Amit Kumar Rathi

Amit Kumar Rathi

Unitus Capital, Bangalore

About Me

We were incorporated more than 4 years ago and have till date raised close to $750 million in both debt and equity for more than 30 clients, primarily in India. A few of our clients are based in China, Phillipines and Australia. Our experience for raising money for start-ups have been quite fulfilling and satisfying. There are quite a lot of funds in Europe and US which look at investing in socially relevant businesses but find it difficult to identify the right opportunity. These funds look at investing in commercially attractive opportunities which meet their double bottom-line criteria of generating attractive financial returns while making an impact on the society. Similarly there are many socially relevant companies which require funds but they are early in stage and hence are not able to attract the regular investment bankers to help them understand and them through the rigmarole of equity raising process from investors. While the promoters knows how to run the business or develop a product, create the market and make huge impact, they are quite naïve about the financial models, corporate structure, legal complexity of equity finance, valuations and other concepts relating to investment. We were set up to fill this void and are among the very rare set of Investment bankers who help the “social businesses” attract capital from like minded investors. Clearly our journey has been quite interesting as we can see the positive impact our role has on the society / bottom of the pyramid population through the activities of our clients like Janalakshmi, Bandhan, GVFL et Vindhya, Forus etc., A brief note on couple of our clients are given below :- Vindhya E-InfoMedia Pvt. Ltd. is a regular BPO company catering to broad range of companies, primarily in the financial services sector. All of their shop floor employees (about 350) are differently-abled. The work which the promoters have done in helping the people who are otherwise marginalized in the society, is really moving and motivating. Forus Healthcare Pvt. Ltd. manufactures equipment for diagnostics in ophthalmology which is portable and comes at a fraction of the cost of similar products. The product is portable and rugged to carry to remote locations for detection of many ailments related to eyes.

Common Challenges Startups Face
Host of challenges which start up faces are arranging funds for setting up the business initially or for developing prototype, proving the concept, ability to scale up, convincing the investor that the business is not promoter dependent but can be made process dependent, availability of team to execute the plan etc.,  Most of the VC’s in India tend to behave like PE’s which would require proof of concept and some even want to see profitable operations before deciding to invest. This becomes significant hurdle as fixed costs do not get absorbed in the initial stage of the business. Also given the peculiarity which India as a country poses, there are many a times no comparables which can be drawn from the International arena to prove the potential viability of the businesses.

Added to all of these above, the number of investors in the VC space in India are very few.  It is actually easier to raise $10 million + capital given the number of potential investors in that segment compared to sub $10 million investment.  This makes the market an investors market (buyers’ market) where numerous proposals are chasing limited amount of capital / VC funds.

My Advice If You are Starting Out
As an entrepreneur they are inherently optimistic and have such a view of the market and the business potential.  This generally results in company making over ambitious business plans which the investors feel are too good to be achieved. As banker, we help promoters set realistic assumptions and targets while drawing their business plan which would not be discounted by the VC investors.  We have noticed that VC investors prefer a detailed plan which is drawn from base assumptions. These provide a comfort to the investors that numerous aspects of the business have been thought through and incorporated in the business plan.
3 Piece Advice
The key advices I would give the entrepreneurs is

Always think about creating long term values for the Company and act in accordance with that.  It is very tempting to get swayed by adopting short cuts which may provide cost advantage in the near but they may have long term impact on the business.

Invest in your team and develop an good HR process (both financial and non-financial) which keeps the employees motivated to achieve goals.

Choose the right advisors and bankers for your business who have a good team, demonstrated track record in the industry, understand your passion, expectations and future goal and who have very strong relationships in the market.