This Successful Entrepreneur Believes This is What it Takes to Raise a Series C Funding
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Funding is an integral part of any start-up’s growth. While the boom of start-ups in India has seen a rise in the number of funding deals over the years, as a start-up gains maturity, funding becomes a difficult task. According to reports, India saw about $11.5 billion invested across 95 deals in the late stage of start-ups in 2017.
When a start-up is in its initial stages, the tickets are smaller and the risks involved in investments are smaller too. But as a start-up grows, the company faces bigger challenges and the investment tickets are larger. In such a scenario, the start-up cannot promise the same growth to the investor as it did during its initial stages.
To decode what it takes to raise a late-stage funding, Entrepreneur India caught up with Ashwin Ajila, Founder and Managing Director, iNurture, the leading provider of career-ready formal higher education programs. The start-up recently raised INR 28 crores in its Series C funding round.
Ajila refers to his company as a higher education managed services company, which offers end-to-end operations for colleges. Due to regulations while they cannot accept all operations offered by iNurture, universities can adopt the curriculum offered by the start-up, where the college manages the faculty.
Accepting such a curriculum works in the favour of the universities as it doesn’t just promise them higher number of students but also a diverse range of subjects that they can offer to these students. “Most engineering colleges offer general IT courses, but with our programs which are designed to include the employability quotient, we ensure the students can undertake courses which will land them jobs in cloud, security, Big Data etc,” said Ajila, adding that they create the jobs of tomorrow.
Challenges of Having a Challenging Model
As he started iNurture, Ajila realised that his challenging model of offering universities to outsource the duties that they should essentially be undertaking, is a difficult task. Most universities he approached, he faced two questions – what can iNurture do that the university can’t, and why can’t the college in itself build the same curriculum in-house?
“Most universities said that iNurture will be scaling under their brand, putting them under a risk, even more if it’s a big university. But we kept looking for a dynamic management that would accept the change. Within 5 years of operations, we managed to prove the success behind this model as for the universities we on boarded we added over 800 students,” he said.
There were no doubts in Ajila’s mind that his idea would require huge investments even while the growth happened slowly over time. So, they had to reach out to investors with deep pockets. When they secured their first round of funding in 2007, it gave them an impetus. Ever since then, they have been able to prove the need in the market.
However, as Ajila grew his start-up, more and more investors had one question – What will you do if well established brands in education would follow the same business model as theirs? “We clearly told them that the problem well established brands is that they are already competing with these universities. And it still stands true today, nobody is doing what we are doing,” he said.
The Secret to Scaling
Ask him about a magic formula for funding or success and he quickly replies, there is no magic formula. For every one start-up that sees the light of the day, there are about 99 others who fail. Ajila believes that it is all about defining the need in the market and then ensuring that it’s scalable.
There are a lot of cases these days where three ex-colleagues come together to start their own business. Ajila said that it is important to maintain a balance between the founding members. “If you have three founders, you can’t have all three from the same background. Each founder should bring something new on the table,” he said.
Talking about how valuation has become a huge issue, Ajila points out that a big problem is that entrepreneurs’ expectations are no more realistic. “They are stuck in that game and are unable to raise money. They should instead be thinking about how they can build the company and reach a desired valuation,” he said.
What Happens When You Reach Series C Stage?
As the start-up matures, the challenges change. One of the problems that Ajila faced was the expectation of every new investor who came on board to have the same growth as the previous investors. “They are all looking at maximizing their profits. But you need to be honest about your project and focus on how you can sustain growth,” he said.
Another problem most start-ups face is that they get too comfortable once they have reached that stage. They believe that luck is now in their favour. But what they forget is that it is an important challenge to sustain that growth. “You are going to have competition. The trick lies in staying excited and continuing to build for growth. You have to be smart enough to understand your strength,” said Ajila.
Instead of grabbing every opportunity that comes their way, an entrepreneur should evaluate the plan of action and then proceed. With money in the bank, Ajila believes, you should never forget to invest smartly.