About Me

 

Utilizing this digital window to share my understanding of the funder and founder relationships and….
several other things that intrigue me!

August 2014

Artha, Entrepreneurship, Venture Capital

  Artha Venture Partners recently closed on its 25th investment, Interview Master. We have since then committed to investing into a number of startups that will raise the total shortly. So far we have seen: 1 exit (soon to be 2) 8 2nd round of

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Artha Venture Partners recently closed on its 25th investment, Interview Master. We have since then committed to investing into a number of startups that will raise the total shortly.
So far we have seen:

  • 1 exit (soon to be 2)
  • 8 2nd round of raises
  • 5 startups gearing for 2nd round of investment
  • 2 failed investments

So while most of our investments are under 3 years old, it is still early days for me to assess the performance of our portfolio based on cold hard cash returns. Meanwhile we have made several adjustments from investments that have grown and from investments that have gone bust. I will share my learning’s over a 5 part series.. this is part one.

  1. Filter the duds

    In our experience, the most important learning lesson is to learn how to say “no” in a firm yet constructive manner. We received a number of business plans per month and we have invested in just 27. Even our most conservative estimates puts that at a closing ratio of 1% or even below that.

  2. Don’t Make Assumptions

    In a world where total generation of knowledge and the rate of evolution of technology are kissing the clouds it can be a tough job to understand all the business plans that come to you. While the business itself may not be completely understood by you, if you find a “business case” and like the model then you may be interested in investing after all.
    However to understand the deep intricacies of a business case, the model, the plan, etc. it is important that you make as little of an assumption as possible. It is better to have asked a question than to have not because later you will be kicking yourself for not having asked the question that you should have to get better understanding.
    There was a deal two years ago that was on the verge of being invested into by over 40 angels. Then one of the members asked founder about the holding structure and the founder was looking for investment into a subsidiary with the parent company holding firmly with him (along with the tech and IP which was to be developed with our money). This was unfair for the investing group and they sought investment into the parent. The founder however refused investment into the parent… and we rejected the kid.

  3. Buy the Team

    The team is what will decide the success or failure of a venture so it is very important to thoroughly do your research on the team prior to investment. Spend time with the whole team and with the individual team members to understand their relationship with each other and with the company. How long are they looking to be involved into the venture? How long do they expect their co-founder to be involved? Does answer one match with answer two? If not, why not?
    Get the team analysed by experts in areas of your own weakness and share the findings with the team and gauge their willingness to make the required changes as suggested by the experts. They may not need to change but being open to discuss a change is an important trait to notice and appreciate.

  4. Go with your Gut

    “Hey! But you just said don’t make assumptions!”
    Yes, I said it! There are times when you just cannot get the required amount of information to satisfy all your questions. This happens more at a seed stage investment when you are dealing with a business model that hasn’t been seen until today (Twitter, Dropbox for instance!) and while you may be tempted not to move ahead due to the lack of information.
    But if you have #3 working for you and there is enough confidence in you to take the leap of faith, then do it! I just recommend that you make that leap with a smaller allocation than you normally would for a business model you do understand.
    A classic case for us was the investment into Oravel. It was a business model that is still being developed abroad and the business case for India was quite grim considering the fragmented B&B market. However, we were willing to bet that Ritesh would do something great with his determination and energy and so far we have been proved right J
     

  5. Choose the Investee Director… Choose Wisely

    Yes it is your money and your fore-fathers told you to be in total control of the money and the people that are using it. But does that mean that you have to be the one leading the team you bought? Are you the best person to approve critical decisions that the team has to make for its tech or business needs?
    This is a common misconception that the Investee Director is the only one who can push the team to do something. An investor has rights (by law and otherwise) that he can exercise to get his voice heard. The Investee Director is representing the voice of the investors and a query raised by an investor, if not answered, directly by the management (yes, you can email them directly) has to be taken up and answered by the Investee Director.
    Therefore instead of keeping all the power to yourself, it is prudent that you choose the best person for the job and come to an agreement on how you can all work together under his/her representation. The Investee Director should ideally be someone that knows the space and has the time to lead the team.

     

To be continued….

Opinion

We owe a lot to the Indians, who taught us how to count, without which no worthwhilescientific discovery could have been made. ~ Albert Einstein India is the cradle of the human race, the birthplace of human speech, the mother of history,

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We owe a lot to the Indians, who taught us how to count, without which no worthwhile
scientific discovery could have been made. ~ Albert Einstein
 
India is the cradle of the human race, the birthplace of human speech, the mother of history, the
grandmother of legend, and the great grandmother of tradition. Our most valuable and most constructive materials in the history of man are treasured up in India only.
~  Mark Twain
If there is one place on the face of earth where all the dreams of living men have found a home from the very earliest days when man began the dream of existence, it is India.
~ French scholar Romain Rolland 
India conquered and dominated China culturally for 20 centuries without ever having to send a single soldier across her border.
~  Hu Shih, former Ambassador of China to USA 
 
Many of the advances in the sciences that we consider today to have been made in Europe were in fact made in India centuries ago.
~ Grant Duff (British Historian of India)
 
India was the motherland of our race and Sanskrit the mother of Europe’s languages. India was
the mother of our philosophy, of much of our mathematics, of the ideals embodied in Christianity… of self-government and democracy. In many ways, Mother India is the mother of us all.
~  Will Durant (American Historian 1885-1981)
 
 
 
These are but a few of the praises that have been said about the soil you and I sit on today. The CIA ranks India as the 4th largest economy in the world in terms of Purchasing Power Parity. Since it counts EU as the 2nd largest it actually puts India at 3rd when we go toe-to-toe as a country. Just recently Business Insider ranked India as the 4th in the most powerful militaries in the world.
 
Yes, this soil of India where an army of 35 lakh individuals, a relatively new constitution,a fiercely independent judiciary and a government elected by the largest democratic population in the world leads and protects the 2nd largest population in the world comprising of: 
  • 2nd largest followers of Islam
  • Largest followers of Hinduism
  • 10th largest followers of Buddhism
  • 2.4 crore Christians
  • 2.1 crore Sikhs
Brand India is over 3000 years old and we have held the world in awe with the deep diversity displayed in our culture, economics, ecology and religion. We don’t have to rebuild a brand that has given the world Yoga, the Gita, Sanskrit, Chanakyaneeti, the Shunya, the path of non-violence, the power of civil disobedience and what was in Mohenjadro – the oldest and globally trading civilization known to mankind.
 
India truly is the “land of opportunity”,  where a deep history is evolving through the eyes and efforts of a young population in a democracy that with all its aches and pain is still respected around the world for what it has achieved.
This is the very country that according to a recent Bloomberg article grew at 6.8%annually for the past 20 years. The same country where until 2007 we had a Christian lady leading the largest elected political party, a Sikh prime minister leading the country who were both answerable to a Muslim President that the country loved unconditionally. They were all presiding over a population that is 75-80% Hindu – which my friends is the strength of the fabric of Brand India.
The sons and daughters of this very soil have gone to lead some of the largest and most popular brands around the world. Their companies and in fact even their start-ups compete,out think, and out-innovate the sharpest minds in the world. You can walk into almost any developed country in the Western hemisphere and there is an awe in the eyes of the foreigner how well Indians perform when they have a platform.
It isn’t a hidden fact that Indians as a community are the highest per capita income earners in the US, UK,… we beat them in their own backyard!
 
So what happens to the Indians that stay in India ? How is it that almost of 5 trillion dollar economy in terms of PPP has such a low share of the global trade and an even lower image of the “Made i
n India” brand?
 
In my opinion the rebuilding of India has to start with you and me… It is us, we Indians and the makers of the “Made in India” brand that will have to make the change we want to see.Our chalta hai attitude which is a silent acceptance of shoddy service, low quality and fleecing of money from the system is the cause of where we stand today.
 images
Our apathy towards the plight we collectively share is truly staggering. Our collective acceptance of an onerous bureaucracy has given us the dishonour of being in almost the bottom quadrant in the ease of doing business rankings released by the World Bank and International Finance Corporation in 2014.
The budding and upcoming entrepreneurs in this room would be shocked to know that in our own land we require 70 odd clearances to start a business, we have to file over 100 returns in a year and follow a maze of 50+ labour laws – most of which were made when your grandparents were born… some that were made when their grandparents were born.
 
This system is broken and it is breaking the back of Indian entrepreneurs. We accept it as a part of our culture but is that what was envisioned by the forefathers of our constitution that the fight they lead to give us freedom and self-governance has come back to drown the voice and expectations of a young India. We have gone from the land of a billion opportunities to a hole of a trillion “offo”-rtunities.
 
Offo-rtunity… how apt that word is for our predicament today. But does it need to stay that way? Can we change?
What brought me back to India after over a decade abroad is the fact that India has grown at tremendous rate for over two decades by a people that are so shackled by its system – a system created during the Nehruvian scarcity & socialist economics of the 1950’s through the late 1960’s that the growth itself is awe-inspiring.
So I imagined, what would happen if those shackles were removed? We would be unbeatable! The very Indians that cannot eke out a living in their own land go on to do tremendous work outside the country. If we offer them that system here, we can literally change the world within and outside our borders!
The fight to unshackle us is not going to be easy but nothing that comes easy is worth anything anyways. This fight requires you and everyone you can influence to change their very attitude towards mediocrity. it isn’t acceptable and cannot be acceptable in any form whether it comes from the government or the private sector.
 
If we want to provide world-class service to the world then that service has to first be given to us, isn’t it? If we want to make the “Made in India” brand the brand that signifies quality and trust… then shouldn’t we be the first adopters of that brand and work out the kinks before the world sees them? Why should our best commodities, products and services only be built for exports? Who will test them and ensure that they can stand toe to toe with global brands?
 
It is an observed practice followed by our successful Asian neighbours where the established companies nurture the younger companies and work with them to make them globally competitive. The people in those countries take the products and services made by their companies very seriously and refuse to accept sub-standard products – that is how their economies have produced innovative yet stable product lines.
So let’s copy that attitude and apply it to our companies. The next time you receive shoddy service or a DOA product, make it a point to protect your rights and ensure that the company not only rectifies the error, it makes it a policy to ensure that those errors aren’t repeated. If you don’t get the protection of your rights go to the consumer protection forums through online mediums which get you almost instant results.
 
 
Do the same when it comes to services provided by the government. The people that live in high offices react when din reaches unbearable levels. If only a few of us make that effort to change the country by changing ourselves, by accepting Jugaad innovation but being a jugaadu customer, we can eradicate the malaise of mediocrity that plagues our India.
So as I have said this in not so many words during this speech. The rebuilding of the brand of India isn’t going to happen without rebuilding the attitude of the Indian. When we take mediocrity or merely “good enough” as our standard of expectation we get into a downward spiral that has embedded its roots deep into foundation of our proud country. The generation before us has taken us this far and they have given us the baton to take this country forward.
 
Therefore before we rebuild brand India… let’s rebuild ourselves first.
 
 

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