Startups: Not for Everyone – Part 3, More Lessons

When I last left you, I was telling you about my second venture, and my first big startup failure, and at the end of that narrative I remember promising that I will be back with the telling of how I put that behind me and moved ahead. I didn’t say the moving ahead was successful commercially, but every failure yields important lessons, so in that respect, from the perspective of being a learning experience I was successful. Some degree of rationalization, yes. A large dose of reality, yes. Plenty of learning, totally.

A lot of the stock market greed had subsided, what with the markets having tanked, people committing suicide, people going bust, the big names from the markets landing in jail. Harshad Mehta being at the front of the rogue pack. It seemed that sanity was coming back. None too soon either.

As I did mention in the previous piece, Part 2due to the grapevine and our fans within the FI community, passing positive comments about our capabilities, our professionalism, some corporates approaching us, and this was how Integra Funds Management Limited came into being. So Integra had not yet vanished completely, as there were still those who believed that we had value to offer.

One such opportunity, came knocking when IDBI, the great Developmental Financial Institution of India, put a leading business family from Goa on to me. The corporate is one of India’s largest Iron Ore mining outfits, and also has interests in the hospitality business. They had taken loans from IDBI, and as part of the deal, there were stock devolvements in favor of the FI’s. They came to us, so we could structure the stock buyback from the institutions. We had never handled such a transaction before, and therefore we were all a-twitter, really excited. Long story short, we successfully structured and executed the buyback deals at a handsome fee.

The testing of our capabilities and the quality service we provided, led to an invitation to visit their Group HQ in Goa, to explore the possibility of an expansion of our business association. They opened the kimono, so to speak, and we narrowed down on three distinct business opportunities: placement of their excess seasonal cash surpluses in Inter-Corporate Deposits, fund-raising for their hospitality business and a USD 60 million syndication.

60 million? Back in the day, and I’m talking some 17-20 years ago, that was a lot of money, and all I could think of is the fee based income that would follow suit. Would it? How? Well 1.5% as a Syndication Fee was a tidy bit of pocket-money.

One thing led to another, and we came across multiple opportunities….The Rotary Club of Panjim in Goa wanted us to come talk to their members about market investments, another owner of a hospitality company wanted to offer his property to us for conceptualization, development and management, I’m now thinking, this is an act of God! One door closes, and others open. I guess when you’re reeling from an acute reversal in fortune, you pretty much are willing to clutch at straws, and I guess this is exactly what I ended up doing.

Without much thought, without weighing the pros and cons, without putting down a detailed business plan, or for that matter, working out the financials, I took the plunge, and set up shop in Goa. Office on rent, car on hire, recruited two young MBA fresher from the Management Institute at Goa University, and we were up and running.

Set up wasn’t really much of a problem, but what about cash for the recurring expenses? Where would that cash come from? Surely from providing stock broker and investment management services to the underserved HNI community in Goa, from the Pub/Restaurant we were going to open. But this was still small change, barely enough to take care of overheads.

The big bucks were coming from the Syndication Fee was it not? Hindsight tells me this was really lame, because USD 60 million? Really? USD 60 million? Its not like I was not capable of raising that kind of cash, I absolutely was, and I proved it by getting term sheets from IDBI, from Asian Development Bank, from FMO in the Netherlands, even the IMF had expressed keen interest! So much so that they deputed two appraising officers and one subject matter specialist to come to Goa and look at the business model and the numbers. I think that the promoters never believed that we would be able to pull this off, simply because a leading financial services company back then had not been able to do much for them, and to top it off, we were but kids. Kids? So frigging what? We had the balls, we had the brain and we certainly had the connections and the gift of the gab.

The big bucks never came in, despite the fact that I singlehandedly brought the foremost FI’s to the table, with commitments to fund the USD 60 million, with one small simple proviso. That the promoters of the 60 mill venture would put in a meagre 5% of the cost. That is when the cookie crumbled, and as far as cookies go, not the tasty kind. Left a really sour taste in the palate, and a gaping hole in the pocket!

What was this project all about? A greenfield venture, never been done in the world….setting up an artificial port built on a floating concrete structure (called a Caisson – French), 8 nautical miles at sea! I can only assure you we weren’t the only ones excited…this had the attention of the international community of financiers, of master builders of ports and harbours, of builders of dry cargo handling systems, of the global dry bulk shipping companies, of the Iron Ore and Coal mining community worldwide! The names I can throw at you, in terms of the people I was hobnobbing with on a daily basis would astound anyone. Ever heard of George Soros? Well, the master designer of handling systems I alluded to was non other than Paul Soros, George’s elder brother, the one responsible for helping George skipping the Iron Curtain, and coming to the US! Oh yes, I was moving up in the world, my sphere of influence was ever-increasing, and people who mattered across several points across the globe were taking notice.

The project never took off, simply because, the promoters didn’t or couldn’t rustle up the promoters contribution, and we ended up getting paid a meagre INR 100,000/- as a startup fee, plus expenses at actual.

So preoccupied, nay possessed, I was that I left all other revenue streams at the hands of the others in my employ, and the businesses that could have flourished, simply languished. The restaurant never took off either, so out of the three identified revenue streams, not even one paid out any cash.

Chalk one up for experience, absolutely. Put another notch in the list of failures, yes. Yet I had this feeling deep inside that all these reversals, were merely prepping me for greater things. They were, and as time panned out I was able to bring that body of experience to bear on my future roles.

If I have one regret out of all this, it is this. That I rubbed some people the wrong way, I think it is an ex-employee from Goa, who till this day slanders me in a manner most foul, not pausing to think for a minute, that there were circumstances that were totally above and beyond my control, and that is why we fell by the wayside.

With this latest set of developments, Integra was finished, the toll was taken, a toll much to much to bear. I have a fair idea who this gentleman is, as he keeps commenting on my public blogs, I have the IP addresses. They originate from the US, and if I ever find this person, I will make sure he goes behind bars for slander, for defamation, and for being a total coward, hiding behind assumed names, hiding behind the names of other loyal employees and well wishers. I suspect that this person believes that I was be damaged, my image will be tarnished, but little does this idiot know, that the goodwill I have generated over my entire career in business, in my profession, and personally is so strong, that people actually laugh when they read his rantings.

With this I conclude the narrative of the series of reversals, and that brings me rather nicely to how I got my first job. I had to take up a job despite the fact that I had never worked for anyone before. Now that job was also with a startup, albeit promoted by a well-known brick and mortar company, and that experience is another fascinating tale. Coming up next.


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