Better known as the father of the Indian BPO industry, Raman Roy has successfully led the BPO initiatives of American Express, GE (now Genpact) and Spectramind (now Wipro BPO), before starting Quatrro in mid-2006. Quatrro focuses on high-end BPO services, with a mix of incubation and acquisition-led strategies.
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| Raman Roy, Indian Angel Network |
He is also an angel investor who funds and mentors the new wave of Indian startups. We spoke to him about his role as an angel investor.
What do you look for in a promoter before investing in his venture?
Passion! I look for the promoter’s passion. See all investors look at things very differently. Usually, entrepreneurs looking for investments send their presentations saying this is what we plan to do. There are people in the angel networks who go through those presentations and decide what looks good and also mention the parts that need tweaking, and so on. What does a person like me do? I say, “Call in the promoter; I want to meet him in person.” In my view, anyone can make a presentation; it is only a passionate entrepreneur who can pull it off even without a presentation.
If you ask Parikshit Jain (promoter of Vienova Technologies, in which Roy has invested recently), he would laugh at the thought of the first meeting he had with me. For me, Parikshit and his management team are most important. Even if he is unable to come up with great ideas, we will guide him. However, if he is not the kind of person who would be able to actualize those, that is a different story. Parikshit says, “We do not give wrong numbers, wrong data on anything.” That is his ethics. That is the kind of person we want to work with. I should not be second-guessing on the reports he sends me to filter out facts.
To me, the quality of the management is also very important. See, there are some great people with whom I say I cannot work, because I know they just will not listen to me.Hence, our ability to work, with the management team is also very important.
What are the typical mistakes that entrepreneurs commit when seeking investments?
Some entrepreneurs behave as though they know it all. If they knew it all, they would not need angel funding. They would have succeeded without it. In addition, some entrepreneurs do not work on building good teams. Individuals cannot do it all on their own. Whether it is Bill Gates, Jack Welch, or NR Narayanamurthy, or Azim Premji, all the people who have been successful have had great teams. Building a great team is a critical component of being successful.
What is your level of involvement in an investee company?
I put my own money into this venture! As yet, I have not taken a seat in the board of any company that I have invested in. Simply because I do not have the time that is required to participate in managerial decisions. However, we do a lot of internal reviews of all the companies in which I have invested in. I participate in those. Apart from this, entrepreneurs do reach out for help in person or on the phone. One of them would call up and say he needs advise on a particular issue, for which I fix up a meeting with him as soon as possible.
What if things go bad, do you get involved operationally?
Our job is not to run the company. It will scare away the entrepreneur. However, if things go bad, we analyze as to why they went bad, and help the entrepreneur rectify it. Like in a game of cricket, if a bowler doesn't bowl well, it does not mean that the umpire will take the ball and starts bowling. It is far simple to say, it is a no ball. If his foot overstepped the line, it is my job to say it should not overstep. Our job is recommendatory and advisory. Our job is not to start doing it. It is physically impossible.
How do you decide on a timeline in which you would want to exit? How do you measure returns?
It happens on its own. It is not rocket science. It is not as though I say some mantra and we get ready for exit. Someone approaches and shows interests in buying off the company, I say, “Okay, let us talk.” Or at times when we are not ready to sell right then, we say maybe in a year we will be ready. The interested party might just participate until we get ready, by buying say 20%-30% of the company’s share. There are times when someone approaches and expresses his interest in the company, but only if the company agrees to follow a certain route. If the entrepreneur does not like the idea, we say that the investee is not interested in this model.
In Quatrro, we have an acquisition-led model. We like a company, we go and talk to the entrepreneur, and express our interest in acquiring the company. At times they turn down our offer, many times they agree to discuss. Fortunately for us, if it is a company in the BPO industry, people are always willing to talk.
As for measuring the returns, it is very simple. If I put in these many lacs of rupees, and these many lacs is what I am getting, in this much time, what is the return? If one invests in stock market, how does he measure returns? It is simple, what is the kind of money you put in, what is the kind of money coming out of it.
What are the areas of conflicts with the investor that an entrepreneur should be aware of?
Conflicts can happen on anything. It could be on ego, it could be on marketing strategy, and it could be on investment and how you do things… the point is to understand what the goals are. See it is like this, conflicts can happen with anyone sitting anywhere, for any reason. So are there any standard areas in which conflicts happen? Exit could be probably one. However, once you understand the goals, the conflicts are minimized.
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written by early stage venture, October 27, 2010
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