When Lehman collapsed, we realised no company can ever be over funded: Phanindra Sama, redBus

When Phanindra Sama sold his online ticketing portal redBus to South Africa’s Naspers Group for over Rs 600 crore, it marked the culmination of a seven-year journey.

Sama, an alumnus of Texas Instruments, and his two co-founders owned little less than a fifth of the stake in the company. In an interview to ET, 32-year-old Sama discussed how he crafted the exit. Edited Excerpts:

How has the journey of entrepreneurship been?

It has been emotionally very taxing. I remember one day, I went at 11 am to meet a bus operator, who didn’t even look at me. At 2 pm he went for lunch, he just ignored me. Finally, when he was shutting his shop at 10 pm, he realised I was still sitting there and talked to me. Every time this happened, we would feel humiliated.

After a few months, four of the seven cofounders also left. Entrepreneurship is a process of self purification. We have become more tolerant and honest. I would bribe a police officer when I break a signal, but after I started redBus, my beliefs changed. I started thinking about the values our company stood for.

Who was your first customer?

We got some of our friends in Infosys to post our names in their discussion boards. That’s how we got our first customer—an Infosys employee. When she booked a seat, we went to the bus stop and made sure she got a seat.

How much seed capital must a startup raise?

The first time we got a cheque from ( venture capital firm) Seedfund, we thought we were being over funded. We were asking for just Rs 30 lakh by giving up a 30% stake and instead we got Rs 2.5 crore. When we raised angel capital, we were making just about Rs 6,000 a month in revenues. Later, when Lehman collapsed, we realised no company can be over funded.

What was your marketing strategy?

Once when we were distributing leaflets in a bus, a passenger happened to be a journalist. He wrote about us and that gave us publicity. Media became the highest priority for us thereafter.

How conservative were you in spending investor money?

We started to think about an exit two years ago, as we were raising more money with each round. We were always conservative with money. Even while we were raising our third round, we had Rs 35 crore in our bank. We had spent only Rs 8 crore of it.

We had an offer from Naspers and I went and discussed it with the board and other cofounders. We could have delayed our exit. But one of our cofounders said our parents had grown old. We would never be able to show them what we have achieved if we don’t exercise the option now.

Will you become an angel investor or mentor?

Yes, young entrepreneurs are approaching me for startup capital, but I am not in the state of mind where I would be able to give them the time required for mentorship. And it would be terrible for a startup. Our new focus is to allow for a smooth and healthy transition, and find new people who will be capable enough to take redBus to the next level.