Does your biz plan have sanity?

He thought up an innovative business plan and PE funding came knocking on his doors. R. Subramanian on what it takes to attract the right investors and what budding entrepreneurs should keep in mind...


An IIM Ahmedabad pass-out opening a local retail store was something quite unthinkable in 1997, but not today, when Subhiksha, and its ‘morcha against kharcha’, has become a household name. But to take this morcha to a pan-India level needed deep pockets, which R. Subramanian, MD of Subhiksha did not have at that time. But, impressed by the vision of this man, ICICI Venture Capital decided to back his plan and till date continues to hold a 24% stake in the company. R. Subramanian, in conversation with 4Ps B&M, tells his side of the story.

You started Subhiksha from just one store, with a meagre investment. What set the ball rolling?

We did put in Rs.5 crore before we took in VC/PE funding – it was tough, not so much for the money part of it, but because we were starting a new business line, which was in its infancy those days. More importantly, we were creating a new business model.

When did you decide to approach ICICI Venture Capital?

To be honest, we were lazy (smiles). It was ICICI Venture, which got in touch with us, saying that they wanted to fund us. The first part of outside funding for Subhiksha came in August 2000. By that time we had been in business for about three years. We then had 50 stores, operating only in Chennai. Funding was important because it came at a time when we were ready to grow geographically, as we believed we had a working concept.

How did the funding help Subhiksha beyond fund infusion?

The funding actually also brought credibility for a new business model and helped in getting some external perspective to what was only a management run company till that stage.

What do VCs looks for before granting funds to entrepreneurs?

I think the foremost criteria that they would look into would be whether they will make money. Also commitment of the promoter/entrepreneur and not to forget, the sanity of the business plan.

A word of advice for budding entrepreneurs looking for PE funding?

When you are small, I think the chemistry and shared wavelength with the financing partner is as important as the money itself – be careful about who you raise money from – be sure that there is broad common alignment as far as what you and they are looking for.

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Source : IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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