Asish Mohapatra’s journey from being an investor to building a fintech startup at scale

“I think I was a good investor, not a great one. I was a good consultant, not a great one,” says Asish. When he started OfBusiness in 2016, within the first three-to-four months, the startup was clocking a GMV of Rs 15-20 crore. It also had a positive NCM 3 (net contribution margin 3) and burning Rs 50-60 lakh. 

While several investors and friends told Asish that it was the highest GMV company in a quarter, he still felt something was amiss. 

“I have always believed in my life that the biggest differentiator that a company can have, or the biggest calling card that a company can have is profitability. While we were in a great march towards that, the reality is the health of that profit is under question because every commerce company, once it attempts to scale, essentially has to solve for financing,” adds Asish. 

He explains B2B commerce companies fundamentally have a credit term involved; the business is not done in advance. Thus, to be able to make a financing transaction, you need to have different capabilities. And those should be around debt raising (because debt is cheaper than equity), underwriting, and collections. 

Building towards profitability 

“You could easily build an unprofitable company unless you care about these three capabilities. I fundamentally thought that those are capabilities that we need to invest in, internally. Now, I also realised that most of the people were buying from us. Not because we were cheaper or we were faster, but because our credit terms were better,” adds Asish. 

If they were offering a seven-day credit term versus a 90-day credit term, the deal conversion was far easier. And it gave Asish the clear sense that the customers are coming to them because of the financing problem. “And the capabilities that they had invested in during my first three-to-four months of the journey were not the ones which were attuned towards financing.”  
That is when he realised that this is something that is not going to scale. “This would probably end up being a dent and a hole again. So, at the peak of our performance with the team, around June 2016, we realised we had to change. It was an arduous journey after that, but we had to change,” he adds. 

During this journey, he found that there are four capabilities needed to bulk great financial services startup. Those, he says, are: 

• A salesforce – It could be automated, driven by technology. It could also be helped by technology, but you need to have a great sales mindset because finally, you need a customer who you can acquire.
• Study the risk to figure out the correlation to the customer’s real business. 
• Raising debt because fundamentally, the business is about creating leverage. So, if you’re building an equity lead financing business, then you’re going to be hard spent in a very short term.
• Collections, because it is a business wherein you have to get money out, whether it is through your own efforts or by outsourcing efforts. 

The next thing was that Asish had to learn about collections and underwriting.

“It was just pure hard work and perseverance. I promised to myself that I was going to read through at least three balance sheets a day for the next three months. I talked to as many people and just listen. Listen, read, persevere at it. And I think I developed that capability wherein I understood the theoretical part of it,” says Asish. 

He then started underwriting for himself for the first nine months. 

Working with the team 

While, as a founder, you decide to make these shifts and changes, Asish adds the team needs to follow-up: 

• People at the top have to start it – He adds people at the top, have to speak the exact same language. 

• Second, you have to force people to consciously develop a risk mindset, which not many of us do because fundamentally, we are empiricist in nature. He explains that we want to be imperial in the way we build our businesses and hence, it has to be drilled down slowly, steadily, and patiently with people who have that mindset. But when they see that the seniors around them are doing and that business outcome is dependent on that, they’ll change, however, slowly. 

What he realised that there are pointers that further helps in shifting and scaling: 

• Being customer-centric is necessary but it is never sufficient: Asish says you cannot stand on your ground unless you are customer-centric. Being customer-centric is never a differentiator; it’s a necessary condition. 
• Be technology-led: He says you need to have technology in your businesses because without that you won’t have access or low-cost access. Thus, you cannot have efficiency in your processes so that you can cut costs. 

Building a strong core and founding team 

Asish adds that to scale a company, it is also important to have a strong team and a set of founders. He adds there are four steps to that as well.  First, you select somebody who fundamentally has a capability that is different but complementary to yours. You should respect that complementing capability. 
The next one is to create a clearly demarcated space, differentiated from everyone. “They need to own that as an empire that is completely their space. They run their own space, I run my own space, and you don’t interfere with each other professionally,” says Asish.
It is important to create a platform where everyone can bounce off ideas. Also, a platform where people can share their experiences. 
Finally, make sure that whether it is a co-founder or a management trainee who’s just joined you, their efforts are celebrated.

“If these mantras are true, according to me, you can find a great co-founder in the journey. It is about treating somebody with so much respect and trust that you do not need to even think behind your shoulder once you’ve entrusted him with that responsibility and vice-versa,” says Asish.