5 Key Learnings from Capillary's Journey to IPO

It was exactly a week ago (Friday, Nov 21^st) when we stepped into the historic BSE (Bombay Stock Exchange) to celebrate Capillary Technologies as it rang the bell and officially entered the public markets. The fact that this was the very same hall where some of India’s largest & most respected companies, like Tata Group & Infosys, got started made the moment even more inspiring and special.  

Since 2019, we at Avataar have had the privilege of working closely with Aneesh and Anant, watching them navigate both breakthroughs and brutal headwinds. Their story is rich with lessons that every founder can learn from.
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Here are five lessons from Capillary's journey that I hope will inspire many more Indian entrepreneurs to #DreamBig as they navigate their own scale-up journeys:
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1. Culture Isn't Soft; It's Your Competitive Advantage

Peter Drucker famously said "culture eats strategy for breakfast," but watching Aneesh implement it brings the maxim to life. During the IPO ceremony, he invited the families of key employees to celebrate the milestone at the BSE listing hall. Everyone was dressed in Nehru jackets.

At Capillary, tenured employees can avail a 10-day vipassana break to recharge (on top of annual holidays). These aren't perks—they're reflections of the founders' values.  

Plus, there’s a constant transparency with the team on both positives and challenges facing the business. It's no wonder then that Capillary's employees remain loyal and ready to fight their hearts out! This culture of transparency and care translated directly into 20%+ lower attrition than industry average; a critical advantage in talent-intensive SaaS.

‍Lesson For founders: Your values aren't wall art. They're your competitive moat.
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2. Fall Down 7 times; Get Up Eight

This is a popular Japanese proverb that means no matter how many times you are knocked down, you rise one more time. Building a lasting business amid fast-changing market conditions inevitably means navigating a roller coaster of highs and lows.

From being awarded SaaS Company of the Year in 2015 to suddenly needing to arrest high churn (especially during Covid) to being recognized as the Comeback Kid at ET Startup Awards 2025, Capillary has seen its share of both sides.

It's the resilience of the founders and their team that made this IPO possible. And in a poetic way, this resilient DNA is exactly what will make Capillary successful at navigating the often choppy and unpredictable waters of public markets.

‍Key lesson: Investors (both private and public) reward resilience more than perfection.
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3. One Must Unlearn to Re-learn

The initial years post-PMF are often amazing. Everything feels up and to the right. Until it doesn't. The curse of incumbency struck Capillary hard. Their earliest and best customers in India struggled to grow despite continuous product innovation & improved ROI.  

There were hard calls to take on the scale-up journey like divorcing price-sensitive customers (forced churn) and deciding to no longer include campaign revenue as ARR. This meant walking away from significant revenue, but it improved margins substantially and set them up for enterprise scale.

Very few founders venture out of their comfort zone until forced to tackle these choices head-on.

The fact that Capillary chose to take it on the chin and take the harder path up the mountain—working double to rebuild back to the same ARR levels—speaks volumes about the company's character.  

Key lesson: Sometimes growth means strategic subtraction, not just addition.
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4. Focus Matters: Say No to Stay Alive

By 2019 (pre-pandemic), Capillary was on a roll. They were the undisputed APAC leader for loyalty management. Growth was now also coming from SEA markets. They had cracked China—going from 0 to 50+ employees within a year, becoming perhaps only the second Indian company (after InMobi) to succeed at scale in that geography. The team was introducing new products (e.g. headless commerce engine) in record time.

Then Covid upset the apple cart. True to their values, the founders tried their best to stay afloat without cutting staff. But every scale-up realizes at some point that they've over-extended themselves.

It was time to clean sheet everything: What segments were most important to serve? Which geos made long-term sense? What were our core products that truly delivered ROI?  

The founder and board's willingness to cut and refocus is one of the reasons they rang the bell at BSE.

The team exited 3 countries and sunset 2 products. Revenue dipped that year. But profitability improved significantly, and it set the foundation for the next growth phase.  

Saying "no" is as important as saying "yes." Sunk cost isn't a fallacy—ultimately focus matters, and you must be able to predictably scale your "core" while ridding yourself of all the shiny objects that entice you to do it all.

Key lesson: The sooner you focus, the better.
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5. Scale Matters—Get to the $100M+ Club ASAP

As part of the refocusing exercise, it became apparent that the US geo and Enterprise segments were most key to Capillary’s growth. But breaking into those bastions required playing things differently – like investing in senior US sales talent, spending more on marketing and branding, and investing in analyst relations became table-stakes.

To be good at the above required investments and cashflows. So, while the organic GTM machine was being forged into hard steel, the team started looking for inorganic growth options to get past the coveted $100M ARR mark—when ecosystem partners (analysts, SIs, enterprise prospects, top talent) start to notice you.

Long story short, a broader rollup play was envisioned and executed flawlessly between 2021-2023.  

Capillary closed 3 strategic acquisitions that catapulted the company to its market leader status in loyalty management (most recently at the top right of the Forrester Wave!). Most importantly, it helped unlock $10M+ ACV deals as enterprises felt confident about the company’s scale & performance.

If there's an organic way to get there, more power to you. But my humble suggestion: constantly keep tabs on inorganic ways to scale faster.  

Pro tip: Start building your M&A pipeline 18 months before you need it. Integration planning should begin before the deal closes, not after. Also, explicitly model out the unhappy path (and key assumptions that drive those) vs just assuming just a happy path with full synergies (which typically do not all play out).
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The Real Story

Capillary’s journey to IPO isn't your regular fairytale—it's a Cinderella story with real scars. The path to IPO included forced churn, market exits, team restructuring, and moments of deep uncertainty. But as Capillary now enters public markets with resilience, predictability, and profitability, they prove that, despite all odds, it IS possible to scale the summit. And to regain your oxygen levels, and to dare scale even higher peaks!  

At Avataar, we feel grateful to have had a ringside seat to this exciting journey. Don’t get me wrong; as a fund we’ve had our own share of tricky spots. And my partner Mohan Kumar deserves huge credit for always believing in what’s possible with Capillary even when other investors (or sometimes even the founders) were unsure or tired.  

That’s the promise Avataar makes to all our founders – to always be honest & push them outside their comfort zone; to not only  ask the hard questions but also help them solve those very questions. To help carry other investors along (several of whom may not have shared the conviction to take the harder path up the mountain) & finally to provide the necessary financial support to help you capitalize on the most impactful opportunities.  

To all our friends at Capillary: this is your new beginning & we wish you the very best for tons more success to come.  

To other Indian entrepreneurs watching: the summit is there for the taking. And we, at Avataar Ventures, stand ready to help you climb it!