2 deals, 22 years apart
Netcore Cloud invested close to $100 million in Unbxd to buy out all the investors and take a 90% stake. Netcore is a Mumbai-based B2C SaaS company with a full-stack customer communications, engagement and experience platform for B2C companies. Unbxd provides AI-based search and product discovery for B2C brands, and is based in San Mateo, California and Bengaluru. Netcore’s strengths in India and emerging markets complements Unbxd’s customer base in the US and other developed markets. Netcore’s $85 million ARR combined with Unbxd’s $10 million ARR creates a combine with nearly $100 million ARR.
So, how did Netcore buy out global investors in Unbxd without ever raising capital? In a world where most new age companies lose money, how did Netcore build a profitable foundation? This is the story of how we built a $100 million ARR (annual recurring revenue) proficorn – private, profitable, bootstrapped and highly valuable. (Other examples of bootstrapped Indian B2B SaaS proficorns are Zoho, Wingify and Zycus.)
But first, a little detour to a day in late November 1999 when I was on the sell-side of a $115 million deal.
I had built IndiaWorld as India’s largest Internet portal. It had been the first India-centric portal to launch in March 1995 – just around the time Yahoo and eBay had launched for global audiences. It was the early days of the Internet – commercial access in India was made available five months later in August. IndiaWorld was not my first entrepreneurial venture – for the past three years, I had failed with multiple initiatives after my return to India from the US; a multimedia database venture and an image processing platform were the two prominent ones.
IndiaWorld grew to be very popular among NRIs (non-resident Indians). Its family of portals included Samachar.com (news), Khoj.com (search), Khel.com (cricket) and Bawarchi.com (food). We also designed and managed over 200 corporates websites. IndiaWorld was profitable since its early days – revenues coming first from website design and hosting, and then from advertising.
In late 1999, I saw many other Internet companies raising capital and spending aggressively for growth. I had tried to raise capital through the past four years and failed. It was then that I got two offers to sell; in a matter of weeks, our valuation rose from $40 million to $115 million in a competitive process managed by DSP Merrill Lynch. And so it was on November 29, 1999 that the acquisition of IndiaWorld was announced by Satyam Infoway, which had just listed on Nasdaq about a month ago.
22 years later, I was participating in a similar-sized deal – this time on the buy-side. Netcore, in its 25th year, was investing $100 million to take a majority stake in Unbxd. The capital was coming from Netcore’s internal accruals, thanks to 15 years of consistent profitable growth under 3 CEOs (Abhijit Saxena, Girish Nair and Kalpit Jain). I had stepped back from active day-to-day management in 2007 to ensure that Netcore became a professionally run company and was not constrained by my limitations as a founder.
As an enterprise software company which has made the transition to SaaS, Netcore’s investment into Unbxd is planned as an accelerator on our path to an IPO – to ensure not just that the global growth story continues but that the 25% employee holding in Netcore gets liquidity and enables wealth creation for our past, present and future employees. For me, the vision is to build Netcore into an enduring great company. As I wrote at the start of 2022: “Netcore has a unique opportunity to build a “profipoly” – not just for ourselves but also for our customers. As an entrepreneur, nothing can be more exciting – lead the creation of a new world with the power of our ideas and products. If we execute well, Netcore can truly become a global company, with all the right adjectives – growing, profitable, enduring, great, forever. The leaders will change, but Netcore as an institution should thrive. That is the best legacy of an entrepreneur.”
Bootstrapping a $100 Million ARR SaaS Company: The Netcore Story (Part 2)
Netcore + Unbxd
From Netcore CEO Kalpit Jain’s blog:
Founded in 2012, Unbxd provides AI-powered search-personalization to leading eCommerce retailers and D2C brands. They offer best-in-class product discovery and search relevance to significantly improve customer retention and conversions. Their customers include marquee brands across the USA, UK, and Australia, including Mattress Firm, Express, Ashley Homestore, Home Shopping Network, Advance Auto Parts, The Children’s Place, Mitre10 and Kookai.
Bigger, Better, Stronger.
- With Unbxd, we now have a strong foothold in the US and developed markets.
- Strengthen our dominance in India and SEA.
- Immense cross-selling and upselling opportunity
- Unbxd’s AI-powered search solutions augment Netcore Cloud’s full-stack Digital Experience Platform (DXP), enabling eCommerce retailers/ D2C brands to deliver a rich shopping experience.
- Beyond the product, the Unbxd team shares our strong commitment to solving customers’ problems through technology and innovation.
What does this mean for our customers?
- Enhanced capabilities in product discovery and search optimization, eCommerce retailers and D2C brands will be able to forge connections with consumers by delivering a relevant and memorable experience.
- A unified view of the consumer, with an entire user journey in a single platform delivering bespoke experiences.
- Interactive feedback loop for crafting an effective customer retention strategy.
- Excellent monetization capability, harnessing the power of search personalization and a full-stack digital experience platform.
- Delivering 5-8x times the ROI on marketing spend by increasing conversion rates and lifetime value.
Since 2019, Netcore Cloud has undertaken three major acquisitions, the first being Quinto.ai (Conversational AI platform), followed by Boxx.ai (AI-First Omnichannel Personalization & Recommendation Engine) and Hansel.io (Real-time no code, product experience platform). These three platforms, teams, and capabilities are already successfully integrated with the Netcore Cloud Platform.
Added Unbxd co-founder Pavan Sondur: “From a place where we had no money, no product, we quickly grew to be one of the most innovative eCommerce search engines to ever exist in the market. Our goal was to provide a seamless eCommerce experience that can generate profitable growth and recover the lost revenue of businesses. And there were several investors along the process who believed in our vision and pushed us forward…Joining that league today is Netcore Cloud. Netcore Cloud is a bootstrapped SaaS company that helps B2C brands and marketers create AI-powered new-age customer experiences at every touchpoint of a customer’s journey. Netcore Cloud’s full-stack marketing platform enables highly personalized digital experiences that are easily scalable and provide actionable analytics, real-time reporting, and quick to implement solutions across channels.”
Bootstrapping a $100 Million ARR SaaS Company: The Netcore Story (Part 3)
Media Coverage – 1
The story about the Netcore-Unbxd partnership was broken by Saritha Rai of Bloomberg. (Incidentally, Saritha had done a story for TIME magazine in February 2000 about my IndiaWorld’s sale to Sify for $115 million. IndiaWorld was also bootstrapped and profitable – a proficorn!) From the Bloomberg story (an ungated version is available at Business Standard):
Rajesh Jain, 54, a pioneer of India’s internet industry, is readying his second startup Netcore Cloud Pvt. for an initial public offer within the next year, fresh after a $100 million acquisition this month.
“We’ve had initial conversations with half-a-dozen bankers and the formal process will start in the next couple of months,” Jain said over a Zoom call discussing the acquisition and the IPO. “We are targeting an IPO within the next nine to 12 months.”
Mumbai-headquartered Netcore is a software-as-a-service, or SaaS, startup that specializes in offering customer communication and engagement solutions to businesses. It bought about a 90% stake in San Mateo, California-based e-commerce search-personalization company Unbxd Inc.
The acquisition would strengthen Netcore’s offerings to its roster of global customers such as Pizza Hut Inc., The Body Shop Inc. and Tommy Hilfiger Corp. The deal would also boost the company’s subscription revenues to $150 million annually within the next 18 months from about $100 million now, Jain said.
Economic Times wrote:
Netcore sells marketing automation software to ecommerce firms and D2C companies, a crop of internet businesses for whom quality of search is critical for purchasers to close transactions. The search optimization algorithms of Unbxd would help Netcore’s customers offer better discovery on their platforms. “Many of the ecommerce companies other than the large ones such as Amazon, search is a big gap, and this is what unbxd cracked very well. It solves a problem for customers. Secondly, there is a big cross-sell opportunity through this acquisition for the both of us,” Jain said.
Jain said the slew of acquisitions also reflect the market reality of the need for consolidation, given the profusion of marketing technology companies in the market. “There are 8-10,000 martech companies in the world, so consolidation has to happen. As martech becomes more and more critical, marketers have to work with fewer companies, because the integration costs would become very high across multiple products.”
VC Circle wrote:
Unbxd, rolled out by Pavan Sondur and Prashant Kumar in 2012, offers search solutions to improve retention and conversions for ecommerce retailers and direct-to-consumer (D2C) brands in the US, UK and Australia.
Currently, the company claims to power 3.5% of all the US e-commerce on-site search queries spread across 150 customers.
Unbxd has a host of clientele including Mattress Firm, Express, Ashley Homestore, Home Shopping Network, Advance Auto Parts, The Children’s Place, Mitre10 and Kookai, among others.
The company was backed by investors like Nirvana Ventures, Chiratae Ventures, Eight Roads and Inventus Capital.
“The coming MarTech era will be defined by budget shifts from Adtech to MarTech as brands will focus more on unit economics and valuing existing customers. This will lead D2C/ecommerce brands to accelerate their spending towards delivering personalized customer experiences.
Unbxd’s AI/ML tech stack will empower our customers to track their shopper’s interactions with search and implement site-wide personalization, merchandising, along with shopper-focused recommendations,” said Kalpit Jain, Group CEO, Netcore Cloud.
“Netcore Cloud platform is growing rapidly at 40% YoY (with international markets growing 100% YoY ). We are positioned as the digital proxy in emerging markets. Added to that, this investment will enable us to get a strong foothold in the US and other developed markets as well,” said Nishant Jain, Chief Strategy Officer and Head of M&A, Netcore Cloud.
