Srikanth Velamakanni has raised over $685M for his AI startup. A company that has now been working in this space for over 20 years.
On the Dealmakers Show, Velamakanni talked about fundraising and giving your investors an exit, how they’ve approached doing over 10 acquisitions of their own, NPS scores and long-term thinking, how to treat your employees on the way out, and the downside of AI.
The Ultimate Guide To Pitch Decks
Math & Psychology
Srikanth Velamakanni was born in India. His father worked for a big oil company, which took their family to many parts of the country.
That meant learning to make new friends in every state and city they moved to. While painful at the time, it has equipped him with the confidence that he can go live and build a network anywhere, and be comfortable there.
Even in the past few years, he has continued to travel for work and live in different places, from California to New York, and Mumbai.
No one in his family was an entrepreneur. In fact, startups or entrepreneurship were not seen kindly when he was growing up. Security was all about going to work for a big company.
Even if you wanted to do your own thing, then raising capital would be very difficult. His father even drilled into him that there was no such thing as an honest business person.
So, Srikanth followed a more traditional route. First pursuing his undergrad in electrical engineering. Then his MBA.
Two things that he says that he has always loved are math and psychology. He soon found that going into finance was more about law and relationships. He ended up in investment banking, and working in asset-backed mortgage debt.
He rode some of the ups and downs of the global economy. Though eventually, he really just wanted to do something more meaningful with his life. Something which he saw entrepreneurship could offer.
Everything else began aligning with this switch too. The dot com boom created more excitement about tech startups. In turn, making it easier to raise capital, and find good talent to work with you.
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Srikanth Velamakanni got together with a few others who wanted to become entrepreneurs. They quit their jobs even before they had a business idea, and went in search of something to work on.
After exploring a few things, they really dug into what their own strengths were. That came back to math and psychology. Specifically honing in on using data and mathematics to drive decision-making. Which was still an early concept back then. Then in turn using AI for decision making.
They began with building models for a bank. As interest in AI has grown, along with their business, they’ve gone on to serve Fortune 100 companies, as strategic partners in driving their analytics and AI transformation in their companies.
Which can be around customer insights, customer analytics, personalization, reducing friction, improving productivity, building new products, and more innovation.
The Most Important Metric In Your Business
As with many technical founders and startups, while they were riding high on their craft, and what their technology could do, one of their advisors and coaches eventually challenged Srikanth on how customer-friendly focused the company really was.
They thought they were helping customers tremendously with their work and the outcomes they could produce for them.
After reflecting on this, he made the decision to lead his company to become more customer-centric.
That led to them putting far more priority on measuring their NPS score. Then using that as the measure of their success. While focusing more effort on improving this key metric.
Ensuring each customer they engaged with would become an advocate for their business, is a principle they also began carrying over to their own employees and workforce too.
So, even if people joined out of college, and ultimately moved on to other companies, they would be vocal advocates who continued to talk well about them and refer them business.
Since starting out with a few checks from friends, Fractal has now raised $685M in capital. In addition to millions raised through a subsidiary, and other startups.
Storytelling is everything which is something that Srikanth Velamakanni was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) where the most critical slides are highlighted.
Remember to unlock the pitch deck template that is being used by founders around the world to raise millions below.
In fact, they’ve also acquired 10 other companies on the journey as well.
One of the biggest challenges facing most founders and startups is that once they take outside money, especially from venture capital firms, they are on the clock.
Those funds typically only last 10 years, after which they must get back their capital and returns so that they can deliver them to their own investors.
If you get money when they are already four to six years into their fund, that can really put on the pressure, and lead to poor short-term decision-making or a forced exit.
Fractal has approached this by understanding the dynamics of their investors and structuring themselves to be able to deliver on those timelines, while not being forced to change their vision.
Instead, they have done a lot of secondary financing to cash out early investors and keep on growing. Some of whom have enjoyed 400x returns.
Listen in to the full podcast episode to find out more, including:
- Fundraising and managing investors
- The downsides of AI
- How to ensure successful acquisitions
- This founder’s top advice for other aspiring entrepreneurs