I like the business, the technical capability & the customer support (the reviews are extremely positive with a large mention of customer support), my only concern is the aggression of the management.
Mr Swaminathan has been saying this for a while now that they need money to spend on marketing & sales. With every new mandate coming up, a fresh market is created & is ripe for the first year or two before the deadline. The companies need to comply & are open to anyone who’d reach out. This is a much easier way to get a client. The other way is to try & convert a client who uses a competitor’s solution. This is way more difficult as the client’s compliance team has gotten used to the existing solution & there is a training effort etc, that too only when the competitor doesn’t offer to reduce the prices himself to retain the client.
In the current environment, with new mandates springing up, I think the management can spend heavily on sales & marketing. Once a customer is signed up, the SaaS model is such that the cost of incremental clients is extremely low & only sales the meaningful cost. The LTV for each customer would be quite high.
The management has talked about issuing rights to fund this but seems way too focused on not diluting at these valuations. IMO the focus should be growing the business. Having said that, I hope the money generated from the windfall growth in collect business gets redeployed here.
Disclaimer – holding for over a year
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