Waiz Rahim is the Founder and CEO of Deligarm, an omnichannel ecommerce company that aims to operate at the intersection of online and offline and integrate the power of digital commerce with offline retail by enabling existing mom and pop corner shops in neighborhoods to act as their agent points for both distribution and collection.
Founded in 2017, Deligram started as a pilot in Comilla. It partnered with 40 retail stores with an ambition to figure out a new model for ecommerce distribution by leveraging the presence of local corner shops to overcome infrastructural challenges. Deligram calls these partners dgAgents. Since Deligram is a Rahimafrooz affiliated company, it could easily use Rahimafrooz’s existing retail channel to build a distribution model. After months of the experiment, it moved to Dhaka in January this year. It has since grown to become one of the important players in Dhaka’s ecommerce space.
In this second and final installment of our interview with Deligram founder and CEO Waiz Rahim, we talk about fundraising, the challenges of entrepreneurship, his lessons from his journey so far, the importance of taking care of yourself as a founder, and much more.
This was a much longer interview. So we had to break it down into two parts. This is part two. You may read part one here.
I want to go back to May when you first started talking to investors, could you please tell us more about it? Your process of talking to investors, what are the things you did, how many investors you spoke with before raising your first round of investment and then the second round? Challenges of raising money and your experience of doing it?
One thing I've realized is that the moment you are reaching out to investors and thinking you are probably ready to raise money, it is already late. So start early.
Then the most important strategy is probably to find out people who are really interested in the space your startup is in.
How do you do that?
It is a small community of investors who closely monitor and follow Bangladesh as an investment destination. The first thing is changing the mindset of talking to all the investors and instead prioritize and talk to people who are interested in Bangladesh. They could be angel investors, hedge fund managers, traditional private equity fund managers or someone who knows that sort of people. Once you are in that circle of people who are interested in Bangladesh, everyone knows everyone else. They help you meet other people who are interested.
It is luck as well. For example, I met one of our first angel investors through a conference in London where I was not supposed to go. I happened to be in London for a family emergency and somebody asked me whether I was going to the Bangladesh Growth Summit that was taking place in London at that time. I didn't know about it. But it happened so that I just knew the organizer so I sent an email to him that I'm coming not even like asking for a ticket or anything. That worked out. There I met a lot of interesting people and one of them is now our investors.
It is all about relationships. One thing leads to the other. What you have to do is that you can't be silent that oh I have this big idea and I would not tell anyone. What you have to do is that you have a brilliant idea and you share it with everyone. When your idea is interesting, it will go to people organically.
How long it took you to raise your first 500k?
It took us about four-six months. We had 3 investors who participated in that round. I probably spoke with at least with 8-10 investors, 3-4 calls with each one of them.
How long it took to raise your series A?
Series A also took about 6 months as well. It could have been quicker but I think the later stage rounds come with more due diligence and financial modeling and stuff around the model. So it takes a longer time.
Later stage rounds are more about model and seed round is more about the story. When you are raising seed, there is no number at all. You just go and say this is the thing that we have, we need just this much of money to prove technical and operational feasibility.
Series A is more about your unit economics, your growth, how much you could be expanded in the next three months, etc. That due diligence and financial management take more time.
Any tip for people who are trying to raise investment?
The first thing is figuring out what kind of funding you need. A lot of people think that they are tech startups whereas they are more of a service-based company. There is nothing wrong with being a service company like if you have a software development company and technically you are a startup because you have just started but you are not a tech startup which has a huge scaleup opportunity. The nature of tech startup is that it is in search of a business model which is scalable and repeatable. You are a restaurant with an app, you have a tech component to your business but could you scale that up to a meaningful level.
First of all, figuring out whether you are a tech startup or a small new venture is important because your funding needs depends on it. If you are a small new venture where you could go to revenue quickly and bootstrap to growth, the advice would be don't take funding. Save up money yourself. Take some friends and family investment. That’s one way of going about it.
Now if you are raising money, make sure you are taking investment from the right kind of people. There are people who would offer you money and would seek to have more than 15% equity in the company at the seed stage when that happens, it is a red flag. The goal with seed or angel investors is to find people who would help you get to the next level and connect you with larger investors. So be aware of the people you bring in.
Second, look at your own startup and pitch deck and figure how investment-worthy this company is. Ask: would I invest in my own company? All of us are in love with our own company but just getting enough raw feedback from people so that you could believe in your own thing is important. First, you have to be convinced that this thing worth this much and so on.
What are some lessons you have learned?
Let's not forget that we all want to make a difference and an impact, but in order to be a business, it has to make financial sense. So for founders, the number one thing to realize is that if you are here to do business, it has to make financial sense.
People often come to starting tech business with a rather superficial understanding that we don't need to be profitable. That Uber is not profitable and so on but what people don't get is that you have to understand the basics of finance. You have to understand that you have your revenue and then you have your gross margins, you have your operational profitability and then you have your EBITDA. Excluding your all HR and stuff, you should be able to generate positive gross margins. You don't need to be profitable now but you have to have positive unit economics. Many ecommerce companies overlook this. They consider revenue as the key metric but for ecommerce, revenue is a vanity metric.
While building a product, I think we should be more critical and ask tough questions. A good starting point is asking whether people really need this. People give different reasons for startup failure starting from stealing of ideas to the competition but the majority of startups fail because people built a product that no one wanted. Whether there is a real customer need and be able to find that as quickly as possible. And then learning enough about finance to actually figure out models of finances to see if it actually makes sense. These are critical for startup founders.
Third, figure out your funding strategy. The thing is that running a company is capital intensive. Although it looks like you just build a website, you are just using ads on Facebook, but it is very capital intensive. So figuring out your fundraising strategy is critical.
The most important thing is building the right team. Finding the right talents is a challenge in Bangladesh. It is hard to find really smart people who can learn really fast. But you have to find them if you want to build a business. We have focused a lot on building a great team and we have been lucky to have some great people in the team. But we have been very deliberate about hiring people. We spend a lot of time in finding and hiring good people.
What are a couple of things that you have found advantageous in your journey so far as an entrepreneur?
The number one thing is self-learning. As a CEO when you are building a team or a platform, it is essential that you know enough about everything that is pertinent to your job, be it hiring or building a platform. For me, when I'm recruiting people for, say, finance positions, my background is not in finance but I would read five books about finance, I would read textbooks and do online courses. I would know just enough to get to a point where I could do the job and understand when I hire someone. The interesting thing about self-learning when you are truly into it is that you would learn things that would surprise veterans in the field. Reading is something infinitely helpful.
Second, surround yourself with the right mentors, people who have done it before. The strategy for startups is doing more things than what people think possible in less time than what people think is possible. It is not possible to do that without making mistakes. By learning from mentors and investors you can avoid a lot of those common mistakes.
Third, take care of yourself. Because your performance would be directly related to your health.
How do you take care of yourself?
I don't. But I'm trying to be more mindful about my health and wellbeing.
How frequently do you meet with your mentors?
I'm fortunate that my current investors are my mentors. I speak to them at least once to twice a month. Other than that there are people who I really appreciate and look up to in the industry whom I meet every six months. If I have a quick question, I give them a call and get their thoughts.
Any parting thoughts?
Technology is not a solution in and of itself. I would urge people to look into a problem and come up with solutions without bringing in technology into it if there is not a proper need for it. Be agnostic of technology and try to solve a problem first and then see if technology can be an enabler to that.
Be able to look into things critically and from an interdisciplinary perspective is important. Our way of looking into things it mostly linear and limited by our experience and exposure. But in order to solve a problem, you have to be able to get at the core of it. A marketing person would tell you that an ecommerce company is not successful because they suck at marketing, a software guy would tell their software sucks and so on but being able to really dive into a problem and pinpointing why and what is the problem and then figuring out the best solutions for the problem, something that we all need to be able to do.
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