Dubai: For UAE-based Indian expat Harsh Kumar, the call to become an entrepreneur full time came after nearly a decade of being an investment banker. And in the years after he became his own boss, the 37-year-old not only managed to help start three new ventures, but also invest in 30-plus start-ups.
“I was encouraged to experiment and take risks early, and as a kid, I would spend money together with a group of friends,” said Kumar. “It wasn't merely splitting bills equally but pooling in based on what we can afford, which changed constantly. I then started observing my spending habits, and planned wisely.
“For instance, with each festival – often a source of gift money – my group fund contribution would be higher then. I gradually developed a sense of rationalised spending like buying a quality gadget, which may be on the costlier side but saves money in the long run compared to its counterpart.”
I was encouraged to experiment and take risks early, and as a kid, I would spend money together with a group of friends
Career in banking taught him to save, invest
During the rest of Kumar’s childhood, while his parents focused on investing in his education and co-curricular activities, the pocket money he got wasn't a whole lot. However, Kumar said this was a valuable lesson in spending for him.
As the years passed by, like many who start out their full-time jobs hoping to make more money, Kumar too considered that earning was the only factor paramount at the start of his career. However, his career in banking taught him the importance of investing and using money to grow funds.
Up until late 2014, when Kumar started his first business – an e-learning platform which connects schools, teachers and parents, he worked at US-based financial services giant Bank of America - Merrill Lynch and then at top German lender Deutsche Bank, in India and Singapore.
From investment banker to an ‘angel investor’
Since 2015, Kumar has also been an ‘angel investor’ in several other start-ups, while co-launching a second portal to manage shipments for businesses in early 2017. A couple of years later, he joined as one of the co-founders of a SaaS-based logistics management platform, which led him to relocate to Dubai.
“Being an ‘angel investor’ gave me a lot of exposure to the nuances of running a business and a closer look at logistics as a promising sector offering many business opportunities,” he added. Kumar doesn't currently run all three start-ups, he is only actively involved in running his latest co-founded venture.
“Logistics has traditionally been a very nascent industry from a technological perspective. Manual processes and legacy systems have only introduced inefficiencies to the industry.”
Kumar saw an opportunity to build a solution that could automate logistics processes, primarily helping small businesses to move their freights faster, cheaper, and more efficiently, by booking, coordinating and managing shipments and cargo online.
What did it cost you to set up your latest business?
Kumar said about $50,000 (Dh183,649) from his personal savings went into setting up his first business, the knowledge-sharing online platform. He was able to secure investment for his subsequent ventures.
"We raised our Series-A funding worth Dh22 million [$6 million] in 2020, partly utilised to set up the Dubai headquarters in 2021, so finances were not a challenge. Additionally, our Series-B funding worth Dh91.82 million [$25 million] in 2022 provided further support in expanding globally," he explained.
“The main expenses in the business are sales and marketing functions, working on implementation of the business concept, and customer participation, which took the larger share of the pie.”
Here are two money rules Kumar lives by:
Rule #1: Budget for contingency and don’t overly invest in riskier assets
His career start had overlapped with the 2008 global financial crisis that taught him always to have budgets for contingency and not overly invest in riskier assets.
"A strict return-based investment approach helped me manage the company's internal expenses more judiciously. Be it marketing spending or resources, everything is looked at from an ROI [return on investment, or how the investment's gains compare favourably to its cost] lens," Kumar added.
"While discretionary spending on marketing is experimented with for ROI for one or two quarters, we see new hires as a one-time investment for that year. Proper recruitment, when followed by employee welfare and training investments, eventually improves efficiencies and productivity. “
During the pandemic, most businesses realised the importance of digitisation which provided a fresh tailwind to their solution as new demand started pouring in.
"We have worked with customers in the manufacturing, courier express and parcel industry, and retail — be it modern trade, pharmacy, food, or grocery delivery. This helped us build a comprehensive solution," he added.
A strict return-based investment approach helped me manage the company's internal expenses more judiciously
Rule #2: Limit discretionary spend, avoid illiquid long-term investing, save via SIPs
As an entrepreneur, you always have limited visibility of future cash flows, so Kumar is of the opinion one should always seek to limit discretionary or non-essential spending – be it personally or from the business’ perspective.
"Discipline in allocating money to assets helps keep emotions at bay and has been rewarding for me. I avoid illiquid long-term asset investments [like real estate] and keep investing in SIP (systematic investment planning) as per the decided allocation amount for the required investment,” said Kumar.
(A systematic investment plan (or SIP) is an investment option offered to investors, allowing them to invest small amounts periodically instead of lump sums. The frequency of investment is usually weekly, monthly or quarterly)
"Since opportunities, age and resources are very much in my favour, I balance riskier and non-riskier assets. For instance, 50 per cent of my investments go into start-ups and equities, while the other half is distributed in time deposits and fixed income."
He also feels upgrading your current skillset can make you financially and professionally resilient. Moreover, participating in networking events is valuable, even if one has to pay for them.
"Networking and travelling helps widen your horizon and develop a diverse perspective, which helps you in business. This is because, ultimately, the success of any business relies on understanding the need of the different persona in the intended target market," he added.