My Funding Picks For Last Week (W28)

Every Monday, I sit with my team to review the funding activity of the previous week. From that list, I pick out three companies that I would have loved to invest in or find founders that are doing similar things. Click here to know about my rationale behind this weekly exercise.

 

For the past several weeks, the ecosystem is plateauing at barely double-digit transactions per week with 10 startups raising $36 million (amounts raised for the last 4 weeks: $65m, $31m, $27m, $92m). Early-stage investors have clinched their purses due to the lack of cool-down in valuations despite a marked tempering in funding interest. How can founders fix that? Stay tuned for my post on the subject next week.

Out of the 10 deals, 8 were in the early-stage rounds (compared to 11 last week), which made the cut for my weekly analysis. After sifting through the news (aggregated from Tracxn, Inc42, and YourStory), I pick these three as my favorite funding news from last week!

 

Name: BRB Chips

Amount Raised: $1m from Secocha Ventures, Globvestor, First Cheque, Kashyap Deorah and Vijay Sivaram

What do BRB Chips do?

Edited from Tracxn: They are a brand of extruded snacks offering chips as a snack.

Why do I like BRB Chips?

There is a lot of branded packets food plays, and while there’s no defensibility to vacuum fried chips, the list of entrepreneurs that decided to start this venture is impressive. The co-founder’s credentials include ex-Bira co-founder, ex-Forbidden Foods co-founder, ex-Coca-Cola, and ex-Schlumberger. As this team raised a significant amount of startup capital, I believe they can build an alternative snacking brand that would fold into a larger FMCG player. The key will be meticulously managing working capital and judiciously investing venture capital.

 

Name: Bold Care

Amount Raised: Undisclosed from Rajesh Ranavat, Abhishek Shah, Kabir Kochhar, and Mohit Satyanand.

What does Bold Care do?

Edited from Tracxn: Provider of an online doctor consultation platform for sexual health

Why do I like Bold Care?

I met a prominent Silicon Valley angel investor last year who increased my interest in the men’s sexual healthcare space. It’s a significantly taboo subject in India, but on average, about 5% of men above the age of 40 have erectile dysfunction. Many quacks (read: hakims) and online platforms sell glorified multi-vitamin tablets in the name of cures. Whether a company like Bold Care can get the sexual health conversation started could be a differentiator. Combining a thoughtful content strategy with the right product mix would reap great rewards from India’s untapped market.

 

Name: Inspekt Labs

Amount Raised: Undisclosed from Rajesh Ranavat, Abhishek Shah, Kabir Kochhar, and Mohit Satyanand.

What does Inspekt Labs do?

Edited from Tracxn: Inspekt Labs provides AI-based solutions for a car damage assessment. It provides an AI/ machine learning API that automates the car assessment. It offers solutions like damage detection, text detection, claims assessment, and fraud detection.

Why do I like Inspekt Labs?

Due to the way their technology works, they can quickly identify errors and emissions with a (claimed) 98% accuracy rate. I see a big space for this technology in insurance, product QA, to name a few. As their algorithms improve with more data collection, there could be future applications in food packaging and warranty repairs. I am especially thrilled to find an Indian startup come up with Indian deeptech with commercial applications. Their growth will only be accelerated by companies looking for new solutions due to the restrictions enforced upon them in the post-pandemic world.

 

I have purposefully left out Piggyride’s ₹3.50 crores raise from Artha Venture Fund last week (round led by JAFCO). However, you can find out Why We Invested in Piggy Ride.

Flashback Friday: Triggero

Triggero was an enterprise rewards and recognition services platform. Triggero worked on a SAAS model and was a provider of an enterprise social recognition platform designed to encourage the culture of appreciation. The company’s enterprise social recognition platform was easy to use. A powerful workflow engine that helped in employer could be custom moduled and self-managed, enabling leaders to drive culture and manage change in the organization.

 

Triggero was instrumental in creating a productive & motivated workforce, energize sales & distribution eco-system. Triggero had partnered with some of the prominent organizations across industries like Telecom, BPO, BFSI, White Goods & IT.

 

Founder: Paras Arora & Abhishek Singh Total funding raised USD 75,000/-
2020 status: Shutdown Number of rounds 1
Co-investors: Mumbai Angels

 

Why did you invest in Triggero?

Triggero was a powerful B2B SaaS platform in the HRMS space, looking at creating a rewards and recognition platform for in-house employees. One must remember that Triggero predated the entry of  Yammer, Slack, or Microsoft Teams in India, platforms that most of us have made an integral part of our work lives today.

Triggero also provided managers the ability to reward employees by giving them points that could get redeemed at the Triggero store for gifts. It was a unique offering.

 

What were the risks involved with the investment in Triggero?

I know now (but I did not know when I made this investment) that rewards & recognitions platforms make the best sense for companies that house large teams managed by a well-established HR department. Therefore selling to medium to larger-sized companies carried its own set of risks like:

  1. Long-tail sales cycles
  2. Larger budgets to hire experienced B2B sales reps
  3. They are competing against legacy systems and high switchover costs.

In 2012 employee rewards and recognition were unknown. Even employees associated HR with Holidays and Rangoli,’ and business owners looked at HR as a cost center. Therefore, I realize (now) that Triggero was probably too early for the Indian market. The company should have raised a much larger round of funding to buy itself time, which unfortunately at the time (and possibly even today) was not available.

 

What was the primary reason behind dead pooling Triggero’s investment?

There were a couple of factors that affected this decision. Triggero lost a major client shortly after we put in the first tranche of investment. The company started to hemorrhage money due to the loss of revenues. This investment also enlightened me on the considerable time lag between billed revenues and banked revenues in a post-paid B2B revenue model.

The founders’ plans to scale fast took a severe hit, and they could not afford the capacity that they had acquired to build their platform. Considering all the issues that the company faced, it did not make sense to continue investing in the company, and I wrote off the investment.

 

What mistakes did Triggero make, and what was your learning as an investor?

Triggero’s biggest mistake was that they tried achieving B2C growth as a B2B company. Therefore, instead of waiting for purchase orders to build development and delivery capacity, they made capacity and then tried chasing sales – a dangerously desperate situation that any B2B founder should not find themselves in. Therefore, a lot of the expenses got frontloaded before revenues flowed in.

Secondly, I firmly believe that they didn’t raise enough capital. Triggero’s angel round did not give them enough runway to experiment, and (with the benefits afforded to me by hindsight), the founders and the angels should have decided against investing the money. Instead, we could have waited until Triggero could raise a more substantial round to give Triggero the runway to become a significant player.

Third I learned the importance of tranche-based investing. It is an essential method of risk mitigation for early-stage investors in cases where the venture doesn’t go down the desired path.

 

Would you invest in a similar startup today?

I believe that the world has moved on from R&R platforms, and Triggero would have a tough time finding a niche in the corporate domains where Slack, Teams, WhatsApp, and Yammer dominate communications.

It had the potential to be an Indian version of Yammer (that Yammer/Microsoft could eventually acquire), but alas, we did not get the required scale and adoption.

 

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Flashback Friday: BookMyCab (Live Minds Solutions)

BookMyCab is an on-demand taxi service with options to rent metered city taxis as well as from their own fleet of cabs. Their taxis are equipped with real-time tracking technology to ensure complete passenger safety. They follow a stringent process of recruitment of taxi drivers and taxis. They also own exclusive rights to advertise on the taxis, i.e., on doors, and inside the taxis.

 

BookMyCab was founded in 2012 in Mumbai and operated with taxi licenses from state governments and approved taxi drivers only. They acquired CabOnClick, a Hyderabad based online taxi booking provider in Nov 2014.

 

Founder: Avinash Chandra Gupta Total funding raised USD 910,000
2020 status: Acquired by Wings Travel Management Number of rounds 2
Co-investors: Yournest, Centerac Technologies, Mumbai Angels

 

Why did you invest in BookMyCab?

It might be hard to remember, but hailing cabs in 2012 was a challenge, especially if you wanted to travel a short distance. BookMyCab offered mobility solutions to a growing target audience of people using smartphones and provided additional income for taxi drivers. The taxi drivers preferred long-range rides since they make more money on those, whereas getting a cab for 2-3 km was quite the task for the consumer. Their platform enabled taxi drivers to find passengers without having to stand in line and wait. Consumers could book a cab which would pick them up, an idea which is standard today. Investing in BookMyCab at the time was a no-brainer since they solved problems for both markets.

 

 

What was your competitive analysis for BookMyCab? As per reports, Ola had already raised 4 Million US dollars from Tiger Global when you invested in BookMyCab.

The most significant moat that BookMyCab had was being the licensed booking service for Mumbai. While Ola was utilizing tourist taxis for local travel (technically not allowed at the time), BookMyCab got the local ‘kali peeli’ taxis, licensed by the RTO. The license gave them a considerable competitive advantage in 2012, before the loosening of regulations that allowed Ola and Uber to expand aggressively. While the other platforms were working in a grey area, I thought this competitive advantage would be critical in fighting off the competition. BookMyCab had a fleet of close to 100,000 taxis they could onboard very quickly. In contrast, the competition had to spend copious amounts of capital to acquire drivers and give massive bonuses to keep them sticky.

 

What did you like about Avinash? Did his IIT Mumbai tag play a significant role in the selection?

More than the IIT tag (I’m not much of a believer in tags), what excited me about working with Avinash was that he was willing to get into the nitty-gritty. He was a part of Financial Technologies with Jignesh Shah, so he had a history of working in intrapreneurial positions. Convincing cab drivers to accept digital cash as payment was a big deal. I appreciated that he was willing to get his hands dirty.

 

The taxi market in cities like Mumbai and Kolkata is still fragmented (Yellow taxi in Kolkata and Kali peeli in Mumbai). Would you invest in a similar startup today if they are looking to consolidate the pending fragmented market?

Consumer preferences have changed today, and there already clear market leaders in this category. People would prefer to either book an Uber or an Ola due to the standardization of services, timely drivers, the cars are in better condition, and well, air conditioning. I wouldn’t change my decision to back BookMyCab in the past, but today, the market is very different from what it was in 2012. The cream-of-the-crop drivers are already on competitor platforms like Ola and Uber. By the way, both platforms also let you book kali peelis.

 

What were your learnings from your investment in BookMyCab?

Whenever you invest in an early-stage startup, they must become a market leader to cement their position. 80% of the investment, visibility, and revenue goes to the top two market leaders. Here are the learnings from my investment with BookMyCab:

  1. Push them to be more aggressive in acquiring drivers. This is not to say that Avinash was not aggressive; I should have encouraged him to be more aggressive.
  2. Early on, I focussed more on growth over profitability.
  3. Not to depend on permits as a competitive advantage. I had (too much) faith that the government would protect the license, and the competition operating in grey areas would ultimately be shut down. Public good consistently trumps legislation. I applied this learning in our investment in LenDenClub, which is doing exceptionally well.
  4. I learned a harsh lesson when Ola offered to acquire us, but the board declined the offer. Ola’s offer value grew by almost 15x over the next 2-3 years. If I had taken the deal, BookMyCab would be the biggest winner in our portfolio, but the lesson was learned. Therefore, if consolidation cements the number one position, then take the offer.

Flashback Friday: BrandIdea Consultancy

BrandIdea is a business intelligence tool for marketing and sales information. They offer a SaaS-based business intelligence enterprise tool that helps companies analyze their markets & last-mile sales data. It Integrates and models data from a multitude of sources and client’s internal data to provide analytics to gain insights & maximize the ROI of marketing campaigns.

 

Using advanced Data Science techniques, they generate visually enriched granular analytics streams that are dynamic, deep, and point to precise directions that help companies to make the right decisions. Critically, these analytics are granular – at the micro-market level, thus creating a bottom-up, aggregating impact of customized marketing actions. So not only can the companies re-visit their decisions at short intervals to course-correct or shift priorities periodically, they can do so at every geo-location, creating the bedrock for growth.

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Founder: Suresh Pillai Total funding raised INR 2.25 Crores
2020 status: Operational in Chennai Number of rounds 2
Co-investors: Mumbai Angels

 

Why did you invest in BrandIdea?

In a market as broad and diverse as (pre-digitalized) India, information at the last mile was always challenging to collect, and the data that existed was inaccurate. BrandIdea provided a solution using which large brands could gather granular and in-depth information about that last mile. This information not only helped the brands with their marketing efforts but also their inventory and other aspects of their business.

BrandIdea was the first enterprise tech company that I invested in. The decision was driven by the fact that their enterprise clients had massive marketing budgets and teams that would be willing to pay for that level of granular data.

 

What were the risks involved with an investment in BrandIdea?

As with any B2B SaaS play, there are a few issues we knew we would face.

  • One of them is the long decision-making timelines that large conglomerates like Colgate, Tide, HUL, Unilever, etc. have. However, it is worth being said that once the partnership is complete, these partnerships can be very lucrative.
  • Enterprises have long gestation periods to make a decision; therefore, another risk with Enterprise SaaS is the sales-cycles are going to be extended. You need to maintain firm control on the burn and accommodate for completing those decision cycles.
  • Another risk is that Enterprise SaaS companies can become profitable but not scalable. This could turn it into a lifestyle business, where the founder makes enough money to live comfortably but doesn’t grow, and as a VC investor, you’re stuck. B2B SaaS plays need to move quickly towards $1M per year in revenue before they can be considered a moderate success. The longer it takes to get there, the lesser the chances of it getting further VC interest.

 

What are your learnings from your investment in BrandIdea?

As I mentioned earlier, there are long gestation periods, and it’s a lot of relationship-building with enterprise SaaS companies. It takes a while to get a lot of clients, and the slower that process is, the worse it is for a VC investor.

This was also the first time we invested in a family-operated business, by Suresh and his daughter, and his daughter eventually left the company.

We learned how to evaluate such companies better. If a company gets into a lifestyle-business model, how do you, as an investor, get your money back; or get good enough dividends. We are still learning that.

 

Would you invest in a ‘BrandIdea’ if it came to you today?

When it comes to enterprise SaaS, we’ve learned that it’s a long process to build a company, and as traditional investors, our IRR expectations are upwards of 75% per year. While BrandIdea didn’t burn too much capital, they didn’t grow fast enough for our liking. Therefore, we don’t think that we are the right investors for them, and they aren’t the right investments for us.

 

What are the exit opportunities that can be foreseen for BrandIdea now?

The possible exit opportunities would either be a founder/company buyback, or the business gets rolled up into a large company offering a suite of products to similar enterprises.

 

Episode I – Harsh Shah, Co-founder of Fynd

Glad to have Harsh Shah as the first entrepreneur on #DamaniTalks, and I couldn’t have asked for a better founder to get us kicked off! Here’s our conversation below. You can catch the interview on IGTV.

Summary of topics:

  • Harsh’s history and the Fynd journey
  • Being acquired by Reliance Jio
  • Harsh’s monthly ‘newsletter’ updates
  • Being transparent with investors about failures
  • Different types of investors in Fynd
  • How has COVID affected Fynd
  • Fynd’s business model in a nutshell
  • How has being a part of Jio been different
  • Is it restrictive or empowering to have one investor
  • Tips for entrepreneurs who want to get acquired
  • Harsh’s personal interests
  • Being a founder investing in other founders
  • Recapping a round of funding with investors
  • Going from the idea phase to execution
  • Rapid Fire Round

Transcription

 

Anirudh: Hi everybody, welcome to the first edition of DamaniTalks (every Thursday at 9:00 pm on IG Live). It’s always been my thought that most VC events talk about raising money, but very few people talk about what happens after you raise money. I’ve (thankfully) been a part of the Fynd journey with Harsh for almost 5 years now. Let’s talk about your history and experience for a minute.

Harsh: It’s great to be here as well, aD! I did my engineering from IIT Bombay, worked for a couple of years in consulting and then analytics. In college, I was a part of the Entrepreneurship cell, and I had a startup in my final year, but I joined a consulting company. My co-founder and I quit our jobs in July 2012, came back to Bombay and started the Fynd journey. It’s been eight years, and I don’t think the journey is anywhere close to completion. Our focus has always been to work with technology in the retail space. Since then (touch wood), the 3 of us have been lumbering on together. 

Anirudh: I’m guessing part of having each other shoulders would also be smacking each other’s backs when you got the Reliance acquisition in August 2019.

Harsh: It’s been almost 10 months since the transaction, and initially we thought “that moment” would be when you sign, or when the money is wired to your account. It’s a much longer process that took 5 months to go through the whole transaction, and at the end of that, the main feeling was not happiness, it was relief. 

Anirudh: One of the things I like about the kind of entrepreneurs you were, was the monthly updates you would voluntarily send us. What inspired that “newsletter?”

Harsh: Firstly, a big thanks to Sakshat, who ingrained this is us. When he asked us for updates, we started with ppts, but quickly figured out that we also need to tell our investors what we required from them. At that point, we had around 20 investors, and since we wanted to give them all an update, the “newsletter” was born. We thought it was essential to get their thoughts and feedback on how we were running Fynd. No matter how many shares you owned in Fynd, you would get our update. 

Anirudh: You were also very transparent and candid about your failures in the updates. Did you ever feel like this could hurt you, and maybe you shouldn’t? 

Harsh: I always believed that our investors were on our side of the ring. All I thought was, “here’s a bunch of people who are working with us to make the company better.” We were doing this for the first time, and we can always use the help. Hiding failures would be more detrimental to us than just being honest. 

Anirudh: How has the journey been different from the different sets of investors you’ve had? 

Harsh: The insight of our investors on how to run a company at every stage was brilliant. We had 86 investors, three founders, and some ESOP holders before we got acquired by Reliance. Overall, I would categorize my investors into five categories:

  1. The angel investors and founders knew us personally, so the mindset going into those investments was they thought we could do something interesting and decided to back us. 
  2. The family offices like Artha are patient investors, who just made sure that things were going well. 
  3. Google told us that they thought Fynd’s problem was a tough one and understood that we didn’t scale up in the best way. But they believed in our idea and its long-lasting strategic value. 
  4. Jio has been different from every other investor. Their questions are similar to early-stage investors. They want to know how fast we can grow and scale-up, and only when we scale the idea, x1000 was it worth talking about it to them.

Anirudh: Let’s talk about current events. There’s an exit in August 2019, 4 months later a pandemic, another 4 months, and we’re in lockdown. What’s been happening at Fynd at that time? 

Harsh: We’ve been continuing with our roadmap, and now we have a partner who can give us access to an extensive use case, especially within retail. Our focus has always been to bring technology to retail, and now we have access to these doors to test out a lot of the ideas we were building. Before Jio, our focus has almost always been towards Fashion & Lifestyle, but we’ve been looking at other categories as well. Our top line and the number of transactions came down by a significant margin because of COVID, but the company and services we built received a massive demand. Many brands have pulled the trigger, saying that they want Fynd’s omnichannel platform to help them power their web stores, marketplace listings, etc. As a team, we’ve been super overworked, COVID has shaken us into accepting this reality immediately. 

Anirudh: What does Fynd do from a consumer angle as well as a brand angle? 

Harsh: Fynd provides a technology platform for brands to merge their offline and online channels. Our B2C business is most accessible to consumers, which has been used by around 20 million users. Funnily enough, that’s the smallest part of our business. As we started building websites for brands, we realized that many features could be made to be modular. The vision is that brands come to us; we build their store and give them the tools to build an ecommerce store and have it running within 4-5 days. And Fynd manages all the payments and logistics for sellers as well. 

Anirudh: What’s it like to be part of something as massive as Reliance Jio, and is it everything it’s made out to be?

Harsh: When we were in talks with Jio, everyone told us we would get lost and pushed around by the conglomerate, but kudos to Reliance, we’ve been quite happy. They respected our capabilities in what we’ve done and what we can do. They recognized what we brought to the table and how we built our company and culture. They want us to remain in that high-performing comfort zone, as long as our goals and interests were aligned. We talk to them often, and apart from being an investor, they play a significant role as a client too.

Anirudh: Now, you’ve gone from managing 86 investors to 1. Does that change the way things are right now – is it constrictive, or is it more creatively empowering? 

Harsh: I’d say it’s more creatively empowering since they’ve given us the independence to do things our way. We have a fairly large playground to experiment in. If an idea doesn’t work, we can go back to the drawing board, but if it works, then we have the resources to scale up massively. 

Anirudh: I’m glad we finally have someone in India willing to acquire entrepreneurs and let them be. What are some tips for entrepreneurs who want to get acquired by companies like Jio?

Harsh: None of us founders were looking to sell when Jio acquired our investors’ shares (87%). As a founder, if you’re just looking to get sold, that’s probably not the right mindset.

Anirudh: There’s a common misconception that entrepreneurs should always be thinking about their business. I did some research and learned that you’re an advanced open water diver, an avid reader, you travel, and you’re also into running.

Harsh: Haha, I went diving in the Galapagos in December, and my co-founder, Farouq, introduced me to it. Luckily, my wife and our friends are also into diving. It was magical to be inside the water where you hear nothing but the sound of your bubbles, and you can just forget about everything. 

Anirudh: That’s true, every time you go underwater, it’s just you, the surroundings and your bubbles and you’re one of the fishes. 

Now, you, too, are a founder investing in other founders. We’re about to close investing in one of the deals you referred to us. What was your inspiration to start investing, and what are some of your investments? 

Harsh: I don’t have any specific sector or typecast founder. It started as payback; I didn’t think about making money or returns. I respected the help I got from Zishan, Gagan Goel, Rohit and Kunal, Ramakant Sharma, etc. At some point, I decided that I’d love to be a part of the journey and put my money where my mouth is. I have about 16 investments right now, which are sourced through our networks of juniors, seniors, etc. in the industry. It’s about backing a founder who has ambition combined with the potential and capability. If you want to pitch to me, you can connect with me at harsh@fynd.com.

Anirudh: How did you go from building a business plan to getting that show on the road? When do you stop doing the research and start the execution? 

 Harsh: I think you do research continually on the market, but you should mainly focus on the problem and the competition. I think the moment you have identified a problem; then you can build a solution or a product. Don’t try to do anything too fast – take your time to perfect the product. Don’t overthink it; the product will keep changing. 

Anirudh: There’s a lean startup mentality – you go to market, then you learn and then build further. 

Harsh: You are never going to stop building. There is no version 0.5. Your product keeps changing! So just start making a lot of version 1’s.

Anirudh: What are 3 pieces of advice that you could think of that were beneficial to you? 

Harsh

  1. Kunal once said, “Know the organization you are trying to build – build it in line with your personality.” You need to think about the kind of organization you want to build at what scale, and how you’re going to develop that.  

 

  1. Vikram, currently the CEO of NSE, told me, “Maintain an organization chart and reassess your team at every stage.” He helped reorganize and gave us a meticulous structure and told us what we need to follow. We experimented with what he said, and his ideas made us a better company.  

 

  1. Sasha said, “It’s okay to pivot away from what you’ve got, even if it’s successful and profitable but not growing.” He shares many stories about different startups he’s worked with. Before we pivoted away from Shopsense, he said don’t give me my money back – come back in 3 months and tell us what you would do instead. 

 

Anirudh: What are 2 pieces of advice that you got that you thought was initially brilliant, but have now realized its non-sense?  

 Harsh

  1. Hey, this is happening in China – you guys should do it.  
  2. Just figure out growth, revenue can come later  

 

Anirudh: Fynd, at one point, has taken a hit on your evaluation but convinced your investors to recap. Investors gave equity back but were still willing to continue backing your efforts. What was that like? 

Harsh: In conversation with Abhishek – He suggested asking K Capital if they were okay with doing a recap; even Artha did this. We would rather do this than see our money go down the drain. The hit could be less than a write-off. They were never in the dark – the communication lines were always open. We shared a live dashboard with our investors instead of a presentation to see what was going on anytime they wanted.

Anirudh: Have your work hours changed since Reliance has acquired you? 

Harsh: Not really, but since Reliance works at a different timezone, there are more late-night calls. We’re the early risers who get into office at 8 am and out by 4/4:30. I still work 6 days a week, 7 days mentally, but the advantage now is I’ve got free time in the afternoon to spend time with my wife or nap. 

Anirudh: What’s a book you are currently reading?  

Harsh: Being a massive history buff, I’m reading ‘A Little History Of the World.’ I would also recommend ‘Range’ by David Epstein, which talks about how generalists can win in a specialized world. I look at myself as a generalist, which helped me figure out whether I’m doing something right or not.  

Anirudh: Revenue vs. Valuation?  

Harsh: Revenue comes first, except when you’re raising funds – then valuation comes first.  

 

Anirudh: What was the feeling like when the exit was done? Now the journey at least with these investors is over?  

Harsh: Some Investors wanted to continue, and almost all the investors asked us why we were selling. I think all the investors were making decent returns as investors – the lowest IRR was 30% – Artha made 62%. People wanted to stay invested, but we had to do the right thing for the company – if there was a better option, we would have taken it. It was one of the proudest moments of our lives when we were able to give back positive returns to our investors. The fact that we were able to give back the trust they put in us was very satisfying. When we first got our money – we put the money back in our company to pay salaries, etc. We went for dinner to celebrate, and then we started figuring out how to save on capital gain stats.

Anirudh: One piece of advice you would like to give to any Entrepreneur?

Harsh: Figure out how to make profits – what are the moving pieces that help you make returns. Figure out the equation and factors that are going to make you profitable. If you have already figured that out – then great, read a book! 

Flashback Friday: Rolocule Games

Rolocule Games is a game development studio creating realistic, casual, and social video games for tablets and smartphones. They design games using emerging technologies such as AR, VR, IoT, and AI. From designing award-winning Rolomotion™ technology for Apple to the recent Eagle Eye, which was an SXSW 2019 Innovation Awards finalist, Rolocule is emerging as amongst the leaders in leveraging cutting-edge technology in game design and experiences.

 

Rolocule created the official Australian open Tennis VR game in association with Australian open and Infosys. Their impeccable business ethic about being nimble and flexible has got them rapidly developing multiple games and pivoting, as industry change has become a case study at the world’s top business schools, Harvard and IIM-B.

 

Founder: Rohit Gupta Total funding raised INR 6 Crores
2020 status: Operational in Pune Number of rounds 4
Co-investors: Blume Ventures, Mumbai Angels, CIIE

 

 

  1. Why did you invest in Rolocule Games?

Other than being intrigued by the gaming sector, Rolocule had a fantastic team. What swung my decision was when they were trying to create a game which would utilize your smartphone as a gaming paddle, similar to how the Wii Remote functions. Their game Super Badminton for the iPhone was a huge hit – big enough that they were invited to Cupertino by Apple in 2013.

 

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

Like with any gaming company, it’s a zero-one risk; it’s either a success or a failure. Rolocule was going to be a success and a fantastic winner in our portfolio, or they were going to shut down. Creating, publishing, and promoting a game is an expensive proposition, and funding would only give them a few chances to succeed. It was also possible that the games would not be received well, and if there were 2-3 failures in a row, it considerably reduces the chances of following games being a success.

 

  1. Where do you place your investment in Rolocule Games when you see the success of games like FIFA, PokémonGo, etc.?

In my opinion, the two aren’t comparable. Apart from the difference in budgets, games like the FIFA series are licensed brand names from the organizations and backed by AAA game studios like EA Sports. PokémonGo has Nintendo’s name behind it, and Pokémon is a sensation on its own. Just these reasons are enough to set them apart, overlooking the fact that games like FIFA are updated and released annually. Rolocule exists in a different gaming space where they’ve integrated the technology in smartphones to software, allowing players to use it as a racquet or a paddle, like the Wii Remote.

 

  1. What are your learnings from your investment in Rolocule Games?

It taught me to be more realistic about zero-one plays, where you need to know when it’s not working and stop pumping more money into it. Initial success is not a guarantor for long-term success. It also taught me that not everything could be gets written off as simply; Rolocule went from becoming a game developer and publisher to just a developer of games. I’ve also learned that the defensibility of games is lower than usual. Similar to how most movies have a shelf life of 4-6 months, you have to reap everything you can in that window of opportunity.

 

  1. Would you invest in a similar startup today?

Yes, but with some caveats. As an investor, I would want better control. With the experience of backing a zero-one style business, I have a much better understanding of the space, and I would invest in an entrepreneur like Rohit again. Still, in terms of the venture, I would be more careful about the valuation and evaluate success, keeping in mind that initial success is not a guarantor of long-term viability.

 

 

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. 

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

21 Point Action Plan to Corona-Proof Your Startup Dream

Calling the shutdown caused by the Coronavirus pandemic, an economic crisis is a gross understatement. It could be a crisis for the established business ecosystem, but it is the equivalent of a tsar bomba for the early-stage startup ecosystem. If all of us do not act quickly, the entire venture capital ecosystem is staring down at years of effort, getting incinerated in a matter of weeks.

When the Prime Minister, Mr. Narendra Modi, announced the Janta curfew, he talked about blackout drills and wartime curfews to a population where the majority hadn’t witnessed one. It was a reminder of a dark 15-20 period when India went through several wars with Pakistan & China. That ignited a mortal fear in me as well.

I feared that this crisis could destroy the decades of work that it took to provide confidence to young graduates to convert themselves from job seekers to job creators. We had to show years of results to convince Indian & global investors to pour money into startups via venture capital funds, angel networks, superangel syndicates, and venture debt funds. All this effort all this sacrifice, of the tens of thousands of people that make up the entrepreneurial ecosystem viz. over 39,000+ founders, 10,000+ angel investors, 500+ VC funds, several visionary politicians & government officers is on the brink of collapse.

However, real entrepreneurs are problem solvers, optimists, and overachievers. Any challenge, even something that challenges their mortal existence, will help an entrepreneur find another gear within them. As they say, even in adversity, they only see opportunity.

My team and I started to sound out Artha Venture Fund’s founders on the business impact the coronavirus pandemic was about to make a couple of weeks before lockdown. We asked our founders to create new budgets to account for the onset of nuclear winter in the fundraising world, bring their expenses down to the bare minimum, and to show patience along with courage at this time.

It has not been easy to convince the optimist in them to slow down for now and conserve energy to speed up later. Last week we put all our heads together on a zoom call to chart out an action plan for saving their dream – their startup.

I summarized the call in a 21-point action plan to save your startup memo for the founders. My team went a step further to make it into a beautiful & impactful presentation. In the spirit of joining hands during this adversity, I am sharing that presentation with you:

 

It is important to remember the immortal words of General S Patton:

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Together we will win the coronavirus fight in our homes, in our businesses, and our minds. Let’s roll!
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