Mytek Innovations: Valuing a Start-up

Discussion Questions

As Mr Shivakumar Borade sipped his morning tea, he read an article in The Economic Times titled ‘Projects delayed? Ministries likely to face question hour’ (Annexure i). The article appeared significant for his company, Mytek Innovations Private Limited (MIPL). While it highlighted possible scrutiny for ministries and government departments experiencing delays, it also suggested opportunities for companies like MIPL, which had developed a digital platform enabling clients, contractors, sub-contractors and suppliers to share project information in real time.

The engineering project management industry was undergoing transformation with the adoption of AI-driven systems that provided real-time tracking, decision-support tools and recommendations for resource allocation. Technology start-ups were central to this shift. India, which had the third-largest start-up ecosystem globally, was experiencing an annual growth rate of 12%–15%. In 2024, Indian technology start-ups collectively raised $11.3 billion through private funding rounds. Start-ups were no longer concentrated in IT and IT-enabled services; they were increasingly present in sectors such as construction, health care and financial technology. Despite these developments, many early-stage start-ups continued to face difficulties in accessing capital.

Over the previous three years, MIPL had secured contracts for real-time progress tracking in several infrastructure projects and had delivered them within agreed timelines. This positioned civil engineering project management as one of the company’s primary areas of expertise. During this period, the business recorded a 19-fold increase in turnover between 2022 and 2024. Maharashtra, where most of MIPL’s clients were located, announced upcoming greenfield projects valued at $3.6 billion. The state was also the site of several initiatives under the Prime Minister’s Gati Shakti National Master Plan, including a Multi-Modal Logistics Park. With India’s potential market size estimated at $204 billion, and approximately 10% of that concentrated in Maharashtra, MIPL operated within a significant growth landscape.

Since its inception, MIPL had operated without debt, relying on internally generated resources. This reflected the approach of its founder, Mr Shivakumar Borade, who consistently advocated bootstrapping. Although the specific reasons for his reluctance to use debt financing were not fully documented, they could be linked to his background and early experiences (discussed in the following section). In contrast to the preferences of his business partner, Mr Borade remained hesitant to pursue debt financing. He also considered it premature to explore a public issue through an initial public offering. However, he expressed openness to private equity or venture capital (VC) investment, provided the valuation aligned with his expectations.

With these considerations in mind, Mr Borade planned to meet with his business partner and long-time associate, Mr Ashwajit Wankhede, to review MIPL’s growth trajectory and assess the valuation that the company might seek from potential external investors.

About the Promoter

Mr Shivakumar Borade began earning at the age of 17, working both as a karate trainer and as a mechanic at an automobile service garage in his hometown. He came from a lower-middle-class family in Pandharpur, a small temple town in western Maharashtra, India. Financial challenges marked his early years as he contributed to supporting his family.

One of the anecdotes he often shared came from the time shortly after his marriage. On one occasion, he and his wife needed to travel ten miles on a hot day to visit a potential business site. They had limited funds, and the choice was between taking a rickshaw or purchasing a water bottle and walking. They chose the latter, prioritizing savings over convenience.

Through consistent efforts to save at a micro level and a strong determination to build a business career, Mr Borade eventually moved from Pandharpur to Pune and later to Mumbai, where he pursued new opportunities and laid the foundation for his entrepreneurial journey.

Mr Borade took on various jobs, including work as a driver and an insurance agent, while continuing to educate himself through regular reading. During the course of his work, he interacted with daily-wage workers and contractors engaged in infrastructure projects. Through these interactions, he observed a recurring challenge: the absence of an integrated ecosystem where clients, contractors, sub-contractors, suppliers, investors, banks and end-users could share information on a common platform.

This gap created multiple operational difficulties. Contractors and sub-contractors often faced barriers in accessing funds and working capital, while government agencies encountered challenges in assembling and coordinating operational teams on project sites.

This idea led to the establishment of Mytek, an artificial intelligence (AI)- and machine learning (ML)- based digital platform designed to provide role-based access for stakeholders involved in project planning, supply chain management, collaboration and real-time progress tracking. By March 2024, MIPL reported a turnover of $209 million, reflecting a 100% increase compared to the previous year (see Exhibit 1).

Background of Infrastructure Projects in India

With the growing demand for infrastructure development and the advantages associated with public– private partnerships (PPP), governments across the world are increasingly engaging private sector participation to address gaps in capacity. In the transportation sector alone, the World Bank’s Private Participation in Infrastructure database recorded 1,634 projects in 139 low- and middle-income countries, representing a total investment of over $473 billion, of which $387 billion came from private investors.

Despite this level of investment, infrastructure projects frequently encountered challenges such as delays in construction, lower-than-estimated revenues, aggressive bidding practices and land acquisition issues. These factors often resulted in cost and time overruns, leading to financial losses for infrastructure firms. The execution of such projects remained complex and involved risks for both public and private partners, at times preventing governments from meeting their targets. Research indicated that a lack of trust and collaboration among contracting parties was a recurring reason for project delays. In India, of the more than 1,350 PPP-based infrastructure projects initiated up to 2016, only 46% became operational, while the remainder were either delayed, terminated or stalled.

The Mytek Solution: Building Bharat Faster

Mytek was developed as a suite of solutions for project management rather than a single product. Its offerings included:

Fintech platform: This module was designed to support contractors who had secured work orders but required temporary funding or partners to manage working capital.

By 2024, the civil and infrastructure project segment had become the strongest vertical, recording more than a 120-fold increase in turnover compared to 2021. Management also identified opportunities to extend the platform’s application to other industries, including real estate, automobile manufacturing and pharmaceutical manufacturing.

MIPL’s revenue model was based on charging a percentage of the project’s top line. Competitors in the market (see Exhibit 2) primarily focused on serving procurement needs in the manufacturing and construction sectors. In contrast, there were relatively fewer project management service providers operating in the civil and infrastructure segments, which were less structured compared to manufacturing.

Industry observations suggested that approximately 10%–12% of project profitability was often lost due to inefficiencies arising from limited collaboration among stakeholders. The MIPL platform was designed to address these inefficiencies by integrating activities such as procurement, subcontracting, execution and payments within a single system. By reducing the likelihood of time overruns, the platform aimed to lower overall project costs and improve profitability, thereby strengthening MIPL’s ability to secure additional project management contracts.

In addition to these operational capabilities, MIPL obtained certifications in environmental management systems (ISO 14001:2015), occupational health and safety management (ISO 45001:2018), and quality management systems (ISO 9001:2015).

Future Growth Path

MIPL planned to integrate the requirements of all stakeholders onto a single platform. The company began with an initial capital of $0.1 million, and it was established as a 50–50 partnership between Mr Borade and Mr Wankhede. In 2023, both directors contributed an additional $9.9 million (in equal amounts), bringing the total share capital to $10 million (see Exhibit 3). In addition, Mr Borade invested approximately $14 million in the form of unsecured loans. This capital infusion increased the company’s capacity to execute larger-scale work orders. By 2024, MIPL had completed projects with a cumulative value exceeding $700 million (see Exhibit 4). Management set a target of reaching $1,400 million in turnover over the following two financial years, by 2026.

At that time, the organization employed 25 team members. The management positioned them as active contributors to the company’s progress, rather than as employees alone. To reinforce this approach, an employee stock option scheme was introduced for selected team members, which was announced on Mr Borade’s birthday.

Looking ahead, MIPL planned to diversify into additional verticals such as telecommunications, wind energy installations, textiles and digital project consultancy services. In these industries, manufacturers frequently outsourced specialized services to local producers, requiring detailed product specifications, oversight of completion and delivery and management of supply chain challenges across multiple partners. MIPL intended to position itself in these sectors by offering AI- and ML-enabled digital tools as an alternative to traditional consulting services, to improve efficiency and ensure timely project delivery.

Projections

Between 2021 and 2024, MIPL reported revenue growth of 120 times. While this increase was significant, some competitors in the sector recorded growth rates of approximately 500 times during the same period (see Exhibit 5). Projections were based on several assumptions. First, sales were expected to increase by 2.6 times year-on-year over the next four to five years, even under conservative estimates, before stabilizing at an annual growth rate of 10%–12%. Second, expenses, excluding interest, depreciation and tax, were anticipated to remain constant at around 73%t of income, consistent with previous years. Third, with additional fund infusion, MIPL planned to increase investment in fixed assets by 20% annually, while growth in working capital was expected to align with turnover growth.

Decision

To finance its growth and ambitious expansion plans, MIPL projected a need for approximately $400 million in fresh capital by the end of 2025 (see Exhibit 6). In 2023, the two directors had infused $20 million, as reflected in the balance sheet (see Exhibit 3). The company’s authorized share capital stood at $200 million (20 million shares at $10 each), of which the promoters collectively held 1 million shares.

Over lunch that afternoon, the partners discussed possible financing options. Mr Borade reiterated his reluctance to raise debt and considered both VC and private equity (PE) viable alternatives, provided the valuation was favourable (Black & Dorf, 2020; Chandra, 2020). He pointed to examples such as Zetwerk, which raised $70 million in a VC round led by Khosla Ventures, and Moglix, which raised $250 million in a Series F round in 2022 (Damodaran, 2005, 2009). In contrast, Mr Wankhede favoured a more cautious approach, suggesting that debt funding from banks could support incremental expansion while allowing the promoters to retain control. He argued that comparing MIPL with much larger companies like Zetwerk or Moglix might not be appropriate at this stage (Feld & Mendelson, 2019).

The two partners agreed that obtaining a fair valuation of MIPL was a necessary first step before approaching external investors. They also acknowledged the possibility of alternative funding avenues, such as angel investment, noting that Vendor Infra—a company of comparable size—had raised approximately USD 0.20 million through this route (Rose, 2014).

As they concluded their discussion, the partners recognized that the choice of financing would shape the trajectory of MIPL’s growth. Should they maintain their debt-free principle and pursue equity funding through VC or PE? Should they take on bank financing to preserve ownership and control? Or should they explore hybrid or alternative models of funding? Their decision would determine not only the company’s immediate expansion but also the long-term sustainability of its business model.