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I am an eternal optimist;
to an extent that I do not even notice the most obvious roadblocks.
Most business folks will find this is a definite handicap but optimism
is the single most important trait that has helped me survive the 10
months, from signing a Letter of Intent with Sierra Ventures, a US
venture capital firm, till the time CarWale finally got the promised
$7-million funding.
It usually takes up to three months
for the investor to complete due diligence and release funds. But my
case happened to take 10 months. This was the time when the aftershocks
of the US subprime-lending crisis had just started spreading. Financial
giants were already hit and India had started worrying about gloomy
times. I didn’t know whether to feel lucky or worried. My company had
been valued in more buoyant times, but the funds had not yet been
credited. At one point, I just sent an SMS to one of my investors
saying: “If you don’t invest, we are still going to survive.”
It took a lot of courage to say that.
We had moved to a bigger office and the rent had shot up 14 times. The
team had expanded. One of our vice-presidents had left us to start his
venture. The money was still not in the bank. Thankfully, the long time
interval worked in our favour. Our investors had begun working with us
during this time and studied the company thoroughly. I was more
convinced each passing day that I had made the right choice.
At the beginning, it had seemed very confusing.
I had met nine – yes, that’s nine – venture capital firms in a single
week in early 2008. I was convinced that I should survey the market so
that I could clinch the best deal. So I would present to all VCs who
would listen to me. Four out these nine took the next step and offered
me a termsheet. That gave me a lot of room for negotiation.
Once I signed the termsheet with Sierra,
I prepared for the due diligence. I anticipated their demands. I
presented a revised plan, one which was aggressive on cost cuts and
conservative on revenue targets. If the VCs came up with questions, I
was responsive but not hasty. I took time to respond, was thorough in
my answers and never defensive about my plans. I worked with them as a
team, sharing the good and bad news. Most importantly, I gave them the
respect due to someone who had seen several companies like mine.
I tried to sound like a confident CEO
and not a belligerent business owner. While I let them have their say
on certain issues like how long the founding team would stay at the
helm of affairs, I stayed put on my valuation and the exit clauses for
the founders.
Meanwhile, my business plan had changed considerably,
as would happen to any business in a downturn. I also committed the
gravest of errors – overpromised and under-delivered. We missed our
sales targets for two consecutive quarters since the signing of the
termsheet.
But I didn’t lose sight of the big picture
and my hope that I had $7 million waiting for me. My faith was
rewarded. The money hit the bank in October 2008. In real life, too,
some stories have a happy ending or should that be a happy beginning.
As told to Pooja Kothari
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