Interview with Neal Gupta, Co-Founder and CIO of KiwiTech
Over the last decade, KiwiTech has led innovation across multiple verticals scaling businesses in the tech space. KiwiTech intimately understands the challenges faced by new founders, aspiring unicorns and established leaders and works closely with them to realize their passion and purpose. Through its extensive relationships and expertise, KiwiTech brings a perspective that helps strategically connect technology creators with technology consumers. KiwiTech is an ecosystem of proactive investors and advisors who are passionate about building technology, supporting entrepreneurship, and helping companies realize their maximum potential.
KiwiTech is home to over 250 portfolio startups across a wide range of verticals, including HealthTech, FinTech, EdTech, InsurTech, PublishingTech, SportsTech, and EventsTech. These companies are in both B2B and B2C, and located coast to coast in the US, with a few in other regions including MidEast, Europe, and Canada.
Tell us about your previous and current companies. What led you to found these organizations?
We invest in startups where we have an inside track and informational edge. We then open our network to the startup’s management team for business, management, investor, mentor, and enterprise connections. KiwiTech actively collaborates with other investors to share deal flow and help fund our partner tech startups.
Prior to KiwiTech, I co-founded Aptara in 1988, which became the world’s largest content services company with over 5,000 employees in the U.S., U.K., Australia, Germany, and India. Aptara was on the Inc. 500 Fastest Growing Companies list for 3 years, and was sold in 2012.
The founders started investing in other entrepreneurs and founding the KiwiTech platform, because they wanted to fill in the gaps which they themselves faced as young entrepreneurs. They saw that today’s entrepreneurs faced the same challenges as the previous generation. Startup management teams required help with technology, investment, mentorship, training, board governance, and exit strategy. KiwiTech’s founders felt they could bring their experience to bear and partner with these startups, while sitting on the same side of the table as them, by creating a vested interest relationship.
You have operated these companies together with your siblings. What are some of the advantages/disadvantages of running a family business?
That is true that our 3 member sibling team has worked together for decades. However, we feel that we do not operate like most typical family businesses. We groom senior management early in the building process, and operate via a consensus driven approach. We do not want to create a multi-generational enterprise, and ensure that major contributors in the company have equity, for a true wealth creation opportunity across the board. The advantage in my opinion is that there is an implicit level of trust. The disadvantage may be that from the outside we are considered a “family business” which comes with its connotations.
Tell us about some of your top-performing portfolio companies and what makes them outstanding.
Out of our 250+ portfolio firms, there are about 60 companies which have made significant progress till date, and where we see valuations at substantially higher levels than where we invested. A few examples are below.
A portfolio company called OurBus is a transport-tech firm that specializes in crowdsourced intercity and commuter bus routes across the United States. In early 2019, we acquired $1 million of equity at a $25 million pre-money valuation in OurBus. The company has scaled to $25 million run rate revenue.
Hungry is a sharing economy-based digital marketplace that provides unique access to great local chefs. In 2017, we invested at a $8 million pre-money valuation. They raised in late 2019 at a $100 million pre-money valuation, and the “multi-exit CEO” believes he can achieve a $1 billion valuation as they scale.
Urban FT is a SaaS-based digital payments platform that enables any brand to seamlessly launch a branded Mastercard or Visa card and loyalty program to complement a client’s core business. KiwiTech invested at valuations of $10m and $70m. The company has scaled to $20 million revenue, and over $100m valuation.
How is KiwiTech helping these start-ups to reach business success?
Startups who partner with KiwiTech get access to all of our technology resources, with 500+ employees across three offices in the U.S. and India. They also gain access to our strong network of mentors and investors, as we hold multiple in-person and online demo days and workshops every month. In specific cases, when we are invited to join the board we consider that option. We also assist on a case by case basis with larger capital raises and exit strategy.
What are some of the advantages investors can gain while making new technology investments during COVID-19?
Many of Kiwi’s health tech firms are finding unique opportunities with COVID-19, while our travel & hospitality tech startups are having to pause their business. Investors can potentially invest in health tech startups that have found a niche to help in this pandemic. And investors can find good deals and buying opportunities in tech firms which have good businesses but are in sectors adversely affected by this crisis.
Based on your technology investment experience, what advice would you give our investors readers?
If one looks at the most successful tech investors today, they have usually invested in many of the current, great, leading tech companies. Often, these investments were made when these portfolio firms were still relatively early stage, during the last recession. So, instead of totally pulling back, these investors found pockets of innovation which is often higher during economic slowdowns, and were active investors at the low points of the economic cycles.