Exotel is a cloud telephony (IVR, missed call management.)service provider offering various products for a hassle-free experience. Service includes Voice for a loud and clear experience, SMS for improving the customer experience, OTP based authentication, and VoIP based app to app calling for small and medium enterprises in India. Exotel helps inbuilding a reliable and efficient business communication system. Exotel currently handles over 11 million customer conversations every day on an average. Last year, they were dealing withnearly5-6 million calls a day, which has doubled now. Exotel has thus far acquired two companies - Voyce, a platform that allows businesses to gather customer feedback, and Singaporean voice-based social media startup Croak.it. Exotel had a revenue of more than 120 crores in the last financial year.
Founders: Shivakumar Ganesan
Total funding raised : INR 4 crore
2020 status: Operational
Number of rounds : 3
Co-investors: Mumbai Angels & Blume Ventures
- Why did you invest in Exotel?
Freshly back from my professional & entrepreneurial stint in the US. Exotel reminded me of a vEPABX service that we utilized the customer service & operations team. It improved our efficiency and service delivery quality. Therefore, it was a surprise for me (circa 2012) that Indian SMEs didn’t have access to this critical technology that would reduce their communication costs. Therefore Exotel, was a no-brainer investment for me as I knew that they would become the backbone for many businesses in India.
- What were the risks involved with an investment in Exotel?
The most significant risk was the excessive regulations that controlled VoIP calling at the time. Exotel wasn’t allowed to directly purchase minutes from Indian telecom operators, and unfortunately, they tried to bully the company through complicated pricing plans. Despite all the difficulties, the team worked dutifully in securing the necessary licenses and offering such great value for business owners & startups.
- What were the possible avenues of an exit when you evaluated the investment opportunity at Exotel?
I believed (at the time) that a telecom operator would see the stickiness of an Exotel customer and their excellent margins on non-voice revenues to snap them up. Unfortunately, most of the telecom operators have concentrated on the B2C customer with a step-motherly treatment for business owners – despite the knowledge that businesspeople are willing to pay more for better service.
- What are your learnings from investment in Exotel?
Shivakumar Ganesan, aka Shivku, is a second-time founder, an alumnus of BITS-Pilani, Yahoo, and Flipkart. To find a founder with such an impressive resume was a rarity in those times. Therefore, as an investor, we had to learn how to support someone like Shivku. Another significant learning for us was how to invest in startups that operate in highly regulated areas. Exotel along with United Mobile Apps gave me (and my team) a wealth of experience that helped in later investments like BookMyCab, LenDenClub, Confirmtkt, Rapido, Tala and Karza Technologies (to name a few)
- Would you invest in a similar startup today?
Yes, I would. However, I would structure part of my investment as debt or as payment via dividends. Companies like Exotel threw out a lot of cash, which can be daunting for traditional VC funds to evaluate for future funding rounds.