How SahiGST Grew and Then Got Acquired by Vayana Network

“All Lasting Business is Built on Great Partnership.”

When it comes to strategic acquisitions, Indian Fintech industry is perhaps one of the most vibrant and active. Ever since demonetization, we have rapidly shifted gears towards comprehensively digitized and tech-enabled finance. The next overhaul came in July 2017, when GST was launched across the country – once again this time, our Fintech innovators stole the show. Earlier this year, SahiGST – a game-changing tech startup that revolutionized GST filing and compliance – was acquired by Pune based Vayana Network. This is the story of their inspirational journey, brought to you by Indiabizforsale.com in conversation with Annkur Agarwal – co-founder of SahiGST & Pricebaba.

Inception: How It All Started

Back in 2002, when Annkur Agarwal started out as an online retailer, he got the taste of the exciting world of entrepreneurship for the first time, and since then there has been no looking back. The startup wave in India picked up around 2010, and 2 years later the technology bug bit Annkur as well. With a founding team of 4 core members, Pricebaba was born – an intelligence product research engine that helps consumers find the right product at the right price from the right seller.

Four years went by, with Pricebaba going strong for the most of it. Meanwhile, in 2016, the Government announced GST rollout plans for 2018, inviting technopreneurs to build the Google of GST with licensed APIs. It is around this time that Dinesh Tejwani – one of the investors in Pricebaba – reached out to the cofounders with the idea of SahiGST – a cloud based comprehensive solution for businesses for simplified GST filing and hassle-free compliance management. The market opportunity seemed lucrative, and building such a challenging product was any coder’s dream. Thus, with a lean team of 6 – i.e. 5 co founders (Annkur and 3 others from Pricebaba and investor Dinesh Tejwani) along with a domain consultant in GST, SahiGST kickstarted in December 2016. After the first few months of product conceptualization, the team strength grew to 15, focusing primarily on product development and testing.

Product Launch and Challenges

For Annkur and team, this was not a smooth ride – and nor did they expect it to be. Like any other major economic overhaul, GST brought with it intense legal and political volatility that translated into chaotic product development. To start with, the various provisions, categories, rates, and procedures underwent massive changes in the months leading up to the rollout – which were also incidentally the peak months for product development. The cofounders at SahiGST had already been forewarned of such a possibility by their domain expert, but even so it was a roller-coaster ride to keep up with the ever changing provisions. After months of burning midnight oil, when they finally started eying April-March for a grand launch of SahiGST, the rollout was again pushed back to July 2018, and more changes were ushered in – though mostly incremental this time.

Annkur shares with us how his team’s decision to bootstrap SahiGST instead of seeking external investment proved to be critical to survival in hindsight. As he writes in his blog, “Given the volatility around GST & its implementation, we knew that… deploying any funds (specially borrowed) in an aggressive manner might be a gamble… We could build a great product with two technical co-founders & three founders focussed on marketing, sales and support. So…[we] ran a lean ship instead of expanding prematurely. In hindsight, that went just perfect, had we invested too heavily, we would have burnt a lot of money in vain…”

Indeed, this master plan worked perfectly. Undeterred by the long gestation period, when GST was finally launched in July 2017, SahiGST became the first player using Govt. API to go live and turned cash positive within 2 months of launch!

Partnership with Vayana Network

The acquisition of SahiGST by Vayana Network goes way back to the partnership between the two entities during its early days.

To begin with, let us first understand how the GST implementation works in simple terms. The first key player is the GSTN – the Goods and Services Tax Network (GSTN) is a non-profit, public private partnership company. Its primary purpose is to provide IT infrastructure and services to central and state governments, taxpayers and other stakeholders, thereby facilitating the implementation of the Goods and Services Tax (GST). The next key components are GSP and ASP. In a nutshell, taxpayers interact with the GST filing system through secure GST System APIs that are developed and serviced by third parties called GST Suvidha Provider (GSP) and Application Service Providers (ASP). ASPs take taxpayers’ raw data on sales and purchases to arrive at the net GST returns, which are then filed via the GSP. ASPs, therefore, act as the link between the taxpayers and the GSPs.

Vayana is a pureplay GSP which enabled SahiGST (an ASP), and thus a partnership blossomed. What started out as a sheer tech-based symbiosis, soon transformed into a partnership of mutual understanding and shared vision. As the working relationship continued to grow in strength and purpose, a new pattern emerged in the market opportunity for SahiGST.

Annkur and team had started out with the notion that they would be servicing a fragmented market mostly consisting of SMEs and small CA firms. However, within a short span of time, larger corporate clients looking for enterprise and conglomerate level solutions flocked to the product. They realized that while this was a pleasant and welcome surprise, to service and compete in this larger and more competitive market space required much deeper pockets, bigger and stronger team and more energy to be directed away from Pricebaba into SahiGST. The team began to wonder whether seeking strategic sale to the right buyer was the best way to go. Opportunity arrived at their door when their robust relationship with Vayana Network paved the way for an acquisition deal to emerge on the table.

Acquisition: How It Happened

Annkur had already anticipated the possibility of a deal when the CTO and CEO of Vayana Network reached out to him, stating his intent to pursue an acquisition – interestingly, the two of them had already met each other 9 years earlier at an event in Pune. Annkur chuckles, “It is amazing how life comes circling back to you – one should never underestimate the value of network and relationships.”

Things moved quickly from there in the first few months, since Vayana was already familiar with the business and technology details of SahiGST. Even so, Vayana conducted a thorough and meticulous due diligence with the help of seasoned professionals. On the part of SahiGST, Dinesh Tejwani spearheaded the deal, with the former’s extensive experience in deal-making coming to much aid. After a reasonable amount of negotiation, the valuation figure was finally pegged close to the first figure expected by SahiGSt team in the beginning of the deal. He recalls with some frustration the speed breaker that they reached during deal structuring, when lawyers were doing their thing – with elaborate grinding on each and every aspect of business, technology, IP, employee, customer, transition and so on. However, he shares his appreciation for decision makers at Vayana who expedited the deal and respected the timelines that he had quoted to them. Since the licenses of SahiGST users was due for renewal in April, the deal closed at the right time for a transition to Vayana being announced to customers & partners.

The transition too, took place in a highly cooperative spirit. Annkur and his team committed to support the transition process till July, 2018, although it was wrapped up much earlier. Interestingly, in a different turn of events, one of the co-founders exited Pricebaba team and joined Vayana to lead and manage the acquired SahiGST platform hands-on. With SahiGST off the table, Annkur and others now hope to focus full-time on Pricebaba and take it to new heights.

Key Takeaways

1. Opportunities don’t last forever – be quick in identifying a market opportunity before it’s gone!
2. Stay lean and focused – it will help you survive during chaotic times
3. Nurture relationships with patience – the right partnerships can bring you extraordinary rewards
4. Learn to let go – transition the business into able hands when it’s time.

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