Sramana: How much capital has gone into this company? You spent $100,000 to launch. Did you have to add more capital?
Mithun Sacheti: We did. We had to put in some capital to launch and then periodically added more. In 2011 we got funded by Tiger Global.
Sramana: How much funding did you receive from your family?
Mithun Sacheti: We put in about $500,000. We have a positive cash flow model; we were operating on our positive cash flow. We were really running on fumes for about a year.
Sramana: How much revenue were you bringing in by the time you raised money from Tiger Global?
Mithun Sacheti: We were at $5 million in revenue. We raised $6 million from Tiger.
Sramana: What is your revenue forecast this year?
Mithun Sacheti: We closed in March at close to $18 million.
Sramana: You were already a profitable company when you raised money. Where did you put the funding?
Mithun Sacheti: We were not profitable. We kept investing to keep growing. We set up a large manufacturing facility so that we could provide just-in-time manufacturing for the product that we make. That is something that we invested heavily in, and we built that in Chennai.
Sramana: You have built a company with huge potential. What is your assessment of what is happening in India with the family businesses that have multigenerational wealth, yet the modern generation of these families are looking at different types of businesses? To me it seems like a trend. Do you think it is?
Mithun Sacheti: I think that there is a trend. When I started in 2007, there were hardly any Internet companies around. My brother tried to build a website in 2001. He was too far ahead of his time. He wanted to focus on gemstones instead of diamonds. When the crash happened, it seemed that websites were a bad thing to do.
Today there are a lot of e-commerce portals that have received several rounds of funding. I get a call every day on my cell phone from somebody who has an e-commerce idea he or she wants to build out. There might not be a genuine need for it in the market, but someone thinks there is enough demand to build a business. All of them are people whose families have great businesses.
Sramana: The advantage of coming out of family businesses is the availability of seed capital. India still has a tremendous seed capital problem.
Mithun Sacheti: A few years ago that was the case. Today almost every city has an angel organization. I would imagine they are looking for ideas now.
Sramana: I work with all of the angel groups. I know that space intimately, and seed capital remains a problem. Angels have started behaving like VCs. Who is going to fund the proof of concept if you have not the ability to fund the proof of concept?
Mithun Sacheti: That is very true. Your insight there is invaluable. The angels are behaving like VCs. They are walking in after the concept has been proven. A lot of people I meet think getting funded is the goal. That is not the goal. Making the company successful is the goal.
Sramana: In 1M/1M we say that companies equal customers, revenue and profit. Financing is optional. There is a tremendous misconception in the world that entrepreneurship equals financing.
Mithun Sacheti: This myth needs to get cleared in the media. The moment you get financed, the media wants to write about you.
Sramana: On this topic the media is supremely dumb.
Mithun Sacheti: For me, it is easier to leave my second round funding story out there than it is to get press on the launch of an unbelievable product.
Sramana: If you told the media that you have achieved $16 million in revenue, they would not understand the significance. They understand the significance of a $5 million financing. It is ridiculous.
Mithun Sacheti: We are not doing couponing. We are bringing real value. We use technology as an enabler, not an end game. E-commerce is another way of selling diamonds. My product is diamonds. I can create stores and sell diamonds there, too.
Sramana: You can proliferate and create one brand that encompasses retail and e-commerce. That is how you grow the company.
Mithun Sacheti: We have been toying with something that will take us tenfold from where we are. I am excited about that, and it is based on the concepts we are talking about.
Sramana: Good luck. This is a great story; I enjoyed it very much.
[Also check out my Entrepreneur Journeys book, Seed India – How To Navigate The Seed Capital Gap in India]