Founders' Mentality
Forbes India|January 29, 2021
Accel seeded the passion of entrepreneurs into its investing DNA to spot early winners in the consumer business. Its next big bet: SaaS unicorns
Rajiv Singh

Chennai, circa 2011: Shekhar Kirani had sniffed an untapped opportunity. Kirani, who joined global venture investment firm Accel as a partner the same year after stints with two Silicon Valley-based startups, knew the nuances and magic of the subscription business. Both his former companies (LightSurf and StarFish) made loads of money and got eventually sold to Motorola and VeriSign. So when the young venture capitalist (VC) started hunting for his maiden investment, SaaS (software as a service) turned out to be his first segment of choice. He zeroed in on Freshdesk, a SaaS-based social customer support startup co-founded by Girish Mathrubootham and Shanmugam Krishnasamy in 2010. “I knew what SaaS meant, and how powerful subscriptions could be,” he recalls.

The opportunity, though, came with an equally titanic problem. In fact, there were two. The first was to do with Mathrubootham’s educational and professional background. He lacked pedigree. “He was not from IIT or IIM. Nobody would have taken him seriously,” Kirani recalls. The only serious accomplishment, he lets on, was that Mathrubootham worked with software developer Zoho before turning entrepreneur. His résumé didn’t have a Google or a Facebook mention or a Silicon Valley background. “So credibility-wise his résumé was not up to the mark,” he recalls. Kirani, though, was looking at two boxes: The category which Freshdesk was going after, and a team which could execute the plan. Mathrubootham and his Chennai-based compact team ticked both.

Kirani was keen to invest, but Mathrubootham had second thoughts. This was the ‘second’ problem for Kirani. Apart from Accel, the entrepreneur was in talks with two more investors. Mathrubootham was more likely to skip Accel. Reasons: He didn’t know the Accel brand or pedigree; and one of the suitors was willing to give capital at a much lower dilution. Kirani was all set to lose his maiden deal.

Cut to late 2014 in Bengaluru. Abhinav Chaturvedi was about to turn adventurous. The young associate at Accel wanted to know how different an ‘exorbitant’ 250 hair cut was from a ‘normal mundane’ one. He landed up at one of the salons at Jayanagar. What got his attention was not a stylish haircut but the smooth and quick checkout experience of the product the salon was using. His inherent curiosity ensured he got the name of the company making the software product: ManageMySpa, a Hyderabad-based startup.

Chaturvedi got in touch with founder Sudheer Koneru, got a hang of the business after multiple rounds of talk, and convinced Kirani to fly down to Hyderabad to meet the ManageMySpa team. The talks went well, except for a tiny issue. The founder didn’t need money. “When they came to meet us, we were not even looking for money,” recalls Koneru. The company was self-funded, and the funder was about to take $1 million from family and friends. There was another glitch. The Accel team told Koneru that ManageMySpa was doing a great job in India, but the founder should look at bigger global markets such as the US and Europe. Koneru was not convinced. “I was fine with whatever I was doing. I was not looking for a big outcome,” he recalls.

Cut to December 2020. Koneru gives India its last unicorn in a pandemic year. Zenoti, which was known as ManageMySpa till 2015, reportedly raised $160 million at a valuation of over $1 billion. The Series D round was led by private equity firm Advent International, and existing investors Tiger Global and Steadview Partners also participated. “I don’t think much about being a unicorn,” says Koneru. Zenoti, he lets on, is on a mission to transform the salon, spa and beauty industry. Founded in 2010, Zenoti gets 60 percent of revenues from the US, another 20 percent from the UK, India and West Asia pitch in with five percent, and the remaining 15 percent comes from the rest of teh world.

For an entrepreneur who was content with his India operations in 2015, Koneru is living a bold dream. He, however, gives credit where it is due. “Had it not been for the Accel thing (seed investment in 2015), there’s no way we would have got bold and come here,” he confesses. “Taking money from Accel, he lets on, implied that we will focus on a larger outcome. And it has happened.”

Rewind to December 2011: Mathrubootham takes a leap of faith and decides to go with Accel as its first institutional investor. What changed his mind was advice from an employee. While the conversation with other funds revolved around the quantum of investment, Kirani was scrambling to find the right answers. “That pushing hard never stopped. It’s on even today,” says Mathrubootham, founder and chief executive officer of Freshworks, a leading global SaaS company and India’s first SaaS unicorn. In June 2017, Freshdesk rebranded to Freshworks, which was last valued at $3.5 billion.

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