order is specific and you need it to be executed specifically?

 

Amrit Acharya 21:12

Yes, the know-how it converges is on the supplies side. So, while every order looks different and they are their unique bespoke items, but the manufacturing process converges at some point. So, you have suppliers who specialize in one or many manufacturing processes and they also specialize in one or many manufacturing commodities. So that’s the 2 by 2, a commodity slash process. So, for example, you have something like steel fabrication, within the steel, you also do machining castings forgings. And within these supplies literally fungible like steel fabricators you know, of course, you have to look at each business uniquely, but beyond a point that is somewhat fungible. Similarly, you have aluminum die castings, for aerospace we do a lot of machining. So, so, the convergence happens there and I would say you know, we are dominant in steel fabrication, we dominant in aluminum machining, steel castings, injection molding is a new category for us. So, we pick and choose categories, rather than say that we can do everything. So, we, you know, in fact, we, we turn down 80 to 90% of business that customers want us to do. So, you know, we get billions of dollars of designs every month, from customers, and we pick very little of that basis, what we have strong capabilities to support. And where we feel that there is enough depth in the market that we want, it is interesting for us to pursue for a period of time.

 

Siddhartha Ahluwalia 22:51

And so, but your specialization is, you know, you’re not manufacturing yourself your specialization getting it manufactured. in an ideal way, you could have taken all of the billions of dollars of orders because there is plenty of manufacturers available. Right?

 

Amrit Acharya 23:13

but you know, you can’t find these manufacturers by going to Google and searching who can make a pressure vessel who can make you know, oil and gas refinery keep component. So, this is an uncatalogued market and we get creating that catalog from scratch. So, today when we onboard suppliers, we collect 200 data points per supplier, you know, starting from, who they are, what machines they have made before, who are the customers, and this is a fundamental catalog that does not exist. And sometimes very simple, like a supplier has worked only in oil and gas for their entire life. But they have no idea that the same machines they have can also service, renewable energy demand can serve as thermal power demand. Same thing we saw auto versus aerospace supplies readily fungible, but because these people come from that one industry mindset, they have never explored industries outside. Whereas, you know, we have, we have no concept of that it’ll be very industry agnostic. Do we just look at what is the product that needs to be made? What are the manufacturing steps that are involved? And then we tie we find out who amongst our suppliers have those capabilities. And but that being said, you know, we have not cataloged the whole country. It’s a large country and yeah, that’s the journey we’re on essentially, in structuring this part of the market and making it more formal.

 

Siddhartha Ahluwalia 24:41

And once you onboard a supplier, right in the last 3 years, what has the data suppliers has seen the increase in their revenue and average across these 3000 suppliers

 

Amrit Acharya 24:53

on average, our supplier sees at least a 50% lift in revenue. It may happen in two quarters; it may happen in four quarters. But that’s the impact that these guys see. And with some of our best suppliers, they see even a 50-60% increase in revenue. And, these are all small businesses, these are all families and enterprises, largely, and even at 20% to 50% revenue uplift is life-changing for a lot of these people that, you know, we sometimes get a lot of photos from some of our suppliers that they bought a new house, they’ve purchased a new car, and nothing delights us more than to see the average, you know, small manufacturing entrepreneur be more successful. And in a way, our business succeeds if the manufacturers, we work with succeed. So, if they are increasing higher revenue, or they’re seeing higher, take home, somewhere down the line, you know, it benefits us also as a company, because we are in essence a platform company, we are starting with genetic demand for the small manufacturers, but over a period of time relating logistics with leading financial services relating raw material purchase. So, there’s a lot of layers, which get added to the platform. And in for any platform, the value they create for stakeholders is far higher than the value they capture internally. And we completely operate with that mindset.

 

Siddhartha Ahluwalia 26:32

In your journey, there have been 2 pivots. Can you share the mental models that have worked for you during these pivots? Also, the mental models or processes that have worked for you for scaling the company?

 

Amrit Acharya 26:49

Yeah, it’s a very interesting question. I’ll take the first one. So, in terms of how we would when we started the business, you know, we, of course, a wide-eyed optimist. And we, really felt that there’s a big piece of software that is missing in this industry. And this is something which I personally experienced also the basis, my first job at ITC. But what we realized quickly was, you know, the sales cycles are really long. And that’s where three things are very important, which some of this in hindsight. But some of this also was real-time learning. One was, you know, the market is constantly giving you feedback. And sometimes that feedback can happen in one week, or in one month. Sometimes that feedback can take six months. And what we realized was that in an enterprise sales model, the feedback would come in six to 12 months. And we were not prepared as an all to have such long feedback cycles at that point in time. but the market was giving more nuanced feedback that looks, while the software is great, I also need help with transactions. And that’s when we picked up on that thread. And we made our first pivot. I think the other thing to think about some of these things is founder market fit as we all talk about product-market fit which is extremely important. And like a seed-stage company, the only optimization should be on product market fit. But it is also important to think about founder market fit, we as founders, but not founders who could work with the elements in Second, there are plenty of companies which can and we come across many such enterprise sales companies who are really like doing a lot of hard work and winning large enterprise accounts but it takes time it’s very important to ask a question do you have founder market fit with the problem you trying to solve and we realized that like a large sales cycle was not a good founder market fit for us at that point in time. It’s very different today. Today we are back to our roots here you know, with you know, looking at selling software to the same sort of companies which you know, we were targeting three years ago. But we realize that a faster go-to-market, which we discovered by listening to our customers is a good product-market fit for sure and is also a great founder market. So, I would say these are some of the important things listening to the customers. Ultimately, as entrepreneurs, we’re either changing the market completely or you’re making the market more efficient, I think it’s important to realize which business you’re in, we were very clear that you know we are not changing the market, manufacturing is a very traditional industry that is making the market better by having new technology, new business models, etc. And if it making the market better then the market is constantly giving you feedback, and hence it’s important to listen to that feedback and react sooner.

 

Siddhartha Ahluwalia 29:42

what is the second piece of it? Which are your processes and mental models for scaling the business?

 

Amrit Acharya 29:53

Yeah, I mean, it’s so different like this. Journey into zero to one lesson is all about finding product-market fit. that was the only thing that we cared about. Now, product-market fit Again, different people have different definitions. But you know, it’s hard to really define what it is. But sometimes, you know, my analogy is it’s like love. You know when you’re in love, you can’t, you can’t really define what does it take for you to be in love. But the Same thing with the product-market fit, beyond a point, you’ll start seeing a lot of pull from the market, which is what we started experiencing, rather than pushing into the market. In the first couple of months, we were just trying to sell. But over a period of time, that mix completely changed. Today, as I said, we get billions of dollars of designs, and we pick and choose. That’s a great example of product-market fit, because we have way more demand and then what we know what to do, and the businesses more considered on supply, rather than the other way around. but that is always the inflection point between zero to one stage and one to N stage. I think once you identify that you’re in that scaling stage, so focus changes completely. And it has happened to say for us and today the focus is largely on building a great job. Because once you build punch in know what problem you’re trying to solve. And you are able to build that culture that you know we have. And we have a decentralized way of working, building great people and, and letting them solve bits and pieces of that. I think that has been the single-minded focus for us. And you need a different set of folks who can do zero to one and a different set of folks who can do one to N. So, scaling has largely been on building a culture where everyone is aligned. Because today we are 500 people. And it’s very impossible for us to monitor what each person is doing. But are we aligned at the top that broadly we’re trying to solve this problem and how has that percolated to every human level in the organization, I spend a lot of time in making sure that, you know we do regular communications, whether it’s in the form of town halls newsletters, I do one on one to 100 people in the company? And it just helps to make sure that everyone is deeply aligned on the specific problem that we’re trying to solve. And often that takes care of the scaling part.

 

Siddhartha Ahluwalia 32:24

What are some processes beyond the people that have worked for you, because you come from a consulting background, and consulting is all about processes? were you able to get some of your Mckinsey hat?

 

Amrit Acharya 32:39

I am very a typical McKinsey consultant. So that was also my realization pretty early that I didn’t see myself being a long-term consultant, which is why I left pretty much after 15 to 18 months. But that being said, you know, McKinsey is a great organization, I think, where some of the process orientation starts happening, when you have data, till you don’t have data, it becomes very theoretical, one process can be better than the other. So, it also one of our values is to think data think process. And this is something we instilled after close to one and a half, two years of the business because for the first one and a half, two years, there was zero data, the business you know, first of all, the market did not have much data. And we were building software for which was generating data from the business for the first time. So again, all of these are priorities. And the first one of years, we will not focus on the process much. The way we solve for the process was through people by getting great people. But over the last one and a half years, the business has generated tons and tons of data-generating so many insights. One key insight was in any manufacturing step, 80% of the delay happens in step one, which is you know, has a supplier purchase raw material. And but once you once they have bought the raw material, everything else happens fairly quickly, because they need to make sure they put it there. But and this is something we discovered purely by analyzing, you know, just the data that the business was generating. And that’s when we said look, we need to help our suppliers, buy raw material better so that we can shortcut that time. And that became a new business vertical for us. So, a process without data is meaningless. So, it’s important to identify what step in the business journey is a business getting tons and tons of data and on and that you can generate a set of systems and processes which if not automate, but guide decision making better. And so, we apply a very first principles approach rather than saying is just in the best way to do this, and hence we should do the same thing as well

 

Siddhartha Ahluwalia 35:08

Can you share your fundraising journeys at various points in time? And how your approach as entrepreneurs changed towards fundraising during these, you know, a different sets of raises?

 

Amrit Acharya 35:23

Yeah, so you know, we’ve had a fairly kind of, though we were 3 years old, we’ve had multiple fundraise over the last three years. And you know, we’ve had two pretty tough ones. And actually, I would say, three pretty tough ones. The first one was the first time we raised capital, which was our seed round, back, then the company existed only on a piece of paper, inside, we did not even have a PowerPoint deck, because I did not know how to make a pitch deck. So, we were just talking about what we wanted to do, and I just recently returned to India. So, I actually did not have a big network as well. But fortunately, we got connected to a bunch of folks. And again, know this is a topic which is not spoken about similar to product-market fit. I talked about, you know, founder market fit, there is this third thing, which is investor founder fit. I think that’s also extremely important, especially in the earliest parts of the business. And at the very early stages, I said the business existed only on a piece of paper. And hence, we had to find people who believed in us, largely, and that took nothing a lot of doors. We forget I don’t remember how many people we spoke to, but it was a lot of people. But the good part about fundraising also, is you only need one yes, you don’t need 10 yes, you don’t need to be the most popular person in the room. If you have one, yes. This is ideally something where there is investor founder fit, which is more probable in the earliest stages because only somebody who is, you know, believing in your journey will make that first leap of faith. I think that’s sufficient, and whether that one has come from 10 conversations or from 100 conversations actually does not matter. So, we got lucky in that way that over a three-month kind of journey, we were able to speak to a lot of investors, and we found great fits with Sasha, who led our seed round at K and Sequoia joined around. And, you know, that was still fairly challenging. I think the second big challenge we faced was that we were really looking to raise our series c, it was May 2020, I was in the US, as meeting, say March 2020, as meeting a bunch of investors. And I could see the train wreck happening slowly. But around the third week of March is when Sequoia launched the famous Black Swan letter that, you know, this is like a big event in venture and that the whole world is suddenly the auction was taken out of we you know, a lot of the people I was speaking to overnight, just shut down. And they said, look, we like you guys, but you know, come back to us in a few months, we have no idea what’s going to happen to the world. And that’s when our existing folks really stepped up. And again, I would say building a high conviction captable is very important, especially in today’s environment where there is a lot of capital in the market, term sheets are happening in weeks or not months. As a founder, you should pause and really evaluate whether you know, the conviction that you’re getting from the market is a high conviction offer or whether it’s a performance-driven offer, it’s important to distinguish the two because in good times everyone is happy. But when there is a stressful time only the high conviction folks are the ones who will step in and support the business and that’s been our framework largely in terms of selecting investors.

 

Siddhartha Ahluwalia 39:16

And in can you tell us about the journey, what was the total first raise, the second series is. And subsequently, because that will just help entrepreneurs to see if you were the right set of engines, right? It could happen in real fast explorations.

 

Amrit Acharya 39:38

First-round we raised run a million dollars, which is a seed round. Today we would call it a pre-seed or whatever there’s so much jargon in the market today. In our next round or series A we raised 9 million and then the next round which is around 30 million and then Most recently, we did a growth round in February of 100 million. And we did Our latest round was announced a month back was another 100.

 

Siddhartha Ahluwalia 40:11

And 30 million rounds, you’re talking about that you were in March 2020. And investors shut down the shops temporarily.

 

Amrit Acharya 40:21

Yes. And we are existing folks stepped up and look in so if you’re looking to raise capital, in a ticker tape, here’s a here’s an offer from us. And the same sort of folks actually led the next 100 million round also. So, it’s important of depth in the capital. I think that’s again

 

Siddhartha Ahluwalia 40:42

Who are these folks that that stepped up?

 

Amrit Acharya 40:45

all of us, all of our all of our investors, so we have Sequoia, we have Accel, we have lightspeed, you know, the all of them have supported the company when it was, it was not the easiest decision for unsure for them.

 

Siddhartha Ahluwalia 41:08

Since the company, when the company starts growing so fast, right? This is a question which entrepreneurs don’t think early on, but every investor wants to exercise their pro-rata rights, and they are legally bound to do so, how do we as an entrepreneur step in and say, hey, you know, I would request that, no, you don’t step in or you set off you when you’re part of your stake? Because I want to have new folks come in.

 

Amrit Acharya 41:38

Yeah, I mean, it’s a very interesting question. So, we have taken a very different view. So, if we have had opportunities that our insiders want to lead around, we have let raise our round. like the February round, I was speaking about was led by lightspeed US, we had a lot of excellent term sheets. But I think it’s the highest quality signal, if you’re an existing investor is doubling down or tripling down on the same company. When the typical venture model is to have distribution across investments. And if there are folks on your capital who want to concentrate, I think, as entrepreneurs, we should allow them to every Of course, they should continue to broad base your captable, but, if there is a scenario where existing folks want to double down, triple down, I think that’s a great sign for the business. Because nobody understands your business as well as the existing investors. And, so we take the opposite way if somebody wants to the pro-rata, we will, we will fight for those guys to exercise versus asking them not to do so.

 

Siddhartha Ahluwalia 42:54

Thank you so much. And it’s been a wonderful conversation with you. Thank you so much for sharing your experience from buildings and the tons of knowledge which you learned during the last few years of your journey, and what other entrepreneurs could learn from the journey and implement on their own. It’s been a fantastic conversation.

 

Amrit Acharya 43:16

Thank you so much.

 

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