Oct. 17, 2020

2 exits and 2 IPOs - how do startups get to an exit? By Srinivas Kilambi

2 exits and 2 IPOs - how do startups get to an exit? By Srinivas Kilambi

Srinivas Kilambi, founder with 2 exits and 2 IPOs and currently the Founder at Accelenovate talks about the exits in his career and one unsuccessful venture he had. We also discussed the major steps he took to get to those exits and his thoughts on the major mistake he's done in the past in terms of fundraising.

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Transcript

And today's a guest speaker, we have 3 of us, Columbia founder with 2, exits and 2, and currently the founder at Excel innovate and then this episode we'll talk about those 2, exits and 2. 

we'll see how string of us managed to get there. And what were the major step that he felt to get there? So, 3 of us, unless he cough by, you're giving us some background on yourself and on Excel, innovate. 

Yes, so so good morning. Good day all of you. Thank you for for giving me the opportunity. So my background is that I'm from originally from India,
from this,
from the city of Nebraska, 

South studied in in the in the MIT of India called it ambassadors and chemical engineering came to United States did a masters partially at Johns Hopkins and finished Clarkson University in 

chemical environmental engineering, 

and also from English tenancy or Christmas lab and chemical engineering and also so I'm also see, 

my was very unique. 

It was part of the fast 1 of the fastest ever in the English to Tennessee, less than 2 and a half years and it produced for patents for patents. 

And 2 of those patents were actually acquired by a private equity firm in New York, and called the commodore group. And I'm talking about mid 19. 

Nice that sounds really complicated, so well, not yet entertaining because I'll get lost very fast there, but yeah, let's talk about those 2, exits and 2 ideals on our preinterview answer. Preacher. 

You mentioned that only 1 of your company's fields how is that? How do you achieve that result? 1 failure into successes how how did that happen? 

1st, of all let me tell you why 1 company fail that you understand the 1 company failed not because of a bad product, because of quality timing. And I would say, honestly, a little extra greed on my part. 

So, this company was founded in 2000 it was a company called the laptop, which is what the emails the stamps called the lateral 2000. those are very nice company based on abuse of at that time. 

We got an offer from for an acquisition from 1 of the biggest companies in Atlanta in 2001, and it was good acquisition for 1 and a half year old company, the value. 

But I thought, maybe if I take the company longer, I could get a much higher price, but then came September 11, 2001, and we know what happened after that. 

It took about 3 years of the whole economy, and the whole country got into a big recession and everything went south, most downhill dotcom bust. They wouldn't have the same time and my company became history adults. 

So that was a reason. So, it's basically a great product. The bad timing so, Bob, it tells that that you need to have a certain amount of luck, a certain amount of timing. I was a great product and technology to succeed. All of them. 
Without 1 of them, you could be in some. Uh, so so you have a great time that you need to find a way 
to exit the right time. 
And, um, and basically, uh, I actually wrote a paper on this, uh, I have a paper on this it's just got published in journal of stem science technology, engineering mathematics. 

A journal is international Journal and I was the 1st, uh, invited, uh, author for the last 15 years, and it's basically called engineering entrepreneurship. 

From our great idea to a brand exit so it's a public paper. So I detail all the. 

I think that that's really cool and after the absolute, by the way I'll check in with 3 of us so that, you know, I'll make sure to leave the link to that paper in the description of this episode. So you'll definitely be able to read that paper. 

So, now that we've touched on to the fields, uh, company, it was talk about the 4 successes. Let's start with the, how, how did that happen? 

So, basically, yeah, so, once I was doing the I had 2 choices a while I was a foreign student, so I, I didn't have a status. I'm still on a student student reserved that time. 

So, I Tuesday, there's 2 charges 1, was to look for a traditional job, which everybody does otherwise, to actually believe in what technologies I had. 

Found it and try to find a buyer or a sponsor or a VC or whatever you call them. And I saw a 2nd back a lot more riskier buddy, but notice no rewards. Right? So so so I did that. 

I was much younger than I was talking about 20 years ago, and I'm thinking, mentor plan, and I was able to find a case to companies who sort a lot of interest and 1 of them with commerce group. Very interesting things. 

I actually went to New York, met them in and if you found your office, and I gave a presentation and then, basically, they heard me and they tell okay, let's wait here and come back at, like, 45 minutes to an hour. I was not hearing anything. 

I thought they probably don't need me anymore. I forgot about being so I just picked the phone. We only had landlines and cellphones and pick the phone call the wife in Knoxville and say, you know, what looks like so get in. We may have to go to Chicago for the 1 job behalf. 

I will finish the call and. 

Uh, the, the CEO of that fund came in and said, you know, what we love your technology, love your idea and here's the deal scientist. Right now will give you a quarter 1M stock, half 1M options. We give you a hiring bonus. 

We'll give you a job as a senior vice president salary officer, blah, blah, blah and if you sign right now, Here's a signing bonus is going to be a fully loaded Honda Accord car, which will come to your home in Nashville. 

So anyone design side. Exactly. Right. There everything to them and and came home to Knoxville and you would really believe, but I was wondering Knoxville, the car was in my driveway. 

They call it is in the parking lot next to my home and it's fully loaded. Letter of Dallas eats all. I'd never imagined that that was in 90 95 and then and then,
and so this was a very interesting and they actually, 
after the they actually paid for my downpayment of the house in Atlanta, we moved to Atlanta and yes. 

So, I think it was a very good experience a lot a lot to go from what we call a poor, starving grad student, a PhD student to, to us to sort of an companies. 

That's that's a great story. I love hearing those. So, let's move on to you talking about fundraising because, you know, it's fun. Reading radio. That's what we talk about here. So. 

For the past your companies, you raised over 100M dollars, you know, looking back at your experience. Uh, what do you think was the major mistake that you've done through that fundraising process? 

Right. So the biggest mistake I would say too, I did and I would say any, any investor should not or any entrepreneur should not do is to raise too much money too soon. You have to delegate. So, regardless of how much is the exit? Your your stake at the end of it. 

So small that is down the amount. Really? I went through all this for this. So, for example, in 1 of the companies, we actually raised from the best vc's in the World Cup. 70001st and 15 is quickly too quickly. 

And by the time, the company goes to 80M dollar exit 4 years later. My share was around 5. 6%. So, so you're basically left. Sorry? 

Like, 3 or 3% so, yes in terms of number of millions is good, but they're very low. 

So my advice to anybody to raise funding would be that you have a very clear idea of what your your game plan is with the timelines the costs. Exactly. Raise those at the right reservations. 

So that you don't have to delegate and lose control too quickly. So, here, let's talk about the evaluations specifically a lot of. 

1 of the biggest okay, not 1 of the biggest, but 1 of the challenges that founders meet face when their fundraising is picking the right. valiation how how would you recommend them during this? Yeah. 

So, I think I think I think that I think now I would suggest is a very simple methodology. Don't even try to go for a price round until you. At least I would say posts seed round or at least for a lot of time. 

Go for what I call, say, if not, you go for a safe note. 

You basically create a note that says, we'll give you 20% discount or the next valuation and time again or for me, and post money cap and fix that annual raise money, quarterly and half a 1M or 1 to 1M in that save that money. 

Reach what? We call a certain level of milestone and then going for a larger price. Now, if you start doing a price down too early to do, either, your price was too low or too high out of the market and time. It takes. 

Before you find out that your price too high, or too low, you're already already spent 6 to 9 months of your coffee. Don't have a good time and that time could better spend in taking the company forward. 

So, my advice to young entrepreneurs is that go for a safe note to start with do not. 

My new companies keep doing exactly that we're not going for price down go for price out after you've got a certain number of factions, certain number of revenues and a good product in the 
market. And that point you get a reasonably good valuation. That's the plan. 
I will suggest, but if you put in the sales, no, don't phrase too much. Just raise only up to a 1M total Max. 

Right, I think that's just the ultimate advice do not do price rounds before you get no it's a seed plus stages, so definitely definitely follow that advice. 

So, now that we've touched real quick on your mistakes in the past for fundraising, uh, let's talk about the good thing. So, now looking back at your previous fundraising experiences, what do you think was your best move throughout those, all those fundraising rounds? 

Pull the best flow basically, is that, I mean, the probably going for the, that quickly was fantastic, because it actually got a phenomenal evaluation right? Time talking about mid to late nineties. 

Uh, it was booming and you take advantage of that. So, so, that mobile, I think a very, very high valuation and the limit of good exits for everybody. I mean, I was, I was, I sold my SHARES too cheap. 

I was at that time as a student and everything looked good to me. So, that's okay. But, but every investor at that time, you know, so so that's 1 thing. 

Subsequently my last few companies, basically, I think I'm getting.
Uh, a, a real name brand investor investors would actually make sure that your company's. 

Subsequent for funding, and evaluations are very high. Now, of course, it comes to the challenge of working with those name brand investors. They're not easy to work. So. 

You got to have a balance between who want to bring on board. Right, right that's that's a great advice. And.
You know, you've done your 1st rounds while back in these, but. 

For the current situation for 2020 post cobit. Okay. Not quite postcard. But cobit worlds. What's your advice to founders? Trying to raise their very 1st round? What? What do you think their 1st step should be? 

1st cap should be to 1st, of all sit down and really understand their, their product and their roadmap put together that roadmap and say, okay, now what, how much, what is the. 

What I call you have 2 steps and I'm.
What is your, uh, how how soon can we do a proof of concept and prototype? 

To show to prospect to investors and 1st thing is, I will say this is to do what's called f. F. an. F. now reduced f. an. F with friends and family. 

If somebody you and Adam are club friends, family and food, somebody around them some fools to believe in you that you are good. 

So, what I was thinking again, it's not really meant to conference call effort after that extended family and pools pools, regardless of funnel. 

Why don't you because he's got a senior is doing it because the agency is doing and that's if that's critical of interest to you and saying, here, what is this guy's doing it? And he's putting his money. 
So so that's so, what I would say is gets raised some money from that f. an. F round, put some, your money in the game because you don't put anything of your money then. 

White House, and most important start ups is not a part time job called a hobby. It's a full time. 100% occupation for all founders. This is what? I say to all my companies, the portfolio and accelerate, it can't be part time here. 

Otherwise you are wasting your time my time everybody's time. So you got full time otherwise just. 

Don't bother doing it, because it's, it's not it's not something you can do a city at home for 2 hours a day, you know, at middle of night. So so basically, push your time put some money clear road map. 

And then raise money on a safe note so that you can sort of what I call a minimum viable product. And that at that stage, you could actually get paid customers. 

Right. That's a really good point, you know, part time printers. I think I've seen too many succeed. Probably in the beginning of the journey, you should do part time and keep your actual job that covers all your expenses. 

But labor on is definitely not part time for sure. So, let's move on and talk about more current situation on your site to you, or found you're at excel in the dates. And what did you do there? 

What is Excel? Innovate about? What does it do? Yeah. So actually, basically, some sort of. 

Integrating integrating workshop accelerator, so it's more focusing on innovation that activation. 

So, basically you are accelerating, why are you integrating. 

For technology innovations, create key here. So we have to we have about, uh, I would say 8 to 10. 

Portfolio companies interactive too. I'm not very active, but total number of come to attend is active companies in different fields, and having a woman materials 1 in carbon futures. 

To in block chain to 2 in E, commerce and, uh, I don't think so. All these companies basically are all the founders. I basically know them personally. 

So, I'm not, I haven't taken anybody yet, who, I don't know, and I bring them in a common platform and then I joined them as an executive advisor. So it's not a simple high rise and say, bye. 

Bye, it's more of providing 10 hours a month minimum. So, either team and keep them focused, keep them motivated or get them to a task abc's milestones and get them funded. That's the goal. 

A Eva to a safe note was more likely to happen and he's advertised the 1st, companies already got for safe, not funding done. And is on the way towards revenues so there are 7 more waiting the rings. 

It's more of a, but but we maintain the technology acceleration while doing all this we don't that most accelerators was actually just accelerate and activate and forget about technology. 

And I finished the acceleration to obsolete,
although it could be,
like,
too far behind somebody else technology roadmap and technology companies, whether it is in deep tech, 
especially in, and blockchain, 

that could be a lot 3 to 4 months could be a lot somebody else who actually vase behind you this is beyond you on that. 

So it's critical to stay abreast and we do that. 

Right, right, right. Got it. So speaking of funding and. 

Do you do anything besides? Excellent so I can say angel investments or just, uh. 

1, right now I completely focus, so I have 2 things so I basically have I created a LinkedIn and a WhatsApp group called technologies. 

As we focus, we discuss a lot on science. 

Technology and business applications and collaboration and mentorship. The whole idea is to is to create a mini job creators and entrepreneurs adopt creators have a job seekers globally and that's totally free platform. 

It's we have close to 200 members now with that, and we have every BI, weekly seminar, some expert panels, and that's completely free to join. You want to join anybody wants to and can approach me the email out, make sure your right people. And then you join. 

And participate keeps hydrant learn, so that's 1 thing that's the platform available. 

And then the 2nd thing I'm doing is excellent wait where I brought all my talents knowledge into 1 forum, and bringing other companies in and mentoring them and guiding them towards funding and profitability. So, 2 things I'm doing right now, actively. 

Founders to come over here now we've discussed everything and on this pretty positive notes I think we're moving on to last question of today's app is a, which is a call to action. So. 

What's the 1 thing you want to do is here to do as soon as the episode is over. 

So, what I would say is that you got to look at your, if you're a technology company, regardless of which technology you are you out of 1st, the a very clear. 

Road map, in terms of how do you reach your and and what is called minimum viable product an MVP is for you our product what is that? Roadmap? 

1 of the milestones, how much time it will take and I'm a little cost. 

Do you have that 1st taken care of before you even think of the funding once? You know, that then, you know, okay, you did the quarterly going to step 1, which is a half a 1M every month. We get to fully viable product, let's say, and it takes 3. 

6 and 12 months now, you know exactly. At what point to raise money from where, and how rather than trying to do things, you know what I don't know what I'm doing, but I need money and once I have money, I figured out everything, nobody nobody will give you money to figure it out. 

You better have everything figured out that clarity and then go to investors. You have a chance otherwise have no chance. So 1st, step I would say is, is that if you're not done already done. So, how are very clear roadmap is sort of a slight a slight say. 
Here is, is 1 column is showing my milestones, have columns, showing the timelines 3rd column, swaying the money needed. So all these people have done their homework. They know what I'm talking about. 

So now the fetus that actually talking to somebody who's mature enough to receive funding that and some, some cases on the block with us. 

What has been great absolutely. And that's great. Is usually is going to be go to the description of this episode. 

I'll leave few links that 3 of us mentioned during the episode and by the way I'll leave a link to his WhatsApp channel as well. 

So definitely take a look at those and you'll most likely find something helpful for yourself as well as usually have a good date.