“Investors are too shy, they won’t invest in my idea. They want a business plan, a prototype and bloody traction. They don’t want to take any risks. I’m going back to my job.”
Does that sound like someone you know? In the startup world, you hear this all the time. But here is the thing: if you have a good idea and the chops to pull it off, investors will cut you a cheque. Meet Attero, a company that deals with e-waste, more than 8 lakh tonnes of which was estimated to have been generated last year in India.
In 2008, the founding team raised seed funding from IndoUS Venture Partners and Draper Fisher Jurvetson ($6.3 mn) when they had only a power point presentation and an idea. This is a rarity in the Indian startup scene. What did they get right? “The market was unchartered territory. It was wide open. We put together a great team and had clarity of thought. I will not discount luck,” Nitin Gupta, Attero’s co-founder summed it up neatly in an interview with NextBigWhat. Here’s what really worked for them.
1. Founder Pedigree
No point denying it. Founders from top colleges get more investor attention. While this is slowly changing, pedigree still matters to many investors. In Attero’s case, all the members of the founding team are highly qualified and experienced. Nitin Gupta is an electrical engineer who went on to do an MBA from NYU Stern School of Business and worked for a few years.
Nitin’s brother Rohan Gupta, the COO of the company, is an engineer from Regional Engineering College- Jaipur and was part of the founding team at Cinesprite Entertainment.
Rajat Verma, the other co-founder is an MBA from Harvard Business School, an MS from Stanford and a B Tech from IIT Kanpur. Pranamesh Das, Attero’s director of technology, an electrical engineer from IIT-D, has more than 11 software patents to his name and has founded companies before. Saurabh Gupta, their Chief Financial Officer is a PhD in Finance and has worked in top companies.
Really, is a blue chip degree all that important? You don’t need a blue chip degree to startup. Many successful startups are founded by college dropouts or even people who haven’t been anywhere near a school. But for investors, its just a tiny bit easier to go with founders with blue chip education and a proven track record. We can debate how successful that thesis has been but that’s for later. According to a survey by Canaan Partners, nearly three out of four early stage tech founders who raised funding in FY13 from Mumbai had a blue chip degree. The number is similar in Delhi. In Bangalore, one in two founders who raised funds in FY13 had a blue chip degree.
Attero clocks nearly Rs 12 cr revenues in a month now. When they started out in 2008, there were very few players in the e-waste space globally. More than 90% of the e-waste was being managed by the unorganised sector which had inefficiencies and hazards at multiple levels. Attero had thought through a clever plan to set up a sourcing mechanism from the informal sector, consumers and manufacturers.
The company collected more than 250,000 cell phones last year to extract precious metals like Gold and Silver. The growing consumer electronics market (estimated to be around $35 bn at 17% annual growth) leads to more and more waste and the potential was apparent from the beginning. It was now a question of devising the technology. “In electronic waste, the feedstock has intrinsic value in it. Right technology disruption could change the market dynamics,” says Gupta.
3. Strong Technology & Team
Attero has developed strong technology which makes it easier to defend their startup. “Only six companies in the world are equipped to extract precious metals from e-waste. The difference in our tech and theirs is that their minimum viable plant capacity is 100,000 tonnes per annum at a capex of $100 mn.
We innovated around the technology. Our minimum viable plant capacity is 2000 tonnes per annum at a capex of $2 mn,” said Gupta. Which means that the company can do distributed low cost electronic waste processing. But when they raised funds, this wasn’t even ready. They had no research and development work to prove their worth to investors. But then, Gupta says,“If you take anyone at Attero, you’d find a passion for engineering and environment.” This worked for them from the start. The company now employs about 180 people.
* This article was edited for minor inaccuracies.