Germ of an Idea | A Kerala rail station, a Mariah Carey song and India’s 100th unicorn

Open co-founder Anish Achuthan.

Note to Readers: The Germ of an Idea is a series about the entrepreneurial concept–how it was conceived, shaped and launched, detailing the early days filled with uncertainty and apprehension, the bold steps taken and the eventual success. The series hopes to inspire thousands of potential Indian entrepreneurs who are on the cusp of starting up or have ventured recently or are currently in schools and colleges dreaming of turning founders.

The Thiruvananthapuram railway station in Kerala is always bustling—not the place where you will see too many passengers sleeping on benches.

But for Anish Achuthan, the station was his refuge, an escape and a place he spent numerous nights during his difficult teen years. His food, on many days, would be the prasad from the temples in and around the city.

For a Class 10 pass-out, who did not go to college and lived away from his parents, life was hard.

“But I was always hopeful. Deep down I always wanted to prove some people wrong,” says Achuthan, the founder of Open Financial Technologies, a neo-banking platform, which in May became India’s 100th unicorn, a privately owned company worth $1 billion or more.

It has been tough. Achuthan didn’t keep in touch with his parents after school. Like all middle-class Indians, his parents were keen that he join college for a secure future but Achuthan wanted a different life, the one he could live on his terms.

Trains kept rolling in, disturbing his sleep. He would often freshen up in the washroom at the station but his pursuit of technology continued undisturbed.

The Germ

Growing up in Perinthalmanna, a small town in the Malappuram district of Kerala, Achuthan hoped to become a journalist. “I thought one day I would become a television journalist. That was my plan.”

But then the tech bug bit him. Internet was his guru and he realised there was nothing he couldn’t learn from the net. He moved to Thiruvananthapuram, where some of his friends were studying engineering. He learnt from them as well.

Inspired by stories of people like Hotmail founder Sabeer Bhatia, Achuthan wanted his own company. His first company was acquired by the media group Asianet. He had set up a short code for its reality shows. He set up more companies and sold them at a good price.

Cut to January 2017. Achuthan and his wife Mabel Chacko were on a holiday to Kabini in neighbouring Karnataka.

“I told Mabel that I have a new idea and she was like please, at least during a vacation let’s not talk about work. I was thinking about business banking for SMEs. A few companies in the US were already doing that but Mabel was apprehensive about the idea,” he said.

Over the next two months, Achuthan researched neobanks. A neobank is a digital bank with no physical branches which offers mobile-first financial solutions. As digital payments become popular, neobanks, too, have been gaining ground.

Achuthan wanted a neobank that would serve small and medium enterprises, which lacked banking support. He discussed and managed to sell the idea to his brother Ajish.

By then, a fourth co-founder, Deena Jacob, formerly with TaxiforSure, had joined the team as the chief financial officer.

When Achuthan was working with Citrus Pay, which was later acquired by PayU, he had the chance to closely observes small businesses.

“I learnt that business banking was broken for small businesses,” Achuthan said. Businesses used multiple platforms to manage finances right from managing a current account with a traditional bank, a payment gateway to collect online payments, an accounting tool and invoicing tool, payroll platform and many more.

“Managing these platforms and reconciling payments was a big hassle and took a lot of time away from an entrepreneur,” he said.

“That's when we came up with the idea of Open, where we wanted to create one unified platform where an entrepreneur or a small business could manage everything from banking to automated accounting to bookkeeping, compliance, expense management and payroll in one place.”

Savings were low and EMIs would be affected if no revenue came in. “It was a precarious situation for us financially. Where would the cash come from? Just like all middle-class families, we had our loans to pay. That’s when my former boss at PayU, Amrish Rau, said he wanted to meet me in Bengaluru, my new city of operation,” said Achuthan.

Rau had a meeting with tech giant Infosys co-founder Nandan Nilekani that day and wanted to meet Achuthan in the second half.

He knew that Achuthan was working on a new idea and wanted to know more about it. Achuthan was evasive but Rau, also an angel investor, was persistent.

“ ‘Anish, look into my eyes. Tell me about your new project’, he said. 'Meet me in Delhi’, Amrish requested,” said Achuthan, recalling the conversation.

They did meet and soon a cheque of Rs 2 crore was on the table, courtesy Rau and Jitendra Gupta, who, too, had been Achuthan’s boss. Open was born.

Early Days

All the people who met Open’s founders Achuthan, Chacko, Ajish and Jacob said neo-banking would be a tough nut to crack. Banks were not confident of the startup’s ability to see the idea through.

But the employees were upbeat. “If the employees were frustrated, then we as founders also would have got frustrated.”

In 2017, neobanking wasn’t well known. “We were Asia’s first SME neobanking platform and all our competitors were either in Europe or the American market. The first year was the most challenging where we had to convince investors and banks about our product and how it was solving the banking problems businesses face.”

Since most of the major banks were in Mumbai, Achuthan moved to the country’s financial capital for a while along with his newly hired banking alliance head, who joined the Open a fourth of his previous salary.

After more than a year of building rapport and convincing banks, they roped in ICICI Bank as their first partner bank.

“We had 15 days of money left in the bank at that stage,” Achuthan said.

Soon, Japan’s Recruit Group got in touch after reading about them. The Kerala government’s Fund of Funds also reached out –that’s why the company has its registered office at Perinthalmanna.

Their first big break followed. Investors including Recruit Strategic Partners helped them raise their pre-series A round. “This was at a time when most Indian VCs (venture capitalists) had written us off.”

It couldn’t have come in at a better time—the company was running out of cash. Open launched its first product in November 2018 after which sales started picking up. Once ICICI became a client, they quickly snagged 5,000 customers.

In March 2019, Big Daddies of investment were knocking on their doors. New York-based investment firm Tiger Global sent an email. “It was a bit unbelievable. They wanted to talk to us for 30 minutes and were prepared to fly down to Bengaluru. A cheque of $30 million for our series A round – that was Tiger Global’s offer. It was a big moment,” Achuthan said.

As a Tiger Global-backed start-up, Open was making waves and the next round fuelled by IIFL turned the startup into a unicorn. The series D round led by IIFL also saw participation from existing investors Temasek, Tiger Global and 3one4 Capital.

Open had become India’s 100th unicorn. The latest round came six months after it raised $100 million in a round led by Google, Softbank, Visa and Temasek.

“My parents are proud now,” Achuthan said.

The backstory

The early years were like living in a dark room, Achuthan said. “I’ve slept hungry sometimes. It’s not easy living in railway stations but hope drives you forward.”

For him, it was all about absorbing every single bit of information from the internet—he had no other teacher. There was only one internet café in Kozhikode those days and it was at a distance but that didn’t deter him.

He read to keep himself abreast of all the developments in the tech world which was changing at a breath-taking pace.

His appetite for tech knowledge was evident to all his friends. He soaked in everything and built a future that even trained engineers found difficult to fathom.

Achuthan co-founded his first start-up iFuturz Wireless in 2001, which was sold to Asianet. Six years later, he founded Cashnxt, which was into mobile payments for the semi-urban and rural markets.

In 2009, he founded Neartivity Wireless, an NFC-based payment platform and four years later, he set up Zwitch, which was acquired by Citrus Payments. Chacko, who he married in 2011, was part of the Cashnxt, Zwitch and Neartivity projects. At Zwitch, his brother Ajish also joined in.

The road ahead 

Open is regarded as one of Asia’s foremost neo-banking platforms that work on a software-as-a-service (SaaS) model.

As an early starter, it enjoys a distinct edge. It has 27 lakh customers, according to Achuthan. Its transaction value has crossed the $30-billion mark and over the next year, Open plans to disburse loans worth Rs 7,500 crore.

While Open started as a platform for small businesses, it has evolved into a digital banking enterprise today. Apart from Open Money, its SME service, the startup has created Bankingstack, an enterprise digital platform for financial institutions and banks that enable them to launch their own branded neobanking offerings and Zwitch, an embedded finance platform.

Its new products also include Open Flo, a product tailored for ecommerce businesses, Open Settl, an early settlement credit offering, and Open Capital, a working capital lending offering for SMEs.

Open is buzzing with ideas and products, much like the Thiruvananthapuram station, which has since been refurbished with better amenities. And, it has added more benches. Once in a while, Achuthan goes and spends some time there. “There are these lines by singer Mariah Carey that keep me going every year,” he said.

“Lord knows dreams are hard to follow. But don’t let anyone tear them away. Hey yeah, hold on, there will be tomorrow. In time you’ll find the way."