Customer funding is the best form of funding and startups need to rethink the necessity to raise big money from investors before actually launching their product, said Shaadi.com’s founder and chief executive officer Anupam Mittal.
“If you can build a business where you have negative working capital, then the customers’ belief works,” said Mittal, speaking at the TiEcon India Unicorn Summit 2022.
“It’s best to start a venture, do whatever - beg, borrow, steal - from family friends or fools and put together whatever you need and get that product off the ground. You can use customer funding, which is revenue, and in my opinion, that’s the best form of funding and that’s how we started,” Mittal added.
Mittal also said that Shaadi.com didn’t raise capital initially as it managed to generate revenue from its customers, which provided for its working capital needs. He further added that his team also did side hustles like IT services for people to raise money.
“If you want to build a company known for that (prioritising business over raising funds) then probably you’re on the right path and then you will probably find the money. But if you're building a company because you think you can raise a big fat cheque from a VC, I think you’re in the wrong place,” Mittal said.
To be sure, Shaadi.com has raised only $8 million in funding to date, according to data analytics firm Crunchbase. The company, which offers an online matrimonial platform, was founded by Mittal in 1996. It’s one of India’s oldest internet companies.
Mittal’s comments come at a time when venture capital (VC) and private equity (PE) funding to India’s startups is slowing down amid a correction in global financial markets. Many startups are finding it difficult to sustain and are resorting to mass layoffs and streamlining of verticals. Startups are also cutting costs by spending less on advertising and marketing and are downsizing their expansion plans.
Mittal, a serial entrepreneur, who’s also an angel investor, recently featured on the reality show Shark Tank India, an Indian adaptation of the global business reality format - Shark Tank.