What better way to restart the Sponsorship Sunday series than by backing a kid raising money to protect the people who are protecting us!Continue reading
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…?Continue reading
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.”Continue reading
Last week, 19 startups raised $70 million – 18 of which were in the early stage.
I picked Able Jobs, Pixxel, OneScore, & Daalchini as my favorites! Here’s why.Continue reading
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.
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|
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:
- Long-tail sales cycles
- Larger budgets to hire experienced B2B sales reps
- 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.
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:
- 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.
- Early on, I focussed more on growth over profitability.
- 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.
- 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.
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.
While the funds raised by India’s startup ecosystem (barring Jio) fell, it was heartening to note that we continued to maintain 2 deals per day average with 13 startups raising $27 million. Out of the 13 deals, 10 were in the early-stage (compared to 13 last week) rounds, which made the cut for my weekly analysis.
Name: Myelin Foundry
Amount Raised: Undisclosed from Pratithi
What does Myelin Foundry do?
Edited from Traxcn: Myelin Foundry is a video distribution solution provider. It helps to deliver ultra HD zero-rebuffering streaming, on any network and reduce the time and cost to market and deliver AI-powered content.
Why do I like Myelin Foundry?
At first look, Myelin reminded of Pied Piper from the show Silicon Valley. However, after checking out their products page, I am very excited about the tech stack that Myelin is attempting to build. If they can stream HD content through EDGE network – it could be a game-changer!
Name: Ameliorate Biotech
What does Ameliorate Biotech do?
Edited from Traxcn: Ameliorate Biotech develops recombinant therapeutic proteins and diagnostic kits. They have developed their technology to produce a recombinant protein in an antibiotic-free process. They are developing biosimilar products for treating oncology, Autoimmune disease, ophthalmology, and nephrology.
Why do I like Ameliorate Biotech?
I am not a fan of biotech startups because of the long development cycle and high mortality rates of these companies. However, I like the experience the team of Dr. Rashbehari Tunga & Dr. Binit Tunga has in this field, and I’d want them to succeed.
Amount Raised: $3.3M from Nexus Venture Partners and India Quotient
What does YoloBus do?
Edited from Tracxn: YoloBus is an online platform for travelers that provides intercity bus services. Travelers can select their route, choose pickup/destination, enter travel date & make bookings via the app by making an online payment. Their app is available for iOS & Android devices.
Why do I like YoloBus?
This one deserves another mention as I had shortlisted this deal in February 2020. Intercity travel must start once again, and I expect domestic tourism to boom first. However, the quality will trump cost when it comes to matters of health, and YoloBus has a great chance to capitalize on this new trend!
Several founders wait with bated breath as the Indian economy reopens after a 76-day hibernation. Many of them wait in anticipation that there will be an outbreak of indulgence consumption or revenge buying that will flood the empty coffers of revenue starved companies. It is (however), not the time for founders to get complacent. There is a long road ahead once the dust settles and we will see the clear signs of permanent behavioral changes after this temporary hysteria fades away.
I believe that we will see permanent behavioral changes starting from the way we lead our lives to the products or services that we consume (and the way we consume them.) Although I agree with Fred Wilson that companies in telehealth, food delivery, and work from home would benefit from these behavioral changes, I would add a few more for those of us living in India.
One of them is online education. In the past, most online education platforms suffered as the instructors were camera-shy when providing instructions to an online audience. Many instructors also found the technology tools daunting and they avoided using them. However, I do not expect parents to enthusiastically send their children back to school. The lockdown provided an extended incubation period pushing instructors to overcome their fears and shortcomings. I believe that the imparting of education through online mediums will continue to expand. Vocational classes are next, then hobbies and even working out, creating great business opportunities. I have current and prospective investments that will benefit from this behavioral change.
Another one is neobanking. It is a travesty that our banks continue to function with 20th-century design and tech infrastructure. I had hope that the lockdowns would have forced them to take a relook at their online banking offerings and improve services for customers. However, our banks are too big to move quickly. This creates a great opportunity for neobanks that add a friendlier design and process layer over the old banking infrastructure. The next 18 months would be crucial for neobanks to scale massively before the traditional banks catchup. I have current and prospective investments that will benefit from this behavioral change.
Another one is multiplayer online gaming. Social distancing is disrupting the hospitality sector especially the nightlife industry with authorities in Japan going as far as demonizing nightlife districts. However, the human need for socializing is driving us online and onto apps like Ludo, Houseparty, and Tambola. Ludo King reported a 4x increase in DAUs with more than 50 million users interacting with their app daily. I believe that the joy of online gaming companies has just begun.
Like Fred mentioned in his post, the next 6-18 months will be an interesting period to study these behavioral changes. It is an important period for founders as they must navigate these uncertain waters, readjust, once again achieve product-market fit and then start scaling up again.
Recently, I was on a weekly update call with one of our food delivery startup founders. They were restarting delivery operations from a multitude of small, but FSSAI certified kitchens. To rebuild consumer confidence, they developed technology that would not only let consumers know the food they were buying was prepared in a clean environment – it would also let them know that the people making the food were healthy at the time of preparation.
As the founders ran through the list of checks and updates they were keeping on the chef and the helpers, I asked a question that brought pin-drop silence to the Microsoft Teams call, “Why don’t we install live CCTV feeds from the kitchen to our control centers and give the consumer the ability to view the footage?”
My team and the founders immediately countered my proposal with issues related to privacy. While I have (for an insanely long time) believed that privacy is a myth, I believe that in a post-COVID world, privacy will lose out to health.
Not only will consumers demand transparency into what goes into their food. They would also want to know more about the people preparing the food as well as the people involved in its delivery. The need for more information will clash with the worker’s demand for privacy. The privacy evangelists may stand on the streets with placards demanding protection; unfortunately, we live in such novel times that companies that wish to protect privacy may find themselves out of business.
It was not a surprise to me that I found a tweet about a Chinese delivery app that has installed body temperature monitors on their workers. They provide a live feed of the temperature on the consumer’s app. Some could say that this is an invasion of privacy.
Friend in China just shared screenshot from a local delivery service. The delivery person’s body temperature is now displayed in the mobile app on delivery details screen. 😮😮😮 #COVID #COVID19 pic.twitter.com/ChEmrKPeoK
— Derek Andersen (@DerekjAndersen) April 8, 2020
In fact, how long would it be before the consumers demand similar monitors and information on the chefs, the helpers, and the waiters? In fact, why not the suppliers? The cleaners? Where does it stop?
The Chinese are not global role models for privacy protection; however, the pandemic is pitting the ideological notions of privacy against the real danger to health due to the way this virus spreads. Interestingly this debate isn’t confined to the US or China; it rages in South Korea, India, and several other countries.
Therefore, Casey Ross is correct in asking if this is a 9/11 moment for the health-over-privacy debate. We gave up privacy for security then, what stops us from making that trade-off now?