The Fundas Of Funding

Business management currently has more or less branched into two major
areas-fund and people management. Both are crucial for a company's success, but
are equally challenging. This is why rather than following the plan of having a
presentation on fund management at the third DQ Channels SP Summit at Andaman,
it was decided to have a panel discussion on this, impromptu.

To give a balanced view, there was Sanjay Mody of Realtime Systems, an angel
investor, who has funded several companies. Devendra Taneja of PC Solutions, a
company that has stoically steered clear in attracting external funds, but has
still managed to keep its bottomline healthy, represented the channel community.

Alok Gupta of Samtech Infotech also participated to talk about how he had
faced challenges while getting financial institutions to invest in his company.
Pradeep Gupta, CMD, CyberMedia India moderated the session and started the
session stating that for most businesses, today the concern is not just about
taking funds for scaling up business but rather where to take funds from. “The
confusion is whether one should consider venture capitalists (VC) or are IPOs a
safer way out?” he questioned.

The panel comprising (L-R) Sanjay Mody of Realtime Systems, Pradeep Gupta of CyberMedia, Devendra Taneja of PC Solutions and Alok Gupta of Samtech Infotech debated on venture capital funding or IPOs made sense

Taking part in the discussion, Taneja said that his company had grown over
the years through internal approvals and did not opt for either VC funding or
private equity. “We began as a services company and from the very beginning we
kept our focus on bottomlines. This focus and analysis helped us to do the right
kind of investment.”

“We have not opted for VC funding or private equity but have grown through internal approvals” Devendra taneja, PC Solutions	“VCs look at a company's growth plan and scalability before funding them” Sanjay Modi, Realtime Systems

PC Solutions has continued to invest some percentage of its revenue back into
the business and grow over the years. “This has helped us meet all our fund
requirements through internal approvals only, and we are happy that we are a
zero credit company today,” Taneja indicated.

What a VC seeks

Sharing his thoughts during the discussion, Sanjay Modi, Chairman and Joint
Director, Realtime Systems said, “VCs look at a company's growth plan and
scalability before they provide any kind of funding. They would invest in
companies, which have a clearly defined growth path and show some kind of
consistency in their profitability.”

Sharing his experience of working with VCs, Alok Gupta, MD, Samtech Infonet
said that given the option of choosing between an IPO and a VC, his company
chose to go the VC way since it did not have the required cash to invest in an
IPO. “However at a time when the economy was down, we opted to invest and opened
many offices across the globe. This according to me did not work in our favor.
Unfortunately in our case the VC turned out be bane than a boon,” Gupta added.

Seeking funds

Giving his thoughts on the partners' experience, Gupta said that whenever a
company thinks of opting for funds, be it an IPO or private equity or any other,
it would be advisable to have some mentors with them from whose experience they
can learn and decide whether to opt for VC funding or IPO. Additionally, he felt
that one must be very clear of the exit path so that one would have less
problems to tackle.

Interestingly what came out of the panel discussion was that debt could be a
good option to consider because that would ensure that a bank has faith in the
organization. This in turn meant that more the VCs convinced of the company's
credibility, more they will be ready to invest.

Gupta also spoke at length about his experience of building his company, and
touched upon his IPO experience in the course of the conversation as well. At
the end of the discussion, partners seemed to be a lot more confident as far as
funding went as now they had Gupta as their mentor.

DQC News Bureau