Arthur M. Blank Center
Babson Park, MA
The late spring of 2002 had been a maddening period for Vayusa founder Ajay Bam. Here he had a unique idea (confirmed by a high-profile technology grant and a host of exceptional advisors), a leading venture capital firm seventy-five percent sold, a talented software developer ready to go, and keen interest from a number of key players in the electronic payments industry. Vayusa had seemed at once to have it all, and nothing whatsoever. Ajay knew that unless he was able to secure a substantial start-up investment, and soon, he would be forced to give up the fight and grudgingly return to a six-figure income as a Wall Street analyst.
When his landlord, Idealab, had informed him that they would be increasing the monthly rates at their downtown Boston office space, Ajay responded to the news by moving out: We were running out of money at that time to pay the rent, so we thought a better use would be to go back and work from home. To be honest, we had thought that being in the city would do some good, but it didn’t add much…Instant messaging is the best idea that ever happened. We all can talk every day, save time, money and everything. When you start something you have to be frugal—and even after you get money, you still have to be frugal.
That summer, the National Collegiate Inventors and Innovators Alliance (NCIIA) awarded Vayusa a second grant—this time for $8,200—and things finally began to move. The Smithsonian Bounce
In addition to the grant, the NCIIA invited the Vayusa team—Ajay and Phuc Truong—to present their concept at its annual technology forum held at The Museum of
This case was prepared by Carl Hedberg under the direction of Professor William Bygrave. © Copyright Babson College, 2003. Funding provided by the Ewing Marion Kauffman Foundation. All rights reserved.
American History in Washington D.C. Ajay was thrilled at the opportunity to make their case:
The Smithsonian event was a good validation of the idea because we actually showed our mobile payments solution to a lot of people. It was good to get their feedback on the idea. I think that most people loved it…We were one of twenty-five teams; the best and the brightest from around the country doing some very interesting projects…and we were the only MBA school [in the group]...Out of the twenty-five, there were only four or five moving towards commercialization of the technology like we were. We came back and got some traction from that.
The team was still struggling to break into what Ajay referred to as an entrepreneurial triangle composed of investors, customers and technology: Investors would not fund the idea until merchants had been signed up, and merchants wanted to see a viable product before they would commit to anything. Ajay reasoned that of the three, the technology was the only one that he could really control. So, despite having no money to fund such an endeavor, he threw himself at the challenge of developing tangible proof of his vision. Product Development
Systems developer Rahul Mutha had been relentlessly seeking a deal with Vayusa for over three months when Ajay finally explained that he was without capital. When Rahul offered to develop the product for an equity stake in the new venture, Ajay tempered his excitement until after he had performed his usual due diligence: It doesn’t matter if it’s a friend or whatever, you have to check references… Like every new person I have brought in, I made sure that all my advisors talked to Rahul. I wanted other people to screen him because maybe I could be wrong in my judgment…. Rahul himself has been very successful. He sold an eleven million dollar company at age twenty-five and made a lot of money. He knew that if this takes off it is going to be big. So that is why he was attracted to this.