The wealth wallahs
The world of entrepreneurship is a waste bin for the best laid plans. In December 2014, Raghunandan G and Aprameya Radhakrishna, cofounders of app-based cabs aggregator TaxiForSure, were busy thinking up strategies and making expansion plans that they would not have a chance to implement. Raghu, as he is popularly known, was working out of cafés across sunny California, while Aprameya was holding the fort in the start-up’s buzzing office in Bengaluru. In the months leading up to that December, they had aggressively increased their customer base although this had bled their reserves.
At that time, TaxiForSure was one of India’s hottest young companies, having raised $26 million ( ₹174.98 crores) from venture capitalists such as Accel Partners, Helion Venture Partners and Blume Ventures since it started in 2011. It was also locked in a three-way battle with Ola Cabs and Uber—both popular app-based aggregators as well—to capture market share of India’s rapidly changing taxi business.
Raghu was in Silicon Valley through November and December to raise about $200 million ( ₹1,334 crore) from investors to power this high-stakes, cash-burning contest and fuel TaxiForSure’s growth ride.
On 5 December 2014, a young woman was allegedly brutally raped by an Uber driver. That put a rude brake on those plans. Along with Uber, the Delhi Police banned all app-based taxi aggregators from operating in Delhi. A few other states followed suit, leading to several weeks of regulatory chaos and doubts about the future of these companies in India.
The ambiguity sharply changed the tenor of conversations in investor circles in Silicon Valley. Enthusiasm gave way to deep caution. From a hot start-up, TaxiForSure quickly became almost untouchable. They were forced to bide their time. Investors didn’t want to take a company that was passing through such ambiguity to their Investment Councils.
The new circumstances quickly shaped a different set of choices for Raghu and Aprameya—either raise only a part of the amount they needed and wait out six to eight months for the storm to settle, or take up the feelers for acquisition being sent by both of their dominant competitors, Ola Cabs and Uber.
‘We weren’t really planning to sell. As founders, you never want to sell to a business rival but things started to move very, very quickly,’ Aprameya remembers. The cash in their holding company Serendipity Infolabs was running out and their
main competitor Ola Cabs—high on a $210 million ( ₹1,401 crore) fund raise by Softbank and its existing investors such as Tiger Global, Matrix Partners India and Steadview Capital in October 2014—had cranked up the heat. By the end of January 2015, Aprameya says, they already had an offer from Ola.
The dilemma about right and wrong began jostling for space with the deal’s personal impact—coming into a large tranche of wealth. Investor valuations are notional paper money. Converting that to actual money is a dream everybody has but you’re never certain it will play out that way,’ says the 35-year-old.
Not that their wealth felt tangible even then. ‘You don’t really know what that kind of money feels like. Both of us come from middle-class backgrounds, and if you can go to a nice restaurant every weekend, or can easily afford the holiday you’ve planned, that is enough. It’s the maximum you’ve ever wanted and the salary we were paying ourselves covered that,’ he observes.
Ola Cabs completed its acquisition of TaxiForSure by March 2015, making it one of the largest internet space transactions in India till then. The deal was also remarkable for the accelerated journey of TaxiForSure’s young founders. They were exiting their business less than four years after they started it, something unheard of even in the fast shape-shifting world of internet start-ups.
The co-founders are estimated to have become richer by “several tens of crores”—newspaper reports peg it anywhere between ₹136 crore—220 crore ($20.4 million - $33 million) each. Both also hold a small share in Ola that in its last fundraising round in November 2015 was valued at $5 billion ( ₹33,367 crore).
The money from the Ola transaction came in around 15 March, 2015. ‘I opened my bank account on my mobile, and couldn’t even comprehend the figure,’ Aprameya laughs. It took some time to count from units, tens and thousands and put imaginary commas to make sense of the number, he recalls. ‘When I showed my mother the bank statement, she was worried I would get enemies and told me I shouldn’t stop for strangers when I was driving,’ he tells me with a smile.
The sudden explosion of riches was overwhelming, he admits quite frankly.
Even more seriously, there was an immediate need—to manage this wealth. The money hit his bank account with only sixteen days left for the financial year to end. It was important to get his tax planning right before the end of the month. Could help be at hand to deal with his problem of plenty?
dial a for advisor
The world’s best consulting and financial services companies go to recruit ambitious, smart managers at IIM Ahmedabad, Aprameya’s alma mater. Yet the young entrepreneur confesses that up until March 2015, he had never been introduced to, or thought about, the concept of wealth management. It had never come up in their management curriculum and almost none of his friends from business school had taken up such a role. Almost sheepishly, he admits to thinking that all the rich did was buy things.
His company’s transaction had made big news. Soon enough, a swarm of wealth managers, financial advisors and private bankers—an entire new universe of people—came calling on him with ideas for equity investments and tax structures. He hadn’t expected this deluge and hard sell. But he didn’t have the luxury of time to linger on a decision—he had to learn fast. ■
From a hot start-up, TaxiForSure quickly became almost untouchable. They were forced to bide their time. Investors didn’t want to take a company that was passing through such ambiguity to their Investment Councils.
2016, ₹499, 209 pgs, Hardcover