"I am open to the idea of taking external funds," says Bhavin Turakhia

3 Oct, 2016

The Turakhia brothers, who are known to have turned billionaires by selling their bootstrapped startups which they built and scaled up without raising any external funds, are open to the idea of getting investors on board for their fintech venture Zeta.

"There seems to be a general notion that I am not open to taking external funds, and I just want to clarify that I am open to the idea of taking external funds," said Bhavin Turakhia, the co-founder of Directi group, a bootstrapped venture launched in 1998 and currently valued at $1.4 billion.

Turakhia said this in the context of Zeta needing a fresh investment of $25 million between this and the next financial year. Zeta is a tax benefits and payroll optimization services provider, which was launched in April 2015.

While an amount of $19 million has already been invested in Zeta so far, Bhavin said the company will require additional funds in the near term. "We have seen good growth in the past few months. Given our pace, Zeta will see an investment to the tune of $25 million in the current and next financial year that will be used for scaling up the business," he said.

On being asked by Techcircle, if he will be infusing the fresh funds internally, Bhavin said: "I am open to the notion of external funding for the next $25 million."

On the face of it, the idea of seeking external funds, however, seems implausible at this stage because the brothers are currently flush with cash after having sold one of their bootstrapped companies to a group of Chinese investors. "I am willing to put in the entire amount myself also," Turakhia added.

Of the $19 million already invested in Zeta, initial $4 million was put in by Turakhia and Zeta's co-founder Ramki Gaddipati. The subsequent $15 million was invested by Turakhia alone.

The Turakhia brothers (Bhavin and Divyank) were in news recently after Media.net, an ad-tech company they set up in 2010, was bought by a consortium of Chinese companies for $900 million in August.

This wasn't the first time the brothers sold a bootstrapped company and made millions. In 2014, Endurance International Group, a provider of cloud-based SMB solutions, had acquired their flagship firm Directi group's four businesses for $160 million.

Meanwhile, Zeta offers tax saving solutions to employees as per legal provisions on fuel reimbursements and other allowances such as mobile phone and internet bills and expenses on books and periodicals. These solutions are in addition to Zeta's existing offerings that include meal vouchers, medical reimbursements, gadget and gift cards. Zeta gets a commission of 1-1.2% from merchants on its coupons. Currently, it is free for enterprises but the company plans to charge a small margin from them, at a later stage. "It is not going to happen in the next 6-12 months," Turakhia clarified.

More than 300 companies, including 35000 users, ranging from start-ups to conglomerates across industries, have already availed of Zeta's solutions, the company claimed.

Turakhia says only 1 million employees in India use meal vouchers, compared to about 10 million employees who can use these meal vouchers but do not because their companies find the process of offering coupons cumbersome and costly.

Sodexo and Ticket are the two biggest players in the meal voucher business in India.

Like this report? Sign up for our daily newsletter to get our top reports.