Weekly Startup Profiles > Adventity
|When these senior executives at leading banks saw the opportunity to provide out-sourced financial services, they didn't hesitate. Their departures made the news - the result? Even bigger news.
Niche financial services KPO
It was mid-2003. The BPO wave had hit Indian shores, and the success stories began to ignite the imaginations of dormant entrepreneurs. Kumar Subramanian was one of them. The Head of Operations at IDBI bank had been mulling over the idea of starting his own business for a while.
"In early 2003, I was approached by a lot of the foreign banks who were looking to set up their back office operations in India. They wanted me to head the operations, based on my nearly two decades of experience in the banking and financial services industry." That, he says, started the thought process for starting his own business. "I knew there was an opportunity in the space."
At the same time, on the other side of the globe, Niket Patankar, an investment banker with CSFB was fired by a similar idea. Patankar knew firsthand how much investment bankers in the U.S. earn. He also saw how off-shoring certain functions could increase revenues per banker for investment banks.
Similar ideas and common contacts brought the two of them together, along with three other co-founders. And very soon the idea crystallized into a blueprint for a company. "Between the five of us, we knew we had the knowledge and the experience to get started," says Kumar. "It took another four months to find money to fund our plan."
Adventity offers research and other high-end services performed by MBAs and finance graduates from leading Indian universities to investment banks in the US.
Kumar explains their business model: "A typical investment banker in the US earns about a quarter of a million dollars a year, and services about 2-3 clients a month. Adventity offers to help him with research and other day-to-day activities. This would help free up his time so he could then service a larger number of clients and thereby bring in more revenue for the bank."
The founders knew from experience just how large this opportunity might be: "Each of the top investment banks probably has about 3000 to 4000 analysts, each of them will be working on at least 2-3 deals, so seriously, there's plenty of work to go around."
Still, the business process outsourcing industry was hardly an open field. With so many players in the off-shoring services field, how did Adventity stand out? "The different between us and the large, voice-based BPOs in India was that we had domain expertise - we all had banking experience. We understood the processes very well," says Kumar.
In addition, they decided not to compete simply on price. Kumar explains, "We decided instead to try meeting the business heads and talk to them about how we can add quality and increase revenues. That got people intrigued." He adds, "Our strong resumes helped us."
We actually walked the streets looking for money. We went out and met VC firms - everybody who was willing to meet, says Kumar.
However, they found that most of these VC firms had already invested in call centers, and their response was, "Since we've already sunk in money into the voice-based companies, why don't you just join one of them and help them grow up the value chain."
Unwilling to compromise, they turned to angel investing and got lucky when a mid-sized industrial house in Mumbai agreed to back them. "They gave us 6.5 million dollars in cash and an office facility in Mumbai worth four million dollars," says Kumar. That set the ball rolling.
Later, in early 2007, they received their first institutional funding of $20 million from Silicon Valley-based Norwest Venture Partners.
Five can sometimes be a crowd but for Adventity it led to a winning team. "It's almost as if we found each other. Our core team of five was formed within about 20 days," says Kumar
He explains how when he, along with Ulhas Deshpande, the personnel head at IDBI, decided to quit and start their own venture, it made news in the Economic Times. "Our third partner, Vivek Arora, who had worked with me in the past, happened to read the article and that's when he got in touch."
Vivek also linked the team to his former classmate Niket Patankar in the U.S. Niket was fishing for the right India partners. There was an instant fit. Niket's old colleague Jagdish Iyer joined the team as the fifth partner.
Small beginnings soon led to exponential growth and today the employee base is about 3,000 and still growing.
Adventity's advantage, says Kumar, is its client base. "As of today, we have over 65 clients spread over the various business divisions and our client roster includes enviable global banks," says Kumar.
They were also the first to enter the mortgage origination business. "When we entered the market, I-Gate and Progeon were the only two companies in India handling mortgage servicing. We again took an approach which is contrary to others, we decided we'll work on mortgage origination as well, which is basically increasing the number of loans, not just servicing the existing ones," explains Kumar.
Origination of mortgages meant a lot of groundwork including being licensed in all 50 of the U.S. states. The groundwork took Adventity 18 months and it's today successfully licensed in 42 U.S. states. "It was a lot of effort but it gives us a high because we know that it's all the more difficult now for any other BPO company to replicate this model," says Kumar.
Well for Kumar, literally everything. "I actually spend 24/7 at work and I even have a room with a bed within the office facility. I'm what you'd call a live-in CEO," he says with a laugh. So obsessed is he with his work that he has an arrangement with his wife wherein the days he's working he spends all his time at the office in Mumbai, and once in a while he takes off to Chennai to spend time with his family.
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