Hyderabad: A serial entrepreneur, Sashi Reddi loves technology. When he did his BTech in Computer Science in 1987, it was not evident that computers would be anything more than a support technology for various businesses. Over the last 30 years, he says, it has now become clear that technology is central to every industry and company.
“So it is my good fortune that I started in computers so early and could then witness every large revolution, whether it is internet businesses or artificial intelligence or drones or self-driving cars. Given the many technology cycles I have seen, I now have a clear perspective on what is a short-term hype and what could be a long-term sustainable trend,” he says.
Reddi did his BTech in Computer Science from IIT Delhi and then he went to the US to do an MS also in Computer Science from New York University. He then did a PhD from The Wharton School in Information Economics. His schooling was from Lawrence School, Lovedale near Ooty.
After his PhD, he had a couple of job offers but he decided to join two friends and start his first company. He says, in his entrepreneurial journey, Hyderabad has been central. While he was developing his businesses in the US, the city acted as the base, where he founded some of his companies.
His first company, EZPower Systems, was started in 1994, which built a web content management system that helped large companies manage all their content for publishing web sites. As a first time founder and first time CEO, it was a big challenge to raise money.
“We raised some money from family and friends and launched our product. We had around 30 customers, including a few large companies. In those days, to build a product company required at least $20 M and we could not raise that money. However, the technology was so good that we had two offers to be bought out. We eventually got acquired by a newly public company called DocuCorp, based in Dallas. I stayed on for a few months before starting my next venture in the e-commerce space,” he recalls.
When Reddi started AppLabs in April 2001, soon after the dotcom crash, it was supposed to be a temporary thing to make some easy money doing offshore IT services until the investment climate picked up.
“But then in September that year, we had the 9/11 terrorist attacks and it became clear that things would remain weak and uncertain for a couple of years. So then I started to focus on AppLabs as a long-term play and quickly figured out that there was an amazing opportunity to create specialist testing-services company. This way, I did not have to compete with Infosys, Wipro, TCS, Cognizant, and all the other large IT services companies. I could be seen as the specialist testing firm that would help the customers get the quality software they were paying these large companies for,” Reddi said.
AppLabs raised money from Westbridge Capital and two of their key partners, Sumir Chadha and Sandeep Singhal, joined the board and helped the company build on this testing strategy. In exactly 10 years after AppLabs was founded, he sold the company to CSC (now called DXC). AppLabs had built a global brand in software testing and there were multiple buyers, both large companies as well as PE firms, that were keen to acquire the company. At the time of its sale, AppLabs was seen as the largest independent testing company in the world.
Venture capital funding
For the last 5-6 years, Reddi had been actively investing in early-stage technology companies using his own capital. Hi partner over the last few years has been Doc Parghi, who has worked with him on two of his startups including as my number 2 at AppLabs. They did 30 investments, of which around 10 were in India, mainly B2C startups, and the remaining 20 were primarily in the US in enterprise software/technology. Over the last few years as seed stage investors, they learnt a lot in terms of what it takes to be a successful investor. Using this experience, they launched SRI Capital in 2012 because they saw a need for a high quality cross-border fund between the US and India.
On his VC fund, he says, “We are one of the only funds that have senior people both in the US and in India so that we can support startups that want to build technology in India and sell in the US market. This is a huge benefit to startups since they are looking for help on how to sell to large companies in the US as well as raise money in the US. We were the first investors in Fab Hotels, HealthifyMe, and YuppTV in India. We are also the first investors in various successful enterprise tech companies in the US like PhenomPeople and ThinCI. So, around a third of our portfolio from the last five years is doing extremely well.”
He adds, “We launched our new fund in January 2018 and we have done six investments through that fund. Some of the major Indian investments are IndianMoney in Bengaluru and LetsMD and Sports Flashes in Delhi. In Hyderabad, we invested in a company called Foyr that is headquartered in Singapore though all the technology is built in Hyderabad. We expect to be the leading enterprise tech VC in India as well as in the cross-border US-India space.”
Reddi says, “Once you get used to working for yourself, it becomes easy to make decisions, build teams, and execute. You are constantly selling, whether it is to investors to raise money or to customers of your products/services. You are also responsible for keeping your team motivated and aligned with the company’s vision. After the first company, things become so much easier since people believe that you know what you are doing and are happy to support your decisions. As you build up your own credibility as an entrepreneur, it also becomes that much easier to attract the best people. So the first company is the most difficult and then it gets easier.”
Creating value from nothing is a great feeling. It feels terrific to just take a blank piece of paper and put a business together from scratch and see how you are serving customers and creating value for yourself and your employees. As an entrepreneur you feel that you are making a difference every day by the fact that you employ people, see them energised, and then seeing customers appreciate the value that your company brings.
“So if I had to pick a defining moment in each company, it is always that first customer win and seeing how the product/service is being used and making their lives better. As we know, that first happy customer leads to 10 happy customers and then soon you have a great company that everyone is excited about,” he adds.
“Nothing gives me more joy than working with and helping other entrepreneurs. So while I do believe that SRI Capital will be a very successful fund, our primary contribution to the ecosystem will be to bring global access to Indian startups through our network. We hope to find and fund global tech leaders over the next 10 years, hopefully some of them coming from Hyderabad,” he signs off.