About Me

 

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

Entrepreneurship

Entrepreneurship, Jobs, Learning, Things that Inspire Me

I have a tremendous amount of respect for excellent executive assistants, having been one myself. Much like Anil's experience as an EA, it is one of the highlights of my career.

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After a brief hiatus, I started #DamaniTalks Season II with Anil Joshi, Managing Partner at Unicorn India Ventures, last night.

I have known Anil for over 8 years, and I credit him for introducing me to angel investing. He raised the flag for angel investing in India when it got spoken about in hushed tones. His efforts in scaling Mumbai Angels created an incredible impact on the early-stage venture capital ecosystem.

During my research for the episode, I found out that Anil had been an Executive Assistant (EA) during his formative professional years. In India, the EA role gets misunderstood as an administrative function; therefore, most people would hide their EA stint. Anil displays his 2-year EA stint on his LinkedIn profile – I knew that he had a great story to tell there.

In my professional career, I was in a de-facto EA position, which is why I have a tremendous amount of respect for excellent executive assistants.

Given an opportunity of two EAs talking to each other, I urged Anil to speak about the role, its importance, and, most notably, its impact on Anil’s career. Here is an excerpt on his EA role from our conversation:

As Anil states, an EA gets a helicopter view of the business with the clear intention to take over an executive management role in 2-3 years. The timeline could get longer if the purpose is to groom someone for a C-suite role.

An EA role should not be that of a glorified personal assistant, from the perspective of the management or of the employee. The position holds a significant amount of power, and the EA is not only supposed to represent the executive they work with; in many cases, they must also decide on behalf of that person!

I have had executive assistants for as long as I can remember. My last EA is the current COO at Artha Group, the one before founding an events management company. Hopefully, I have given them a ton of varied experiences and decisional latitude to expand their horizons, preparing them for their current and future leadership roles.

Simply put, an EA role is the fast track into a position of power and authority, and it should not (and does not) handed out to anyone that will bite. The roles require you to get organized, be well-read, trustworthy to keep organizational secrets, be fiercely loyal, lead meetings, provide well thought out opinions, and do whatever it takes to increase your boss’ productivity. It is one of the most challenging professional experiences for which one could sign up.

But Anil and I can tell you from our EA experiences that those were the highlights of our careers.

Here are some Executive Assistant and the notable assignments that they are doing today

Entrepreneurship, Opinion, Venture Capital

If you're a founder looking for investors, you can't play it "safe" with your strategy! It's only natural for investors to expect aggression and risk-taking from founders.

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Yesterday, I was on a pitch call with a consumer brand creating a niche in a mass-market commodity with strong incumbents. Their legacy product-buying customers are looking for a change. The founder understood the space well, he made a good differentiation with his product positioning, and I liked his overall approach to entice the aspirational customers in his target market to upgrade from the run-of-the-mill offerings.

Where his pitch fell flat was in offering his product at a 5% premium to the incumbent. Quizzically I asked him about his odd pricing strategy, and after going through the 5 whys, he frustratingly blurted out that it was the ‘safe‘ thing to do. He revealed that while he felt safe selling at the current prices, he would raise prices in the future.

I tested the founder’s resolve on raising prices, asking him what prevented him from pricing his product at 30% above the incumbent and proving to his customers that his creation was a notch above what they were consuming. His response was a plan to raise prices 2-3% a year, i.e., at the rate of inflation, therefore not alienating the customers as the entire category would be increasing their product’s prices. I queried further that if he (as the founder) was willing to sacrifice blood, sweat, tears (and a lot of working capital), why sell a premium product to the mass of the market?

His discomfiture to raise prices was evident as he pushed off the decision to a future timing when things would be ‘right’. I ended that call wondering how a founder who wants to raise venture capital, both extremely risky activities, justified his stance on playing it ‘safe’. I attempted to explain the fallacy of playing it ‘safe’ and the inaccuracy in the founder’s romantic belief that he can increase prices on their consumers in my feedback.

It is insanely difficult to raise prices on your customers, and infinitely easier to drop prices on them instead. This argument holds even if your COGS are like those of the incumbent. Instead of selling at the same price, utilize the extra margins from your higher prices to increase your market differentiation through branding, trials, and marketing campaigns. That is when you could truly disrupt the market, and disruptions do not come by playing it ‘safe.‘

I could not distill this feedback in the way I had wanted to during the call. Therefore, I kept looking for the best way to explain why startup founders should take risks that their much larger competitors cannot. I found it in the opening chapter from Do More Faster India, written by David Cohen:

If there’s one competitive advantage that most startups have, it’s that they can do more, faster. And because they can do more, faster, they can learn more, faster. Startups can immediately throw things away that don’t work, because no one cares, anyway. Nobody is trying to protect a brand that doesn’t exist, and there isn’t any reason to be afraid of small failures. Startups know that that’s just part of the process.

Therefore it is sage advice to founders to experiment with pricing like they would with the product. To not experiment for your need for safety is not the approach I am looking for in founders I?d love to back. 

Analysis, Entrepreneurship, Learning, Opinion

Today, I heard that Smaaash shut down as a result of the pandemic. Being a place I had created numerous great memories, this made me sad. However, I quickly picked myself up and realised that its (premature) death still had

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Yesterday, an icon in the sports entertainment space – where I have innumerable memories with family, friends, team, and even a surprise birthday celebration, shut down. A few minutes after the news got out, my WhatsApp Groups got flooded with messages.

Most of the messages revolved around

  • How difficult it is to do business in India
  • How the idea was never going to work
  • That Indians are challenging to sell to
  • The classical – “there will be more startup casualties from the pandemic.”

I stopped reading the messages after a few minutes as I felt my energy levels plummet with the negativity. While I loved the concept, I had not studied the Smaaash business model very well; therefore, I started to research to educate myself better. I am blown away by what I have learned about them:

This story could have ended very differently, but external circumstances landed it in the cemetery of startups that could have been. But Shripal Morakhia’s efforts would be a total waste if we only concentrated on the result and not the journey this founder went through.

Shripal took a massive risk with his time, money, and reputation to bring a world-class gaming arcade to India. His venture not only fed 700+ families for several years but also entertained 100,000s of people across India. It took guts of steel to build this venture and at a scale that no other entrepreneur achieved in this space in India.

Now, unfortunately, an event outside his control led to the demise of a promising venture, something the entrepreneur calls a “premature death.” His experiences are something for us to learn from – not to get further depressed over. If you, as a founder (or investor), are to grow, and if our ecosystem is to reach the global zenith that we all want it to – we must start sharing the learnings from our failures and celebrating the end of a journey!

I, for one, would love to learn from Shripal’s experiences of exciting innumerable Indian consumers for almost a decade so that I can utilize his learnings to help my ventures. Also, I would love a sit down with the investors who sat on the company’s board (Nikhil Vora) as it scaled heights and then watched it plummet to its eventual demise. He must have tried his best to save the ship, and it would be foolhardy for people connected to him to avoid gaining from his learnings.

But in the end, I will congratulate both for taking a risk and creating a permanent pivot in Indian gaming – their Smaaash journey is a unicorn learning for me.

Book Review, Brand, Entrepreneurship, Things that Inspire Me

What's common between the worlds largest brewer, the 5th largest food & beverage company, and the 7th largest food chain in the world? They're all owned by 3 guys - the co-founders of the PE firm 3G Capital.

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Yash recommended this book to me a year ago, but I read it on my break last week. I finished it in one sitting.

What is common between

???

3 guys from Brazil own all 3 companies – directly or indirectly. They are the co-founders of private equity firm 3G Capital, i.e., Jorge Paulo Lemman, Marcel Hermann Telles, and Carlos Alberto Sicupira – the 2nd, 4th, and 5th wealthiest Brazilians!

Why these 3 investment bankers own, arguably, the most envied FMCG portfolio in the world is the focus of The 3g Way: An Introduction to the Management Style of the Trio That’s Taken Over Some of the Most Important Icons of American Capitalism. Francisco Souza Homem de Mello authored the book.

Francisco goes into minute details around the trio’s management system based on Dream, People, and Culture. Their strategy gives them the ability to turnaround great companies bogged down by bad management and poor culture. What is most commendable about the 3G culture is how it churns out reliable leaders that live and breathe the same system. The system’s stupendous success got them the opportunity to partner up with their idol; the Oracle of Omaha, Warren Buffet, in the Kraft Heinz transaction!

The chapters on Meritocracy, Growth, the Talent Factory, From Dreams to Goals, Gaps and Methods, Ownership mindset, and Costs and Budgets left a lasting impact.

What I love about this book are the charts, formulas, and diagrams that I could utilize in resolving issues that I face at Artha or in our portfolio companies. The simplicity of 3G’s management style based on simplicity and transparency provides a strong pull for me.

Not just me; any founder could easily see instant results by following the guidelines provided in this book – I strongly recommend this book to all founders!

Here is a list of my highlights from the book:

  • They’ve followed Warren Buffet’s famous tenet: “I try to buy stocks in businesses that are so wonderful that an idiot can run them. Because sooner or later, one will.”
  • We’re a one-trick-pony: our trick is to leverage people. That’s what we know how to do. Find people that have talent, a spark in their eyes, and a desire to grow, and open up their path, to help them get ahead. – Marcel Telles
  • In order to have great people, a company has to invest in several fronts:
    • Foster an environment where great people feel great.
    • Create a constant pipeline for great people to enter and climb the company’s ranks.
    • Compensate great people dis-proportionately.
    • Get rid of the poorest performers, so that the average talent pool improves constantly.
  • According to Brito, great people like working for companies that have three key traits:
    • Meritocracy: the best are recognized and the worst are driven out of the system.
    • Informality: hierarchy is not imposed, but earned, and where they can express their opinions openly without peer pressure and political concerns.
    • Candor: there are no hidden agendas. Fact-based discussions and a clear notion of where people stand in the company is the rule and not the exception.
  • It is very important that the company has a constant pipeline of talent in all its ranks.
  • Leaders are all required to have at least two team members identified as potential successors, from which at least one must be ready to take on the position within the next six months.
  • Dealing with poor performance, for example, takes manager discipline to face the facts, confront the employee, and fire him or her after three feedback sessions have not brought about the intended performance improvement.
  • Letting employees know how their performance relates to their colleagues’ achievements fosters healthy competition.
  • Bosses should not use their position or their clothing to impose respect; they should earn their team’s respect through example, performance, and argument.
  • According to Brito, a candid environment is one where “everyone in the company can speak up as long as they are respectful and constructive,” and where “people know where they stand” in terms of their performance and the company’s plans for them
  • According to Vicente Falconi, encouraging employees to speak up brings them great enthusiasm, since they’re able to persuade colleagues and take an active part in the direction taken by the company.
  • Leaders must always provide reports with open, candid feedback that allows them to improve their weaknesses and enhance their strengths.
  • Great people like to know if the company has great plans for them
  • But the fact is that growth and talent must walk hand-in-hand, or everything falls apart.
  • The company only grows when its people grow.
  • From the “big dream,” which is the company’s long-term business goal, achievable in three to five years, the company breaks down its yearly plan, and then the goals and tasks of every employee, from the CEO to the plants’ janitorial staff.
  • When people stay at the first layer of a problem (the first “why”) they tend to overlook the real root cause. Therefore, the tool is to ask Why five subsequent times (or as many times as needed) until the final root cause of a problem is found.
  • The root cause often makes an action plan to solve the problem obvious.
  • 80% of an employee’s goal/gap (or the company’s, for that matter) has to be achievable with the skills presently owned by him. The other 20% are the stretch that makes the employee go the extra mile
  • Everything, throughout the company, has to have an owner: someone clearly responsible for the outcomes of a process, decision, or project.
  • Owners produce more and better work.
  • First, owners are committed to businesses for the long term, and therefore think long term.
  • The trio views a hands-on attitude as a fundamental attribute of great people.
  • A big trait of the trio’s 3G management style is adopting the world’s best practices, when available, and then improving upon them, instead of trying to reinvent the wheel at great cost of time and money.
  • The practice of shaving costs and expenses and out-spending competitors in activities like product R&D, marketing, and branding, was inspired by a little-known book that has been repeatedly distributed by the trio amongst their executives over the years: Double Your Profits: In Six Months or Less, by Bob Fifer.
  • Great companies underspend their competitors on non-strategic costs, and overspend them on strategic ones.
  • Leaders are those who “need a team in order to reach goals.”
  • A leader’s role is to recruit people that are better than him- or herself, and then train, challenge, and retain them.
  • Strategic costs are those that “clearly bring in business and improve the bottom line.”
  • Great businesses have to ruthlessly cut non-strategic costs, and even underspend their competition, while overspending in strategic costs.
  • Great people grow at the pace of their talent and are rewarded accordingly.
  • We will be judged by the quality of our teams.
  • We are a company of owners. Owners take results personally.
Entrepreneurship, Investments, Venture Capital

If a man gets known by the startup he keeps, then a founder should be known by their legal professionals.  Think about it, out of the vast sea of capable professionals available, the founder’s ability to separate the chaff from

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If a man gets known by the startup he keeps, then a founder should be known by their legal professionals.  Think about it, out of the vast sea of capable professionals available, the founder’s ability to separate the chaff from the wheat gets judged when they choose untested people to represent them in front of investors (or acquirers).

In a recent transaction, the partner of the law firm signed up our founder to protect them, but then the transaction was quickly hived off to an associate who was (at the time) working on their 2nd or 3rd term sheet. The “associate” relying on the legal knowledge taught in textbooks versus the knowledge gained from doing real transactions merrily redlined every single line of our term sheet. It was as though the associate was grading a college assignment.

The founder didn’t understand why there were so many redlines. They did not take the time to know whether the issues redlined were issues (for them) and forwarded the email to us. The entire episode made us reevaluate our assessment of the founder’s maturity.

Note to founders: When your legal help sends back term sheets with more than 10 red lines, you either have the wrong law firm or the wrong investor.

Founders erroneously expect their legal help to do three things that inherently have conflicts of interest:

  • Represent the startup
  • Represent you as a shareholder
  • Represent you as an employee, i.e., CEO/CTO/etc

With three different vantage points to look from, which one should the legal professional put as first, but most importantly – which one comes last?

Who an investor will want lock in their legal agreements can be explained by this diagram from a Pear.vc presentation:

In the early stages, your startup derives its value from your role as an employee. Your startup ties you in as an employee by providing you with a large chunk of equity as a shareholder. Therefore, the startup doing well is directly proportional to you doing well. If you (as an employee) do not perform, i.e., cannot execute on the business plan or leave the startup mid-way, then the large chunk of equity given to you must go back to the startup. Regardless of your involvement in your startup, the startup must continue to operate. It could mean that they must find someone who will execute the plan on which the startup got valued or end up liquidating.

Therefore, the valuing shareholders, i.e., the investors, will include caveats like vesting, lock-in, ROFR, etc., to protect the startup’s interest and its shareholders i.e. you. You must remember the investors are the ones that valued the startup based on your promise to execute the business plan. Any changes that negatively affect the startup’s value will get reprimanded seriously. It may not be in your best interest as an employee, but it is in the best interest of the startup and yours as a shareholder.

As the startup matures, the reliance on you will reduce, and the startup will justify its valuation with revenues, intellectual property, profits, etc. Most founders will move out of the daily affairs of the startup as running day to day operations get too structured for their innovative mindset. However, the startup will continue to flourish without them.

Now imagine that the startup is going an IPO. Would you (as the shareholder) and your startup have the same lawyer representing both of you? No, you would not. It would be unsound legal advice.

Therefore, just like hiring investment bankers to raise early rounds of capital is useless – so is hiring a law firm to negotiate early rounds. The law firm’s partner cannot justify spending their high per-hour legal charges on the nominal fees you can afford; therefore, your transaction will get managed by an associate looking at making a mark.

However, should your startup be the guinea pig for someone else’s career ambitions?

A better strategy is to self-educate on term sheets and shareholders’ agreements. Brad Feld’s Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist is a good start, although it specifically caters to the western ecosystems. You could sign up for TiE Mumbai’s workshops on Termsheets and Founder’s Agreements, which are helpful for you too. Here is a video from one of their sessions on valuation:

Therefore, instead of pushing off the problem onto your lawyer, who will push it off onto an associate who will eventually screw up your relationship with your investor. You, as a founder, get better served by knowing the monster you are dealing with and leaving the legal firms for rounds where the fees you payout are commensurate to the size of the round you are raising. Then you can demand that the partner personally looks at the documentation.  

No one gets a free lunch. No one.

Entrepreneurship, Opinion, Thoughts, Venture Capital

Spectacular turnaround in the digital economy and the aggression of investors to invest in these startups could lead to a hiring spree. But are we going too fast

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Two contrasting events took place yesterday. First, as we got to the end of a board meeting, the founders initiated a discussion on when to restore salaries to pre-COVID levels for the team and the management. Later in the day, my dad sent me an article on my investee company, Purplle, [ramping] up headcount. Considering the volatile nature of this recovery, I wondered how you are thinking about increasing salaries or ramping up the team.

Things have not been as bad as they were supposed to be when economies started shutting down.  Offline retail suffered, but there is a strong revival in the digital economy as consumers quickly shifted to transacting in the new normal. Many companies that may have had feared major disruptions in work found out that not only did work-from-home work, but people were more productive than they were at the office. Now that the worst of the storm weathered and the coast looks clear – is it time to break open the champagne?

I don’t think so.

It is easy to get lulled into a false sense of security that things are back to normal. Barring a select few, most startups have yet to exceed Feb 2020 revenue numbers, i.e., they would burn more money if they increased costs to pre-COVID levels before revenues got restored to pre-COVID numbers.

You must also not forget that your startup’s budgets are forward-looking; therefore, investments in people and products or services get made today to get repaid through revenue growth and an increase in profits or margins. Thus, if your startup has just achieved pre-COVID revenues, it is an achievement to pat yourselves on the back for, but your Jan-Mar budget got approved for much higher revenue assumption for July. Let us not forget that.

Besides, it would be best if you did not forget that the world is not yet out of COVID’s grasp. Just yesterday Hong Kong reported the world’s first confirmed case of reinfection, the lockdown got extended in Auckland, India reported it 60,000th death from COVID, and a Bloomberg reporter asked Did Europe Make a Mistake Reopening Its Borders?

We are not out of the woods yet, and it will not only take the successful creation of a vaccine but also the successful mass production and wide-scale distribution of the vaccine to say that we are in safe waters. As entrepreneurs, it is in our nature to be positive, and we should attempt to capitalize on every opportunity that gets presented to us – but you must continue to toe the line of fiscal prudence and make incremental adjustments to your budgets and team strength.

Despite the gloom that surrounds us, it is vital to keep your team motivated to fight, and to stoke that fire, you must get them to buy into your startup’s success – and help them profit from it. To keep the fire lit, I suggested setting up a quarterly bonus for the team based on cash in the bank.

  1. Set up a quarterly budget which whittles down to the exact cash that should remain in the bank account
  2. Share that budget with the team and explain your rationale for the budget. Encourage the team to provide feedback on the budget and adjust if required.
  3. Track the progress towards the budget on a bi-monthly basis and encourage the team to participate in helping with either reducing costs, improving productivity, or increasing sales. If you can get each team member to push 1% harder – they can create energy that could move a mountain.
  4. At the end of the quarter, share the final cash balance with the team. Deduct any costs that are provisioned but not paid out and do not add revenues that got billed but were not credited.
  5. If the cash balance in more than the budgeted number, distribute 25-30% of the excess cash to the team. This achievement is as much theirs as it is yours.

Getting each team member to buy into the success of your startup is the hallmark of a robust culture, and there isn’t a better opportunity than this adversity to build that culture!

Analysis, Entrepreneurship, Learning, Opinion, Venture Capital

A question that haunts founders and funders alike – profitability over growth, or vice-a-versa? Here's my take on what most people would answer, "it depends."

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In my last blog on gross margins, I had written about the importance of gross profits for a startup to survive in any business environment – especially black swan events like COVID. It did not end there. Throughout my 5+ month WFH stint, a question keeps me obsessed, i.e., what matters most growth or gross margins?

There are (expectedly) a range of suggestions on this topic. David George and Alex Immerman laid out a convincing argument that as an investor, there are 4 metrics that trump gross margins when valuing a business.

  • Economies of scale
  • Meaningfully differentiated technology
  • Network effects; and
  • Direct brand power

It is important to note that while David & Alex endorse moats before margins, they do not encourage that strategy at the cost of degrading unit economics. In a clear message to founders, they state that in the quest for high volume and scale benefits, you cannot make your unit economics become unprofitable.

However, you would be incorrect to assume that your startup can throw caution to the wind in the quest to build a moat filled with investor money.

Two Sigma Ventures’ Villi Iltchev in Why Gross Margins Matter writes that [founders] often naively assume that with scale, gross margin will improve, and are surprised a few years later when they realize there is very little in their control to move margins. Even public companies have a hard time growing their gross margins, a fact that Villi corroborates.

Villi’s blog focussed on sticky gross margins of SaaS companies, but Fred Wilson saw this behavior in on-demand service providers and B2B service providers. Still, it was way-way back in 2015 when he wrote about Negative Gross Margins — criticizing on-demand service providers who aggregated supply at a higher price than they sold it. Uber, Ola, Urban Clap, WeWork, DoorDash, Swiggy, OYO, and a plethora of on-demand startups indulged in this behavior – to build demand for [their] service.

Founders assumed that at a particular scale, they would hold a monopolistic position that would give them pricing power – to decrease payouts to suppliers and increase realizations from customers. Therefore, raising a ton of money to operate a scorched earth strategy and force your competitors out of the market was the accepted business practice of that day. The approach found takers in VC funds, and they raised mega funding rounds, raising these startups to unicorn or decacorn status.

A group of founders took inspiration from this growth hack and adopted the negative gross margin strategy for direct to consumer brands, aka D2C brands. Why did they do it? Because it made sense!

Most mass-market consumer brands (like HUL, P&G, Marico, etc.) do not manufacture what they sell. Instead, most of their goods are contract made, letting the brands concentrate on quality control, distribution, marketing, and brand building.

The spare capacity with contract manufacturers became the targets of the D2C brand founders. They aggregated the distributed supply and sold it under their brand name. To quickly get to a leadership position in their category, the founders applied the same negative gross margin strategy as the players identified above. Projecting that at a particular level of sales, their startup would possess the pricing power to reduce costs and increase prices and creating a viable business these founders asked for stacks of money today to burn their way to a monopoly.

However, their monopolistic apple cart got upset as challenger brands quickly propped up, ironically supported by the same contract manufacturers that backed the challenger brand. The competition put the contract manufacturer and the customer in the driver’s seat. Either (or both) of them could switch their loyalties to another competitor that would offer better terms if a startup negotiated lower prices with suppliers or increased rates on their customers.

Achieving the monopolistic scale became a long shot for most of these brands. COVID just buried them.

Entrepreneurship, Investments, Venture Capital

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

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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.

Last week, the ecosystem breached the 2 deals/day average yet again with 15 startups raising $168 million. The recent weeks have seen a surge in FDI due to increasing global interest in Indian founders.

The surge of foreign investments seems to have increased local confidence and barring another wave of lockdowns; the trend should continue to stay positive.

aD_Blog_2020_07_20_My Funding Picks from Last Week (w30)_Graph

Out of the 15 deals, 13 were in the early-stage rounds (compared to 16 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: Plum

Amount Raised: $933k from Incubate Fund, Gemba Capital and Tracxn Labs; and angel investors

What does Plum do?

Edited from Tracxn: Plum provides health insurance and health benefits for employers. It features policies for OPD, accident, and term life insurance. It offers coverage for employees, spouse, children, parents, and siblings, and enables employees to customize insurance with multiple health benefits.

Why do I like Plum?

If there is a silver lining to the disruption caused by the pandemic, then it is bringing the concept of healthy living from a fringe benefit to a mainstream requirement for organizations. Your organization’s health is only as good as the person with the weakest immune system, and many leaders want to get ahead of this problem. Platforms like Plum, which would be considered a luxury pre-COVID, will be a necessity in the new business order.

 

Name: School Diary

Amount Raised: Undisclosed from The Chennai Angels

What does School Diary do?

Edited from Tracxn: School Diary is a closed-loop platform that schools use to engage & communicate with parents. Schools can send push notifications instantly, share class activities, and capture and share children’s attendance information. Parents can view the daily activity of children in daycare, track buses, get updates on upcoming meetings, etc.

Why do I like School Diary?

I invested in an edtech platform that was ahead of its time but provided a single platform for open communication between parents and teachers in 2012. The founder had to pivot because the idea was way before its time. Well, how the world has changed now!

 

Name: Crio

Amount Raised: $1m from 021 Capital

What does Crio do?

Edited from Tracxn: Crio offers a learning platform for teams and individuals. They provide personalized and adaptive learning opportunities for developers and enable tech companies to nurture talent.

Why do I like Crio?

I have liked on-the-job training platforms for a very long time, and Crio just joined my list with GreyAtom. However, I continue to scour and look for someone to do this in the finance space, which teaches techniques like financial modeling and valuation on the job using real-world examples. So if you know anyone who is working on this, reach out to as soon as possible.

Artha, Entrepreneurship, Investments, News, Venture Capital

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.

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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.

Analysis, Artha, Entrepreneurship, Investments, Learning, Venture Capital

In 2012, I invested in Squeakee Media Pvt Ltd. Here are some of my learnings from my investment

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Squeakee Media Private Limited was a provider of cloud-based ecommerce store builder on a subscription model helping offline SMBs to go online. Offerings include multi-channel automation, content management, cart & payment gateway integration, logistics, email integration, and invoicing.

 

Squeakee launched its mobile application for android in 2014. They also launched their new domain name OffersOn, to increase visibility. OffersOn used a map-based interface to help confused consumers with the best deals within the area of choice in categories such as pubs, food, electronics, apparels, mobiles, beauty, and so on in cities Mumbai, Delhi, Bangalore, and more. Once a user clicks an offer, they get details like the address of the store or restaurant and the contact number.

In 2016 ShopClues acquired the IP of a SaaS platform from Squeakee Media.

 

Founder: Abrar S Total funding raised USD 450,000/-
2020 status: Acquired by ShopClues Number of rounds 2
Co-investors: Mumbai Angels, Kae Capital

 

 

Why did you invest in Squeakee?

In 2013, ecommerce in India was still in its infancy stages, accounting for just 0.60% of total retail sales. There was a general perception that touch and feel were necessary when buying products, unlike today, where the ecommerce share of total retail sales stands at 4.8%. Yet it was difficult to know what brick and mortar stores had on offer. Squeakee used your phone’s GPS to provide the best offers in the area, giving offline stores a chance to compete and make specific offers to the user. It was a great way to push online customers to stores and increase footfalls.

 

What were the risks involved with the investment in Squeakee?

The most significant risk with investing in a marketing-tech platform is that the loyalty of the customer is towards price discovery, and the lowest price will always win. Squeakee had to convince the retailer to either continue maintaining high discounts or keep increasing them to be relevant to their customer.

This works against the retailer’s interests since they need to keep dipping into their margins to stay relevant on the platform. The retailer might do it initially to get discovered, but they realize that a consistent discounting model is bad for business.

Eventually, the customer interest will reach a plateau after which no further discounts will convince them to buy. You must offer something beyond just discounts to keep customer loyalty, i.e., greater discounts = no profits.

Therefore discount or marketing models carry the inherent risk of losing consumer & retailer interest after the initial euphoria has worn off. The barrier to entry in such plays (as I discovered later) is quite low.

 

What did you like about the founder Abrar?

Despite taking on a very challenging business, he stuck at it for 6 years, never throwing in the towel until ShopClues acquired them. I admired his intelligence, tenacity, and that he was willing to work hard. Those are the qualities that I would back again and again.

 

What are your learnings from investment in Squeakee, and would you invest in a similar startup today?

Building loyalty on discounting and pricing is excellent in the short term, but business suicide in the long run. The customers will only use your platform if it has the best prices and nothing beyond that. It encourages undesirable customer behavior, i.e., you cannot build a business on offering the highest discounts or lowest pricing.

I also believe Squeakee was too early for its time. If it launched two years ago, I think their experience would have been different. I have learned that businesses based on the coupon or discount model cannot scale beyond a point; therefore, I wouldn’t invest in a similar startup today.

However, I would invest in a founder like Abrar again.