Aug 23, 2022 · 1h 12m · neon-show
How He Built India's #1 SaaS for Manufacturers? Ft. Divyaanshu Makkar, Co-Founder-Sourcewiz
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In this episode of 100x Entrepreneur, Sourcewiz co-founder and CEO Divyanshu Makkar discusses his transition from venture capital to founding a vertical SaaS platform digitizing India's traditional manufacturing sector. He shares actionable frameworks on customer discovery, feet-on-the-street distribution, upfront pricing models, and navigating institutional fundraising to scale a SaaS-enabled B2B marketplace.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
Siddhartha as informed peer 3.2 Guest teaching 6.2 Guest disagreement 1.4 Siddhartha pushing back 0.3
speaking balance: gold is Siddhartha, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 30:08 Dismissing pre-product financial projections
Divyanshu firmly rejects the utility of 5-year projections for pre-product startups, stating that making projections is just drawing art and that any seed VC requesting them is unsuited for seed-stage investing.
Hardest push from Siddhartha ▶ 30:01 Challenging readiness of seed fundraise projectionsSiddhartha tests whether a structured financial model was handy before starting investor pitches, pushing Divyanshu to defend how seed founders should approach stage-appropriate deliverables.
Biggest teaching moment ▶ 42:15 Educating on payment psychology of Indian SMB factory ownersDivyanshu breaks down why standard SaaS monthly subscription models fail in Indian manufacturing due to continuous collection friction, proving why annual upfront commitments are essential.
Siddhartha holds their own ▶ 33:31 Formulating investor evaluation ruleSiddhartha intervenes to summarize a core rule from his investing experience, asserting that founders should prioritize straightforward, candid VCs over those who beat around the bush.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Siddhartha as informed peer | Guest teaching | Guest disagreement | Siddhartha pushing back | Why |
|---|---|---|---|---|---|---|
| Divyanshu's Background: From Consulting to VC | 3 | 5 | 1 | 0 | Siddhartha introduces Divyanshu warmly and asks about his background prior to Sourcewiz. Divyanshu gives a detailed autobiographical walkthrough from IIT Delhi, Parthenon consulting, his first venture Connect to Teach, to his stint at Bessemer Venture Partners. | |
| Returning to Entrepreneurship After VC Experience | 3 | 6 | 1 | 1 | Siddhartha asks why Divyanshu returned to entrepreneurship so quickly rather than building VC social and financial capital. Divyanshu explains that VC skills are largely non-transferable to zero-to-one operational execution. | |
| Core Lessons Applied to Sourcewiz | 3 | 6 | 1 | 0 | Siddhartha prompts for documented mistakes from the first venture. Divyanshu delivers structured insights on co-founder alignment, not being wedded to a specific solution, and hiring senior operators while maintaining a tech-first approach. | |
| SaaS Pitching Mistakes and Metric-Driven Evaluation | 3 | 7 | 2 | 0 | Siddhartha inquires about common mistakes SaaS founders make when pitching VCs. Divyanshu explains that founders must assume VCs know nothing about niche unsexy industries and need clear metric benchmarks to evaluate opportunities. | |
| Selecting Manufacturing as a High-TAM Market | 3 | 7 | 1 | 0 | Siddhartha asks for the framework behind market selection. Divyanshu breaks down the macro tailwinds in Indian manufacturing (China+1, shifting generational leadership in factories) and the strategic benefits of unsexy, low-competition markets. | |
| On-Ground Customer Discovery in Indian Factories | 2 | 6 | 0 | 0 | Divyanshu explains meeting around 100 factory owners across various tier-2 manufacturing hubs during customer discovery. The segment also contains a mid-roll sponsor insert by Prashant Ganti explaining Zoho Payroll's product vision. | |
| Prototyping and Validating Willingness to Pay | 3 | 6 | 1 | 0 | Divyanshu details using Figma mockups disguised as ready software to validate willingness to pay before writing any code. He explains closing their seed round in 15 days using authentic founder references to select patient investors. | |
| Fundraising Preparation and Managing Seed Expectations | 4 | 7 | 3 | 2 | Siddhartha asks if Divyanshu had 5-year projections ready for his seed fundraise. Divyanshu firmly dismisses financial projections for pre-product companies as useless fiction and explains that VCs demanding them are ill-suited for seed investing. | |
| Building the Investor Relationship with Blume's Sajith Pai | 3 | 5 | 1 | 0 | Divyanshu narrates how he developed a multi-touch relationship with Sajith Pai of Blume Ventures, transitioning from an initial rejection for an internship to securing an institutional lead investment. | |
| VC Pitch Feedback Loops and Managing Investor Biases | 5 | 6 | 2 | 1 | Siddhartha shares his principle about preferring blunt VCs over evasive ones. Divyanshu outlines how he adapted his pitch deck over 20 iterations by preempting VC cognitive biases and explains why Sourcewiz prioritized front-end sales tooling over clunky ERP implementations. | |
| First Paying Customers and Annual Pricing Architecture | 3 | 7 | 2 | 0 | Divyanshu explains why monthly subscriptions fail for Indian manufacturing SMBs due to high collection overheads, justifying why Sourcewiz enforced mandatory annual upfront billing and iterated price points upwards. | |
| Building Feet-on-Street Sales in Tier-2 Hubs | 3 | 7 | 2 | 1 | Siddhartha asks about the operational hurdles of building field sales teams. Divyanshu describes navigating the severe trust deficit in tier-2 manufacturing hubs like Panipat and Mirzapur where factory owners have been repeatedly burned by tech vendors. | |
| Scaling Customer Acquisition and Moving Upmarket | 3 | 6 | 1 | 0 | Divyanshu details scaling to 400 paying customers and expanding into an export marketplace model that enables international retailers in the US and GCC to curate product catalogs directly from Indian suppliers. | |
| Regional Hub Expansion and Grassroots Community Building | 3 | 6 | 1 | 0 | Divyanshu discusses scaling physical presence across 14 manufacturing clusters in UP, Rajasthan, and South India, using creative community sponsorships like local cricket leagues to overcome trade secrecy barriers. | |
| Operational Scaling, Team Accountability, and Quality Control | 3 | 6 | 1 | 0 | Divyanshu describes implementing strict weekly operational reviews and decentralized leadership to prevent mis-selling and maintain rapid under-10-day customer onboarding cycles across distributed field teams. | |
| Navigating Market Unknowns and Quality Variations | 3 | 6 | 1 | 0 | Divyanshu discusses key risks including quality variability in handmade Indian goods compared to mechanized Chinese manufacturing. He also explains how Matrix Partners preempted their Series A after seeing proven monetization traction. | |
| Strategic Angel Investor Composition | 4 | 7 | 2 | 0 | Divyanshu outlines his strategy for angel investor onboarding and summarizes core operational advice, urging founders not to shun manual operations or field sales. Siddhartha commends his disciplined customer discovery documentation in Notion. |
Statements from this episode (23)
Makkar: VC skills do not translate to early-stage startup operations
“The skills that you learn in VCs are not really applicable to what you will do as an entrepreneur. And that became very clear to me very quickly. It was clear to me when I did consulting because none of what I did as an entrepreneur You know, outside of like, …”
Makkar: Raising venture capital locks startups into rapid growth trajectories
“As soon as you take VC money, right? Like you have decided a trajectory to follow for your business. You know, you can't then say that, okay, I don't want to grow this rapidly or I, you know, want to probably, you know, build this a different way. You have to …”
Vertical SaaS founders must assume pitching VCs have zero domain knowledge
“Like a person like me sitting there at Bessemer, I personally cannot know hundred industries. I cannot associate with a hundred problems. So you have to go in knowing that this guy doesn't understand it. And it's okay for him to not understand it or her unders…”
Makkar: Bessemer evaluates vertical SaaS entirely on metrics, not domain expertise
“And at Bessemer, at least we were very, very metric driven. And I think we published like a good, better, best of SaaS, global SaaS out there. So pretty much that's how I'm going to evaluate. So there were companies in oil and gas. I have no idea about oil and…”
Unsexy markets allow founders to build without chasing vanity metrics
“Those businesses are very, very strong business fundamentals, you know, not very, a lot of people are competing in those spaces, and it gives you a lot of time to build something of value to your customers. You're not always chasing numbers. You're rather like…”
Makkar: India's second-gen factory owners prioritize modern tech and customer experience
“When I actually went on ground, I met like, you know, the second generation, everybody studied abroad or, you know, has gone to a good university. They don't, they have, they're ambitious, they don't want to run it like their fathers, and they are, you know, d…”
Sourcewiz founders shadowed owners at nearly 100 factories before launching
“So we probably met. 90 to hundred like ballpark hundred factories before we started. And in some of these factories, we spent two weeks, three weeks shadowing, like the owners just seeing how they work.”
Sourcewiz validated demand by selling a no-code Figma prototype upfront
“So we built a prototype. It was a Figma prototype. No tech, no coding involved, but it was literally, you could look at it and you would like, we'll pitch it to you in a way that you will, as a manufacturer, you will not know that I'm pitching to you a prototy…”
Matrix Partners doubted Sourcewiz's monetization before leading their next round
“In fact, Matrix literally didn't believe that, you know, we would be able to charge our customers money. And then when they saw that we actually were able to charge them money, they came in, in the next round, right?”
Makkar: VCs demanding five-year projections pre-product are unfit for seed stage
“Asking for projections for a pre-product company five years out. It's, yeah, it's, you know, I'm just going to do some art there. And I felt like, you know, that like almost all VCs, like no, 99% of the VCs didn't ask me for it only one or two hours. And I, th…”
Sajith Pai rejected Makkar's request for an internship at Blume Ventures
“I'd actually asked Sajit for an internship at Loom. I for not an, like I, after he approached me for his portfolio company, I told him that, Hey, I'm more interested in VC. And he straight away said no to me. He said, we are not hiring. We get too many applica…”
Makkar: VCs evaluate new startups by pattern-matching against portfolio baggage
“Every VC has baggage. Like, they will try to connect you to some portfolio company that they have seen and that has nothing to do with you. That has nothing to do with what you are building. But you know, that's, it's a complex, like, you know, as a VC also, y…”
Indian lifestyle manufacturers could only process 20% of incoming buyer inquiries
“So we realized that out of all the inquiries that were coming to these people to show products, they were only being able to get to 20% of those inquiries and the rest will be delayed to next month, et cetera.”
Charging Indian factory owners monthly creates severe payment collection problems
“Charging Indian factory owner monthly is the worst thing you can do to yourself. And it's like collections will become a huge problem in India. You just keep following up, right?”
Indian Tier-2 manufacturers require in-person sales due to burned trust
“Like people don't convert digitally. This is a segment which is burnt by technology so many times that they will not trust you if you're not, you know, if they don't have a face for it.”
Sourcewiz reached nearly 400 paid customers by acquiring 80 per month
“So by till January, we had like maybe five, seven customers. And then January onwards, we started putting the first salespeople on, on ground. And so now we have, we'll close this month with about close to 400 customers. Every month we're acquiring about 80 cu…”
Makkar predicts Sourcewiz will hit $1M ARR by July 2023
“I think so by next year like same time next year, we should be like, maybe July, we should be hitting a million dollar ARR.”
In traditional industries, SaaS vendors become the client's sole tech contact
“And that's the good thing about unsexy industries. You almost, even if their wifi goes out, they'll call you. Even if there's a big problem, they'll call you. So you are the only tech company they know, essentially, and they'll come to you for every problem.”
Scaling field sales teams in India quickly erodes brand quality control
“When you scale feet on street, right, you lose control of quality very quickly, and that guy will go and present your brand in whatever way they feel fit.”
Indian manufacturing lacks China's consistency because export products are handmade
“India is not known for a lot of consistency in their products. Compared to China, which is very mechanized as a setup, right? So, you know, the products are going to get out with a certain quality fail rate, and it's going to be largely the same, what you're e…”
Software moats are built by shortening customer time to value
“Giving technology is one thing, but, you know, we've worked a lot on onboarding and I think a lot of the modes that we've built are not just the product. It's like the whole process of onboarding the customer and, you know, like making the time to value short.”
Indian B2B SaaS founders must embrace field sales over remote selling
“Do not be scared of building like field sales. Like a lot of people in the beginning told me that, you know, don't do field sales. And a lot of SaaS founders, by the way, hate field sales, right? Like they don't like it. SaaS is usually thought of as a clean b…”
Sourcewiz's pre-product pitch deck featured a Notion log of 90 interviews
“And actually it helps, like it helped us in our early VC conversations. I had a slide where, and actually one of the VCs had given me this advice. We were pre-product, right? So we had a slide where I literally had a snapshot of that notion with like all of th…”