“The Moot Corp Competition helped us identify holes in our business plan. The questions posed by the judges came from their own experiences. It was up to us to learn from their perspectives – and perhaps mistakes – and avoid committing them ourselves.” – Ranjit Nayak, MBA ’07
Planting the Seed
As they were driving to the Texas Evening MBA orientation retreat in San Antonio, Ranjit Nayak, an integration manager at IBM, and Divakak Jandhyala, a product-line development manager at BMC Software, talked about the widespread problem of accounting for the use of IT services. This discussion planted the seed for a business idea they originated three years later when they launched eVapt – a software infrastructure company that helps new, web-based programs or web-based software companies with billing and how they charge for their products.
It was in Bob May’s Managerial Accounting class in 2006 that Nayak and Jandhyala learned about activity-based costing and use of cost drivers in accounting. They both saw how this concept addressed the problem of accounting in the computing industry, the problem they talked about earlier at orientation. Nayak decided to move forward with the idea by entering the Idea to Product Competition, sponsored by the College of Engineering. “The judges had lots of questions and helped to pinpoint areas that needed more development and identify what could go wrong,” Nayak said.
In summer 2006, they took John Doggett’s Entrepreneurship Practicum. The course helped them understand what they were getting into. “This was simply the best preparation I could have hoped for. The class opened my eyes and let me consider my options. Just to know what the issues are is important,” Nayak said.
In the fall of 2006 they took Rob Adams’ New Venture Creation class, where they prepared for the 2007 Texas Moot Corp Competition. “We were able to think through the issues in a rational progression that helped us identify holes in our business plan,” Nayak said.
At the Texas Moot Corp Competition in January 2007, the judges posed a lot of hard questions based on their industry experience. When eVapt didn’t place in the competition, they realized they were not communicating clearly and revamped their presentation for the upcoming Carnegie-Mellon competition. It worked. They won the March 2007 McGinnis Venture Competition at Carnegie Mellon, with a prize valued at $25,000.
While in the MBA program, they networked through other campus organizations and faculty, including organizations like the Texas Entrepreneur Society. Also, Professor Doggett introduced them to organizations like INDUS Entrepreneurs, a professional entrepreneur organization.
After officially launching the company in March 2007, eVapt applied to the Austin Technology Incubator (ATI) where they were housed the next two years. With operational guidance and infrastructure support from ATI, they were able to continue developing their product while networking with other start-ups, potential investors and sales leads. “Having access to Daniel Nelson, MBA ’06, co-founder of Phurnace Software as a part of ATI was extremely valuable. It was like driving in a thunderstorm following the tracks and tail lights of the car in front,” Nayak said.
2007 and 2008 were difficult years in the funding market. Many venture capitalists were backing out of seed-stage investing. Despite this, eVapt began working with a large beta customer, landed their first customer in July 2007 and received a $250,000 investment from a retired Dell angel investor. “We felt the market was not ready for our solution. Ours was new technology that provided a fundamental shift for processing and billing accounting solutions,” he said.
But by March 2009, several large companies showed interest in eVapt’s new software solution, which presented an opportunity for an exit strategy. “Acquisition was the preferred exit at the very inception of the venture,” said Nayak. They put feelers in the market and received interest from several companies. In October 2009, MagnaQuest purchased eVapt. Located in Hyderabad, India, eVapt still operates out of Austin with Jandhyala as CEO. Nayak is pursuing options for his next new venture.