Venture Capital vs. Bootstrapping: Ajoy Sharma of Solyco Capital on How to Determine If Fundraising or Bootstrapping Is the Right Choice for Your Startup
Seek More Than Money from Investors: Look for investors who offer more than just capital. Seek partners who can provide expertise, market access, and strategic guidance. You want investors who are invested in your success and can contribute to your growth beyond financial support.
Founders are often faced with the nagging question of whether Fundraising or Bootstrapping is the best choice for them. What is better, having access to capital or maintaining full control over your vision and profits? What is preferred, to have the seasoned oversight of an experienced investor, or to plow forward with a disruptive and pioneering ‘can do’ attitude? Of course, every situation is different, but what standards can be used to help a founder decide? As a part of this series called “Venture Capital vs. Bootstrapping: How to Determine If Fundraising or Bootstrapping Is the Right Choice for Your Startup”, I had the pleasure of interviewing Ajoy Sharma.
Ajoy brings 25+ years of experience in thematic investing, financial strategy, and operational leadership. He has effectively navigated start-ups, high-growth enterprises, distressed companies and global corporations, and completed transactions totaling $2 billion+ in aggregate value including capital raises and mergers and acquisitions. In his current role as a Senior Partner at Solyco Capital, a leading private equity firm, Ajoy pilots the intricacies of startup ecosystems, making strategic investments and guiding emerging companies towards sustainable success.
Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?
My background is in global business. I started out at Hong Kong and Shanghai Bank (HSBC) as a credit analyst. From there, I transitioned to roles at General Motors and subsequently Delphi, focusing on new ventures, virgin geographies and emerging product lines within Fortune 100s. By the time I left Delphi, I was a regional CFO for a division based in Seoul, South Korea, spearheading business development and expansion in new Asia-Pacific territories. Coming back to the US, I got an opportunity to join a boutique private equity firm and doing roll ups in telecom services. This experience paved the way for my involvement in a technology and business process outsourcing startup, which we grew for over a decade across multiple geographies.
My background has been centered around working with early-stage ventures and ensuring their success through a managed risk-taking approach. That’s what brought me to Solyco. I was attracted to the company’s vision of building not just one or two companies, but an entire portfolio across multiple industry sectors. Their operational focus and business model distinguished them from traditional venture capital firms.
Can you share a story with us about the most humorous mistake you made when you were first starting? What lesson or takeaway did you learn from that?
I was working in Asia during the mid 90’s investing and building a handful of joint ventures and companies. At that point in time, the economic outlook was stable. We accumulated significant US dollar-denominated debt for our entities, capitalizing on its low cost despite conventional financial wisdom advising against mismatched and unhedged currency borrowing. Fast forward 12 months — the Asian currency crisis happened with the currencies devalued by 50–70%. There I was at 28 years old with these healthy cash-flow generating companies in local currencies that were technically bankrupt due to excessive US dollar-denominated debt layered in because of a decision I had made.
In hindsight it feels more ironic than humorous. Financial theorists have always proposed matching company’s financial exposure through common currency basket. One should heed their advice.
You are a successful business leader. Which three-character traits do you think were most instrumental to your success? Can you please share a story or example for each?
There are three traits that have been most instrumental to my success.
- Valuing Relationships — Building and nurturing relationships has been key for me. The people I worked with as an analyst or when I was an associate, have come full circle 25 years later. They have all grown in their careers and in some cases have become partners in some of my businesses.
Case in point. We did a deal with Palltronics (one of our portfolio companies). The Vice Chairman of our strategic partner at Palltronics, once worked for me as an analyst 25 years ago in Korea. We kept our professional relationship for more than 25 years. I knew his professional integrity, resourcefulness and global experience, so when the opportunity came to look for the right strategic partner, I knew he was someone I wanted to work alongside.
What started with a simple connection has grown into one of our most successful partnerships.
2. Keeping an Open Mind — I grew up in eight different countries living in cities small and large. My exposure to these places taught me there is always a different outlook we can have in life and business issues. Being present and willing to learn from others or being open to different experiences or ideas can yield outcomes I might not have imagined.
Case in point. Conventional thinking in American companies is that we can motivate leadership and change behavior by providing performance-based financial incentives that go over and beyond base compensation. However, my international experience has been contrary to that convention. In certain countries and cultures, predictable income trumps large financial incentives for retaining top talent. One must be open to listening and fully digesting non-conventional approaches that might differ from the established approach.
3. Perseverance — Prior to Solyco, I was working at a tech start up. The first 3–4 years we’d knock on doors for business. Rejection was high. The argument against us was typically ‘too much risk.’ Or ‘I want a more stable company.’ Or ‘Not right now’.
That was ok. We kept showing up, going to trade shows and knocking on customer’s doors, working at it — with no expectations. Slowly but surely, after continually showing up and not writing anything off, customers started to take note and were willing to give us a shot. That ultimately opened the floodgates of business for us. All that to say the lesson in is there is value in showing up. This is relevant to any disruptive idea or company.
Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?
I’ve learned more from my failures than my successes. As they say, a rising tide lifts all boats, but it’s during the low tide that you really get tested. My career was always very progressive, and growth oriented with a lot of successes at the Fortune 100 company. The hardest learning was when I had to take a company through a financial restructuring and a bankruptcy reorganization.
As professionals, we have a lot of forgone conclusions on how business interacts with our personal values. While values should guide us, fear can also embrace certain actions. When you are on the downside and very vulnerable, all options become real possibilities.
This introspection forces us to confront our own mental barriers and self-imposed restrictions. Breaking through these barriers liberates our thinking, allowing for greater adaptability and growth in business.
For me that was the biggest tipping point because the thoughts and the associated action we impose on ourselves are only restrictions and opportunities in our own eyes. When we take a 30,000-foot impersonal view of the situation and remember this is business — it becomes clearer, as we can’t hold the viability of a business on our own self imposed restrictions.
None of us are able to achieve success without some help along the way. Is there a particular person or mentor to whom you are grateful who helped get you to where you are? Can you share a story about that?
Where to even start… Throughout my career I’ve had several mentors who have all shaped me in different seasons of life. When I was working in Asia Pacific as a CFO, my president was a huge mentor for me.
Maneuvering through large company bureaucracy can be challenging. Adding differences in culture further complicates the dynamic. My mentor showed me how to frame my arguments with the decision makers in a way that would be well received and considered. It was valuable because in that part of the world there were cultural nuances about pushing the status quo or challenging the chains of command.
You have been blessed with great success in a career path that many have attempted, but eventually gave up on. Do you have any words of advice for others who may want to embark on this career path but are afraid of the prospect of failure?
In our education system, we’re often taught to focus more on assessing risks rather than recognizing opportunities. If someone is overly analytical about life, then they will attach less value to all the possibilities and more value to the failure or downside.
I would say that the key point over here is to learn to bet on yourself. What I mean by that — yes, failure will happen. Risks are involved — but if you’re resourceful and hardworking, you’ll find opportunities even in setbacks. There’s a thin line between success and failure, and sometimes, a small wrong turn can lead to unexpected success. Don’t attach too much distinction between the two — they’re often just part of the same journey.
Ok, thank you for that. Let’s now jump to the main part of our discussion. Can you share a story with us about your most successful Angel or VC investment? Or an investment that you are most proud of? What was its lesson?
I’m proud of Solyco’s investment in Palltronics. Palltronics is a smart pallet manufacturer. I realize that might not sound exciting, but when you think about it everything you consume whether it be fresh fruit, toothpaste or even your computer — it arrives to you via this important piece of the supply chain.
Palltronics has changed how we think about pallets because it developed a product that creates more quality control for the goods on the pallet and less hiccups in the supply chain, which means less hiccups for the consumer. We are tackling a major problem in the industry and disrupting an oligopoly that’s been around for over a century. This is more than financial gain, it’s also about making a significant impact.
The decision to invest in Palltronics wasn’t easy — it required a big financial commitment. We’re proud of our product, which is top-notch in the industry. What’s even more exciting is the partnerships and ecosystems we’ve built around it. Despite focusing on American and North American companies, we’ve managed to attract global partners and investors, which speaks volumes about our team and our vision. It’s been heartening to see the support from our LP base, who understand the risk return profile of these opportunities, but they see what we are trying to solve for and its potential upside. This investment is an example of seeding a company that is both environmentally sustainable and financially rewarding for all stakeholders.
Can you share a story of an Angel or VC funding failure of yours? What was its lesson?
Yes, as I’ve said earlier in the interview; the biggest lessons are when the tide is low, and the rocks are visible.
As investors, we’re looking for a multiple on invested capital (MOIC) of 12 to 15x. I once invested in a F and B opportunity with that same goal. We made a decision to over-invest in physical infrastructure. External factors and delays in approvals ended up lowering our returns more than we expected. We had to pivot our strategy midstream and pull back from the heavy asset investment. It was a tough lesson and a deviation from our usual asset-light approach. Key lesson here is to fail early. Your time and capital are both equally important.
Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?
We’re not usually in a situation where we’re competing with a bunch of other firms for the same deal. We prefer to be the primary player in the game and therefore we don’t operate like most firms where we have people come in and pitch us their business.
We operate on an invitation-only basis, so opportunities usually come to us through our own network. Our investment criteria is complex and we need to make sure the fit aligns not just with our expertise, but also with our ability to add value to the companies.
Let’s imagine that a young founder comes to you and asks your advice about whether Venture Capital or Bootstrapping is best for them? What would you advise them? Can you kindly share “5 things a founder should look at to determine if fundraising or bootstrapping is the right choice”?
Understand the Company’s Stage: It’s crucial to assess where the company stands. Are you in the ideation phase, with just concepts on a napkin, or do you have a fully developed product ready for market? Knowing your stage helps determine your funding needs and strategy.
Define Your End Goal: What are you trying to achieve with your business? Are you looking to build a long-lasting company or aiming for a quick exit? Understanding your end game influences your approach to fundraising or bootstrapping.
Consider the Window of Opportunity: Is your market opportunity wide open, giving you ample time to scale, or is it narrow, demanding quick action before it closes? The window of opportunity guides your funding strategy and timing.
Treat Equity as Currency: Don’t rush to raise capital too soon. Think of your equity as a valuable currency. By maintaining control of your equity and raising funds strategically based on milestones, you minimize dilution and ensure you’re raising at the right stage of growth.
Seek More Than Money from Investors: Look for investors who offer more than just capital. Seek partners who can provide expertise, market access, and strategic guidance. You want investors who are invested in your success and can contribute to your growth beyond financial support.
As a general rule, bootstrapping might make sense until you’re able to crisply define your value proposition, get preliminary market validation and identify the key team members that will help you in executing your vision. Fundraising is best suited for product enhancement (post market validation), scaling infrastructure/team and market growth.
You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)
As a firm, we’d want to democratize alternative investments. In the past, these investments have been perceived as primarily for the uber-wealthy. The common belief was to invest in alternative investment classes — specifically within venture capital and private equity one would have to be able to write a check for $5Million.
That shouldn’t be the case. Smaller investors have become comfortable investing in public markets. We want them to feel the same about alternatives. We can do that by giving them exposure to investments and opportunities at a price point that works for their portfolio.
We are very blessed that a lot of amazing founders and social impact organizations read this column. Is there a person in the world with whom you’d like to have a private breakfast or lunch, and why? He or she might just see this. :-)
It’s always interesting to think about meeting the academics and financial thought leaders at prominent institutions like University of Chicago. These academics are at the forefront, analyzing trends and shaping the future of alternative investments.
I’m specifically fascinated by the shrinking number of public companies in the US, especially when you look at any of the major indexes. Private capital seems to be on the rise — with more investors turning towards privately held companies. I would like to glance to into a crystal ball to gain a better understanding where things are heading.
How can our readers further follow your work online?
We’re active on LinkedIn. I’m partial but it’s a great resource as our partners post insightful content on alternative investments. You can also learn more about our work and our portfolio companies.
Solyco Capital: (https://www.linkedin.com/company/solycocapital/)
You can follow me here: (https://www.linkedin.com/in/ajoy-sharma-857717/)
Thank you so much for this. This was very inspirational, and we wish you only continued success and good health!
