How To Get a Job With a Contrarian Investor

I haven’t blogged consistently as much as I would have liked to in the past few weeks. However, as I started writing the answer to a question asked on www.showmedamani.com/ama, it went from a short form answer to a full-blown blog. It was the best trigger to restart my daily blogging habit.

The question asked: How can I learn more about investing? How can I get a job with a marquee investor?

The first question to answer is, who is a marquee investor?

A marquee investor is someone that consistently beats the market over a long period. Anyone that has invested for a living will tell you that beating the market is not easy; therefore, the select few that do, do it by refusing to follow the market. These investors few enter (or exit) investments against market sentiments because they figure out that the market has mispriced a stock, sector, instrument, etc.

Investors that invest against the market sentiments get branded as contrarian investors.  I consider myself to be one too.

I  understand why finance or investment professionals want to learn from contrarian investors, and it isn’t about the money.

Contrarian investors represent something far more significant, the ability to speak up (through their investment decisions) against the majority and – win. At its very core, contrarian investing is the classic underdog favorite story of David vs. Goliath.

It isn’t a surprise many contrarian investors get bombarded with requests for “ability to learn” from them. What is surprising (to me) is how individuals that want to emulate contrarians do it by approaching them conventionally. They send resumes with cover letters praising the portfolio picks, but their resumes and praises get lost in a pile of many deserving candidates.

So how can a candidate stand out?

The biggest challenge for contrarians is to find people that want to challenge the status quo. It takes a lot of guts to develop a contrarian thesis and an even stronger constitution to hold onto that belief. Contrarian strategies look incorrect for a long time before they look correct, and a contrarian can lose employees, friends, family, and investors by holding onto that belief.

Michael Burry’s predicament in The Big Short is an excellent example of how lonely (and frustrating) it can be as a contrarian holding onto their predictions.

Therefore If a candidate wants to showcase that they can think, act, and hold onto contrarian views, it shouldn’t it reflect in their attempt to seek a job?

Here is an exciting approach that I thought of (and could work on me, possibly):

  • Study your target investor’s thesis and learn how they pick their investments.
  • Try to find the next investment that would excite your target.
  • Prepare an in-depth investment recommendation note for your target.
  • Your note should highlight your ability to research, analyze, model, and recommend.
  • But it should showcase your nonconformist approach to investing, the ability to find information where no one is looking.
  • Most importantly, it should put it on display that you do not think about where the ball is right now, you think about where the ball is going to be.
  • Send that note to your target with a detailed cover letter explaining why you chose the investment you did and how you went about your process.
  • If you have gone a step ahead to tie up the investment for them too – major brownie points.
  • Most importantly: do not ask your target for a job or an opportunity to work with them. Just ask them for feedback on your investment note.

This approach requires effort. However, if one wants to run ahead of the crowd, like Usain Bolt, they must practice harder than everyone else too.

6 Learnings after 60 days of WFH – for Founders

Yesterday was the 60th day since we shut down our office, but it feels much longer. Partly because of the roller coaster journey I have had with a concept that I could not understand, i.e., working from home. In the last 60 days, I have gone from hating to loving the work from home concept and from working myself to the bone to appreciating the freedom and higher productivity this concept brings to my team and to me.   

There are several posts on how to manage employees that are working from home, but very few focus their attention on the founder that is leading their startup through troubled waters. I had 6 distinct learnings that reshaped the way I thought about working from home: 

 

 

  1. Hyper-productivity has its limitations 

    I was guilty of indulging in this mistake for the first 30 days. Theoretically, I saved 90 minutes of commute time; therefore, I decided that I could take on more tasks and responsibilities. Thus, in addition to my duties as a fund manager, I was reworking budgets with our portfolio companiestook on the chief editor role for Artha’s blogs, and I was conducting multiple team calls a day to keep the team focussed and engaged. 

    It was exciting and new the first couple of weeks, and I enjoyed working myself to the point of exhaustion because it kept all the negativity around the crisis out of my mind. However, hyper-productivity began providing diminishing returns the more I indulged in it. 

    It started with general irritability and slight distractions, but eventually, the focus on work suffered, and the list of tasks pending on me started to pile up. Finally, there was just a general numbness to all the work. The enjoyment of completing one task was quickly replaced by the groan of watching the tasks list continuing to expand

    became aware of the toll my hyper-productive avatar was having on my physical and mental health. Eventually, it started affecting my interpersonal relationships – at work and at home. With some sage advice, I toned down my hyperproductivity ambitions and focussed on quality instead of quantity. I concentrated on completing 5 tasks per day (nothing more or less) and utilizing the extra time to expand my knowledge horizon.

  2. Recognizing and dealing with Zoom fatigue 

    It was fun to be on an endless stream of Zoom calls. The meetings were shorter, I drank fewer calories, and I could do double the number of meetings. Then as Brad Feld put it, I started to experience Zoom Fatigue. I caught myself replying to emails, responding to internal team chats, or editing investor newsletters during these online meetings. I was there, but I was not present

    It did not help that I made my meeting schedule so tightly packed that there was no room for error; therefore, if there was an unscheduled call, it would be a couple of days before I could get back to them. 

    At the start of this month, I reduced the time I allocated for online meetings. Encouraged with the results, I have limited my online meeting schedule to just 3 hours a day from this week. This workaround will give me ample down-time to catch up with my inbox, tasks, and team chat – allowing me to be fully attentive during the online meetings 

  3. Taking a break 

    It is ironic that I would find it challenging to take a break from working while working at home. The opportunity to take a break (my TV) is less than 10 steps away, the bed just another 15 steps. Despite my intense working schedule over my 15year working career, I continued to watch at least 1 new movie a week on averageHowever, in the last 9 weeks, I have watched a grand total of 2 new filmsand I had to split watching each one over 2-3 weeks. 

    The fact that the opportunity to take a break was so close developed a false sense of comfort that I could take a break at any time. That time did not come because there was always something pressing that needed my attention.  

    Although it was late, the benefits of taking breaks finally dawned on me. A couple of weeks back, I took a 3-day weekend (I still ended up working for half a day), caught up with friends, and on my sleep. I had a fresh perspective on projects & a spring in my voice when I resumed work, convincing me that taking a break is an imperative undertaking for any founder.

  4. Setting boundaries 

    When we are done with work, we shut our laptops, stuff them into our bags, we commute back home, switching off all the work-related tabs in our minds and refreshing the tabs for our personal livesWhat happens when that commute is cut down to 90 seconds? 

    In my first month I was taking work calls from 8 am to 10 pm daily, I slept with work and woke up in it. There are several times in a year when VCmust put in those types of hours, especially when we are closing multiple deals. However, this was different.

    I did not have time to work out, I took tons of notes with a mental promise to review them but could not find the time to do it. Many a time, I could not remember what I ate for dinner and in what quantity! These endless hours started to take a toll on the team as well.

    I instituted a pm deadline on myself for all workrelated meetings. Everything that could not get completed by 7 pm would get pushed to the next day. To commit myself to this deadline, I started working out on cure.fit with a partner who would ensure that I did not miss workouts, therefore, ensuring that my work-day had an ending

    Without boundaries, the boon of working from home can quickly turn into a curse. Therefore, it is a good idea to schedule winding up and winding down activities so that there is a psychological boundary between work & home. 

  5. Schedule tasks into your calendar 

    There is a big difference between being busy and being productive. One can be busy all day but have nothing to show for their busyness at nightOn the other hand, productivity demands results, it demands focus.  

    I learned an excellent productivity hack that has worked wonders for me. Instead of having a to-do list or a task list – I get my tasks directly scheduled into my calendar, thereby blocking out time to focusThe scheduled slots are limited to 30-45 minutes chunks, with a 15-mins break at the end for contingencies and to report to the team after the job assigned to me is completed. There is an excellent post on Effective Scheduling for more on this. 

  6. Take a vacation 

    It sounds ironic that I would propose vacation time amid an economic crisis, especially when we are working from home! However, a lot of founders have forgone summer vacations due to the way this crisis creeping upon us. As a founder, we must recognize that vacations are essential with several scientifically known benefits of what breaking routines do for our minds & bodies

    While there are minimal options for us to travel for a vacation, there are other ways to take a break from the world and give the body & mind time to recharge their batteries. The Washington Post provided an excellent resource for vacationing at home, aptly titled, The completely correct guide to vacationing at home.

    Oh! You will find the perfect vacation auto-response in my 18-month-old postPerfecting the vacation auto-response.

Summarizing my exit interview with a venture capital intern 

Two interns finished their learning cycle with Artha this week. One of them wanted to speak to me and get my feedback on his performance during his 4month internshipThe schedule short feedback session went on much longer, and at the end of it, we got into an exciting topic – the importance of forming an opinion.  

I believe our discussion applies to anyone who wants to work in the investment business, especially earlystage venture capital. I am sharing a synopsis of that conversation with the permission of the intern.  

 

Intern: What is one piece of advice for me? 

Me: Form an opinion and be vocal about it. It is acceptable to be wrong, completely wrong, and heinously wrong. However, it is cardinal mistake to have the ability to accumulate and analyze data but lack the courage to form a decisive opinion. The best investors have often sought out views from their peers and from people who could provide them with a fresh perspective. In fact, the investors I emulate often seek out contrarian views to their own to test their hypothesis.  

 

Intern: Why is the trait of forming and communicating our opinions so important? 

believe that investing is the ability to predict future outcomes of current decisions, and an investor’s brilliant foresight finds appreciation only in hindsight. That is why I consider investing more of an art than scienceA room full of experienced appreciators of art would almost inevitably have deep-felt disagreements on the value of Van Gogh. They could all be right or be wrong – we would only find out once the money gets transferred into the sellers account 

 

What should an intern do?  

fondly remember eyeopening realizations I have had during discussions (sometimes heated) with interns, associates, principalspartners, coinvestors, and even entrepreneurs over the last 10 years in venture capital. Initially, it was intimidating for me to showcase my opinions in front of the experienced hands of this game. But I realized that I wasnt learning anything by keeping them to myself. I learned more by expressing my incorrect opinions and recognizing the gaps in my understanding, over keeping my opinion to myself for fear of getting called out.  

A newcomer to the investment industry should seek out experiences where they can form these opinions. Join investment clubs, seek out investors who have strong opinions, even if they are contrarians to their own, but learn how to build and present your investment viewpoint. 

 

Don’t be afraid of being wrong; we learn best through the mistakes we make. Expressing your opinion is a win-win situation. You either get called out and learn where you went wrong, or your opinion contributes valuably to the discussion. Most importantly, you grow with each interaction and learn to receive constructive criticism. 

Flashback Friday: Exotel  

Exotel is cloud telephony (IVR, missed call management, etc.service provider offering various products for hassle-free experience. Service includes Voice for a loud and clear experience, SMS for improving the customer experience, OTP based authentication, and VoIP based app to app calling for small and medium enterprises in India. 

Exotel helps in building a reliable and efficient business communication system. 

Exotel currently handles over 11 million customer conversations every day on an average. Last year, they were dealing with nearly 5-6 million calls a day, which has doubled now. Exotel has thus far acquired two companies - Voyce, a platform that allows businesses to gather customer feedbackand Singaporean voice-based social media startup Croak.it. Exotel had a revenue of more than 120 crores in the last financial year.

 

Founders 

Shivakumar Ganesan 

Total funding raised  

INR 4 crore  

2020 status:  

Operational 

Number of rounds  

3 

Co-investors:   Mumbai Angels & Blume Ventures 

 

  1. Why did you invest in Exotel?

    Freshly back from my professional & entrepreneurial stint in the US. Exotel reminded me of a vEPABX service that we utilized the customer service & operations team. It improved our efficiency and service delivery quality. Therefore, it was a surprise for me (circa 2012) that Indian SMEs didn’t have access tthis critical technology that would reduce their communication costs
    Therefore Exotel, was a no-brainer investment for me as I knew that they would become the backbone for many businesses in India.
  2. What were the risks involved with an investment in Exotel?

    The most significant risk was the excessive regulations that controlled VoIP calling at the time. Exotel wasn’t allowed to directly purchase minutes from Indian telecom operators, and unfortunately, they tried to bully the company through complicated pricing plans. 
    Despite all the difficulties, the team worked dutifully in securing the necessary licenses and offering such great value for business owners & startups.

  3. What were the possible avenues of an exit when you evaluated the investment opportunity at Exotel?

    I believed (at the time) that a telecom operator would see the stickiness of an Exotel customer and their excellent margins on non-voice revenues to snap them up. Unfortunately, most of the telecom operators have concentrated on the B2C customer with a stepmotherly treatment for business owners – despite the knowledge that businesspeople are willing to pay more for better service.

  4. What are your learnings from investment in Exotel?

    Shivakumar Ganesan, aka Shivku, is a secondtime founder, an alumnus of BITS-Pilani, Yahoo, and Flipkart. To find a founder with such an impressive resume was rarity in those times. Therefore, as an investor, we had to learn how to support someone like ShivkuAnother significant learning for us was how to invest in startups that operate in highly regulated areas. Exotel along with United Mobile Apps gave me (and my team) a wealth of experience that helped in later investments like BookMyCabLenDenClub, ConfirmtktRapidoTala and Karza Technologies (to name a few)

  5. Would you invest in a similar startup today? 

Yes, I would. However, I would structure part of my investment as debt or as payment via dividends. Companies like Exotel threw out a lot of cash, which can be daunting for traditional VC funds to evaluate for future funding rounds. 

Entrepreneurial lessons from 36,000 feet under the sea!

Image Credits: @Buck_Taylor_ on Instagram

 

Entrepreneurship is an inspired action. Many people equate entrepreneurs as business people, and that assumption could be valid most of the time, but it does not work vice versa. Therefore, an entrepreneur can be a businessman, but not all businessmen are entrepreneurs. There is a big difference in the mental model, as businessmen are analytical thinkers, while entrepreneurs are possibility thinkers.

Yesterday, I read a fantastic story of entrepreneurship, published in the New Yorker, Thirty-Six Thousand Feet Under The Sea. It is a story of Victor Lance Vescovo attempt to become the first person to reach the deepest points in the earth’s 5 oceans. He called this attempt the Five Deeps Expedition. Vescovo got another first along the way.

He covered the most considerable vertical distance (64,869 feet) without leaving the earth’s surface getting the Explorers Grand Slam, i.e., he is the only person in the world to have successfully summited Mount Everest (2010) and plummeted to the bottom of the Challenger Deep in the Mariana Trench (2019).

The New Yorker story covers the ups and downs of Vescovo’s entrepreneurial attempt in a gripping narrative. It reminded me that, like entrepreneurship, there is minimal room for errors when there is 36,000 feet of water above your head, the pressure is immense literally and figuratively.

Vescovo’s story will resonate with budding entrepreneurs and reinforce or answer several questions. Here are a few of them that it did for me

  • Hire for attitude
  • Perfection is the enemy of progress
  • Half done is well begun
  • You can throw money at the problem, but that will not solve it but the will to do it will!

 

Be The Best Of Whatever You Are

It is increasingly clear that India will get back to work in the next 2-4 weeks. However, it won’t be business as usual. Some will get back to work earlier than others. Many of us will be out looking for jobs as the companies we worked for will try to rebuild themselves without us. The road to recovery will be long and hard, but each of us will have an important role to play as we help rebuild the economy.

The biggest lesson we’ve learned from this lockdown is that we are more resilient and self-sufficient than we give ourselves credit for. Another big lesson we’ve all learned is that when we are faced with impossible odds, the best response is to act – don’t stop to dwell on spilled milk.

There is a beautiful Douglas Malloch poem that I read in How to Stop Worrying and Start Living written by Dale Carnegie that captures the essence of that I would like to convey to those that are getting ready to get back to work or to look for a job:

 

If you can’t be a pine on the top of the hill,

Be a scrub in the valley — but be

The best little scrub by the side of the rill;

Be a bush if you can’t be a tree.

 

If you can’t be a bush be a bit of the grass,

And some highway happier make;

If you can’t be a muskie then just be a bass —

But the liveliest bass in the lake!

 

We can’t all be captains, we’ve got to be crew,

There’s something for all of us here,

There’s big work to do, and there’s lesser to do,

And the task you must do is the near.

 

If you can’t be a highway then just be a trail,

If you can’t be the sun be a star;

It isn’t by size that you win or you fail —

Be the best of whatever you are!

Silver linings: Lighting up a revolution (with a pair of binoculars)

I am continuing on the same thread upon which I wrote last week, i.e., Finding Silver Linings in this lockdown.

Yesterday we completed 40 days of working from home. Amongst several pivotal moments that define the turning points for Artha, sparking off a blogging revolution is definitely the most satisfying one.

For a very long time, I tried to convince my team to start blogging. I tried several approaches, showed them how my own blogs helped me express myself creatively and develop a robust network & following. However, the fear of getting criticized publicly made the team members shy away from expressing themselves – whether I offered them a carrot or the stick in return.

I could have got their blogs ghostwritten, but I wanted our blog to be genuine expressions that resonate. After several frustrating failed attempts, I threw in the towel. I stopped pushing the team to write because even when they wrote blogs due to the fear of disappointing me, they were half baked as the attempt to writing them was.

Then the lockdown took place. With commute times dropping to a few seconds from the hours endured earlier, a few members decided to utilize the extra time to creatively express themselves.

As the editor to our blog pages on Medium, any team member that completed a blog for publishing would assign a task to me. I had to review, make final edits, and approve their blog to publish from our Medium publications. Most of the time, it would be weeks, and even months before I would see assigned tasks in my editorial bucket. But things changed quickly.

Within the first week of working from home, I got notifications that I was assigned 2 blogs for publishing! This is interesting, I thought.

The first blog was published on Artha Venture Fund’s blog page. Farhan wrote a playbook for anyone that wants a VC job, i.e., Breaking into VC.  He frankly shared his personal journey of hounding my inboxes until he got me into meeting him face to face. He impressed me enough with his enthusiasm to secure an internship at Artha. With a foot in the door, Farhan converted the opportunity into a full-time role.  Farhan offered his playbook as a model for others to emulate. His post received a fantastic response with 300+ views in 3 days on our otherwise dormant blog page.

Unbeknownst to me, Deepanshu wrote and published a fantastic blog while sitting on his la-z-boy chair at his home in Delhi. Deepanshu’s take on the new work paradigm aptly called Corona: Ghar se Kaam KaroNa, We did it, did you? got published at the appropriate time and it lit up the Artha India Ventures blog page on the same day that the AVF blog saw a massive spike in its activity.

Farhan & Deepanshu’s unrelated but perfectly timed efforts sparked off a content creation race in Artha. They (thankfully) weren’t shy about the attention that their blogging debuts brought to their LinkedIn inboxes. It made others jealous and smashed the glass ceiling that kept the team from expressing themselves. All of a sudden, every person at Artha was lining up to write whether it was partners, principals, legal associates, junior analysts, even our interns!

There was so much content to review & publish that our internal PR team had to put everyone on a publishing calendar. Every team member got assigned 1 day a week to post their efforts on the company blog. I blocked out an hour a day to review the final drafts before publishing. But when I look at the list of blogs waiting for my review, even a couple of hours a day will not do justice.

In the end, I learned a valuable lesson. The thrill of competition drives a person harder than the fear of retribution. I tried igniting a creative explosion within Artha with the right intentions but the wrong strategy. Eventually, the age-old tactic of replacing my stick with a pair of binocular to keep up with the joneses got me to my long-held goal of creating a thriving blogging culture at Artha. That is a silver lining for me to cherish!

Here is the list of the 25 blogs we have published on our blog pages in the last 33 days

Date Blog Name Author
24-03-2020 Breaking into venture capital: A brief playbook Farhan Merchant
24-03-2020 Corona: Ghar se Kaam KaroNa, We did it, did you? Deepanshu Sidhanti
27-03-2020 From Polo to Venture Capital Dhruv Thadani
31-03-2020 21 Point Action Plan to Corona-Proof Your Startup Dream Anirudh A Damani
01-04-2020 Book Review: ‘Start with Why’ by Simon Sinek Gauri Kuchhal
02-04-2020 Humanity First: Hyderabad Man Distributes Free Food Outside Hospital Sandesha Jaitapkar
04-04-2020 3 Takeaways After Evaluating 200 Startups Farhan Merchant
07-04-2020 Book Review: ‘How to Stop Worrying and Start Living’ by Dale Carnegie Gauri Kuchhal
07-04-2020 Week #14: What are our investee companies doing this week? AIV Team
10-04-2020 Silver lining in the dark cloud — Looking up after 22 days of home arrest Shweta Tripathi
10-04-2020 From selling my startup dreams to buying into the startup dreams of many more like me Deepanshu Sidhanti
13-04-2020 MERC Listens — Part 1: Impact on Industrial & Commercial consumers Animesh Damani
15-04-2020 5 things I have learned after 365 days in Venture Capital Dhruv Thadani
17-04-2020 Gordon Ramsay Would’ve Been a Top Tier VC Farhan Merchant
17-04-2020 Flashback Friday: My first startup investment — United Mobile Apps AIV Team
18-04-2020 Week #16 Investment Update: The coming of age for Farm to Fork startups? AIV Team
20-04-2020 Finding silver linings Anirudh A Damani
21-04-2020 My experience of lockdown & work from home Piyali Das
22-04-2020 Book Review — ‘The 21 irrefutable laws of leadership’ by John Maxwell Gauri Kuchhal
21-04-2020 Drawing parallels. Similarities between parenting and investing in early-stage startups Deepanshu Sidhanti
23-04-2020 Impact of the lockdown on the power sector Animesh Damani
24-04-2020 Work from Home — Boon or Curse? Aakash Javeri
24-04-2020 Flashback Friday: CarveNiche Technologies Anirudh Damani
25-04-2020 Week #17: AIV expands funding to SEA AIV Team
27-04-2020 10 things I learned from my 5-year startup journey — Executive Assistant to COO Sandesha Jaitapkar

Flashback Friday: CarveNiche Technologies

As I approach my personal goal of personally investing in 100 startups within 10 years, it was time to reminisce. Each new investment gave me a new experience, sometimes good, sometimes bad and sometimes ugly. Last week I wrote about my first angel investment, United Mobile Apps. This week is its investment #2!

CarveNiche is an innovative EdTech startup. They developed advanced EdTech products such as beGalileo (India’s largest personalized after school math learning program for K-12 education), Wisdom Leap (free online source for K-12 education), and Concept Tutors (personalized 1:1 tutoring focussed on the international market).

CarveNiche created a niche in the EdTech space. It is the first to develop a product using the latest technology, such as Artificial Intelligence (AI), to teach a subject like Maths. The flagship brand, beGalileo, recently became India’s first after school Math learning program to be available as a Windows App.

At present, they have over 750 women entrepreneurs who are running their centers through CarveNiche. The renewal rates exceed 90 percent, which shows the value they provide to the students and parents.

Founder: Avneet Makkar Total funding raised INR 5.5 crore
2020 status: Operational with HQ in Bengaluru Number of rounds 3
Co-investors: Lead Angels, Mumbai Angels, Calcutta Angels

 

  1. Why did we invest in CarveNiche?

CarveNiche’s initial business model was to deliver a superior classroom experience for the school students by utilizing the latest digital hardware with a customized software platform. The platform provided instructors the ability to track the progress of each student and personalize the student’s teaching plan based on how well the student grasped the subject. The platform also offered a messaging service to connect parents & teachers so that they could track the progress of their students at school & home.

I liked the founders. It was a known fact that Indian schools lacked modern equipment to upgrade the delivery of instruction in the classroom. Looking at the massive size of the market, I decided to invest based on the broad target market, solid team, and their clear understanding of the problem and its solution.

 

  1. What were the risks involved with an investment in CarveNiche?

The risks presented themselves in three ways.

    • Long sales cycles: The company had a tiny window to sell its offering to school administrators, their boards, and their trustees. Next, their team must negotiate contracts, find financing to help the school purchase the required equipment. After that, CarveNiche would implement the solution and train the instructors on how to use their platform. If the company could not complete all these steps before the start of the school (academic) year, the sales decision, the invoicing, and the revenues from it would get postponed to the following year. The company must continue to fund its sales team for long periods before they could see the results of their efforts or get feedback to innovate on the product.
    • Providing subprime debt: Most Indian schools do not have a profitable business model. They must regularly fundraise to meet their budgetary needs. Therefore, most schools could not afford the hardware for CarveNiche’s solution – unless provided with equipment financing.

With most of these schools running operating deficits funded by government grants, donations, and trustees, these schools had an inferior debt profile.

To survive, the company had to come up with an equipment leasing/purchasing plan, and they approached us for that financing. We gave subprime debt to a few schools to evaluate their ability to repay, but most of the schools defaulted on their obligations to CarveNiche and us. That experience burned a severe hole in CarveNiche’s bank account, forcing them to abandon this product offering and the selling to schools’ business model.

 

  1. How long did you plan to invest in CarveNiche?

At the time of the investment, it seemed like CarveNiche would scale quickly and get acquired by a larger player like Educomp. However, our investment coincided with the start of the demise of Educomp, and even though the company raised a couple of follow-on funding rounds, they had to (thankfully) pivot to a B2C business model.

 

  1. Would you invest in a similar startup today?

I learned from CarveNiche’s experience that trying to build a massive business that sells to institutions that possess inherently unprofitable business models is like living in a fool’s paradise. The Modi government invests 4.6% of GDP in education, so I know there is money to be made in EdTech.

However, I find that the B2C plays must spend a lot to acquire a customer, and their LTV / CAC ratios stay <1.

In B2B, I have not found a group of founders that understand the pain that CarveNiche went through and have developed a business model that addresses those issues; therefore, we have cautiously stayed out of this space.

CarveNiche’s new business model providing online tutoring has promised, even if it was a bit niche. However, it has scaled beautifully in the COVID19 era. The company has turned around and raised a new round to aid its growth. Avneet has stayed the course despite several setbacks, so she deserves every bit of the luck that comes her way.

In conclusion, I would not invest in the original CarveNiche business model – but I would invest in Avneet.

 

  1. What are your learnings from the pivots that CarveNiche has made over the years?

CarveNiche was my 2nd angel investment, and it taught me many lessons that continue to guide me today. I’ll share a couple of them:

    • Follow-the-money: It is essential to understand how long it will take a business to convert billed revenue into money in its bank account. If the path to getting the money is long and fuzzy – avoid that business model. As a founder or an investor.
    • Avoid investments in long working capital plays: If it takes a long time to close a sale, then a long time for to invoice for sale, and an even longer wait to get the money from that invoice into your bank account – what is getting utilized to keep the lights on today?

If the answer is venture capital, then I would not invest in that business.

Help us help you get that business partnership you want!

During my door to door salesman days, I could go through a wall if that meant I would get a referral to a potential sale. My team and I created, and memorized closes to secure referrals. My managers and I tracked how many transactions took place from referrals, and we pulled up salespeople that had low referral closes. It is clear to any salesperson that a referral is worth its weight in gold – it is a job half done.

Continuing in the same vein, now more than ever, founders are on the lookout for business partnerships to increase business avenues, and you must know that your investor has access to a vast network of people. Your investors’ immediate network has access to an even more extensive network, i.e., your investors know some people that know some people who are very important people.

So why is it that most founders fail at utilizing our reach?

A majority of the investors have every intention of helping you, but here is another critical question.

Have you made it easy for us to help you?

Despite best intentions (and regardless of the size of the fund or team), we have a limited amount of time and resources to address the needs of founders. A little bit of help from you would make it easy for us to help you. Your help would help us get more done in a shorter time and make you and us happy.

Therefore I came up with a list of steps, distilled from my efforts in securing referrals, whether it be for investors into our fund or for business development. Besides, I analyzed the efforts of founders who got the best out of their investors and those that failed at leveraging them, and the result was more straightforward than I would have envisioned when I began writing this list.

  1. Self-research on your target connect.

Venture capitalists have thousands, if not tens of thousands of contacts, and we are very adept at networking and finding people. However, you need to do your research on the people you want us to connect you with.

Usually, your reason to connect with the target is very different from why (or how) we connected with them. Our personal experiences could bias our opinion with your target, i.e., we could have approached them to invest in our fund, and they refused?

Therefore you should do your research on the target, utilize our knowledge about them to sharpen your understanding and find out whether an association with your target would be fruitful.

  1. Be as specific as you can in what you seek

It is a known fact that the most sought after people have the least amount of time. It is likelier that those people have an even shorter attention span. Therefore you must grab their attention, deliver your request before a notification takes your target onto another window.

Therefore avoid long-winded emails and big paragraphs, write in point format, be specific and get to the point quickly. When you show respect for your target’s time (and attention), it speaks volumes about how well you understand their position.

PS: Do not forget to be courteous & spell check!

  1. Know ‘why’ would your target want to work with you

If you or your company is the ultimate beneficiary of your proposal, expect a long period of silences to your requests. You must find a win-win situation and communicate how your association with the target would benefit the benefits them directly or their company.

If you cannot find or demonstrate the benefits of the association for the target – why would they get out of their chair to help you?

PS: If your strategy is to appeal to your target’s charitable side – please find a better reason.

  1. Create a short presentation (or note) on your proposal

After analyzing 40 million emails, Hubspot reported that emails with less than 200 words had the highest response rates. It is sage advice.

It is an excellent chance that your target receives hundreds if not thousands of emails in a week. Your warm introduction through us would encourage the target to etch out time to respond. However, long emails get flagged for reading when we have more time. Which (in most cases) I don’t.

There is a hack, though:

  • Create a short presentation (5-8 slides max) that outlines your research on your target, defines what you do, what you can do for your target, and how your proposal creates a win for the target.
  • Your presentation should excite them to get in touch with you (or get the relevant person from their team to get in touch with you)
  • Write an interesting note that generates enough excitement for the target to open your presentation.

  1. Get your investors’ buy-in.

Once you have found a win-win, written an action invoking short note to go with a presentation that will get you a callback, next, get your investor’s buy-in.

Some founders treat their investors as gofers who should do the founder’s bidding regardless of the investor buying into the proposed plan. You must understand that it takes much effort to create and cultivate relationships. Just one poorly-thought-out request could ruin that relationship for the foreseeable future.

If we get bought into your well thought out plan, and you can convey how we could enrich our relationship (with the target) through your proposal. You would’ve created a win-win-win that will get us to go those extra miles for you.

  1. Write a short, courteous but direct introduction email to your investor asking for your specific help from the target

With your investor bought in, write a quick introductory email asking for a specific connection to your target utilizing the steps outlined above. Your email must convey that you were specifically looking for an introduction to the target (and why).

Emails that convey a spray & pray approach get treated as spam.

  1. Draft the email for your investor

For extra credit (and to ensure that your message isn’t lost), go ahead and write the email that your investor could copy, paste, as their own words, and forward the email you sent in step 6.

It is unlikely that your words will get copy-pasted in the form that you’ve sent it in. However, your words will load our words when we write our email, thereby ensuring a near-total control to you on the messaging.

PS: It won’t take but an extra few minutes, but knowing how busy and dynamic an investor’s day could be, you leaving anything to chance is foolhardy.

  1. Give them a way out

Your target must have a courteous way of saying ‘no’ to your investor. I have explained before that each relationship takes much effort; therefore, the target’s failure to help you through your investor should not lead to a loss of the connection itself.

We want to help you, but if that means it puts our relationships on the line – it isn’t the sort of song that you wish to play in the back of our head.

PS: Give your investor a way out too. You can utilize this forgiven favor soon! 🙂