We met Mr. John Chettri at the fifth edition of Start-up Huddle Kathmandu. He was in the audience and had many valuable insights to add to the program. As we began talking, we realized that Mr. John Chhetri was the Founder of a start-up himself. His enterprise ‘SoAni Tech’- a portmanteau of the words software and animation, works to digitalize the education sector of Nepal. In its three years of operations, Soanitech has diversified and grown. With an aim to understand investment and funding opportunities for start-ups, and how start-ups can navigate and build a strategically beneficial investor-startup relationship, we arranged an interview with him.
Soon after, Blincventures.com spoke to the very affable Mr. Chhetri at his office which is situated right above Ekta Books Store in Manbhawan Lalitpur. You can dive into our conversation with Mr. John Chhetri and maybe as a start-up discover some important views on investment choices too!
1. Tell us about your journey of starting this venture. When and how did it start?
Soanitech was officially registered as a company in 2016. Our concept was simple; we wanted to digitize books.
I have been working in the software and animation section since 2004 now. Before the inception of this venture, I used to run a company called New Harvest software in collaboration with a Korean businessman. We used to work in the website development sector but unfortunately, the company collapsed due to the sudden death of our collaborator and we moved on with the inception of this company.
2. How many people did you start with and how many people are there with you now?
Initially, we started with two people and as we started growing, our needs started to increase too. Currently, we have 18 people working with us including our Board members. This number was higher before we laid off some of our employees working in the Management Information System Department.
3. Could you share with us the reason behind laying off your employees?
Ah, it was a tough decision, but we had to make this call.
We were creating digital content of books by keeping the entire market of Nepal as our base. Unpredictably, our government introduced the Federal Education Act 2076. Now, as per this act, the seven provinces of Nepal and each municipal council is empowered to create its own syllabus; the central government can’t intervene to create a uniform syllabus for all.
This led to an increase in our variable cost, as a result of which we had to do some cost-cutting by letting some of our employees go.
4. So, what is your target market size? Has there been a growth in your market size in the past three years of operations?
Ekta books are our major customers for I-learning. In fact, Ekta Books is our primary investor. For our website services, we have more than 40 customers. On average, we provide website services to 2-3 customers per month.
5. You mentioned about how your needs evolved as you started to grow as a company. What do you think are the key needs of a start-up and how do these needs change as you start growing?
As the founders of a start-up, you really need to multitask. As such, you can’t just be a designer; you must have some knowledge in coding or CSS, finance, management, legal and other aspects of a start-up. Because, as a start-up, you do not have money to hire those from similar fields, so you need to have the mandatory skills. We, as founders, were greatly focused on our products and used to code a lot! But we also had to manage everything else from finance to marketing to bring projects.
Sometimes we would have to say no to projects that came our way because we didn’t have a lot of time and cash. So, your needs change along with your demand for human resources as you start scaling up.
6. And, what are the elements that startups require to scale-up?
For me scaling up means becoming efficient in what you do. For a start-up, the benefit of scaling up comes by investing in the development of your human resources. Because if you’re just hiring people then you’re only focusing on expanding and expansion is something start-ups can’t afford.
7. I have been told several times that investments are not important for a start-up to go big, rather it is more important to have the right market segment and a wide range of potential paying customers. What do you think?
Investment criteria differ for different nature of start-ups. If your product is exceptionally good then investors would want to invest in your company. Now, the tricky question is whether as a start-up you would want to accept that investment or not. Because when you bring in an investor, you bring in their expertise but you also bring in many clauses and agreements.
Saying this, if you are very confident about your product and are sure your customers will like it then you do not need an investor. However, in my personal experience, you need an investor if you are thinking of expansion.
Also, you should have a level of transparency, and clarity in terms of job descriptions and roles that each party will play in the company. Because when the investment is injected into the company it can blur your rational decision making, create friction between the two parties, and become disruptive for the wellbeing of the company.
In our case, we needed investment because we wanted to penetrate the book industry and grow. Accordingly, we received an investment from Mr. Ramchandra Timothy of Ekta Books. He is our Board Member as a result of which (a.) we do not have to worry about marketing (b.) we get to explore their network in Nepal, India, and Thailand, and (c.) we get to benefit from their rich expertise in both academic curriculum and government level. From our side, we brought in technical expertise and developed a mutually beneficial product. This way we created a common vision and synergy.
For startups looking for investments- you and your investment partner should always have a common Big picture!
8. How long did it take you to convince Ekta Books to invest in your company? How much have you invested until now?
To be honest, it took us almost one year. The main reason was that we ourselves were deliberating on whether or not to make the investment!
However, it is also very important to take your time and explore because it allows you to understand each other critically in a deeper level. As you are trying to work with each other for the long-term, it is always good to spend more time. I would recommend start-ups to have more conversations with investors before they actually sign the deal, especially tough conversations because it will allow businesses to move forward constructively.
Regarding the amount of investment, we have invested a paid-up capital of 1 crore in our company.
9. Did you find Ekta Books or did Ekta Books find you?
We approached Ekta with a primary proposal for the plan of action of our business. They took some time to think and revert back to us. There on, we had several meetings before they finally Collaborated with us and they became partners too.
10. How has your relationship evolved since then?
We have deep trust in each other. Mr. Ramchandra is not only a successful businessman but also a deeply humble person. By taking the time to recognize the human side of our investor had truly benefited both me and our company.
11. What are the investment opportunities available for start-ups in Nepal?
If you are a small start-up looking for small investments then there are plenty of opportunities. There companies like Antarprerprana, Nepal Communitere, and other organizations like One to watch, Rockstart Impact, CG who will invest 20-25 lakhs if your business is genuine and has a potential market. Although, if you are looking for a big amount say 5 crores! It can be difficult. But, this does not mean there aren’t any High Net worth individuals looking for investment opportunities. If you are looking for small investments, if you pitch well, and your product is good, you will receive funds without a doubt.
12. Do you think start-up competitions are a good way to get access to investment opportunities?
Yes, Start-up Competitions are a great platform to not only get access to investment but also market your product and network with people.
13. So, where are the investors? Where can start-ups find investors?
Well, the connected investment ecosystem is still in its developing phase in Nepal. To approach and build networks with investors, you can participate in incubation and venture programs. Even SoAni Tech’s journey can be traced back to when we participated in Living with ICT. But, a good way to start would be by approaching friends and families.
14. What are the crucial things that start-ups must keep in mind when approaching investors?
You should have full knowledge of your product and dedication towards your product. Investors recognize your passion and dedication because they invest in people and their persistence. Secondly, investors invest in a team so it’s always good to have a strong team.
15. Any suggestions that you would like to give to our readers?
Keep pursuing your passion and giving full effort in your business regardless of the hurdles that come your way. You are working to create a change. Of course, by receiving investment you gain the ability to overcome a lot of huddles, still do not be disappointed if you don’t. If your product and market are good then people will ultimately be interested. Concentrate on your product, your product will attract investors. Just pursue the best and your product will survive.
Interviewed and article by Shambhavi Singh.