The key to a successful business lies in maintaining profitability, as a profitable business will consistently hold its value and relevance regardless of how the world evolves, serial entrepreneur Suresh Kalpathi advised young entrepreneurs.
“As any of us starting up a business…ensure that your business is profitable. Because whichever way the world goes, wherever it goes…whether it’s in the peak of a frenzy, or in the winter of investments, there is always value for a profitable business,” Kalpathi told a packed audience during a fireside chat at Tamil Nadu Story 2024.
Kalpathi, who wears many hats as the CEO of Veranda Learning, Director of AGS Cinemas, and Chairman and CEO of Kalpathi Investments, shared his thoughts on education, investment, and more in a chat with YourStory Founder and CEO Shradha Sharma.
As someone who has both received and made investments, he advised entrepreneurs to be cautious about pursuing their dreams and passions rather than living out investors’ dreams, as their timeframes are often limited.
“They enter your stock, they exit your stock and they will even exit prematurely if they find a bigger sector that is happening… And when they do that, they would have lived out that dream and then you stay on to live the nightmare,” the entrepreneur and investor noted.
He added, “Never go outside of chasing your own dream. Because when things are down, it’s your passion and dream that keeps you going.”
The Chennai-based serial entrepreneur has always been keenly interested in supporting the startup ecosystem and has made numerous seed investments through Kalpathi Investments.
“I always look for businesses that have first identified a pain point that people are willing to pay to get solved. Identifying such a pain point is 50% of finding a new business,” remarked Kalpathi.
Education is a key focus area for him through Veranda Learning, which aims to be an end-to-end education provider, encompassing everything from preschool to school to college, as well as upskilling, test preparation, post-career education, studying abroad, student housing, and student loans.
“We continue to look for education companies to partner with to buy into to acquire, we continue to look under the Veranda platform. So far, we have bought into 19 businesses…We are building out the entire ecosystem. We are not complete with all of it. We are continuing to look for assets that are doing things very differently,” Kalpathi said.
He pointed out that the first major difference Veranda made was to avoid labelling itself as an edtech company, instead positioning itself as an education company that leverages technology to the fullest.
Speaking about building Veranda, the CEO highlighted that, despite the company’s growth through numerous acquisitions, each deal is evaluated based on two key factors—pedigree and profitability—which has kept the company in good stead.
Very early on, when considering a return to the education sector, Kalpathi found many willing to back him with $50-100 million, but they insisted he pursued an online model, which was their dream, not his.
“My passion was to build a hybrid business because I knew that’s what the people wanted. The COVID-driven change in behaviour was short term, and driven by an external compulsion, and not by your inherent change,” Kalpathi added.
Edtech crisis
Veranda continues to grow and expand in the education sector, which is currently facing a reality check with layoffs and funding challenges following the pandemic-driven surge. In its financial year 2024, Veranda more than doubled its revenue while also narrowing its losses.
Meanwhile, the valuation of edtech businesses has come under scrutiny. BYJU’S, once the shining star of the Indian startup ecosystem, saw its valuation plummet by 99%, dropping from a high of $22 billion.
Speaking about valuations, Kalpathi noted, “Valuation is just a chimera. It’s here, it’s gone tomorrow. It can take you to a high, it can drop you all the way down and just move on. You just become something that’s left behind.”
While education is a focus, he is an entrepreneur running multiple businesses across various sectors, each with its own highs and lows. So, what is it that one looks forward to at the end of the day?
Kalpathi elaborated, “Is there a difference that you are making, by doing what you’re doing…For instance, today, in Veranda, we have close to 3000 people, and you carry the responsibility of all that trust. They expect you to be able to build and take this story forward because it is not my story. It’s a story shared by all of us. When you are able to achieve that on a daily basis, it gives you satisfaction that you made a difference.”
