Srikanth Velamakanni, co-founder and group CEO of Fractal, recently shared a pivotal moment from the company’s early days, calling it “the worst mistake of my life.”
In a LinkedIn post, he recounted how Fractal, just a month old at the time, turned down a $750,000 investment from two HCLTech co-founders—Subhash Arora and Arjun Malhotra—due to board control conditions.
In 2000, Fractal’s founding team was offered a termsheet valuing the company at $3 million, with Arora and Malhotra seeking board control despite holding only 26% equity.
“Our egos took a hit,” Velamakanni admitted, as the team believed they could secure better deals. They rejected the offer over a conference call, only to face an unexpected downturn when markets crashed a month later.
The company struggled for months without funds, narrowly surviving the aftermath of the dot-com bust. Reflecting on this experience, Velamakanni highlighted three key lessons: “Never let ego drive decisions, respect those who put their trust in you, and genuinely understand and address investors’ concerns.”
Despite the setback, Fractal has since grown into a 5,600-employee-strong AI powerhouse, attracting investors across multiple cycles. “We made sure every investor exited happy. And that’s why I sleep easy at night,” he wrote.
Fractal, India’s first AI unicorn, is reportedly also planning to raise $500 million through an initial public offering (IPO) at a valuation of at least $3.5 billion.
The IPO will likely involve a combination of fresh equity and an offer for sale and Fractal is considering filing its DRHP with Sebi in November.
Fractal became a unicorn in 2022 after securing $360 million from TPG Capital. To date, the startup has raised $685 million from investors, including TPG Capital, Khazanah Nasional, and Apax Partners.
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