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In 2011, ‘Wow! Momo’ (WM) pitched to angels.
Sagar Daryani, along with his classmate Binod Homagai, started WM in 2008.
Borrowing ₹30,000 from their parents, they started a kiosk in Kolkata to sell momos. Both Sagar and Binod were about 21 years old.
Sagar Daryani, along with his classmate Binod Homagai, started WM in 2008.
Borrowing ₹30,000 from their parents, they started a kiosk in Kolkata to sell momos. Both Sagar and Binod were about 21 years old.
Sagar and Binod dreamt of building brands through their business. Paucity of capital was a hurdle. Both were street smart. They boot strapped. They put in a lot of hard work and passion. The business took off. It grew rapidly.
Brand WM was carving a niche in QSR business. It differentiated by providing healthier, affordable & an Indian alternative to pizzas/burgers. It had 2 types of momos—steamed and fried—with a variety of fillings. It catered to both veg & non-veg customers.
Being sharply customer centric, WM offered unique experiences. It focused on building loyalty.
Its approach to SCM was simple. It used select, easily available, & quality ingredients.
Backed by its efficient operations, WM set up a solid platform for growth.
Its approach to SCM was simple. It used select, easily available, & quality ingredients.
Backed by its efficient operations, WM set up a solid platform for growth.
By 2011, WM had ten outlets, a revenue of about ₹2.5 crore and a growing brand. Sagar had an opportunity to present his company at a TiE-Kolkata. He met a few angels who connected him to their syndicate. A few weeks later Sagar came down to Mumbai to meet angels.
WM was growing at 50% YoY. It was profitable too. WM’s pitch was well-received by the angels. The initial evaluation was positive. The angels could tick everything in their evaluation checklist. WM had driven founders. It was growing.
WM had a huge potential as a differentiated player in the quick service food business. Operations were sound. Cash management good. Everything seemed on track towards closing the deal. Yet, the deal did not go through. Differences in valuation threw a spanner in the works.
‘We have a compelling growth story. We are confident of delivering profitable growth,’ said Sagar.
‘We would like to support you. We believe this business will do well…but your valuation expectation is a concern….’, said an angel…
‘We would like to support you. We believe this business will do well…but your valuation expectation is a concern….’, said an angel…
…First, without growth capital, you have no credible plan. Capital is critical. Second, we would like to see your ability to build a team and deliver sustained growth. Until then, our valuation estimate is about half of what you expect; there is little room for negotiation.’
‘Thanks, sir; we have done well, so far. We will do well, going forward, too. We have faith in our business. That is why we believe our expectation is fair. We are willing to discuss…but it will be difficult to come down to meet your offer…
…We are sorry, but we are unable to accept your offer. Thank you so much.’, said Sagar.
It was a strange situation.
Both investors and promoters were keen to shake hands, yet could not close the deal.
It was a strange situation.
Both investors and promoters were keen to shake hands, yet could not close the deal.
Sagar says, ‘We were not ready to dilute at that valuation. We worked hard with a simple theory—generate profits and plough them back to grow. Take debt, if required. So, when we had this offer, we thought, why not build a bit more and be ready for a larger round…’
WM continued on its path. In the next three years it grew to about fifty outlets without any dilution of equity. It grew by reinvesting profits and taking some loans.
WM continued on its path. In the next three years it grew to about fifty outlets without any dilution of equity. It grew by reinvesting profits and taking some loans.
‘In 2015, we were recognized as the most admired food service chain of Indian origin at the Coca-Cola Golden Spoon Awards. This gave us visibility. Mayfield fund showed interest in investing. TiE Kolkata came to seek sponsorship. We felt we had arrived…’
‘We set up our stall at the TiE Kolkata event. It was a roaring success.’
At the TiE event, during a panel-discussion, someone asked Sanjeev Bikhchandani, ‘Is it possible to succeed and grow a business without angel funding and VC funding?’
At the TiE event, during a panel-discussion, someone asked Sanjeev Bikhchandani, ‘Is it possible to succeed and grow a business without angel funding and VC funding?’
As luck would have it, the moderator stepped in, ‘We have amidst us Sagar, whose venture Wow! Momo has grown to fifty stores. Possibly, he could comment.’
Sagar narrated his story. That was when Sanjeev Bikhchandani first met Sagar.
Sagar narrated his story. That was when Sanjeev Bikhchandani first met Sagar.
Later during the day, Sanjeev enquired if WM was looking for funding. Sagar was candid about his interactions with Mayfield and also his earlier experience with angels.
Sanjeev offered to invest and to rope in other investors from Indian Angels.
Sanjeev offered to invest and to rope in other investors from Indian Angels.
Sagar came down to Delhi to meet the group. History was repeating itself. There was a group of about forty investors in the hall and many more on call. By the time the session was over, investor interest was clearly visible.
While WM was seeking about ₹7 crore funding, the commitment was about twice as much. Finally, they settled at ₹10 crore at post-money valuation of ₹100 crore.
‘No regrets. The business is on a strong growth path. It is profitable, too…
‘No regrets. The business is on a strong growth path. It is profitable, too…
…We realize that the promoters value equity, which is actually good news—our capital is in safe hands and we can now expect handsome returns,’ said an investor.
Indeed, WM did well. In 2019, it had more than 250 outlets across 13 cities.
Indeed, WM did well. In 2019, it had more than 250 outlets across 13 cities.
WM offers not only snack, but also meal options. It has introduced unique varieties of momos like sizzler momo and tandoori momo. It operates a central kitchen hub in every city which caters to its outlets.
It has standardized the cooking methodology. Sagar and Binod have roped in their friend Miftaur Rahman as a co-founder. In 2017, WM raised ₹40 crore at a valuation of ₹230 crore. This offered an opportunity for angels to exit.
WM received ₹130 crore funding from Tiger Global, in September 2019. WM has been growing rapidly. It has launched ‘Wow! China’. It plans international foray. WM aspires to be the Indian version of Domino’s and McDonald’s!
