Tan Kabra is the founder and CEO of LaunchByte, a 3-year old accelerator and venture capital firm that coined the phrase, "reverse-angel." He founded the innovative company, while in his undergrad at Babson College, and now sits among a team of over 100. LaunchByte wasn’t his first successful venture, Kabra counts VetX and working within the tech distribution industry among his many endeavors.
Kabra’s entrepreneurial journey started early while in Singapore where he began building his vast network of friends and advisors who’ve since helped him launch and grow multiple companies. Now, that same network is bringing new business in countless ways to the LaunchByte offices.
Nina Stepanov: Tell me about your background.
Tan Kabra: I was born in New Delhi, India, but my family moved to the United States was I was two. We lived in New Jersey and New York for a bit and then we moved to Singapore because of my parents’ jobs. I lived there for around 10 years and then I went to Boston to study at Babson.
Moving around was difficult but I met a lot of people and had experiences that I wouldn’t have had living in just one place. I had the opportunity to travel in multiple different cities and build a network around the world. When we do travel for work, my background makes it a lot easier.
NS: How did you end up at Babson? Did the entrepreneurship aspect entice you?
TK: The entrepreneurship aspect drove me there, definitely. My first venture started when I was 16 years old in wholesale tech automation distribution services. We were basically taking high end distribution channels and automating the process to provide just-in-time delivery. At the time this space wasn’t being explored much so a private investor became interested and was able to take that on and grow it, which allowed me to study entrepreneurship.
NS: Your early roles while in undergrad were all in marketing. Why did you move away from that?
TK: The double concentration I had was in Marketing and Data Analytics so it was gaining an understanding of why something is happening versus what many think of marketing as, “here’s a product, you should buy it”. The kind of marketing that I was interested in was growth hacking. I wanted to understand how to get something from point A to point B in a short amount of time, which is what we’ve started doing at LaunchByte, but wasn’t always the focus in college.
NS: You founded VetX, a healthcare platform that connects pet owners with on-demand vets, while at Babson. What led you in the direction of animal healthcare?
TK: VetX came about accidentally actually. One summer I went to a shelter to adopt a cat and that cat had a lot of issues. Not being a previous cat owner, I had no idea what was going on. They’d tell us our cat was fine but we’d get hit with a $200-300 bill. VetX sprouted from that.
There was a clear need for this application in the market. On the first day that the app went live with had a few thousand hits on the app store and investors were reaching out to us soon after. We raised a few rounds, hired a team and now it’s off and running as a B2B telemedicine company.
NS: Before VetX, you founded LaunchByte, a unique startup incubator and angel firm. Can you tell me more about that?
TK: LaunchByte came about because at the time I was helping out friends and people that I knew pro bono with a few different things. As I met more people along the startup journey I realized I could bring these smart people together to do this with me and build a real company out of our expertise. We’ve helped 36 companies since its inception, recently picking up press and hitting exciting milestones in the process. We work with a variety of early stage companies and founders but we also work with corporate companies, primarily within their corporate innovation departments.
I credit a lot of the growth and success to making key hires early on. Many of the management team have either exited multiple startups of their own or been a part of that first 3-4 employees who have. I started LaunchByte with zero capital, grew it to $2-3 million in run rate. At that point, the team and I realized that this was working.
NS: Who do you work with at LaunchByte? Is there anyone you turn away?
TK: We’ve built a model where a founder can come to us with either $100,000 newly invested or $2,000 left in the bank and work with both of them to get to their next milestone. Along the way, we’ve come across people who just aren’t ready to hyper-capitalize their growth yet and in response to that we created the academy arm of LaunchByte.
LaunchByte Academy consists of two tracks: either the founder has an idea that they’re already working on, or the founder doesn’t have an idea but knows they want to be an entrepreneur. Either way we equip them with the knowledge and know-how that doesn’t get taught in college courses to help them achieve their specific goals.
NS: Why do you think LaunchByte is as successful as it is?
TK: The top executives at LaunchByte have been both poor and rich a couple of times. We’ve had startups that have worked well and some that didn’t. The point now is not to make a startup that’s just a multimillion dollar cash cow in our pockets. Rather, we aim to leverage our big-ticket clients to be able to fund LaunchByte with enough revenue so we can contribute back to our early stage ventures.
NS: I’ve heard the term “reverse-angel model” used when describing LaunchByte, can you explain that?
TK: Here’s how it works, you need on average around $500,000 to $750,000 to get a company off the ground. So if you’re a cofounder of a startup and you’ve pulled together $100,000 from family and friends, it’s just not enough to get your company successfully off the ground, especially in this day and age. So, what we’ll do is provide you with all the tools you’ll need to be successful, like marketing, UI/UX, product development, and so on. In the end, a company that would normally take you 5 to 6 years to build / exit by yourself will take us 2 to 3 years.
We realize that the work we’re doing with you is worth $100,000 but we know you need to keep cash in the company as well, so we’ll match your $50,000 of cash with $50,000 as a SAFE investment. In essence we’d rather pay our own bill in exchange for equity rather than take it from you in cash. That’s how we tie the two together.
NS: What stage of investments do you primarily target?
TK: Industry-wise, we don’t have a vertical. We’re looking for viability and whether or not our team has the expertise to make it happen. We do however look for companies who are leveraging nextgen technologies, such as augmented reality, artificial intelligence, and machine learning.
NS: How do you differentiate from MassChallenge, YCombinator, and the like?
TK: Unlike a traditional incubator, we don’t house companies, let them tinker around, and then give them some money and see what they do with it. It really comes down to less coaching more action. We’ve had people come through who go from 5,000 users to half a million in 4 months.
NS: What are the top traits you look for in terms of investing into a company or founder?
TK: When we see a founder pitching in front of us, we look for the work ethic and determination in their eyes to make something work. There are many companies that fail or get hit hard multiple times by unforeseen obstacles, and we look for those who can navigate their way around it. There are people who come to work and close their laptops at 5pm, those are not the people we’re looking for. There have been companies we’ve invested in just because we believed in the founder.
NS: What excites you about the current market in Boston?
TK: I’m actually interested in the surge of growth in the cannabis technology industry. I’m excited about the economic impact potential that it has. More broadly, new markets are emerging in a city that people thought would always be doing the same thing.
NS: What companies in Boston, outside of your portfolio, do you find interesting?
TK: All of our LaunchByte partners are doing stuff that I find really exciting, obviously. Also, any application I haven’t deleted from my iPhone yet.
NS: Outside of your day to day work, what are your personal interests or activities?
TK: I have the cutest dog in the world so I like to hang out with him. I’m also a swimmer. I go to Equinox early in the morning to get a few laps in before my day becomes back to back 30- minute meetings.
NS: What was the last concert that you went to?
TK: One of Buddy Costa’s nights here in the city. He’s a well-known resident DJ, founder of Costa Production Group, in the area who actually approached me with a great idea for a platform and we are now working together on it.
NS: Are you involved in any charitable organizations?
TK: I often forget to bring it up but it’s a huge part of what I do. There’s a startup out of Babson called Womentum run by Derek Tu and Prabha Dublish that originally started with female entrepreneurs in India. They provide a platform for entrepreneurs all around the world to receive funding. Every time we do a big deal, we’ll go on there and donate to a bunch of new entrepreneurs.
I also invested in a non-profit called Second Start that helps Boston’s homeless population. Our office at LaunchByte is located on Boylston in Back Bay, so rarely a day goes by where you don’t pass someone in need on the way in to work. Second Start gives these people the resources and skills they need to get employed, get back on their feet and ultimately improve the quality of their lives.
Images courtesy of Tan Kabra.