Think of a bar. OK, two bars.
In Bar A, you do not pay a cover at the door. You grab a drink, before moving onto Bar B, which is charging $5 at the door, but has a live band playing.
Which bar are you staying at longer?
That, in essence, is what is behind the latest approach by Akhil Suresh Nair, founder and CEO of one of Louisville’s fastest growing startups, Xena Intelligence, which is an e-commerce platform.
As of recently, Nair started charging investors a substantial "cover charge" — $5,000, to be exact — to see his pitch deck. So far, three venture capital firms (VCs), out of approximately 20, have taken him up on his offer in the past few weeks, as he is in the middle of raising a $5 million seed round.
He has been pleased with the results, so far.
“I’ve seen the difference. When VCs … pay for [the deck], they obviously spend more time than in the past and because it’s worth five grand,” Nair told me.
Where did the idea come from?
Nair, who was part of Techstars NYC last year, said that this idea largely stemmed from a Slack channel from the startups that were part of his cohort. Conversations came up there — and everywhere in the startup world, for that matter — about how even for startups that have been doing all the right things, they still cannot find new venture capital due to investors “doubling down on their existing investments.”
"And that could be because a lot of the VCs … [are] stuck, or they are extremely risk averse, or they maybe don’t spend enough time in understanding all these new startups that are coming up," Nair said.
So far, none of his other fellow Techstar counterparts have taken that same leap. He has also shared his approach to a Slack channel for Louisville founders as well.
“Everybody’s been sending a smiley face, saying ‘Maybe we should be doing this, too,’” he said. “[I think] the fear that they have is that ‘Hey, maybe this will turn off investors that might have invested.’ I’m like, ‘It’s so brutal right now. Can you really say who would be turned off?’”
Nair, who was named to our Forty Under 40 list in 2023, added that it is up to each founder to decide how much they want to charge. He said ultimately, even though that money can go to the overall goal of raising capital, that the dollar amount is not important. Assigning a monetary value, though, lets the investor know “a lot of effort has gone into this.”
I first spoke with Nair about Xena Intelligence back in November 2022. Back then, he was still a relatively new transplant to Louisville from Boston, having moved here after being named one of the winners of the 2021 Render Competition (and a Vogt Award winner in 2022).
Since that point, Xena has been named one of our 2023 Startups to Watch and 2023 KY Inno Fire Award winner under the category of “On the Rise.”
What's next for Xena
Xena has 82 customers using his platform to sell products on Amazon, Shopify and Walmart.com — with a combined approximate sales figure of $160 million, approximately doubling the amount that was last reported when I spoke with Nair about his initial $2 million pre-seed round capital raise.
Nair and his team have been rolling out a new product, Xena Foresight, which uses AI to generate pictures of products that clients can use on Amazon or their websites. To generate some buzz around his product, Nair posted four photos of knives on a LinkedIn post. He then asked people to vote for what knife was real. (Spoiler alert: They were all generated by AI).
“The idea is that you don't have to pay 10, 20, 30 grand to create high-quality images for your product. Plus small businesses, they don’t have the money to invest in creating these really good looking images, and now you don’t need to because AI will do it for you for practically next to nothing.”
Nair said that, so far, clients who have been Foresight are seeing their sales increase by 20% without spending more on ads (or anything else).
