Back in 1996, long before “bootstrapped” became a badge of honour, Sridhar Vembu and Tony Thomas co-founded AdventNet Inc. in New Jersey using nothing but their personal savings. The company’s first office was a 10×10 room on the outskirts of Chennai, where a 15-member team worked on network management software. Vembu himself wasn’t even part of the day-to-day operations at first; he was working at Qualcomm in the US after completing his PhD from Princeton, while his brothers Kumar and Shekhar Vembu ran the India base.
The $200 Million “No”: A Philosophy is Forged
From the outset, AdventNet made a deliberate decision to reject venture funding. By 1997, while the company was growing, the founders chose not to pay themselves, reinvesting the revenue into research and development instead. That philosophy was tested during the dot-com boom. Around 2000, a venture capitalist offered $10 million for a 5% stake in AdventNet, valuing the company at $200 million. The offer came with a clause requiring an exit or IPO within seven to eight years.
Vembu declined, believing that investor expectations would restrict their ability to build for the long term. VCs don’t invest their own money; they’re middlemen for other people’s, Vembu said in an interview years later, adding that their incentives often differ from those of founders investing their own savings.
Growth From Within: How One Success Funded the Next
Instead of taking outside funding, the company relied on its own earnings to expand. Profits from its initial product, WebNMS, were used to develop ManageEngine, an IT management division. ManageEngine’s success then financed the creation of Zoho Corporation, which would later build a suite of SaaS applications. Each business line effectively funded the next, allowing the company to grow without ceding control. The model was tested again during the dot-com crash of 2001.
As venture-backed companies folded, Zoho, still operating as AdventNet, survived by virtue of its conservative financial management. The company’s headcount was in line with revenue, and it retained cash reserves rather than spending aggressively on expansion. At one time, a competitor expressed interest in acquiring the company for $25 million, but Vembu turned it down, wanting to maintain independence instead.
Beyond Campuses: Building Talent from the Ground Up
Over time, Vembu’s commitment to cost efficiency and workforce development became a wider philosophy. Moving the business from large cities to the smaller towns in Tamil Nadu increased retention and cut costs. More significantly, the company created Zoho Schools of Learning in 2004 to train high school graduates who could not afford a college education. Students were paid stipends during training and often went on to join the company. Today, about one-fifth of Zoho’s engineers are graduates of this in-house program rather than traditional universities.
The Verdict: A Contrarian Legacy
Zoho’s decision to remain bootstrapped has enabled it to create a culture and operating philosophy. Without any pressure from investors to perform quarterly or to generate an exit for their investment, the company can take a long-term path to product development.
Financial Express attempted to access the latest records for Zoho financials; however, it is not available on public records. In 2023, Zoho’s operating revenue was Rs 8,703.6 cr in FY23. The company’s net profit rose 3% to Rs 2,836 cr from Rs 2,749 cr of the previous year. As per business outlets, North America was the biggest contributor to Zoho’s revenue at Rs 3,988.3 cr. Zoho has more than 700,000 businesses that use its products across 150 countries and more than 100 million users of its services—all without any outside investment or debt.
Vembu has unabashedly criticised the venture capital world and its consequences, and he articulated how VCs incentivise short-term goals and exits without regard to long-term thinking for the company or founder. At a public event in 2022, he said he deliberately stayed out of VCs “because it’s too exit driven,” indicating that it is “a wrong strategy for [our] country.” He even chastised the trend of layoffs happening at venture-backed companies, again referring to flawed priorities.
In addition, Zoho’s focus on geocentric development has allowed it room to experiment with other products, including communications. Nearly three decades since its founding, Zoho continues to operate on the same principles it began with: financial independence, controlled growth, and long-term investment in product development.