In December of 2021, Harshita Srivastava and Aman Goel’s financial services chatbot company, Cogno AI, was acquired by Indian telephony megacompany, Exotel.
It was a momentous occasion for a small company that started as a college project for an entrepreneurship class. The acquisition immediately scaled their 100-person team to 1,000 and put both cofounders in management positions at a business pondering an IPO.
In November of 2021, Harshita’s cofounder, Aman, talked with Bootstrappers editor, Chris Roper, about their story building Cogno AI. Begun in 2017, the college project evolved into a programmable voice and chat-enabled bot. They pitched it to some of the largest Indian banks and managed to shoulder into the traditionally exclusive world of Indian finance.
Eight months later, Harshita agreed to tell us about their acquisition. She explained how she connected with her future buyers, what she wished she’d known going into the process, and why she thinks acquisition was the best route for her business.
How Cogno AI Became One of the Largest Customer Service Platforms in Indian Financial Services
Cogno AI began attracting large enterprise clients when it became a service provider for the State Bank of India (SBI) – India’s largest bank and a Fortune 500 company.
“When we launched our chatbot with SBI, we got mentioned in many prominent news articles. At that time, the company was tiny, but we started onboarding more and more customers. Our name became increasingly popular in the banking and financial services industry since it’s close-knit and full of people who’ve worked with each other before.”
Onboarding some of the largest names in banking and insurance gave Cogno AI access to troves of industry data. When competitors emerged, it had already scaled its service and begun diversifying into other industries.
Harshita says helping customers fill out confidential documents online (co-browsing) became one of Cogno AI’s most profitable new ventures. Instead of an insurance salesman visiting your house to explain documents, you’d get help from Cogno AI’s app – with all of your sensitive personal information redacted.
While co-browsing was initially slow to catch on, Covid-19 lockdowns made Cogno AI’s business one of the only possibilities for insurance providers for almost a year. According to Aman, one of the leading private insurers – Bajaj Allianz Life Insurance – implemented their solution for thousands of field agencies.
During Covid-19, Cogno AI’s headcount jumped. Before the pandemic, it operated with a lean team of 18. By 2021, the team had grown to 70 people. Cogno AI was now the darling of Indian financial services businesses – and many large tech companies took notice.
A Fortunate Connection
Harshita and Aman’s relationship with their future acquirer, Exotel, started when they were a two-person team with a handful of interns. Aman developed a friendly relationship with the founder, Shivakumar Ganesan, in 2017 through a brief email exchange. They wouldn’t speak again until 2019.
Two years later, in August of 2019, the incubator associated with Aman’s college, SINE, hosted an event for local startups and asked the Cogno AI team to showcase its solutions. At the event, Harshita and Aman met a VC firm called A91 partners (an investor in Exotel) who were curious if they had thought about getting acquired. “We didn’t have any such plans at the time since it was pre-Covid-19,” says Harshita. “The person from A91 said, ‘Let’s stay in touch,’ and we exchanged business cards.”
Two years later (2021), A91 again asked if they were interested in an acquisition. After growing so fast during Covid-19, Harshita and Aman felt the time had come. A91 linked them with the cofounders of Exotel, Shivakumar Ganesan and Ishwar Sridharan, and they began to ink a deal.
Exotel had been on a parabolic trajectory in India for about a decade. Started in 2011 as a small call center solution, Exotel received a $500,000 investment¹ from local VCs shortly afterward and grew to 2,500 customers in 2015. Dubbed by its founder as “desi Twilio,” today it serves customer service telephony for Southeast Asian tech giants like Flipkart and GoJek with annual revenue of over $50 million.
In the past five years, Exotel has aggressively widened the scope of its customer service offerings. They acquired two other major businesses: MyVoice in 2015 and, more recently, Ameyo, an enterprise customer engagement platform in 2021². They were in the process of completing their merger with Ameyo when they approached Cogno AI.
Harshita and Aman felt Exotel’s culture and vision aligned with theirs. They also liked Exotel’s founders.
“You should vibe well with the founders of the company acquiring you,” says Harshita. “Other companies had offered to acquire us, but we didn’t vibe well with their founders and company cultures. Acquisitions are like marriages. You should like the people as if you’re going to marry them.”
About a month after their first meeting, In July 2021, Harshita and Aman signed a term sheet with Exotel and prepared to merge.
Advice for Due Diligence
Harshita says due diligence was a grueling process that took several weeks to complete.
“Exotel reviewed each customer agreement we’d made and the whole process took around four months. We didn’t expect it to be so long, and it involved quite a few lawyers.”
However, Harshita and Aman ensured that Cogno AI’s books were squeaky clean and easily traceable. In hindsight, they were relieved to have been so careful.
“In due diligence, they ask for every little transaction you’ve made,” says Harshita. “If your books are clean, it’s smooth. We kept our books very clean. We even kept receipts for small ten-rupee (around thirteen cents) bills. If the books hadn’t been clean it would have easily taken another two months.”
Harshita also recommends working with lawyers and other legal counsel for larger-scale acquisitions. “Our legal counsel – Vertices Partners – were nice and told us what to put in the agreement to protect our rights.”
The Path to IPO?
Harshita and Aman still run Cogno AI with the support of Exotel’s leadership. Harshita says she is ready for this next stage of her career.
“You have a lot of autonomy as your own boss because you aren’t thinking about investors or anything like that. I still have a lot of responsibilities at Exotel but some things have changed. After an acquisition, you are answerable as part of a larger company. Fortunately, the founders are very nice at Exotel. They are open to feedback and suggestions.”
Harshita thinks the acquisition was necessary to grow.
“Scaling requires a lot of time. You can fast-track your vision by getting acquired by another company. When I first came to Cogno AI, it was just us. Then we scaled up to 150 people and since joining Exotel, we’ve scaled to over 150 people plus 850 more in Exotel and Ameyo. Exotel is a series D funded company looking to IPO. I am excited that before the age of thirty, I not only have started a business from scratch, but I have seen it scale and maybe even go public.”
By acquiring Cogno AI, Exotel has become what Harshita calls a “full-stack customer engagement platform.” It has since raised $35 million in funding immediately followed by another $40 million in January of 2022³ – after six years of failing to raise a cent.
Harshita thinks even after joining the larger startup, things will move faster for the team. “As a small team, you can be agile and move fast. As a larger team, you need to create fast processes. Both are ways to grow quickly.”
Sources:
²List of Exotel’s 3 Acquisitions, including Cogno AI And Ameyo | Crunchbase
³Exotel raises $40M for its full-stack customer engagement platform | TechCrunch
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