My Funding Picks For The 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.

My Funding Picks For The Last Week (W25)

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.

After sifting through the news (aggregated from Tracxn, Inc42, and YourStory), I pick out these three as my favorite funding news from last week!

 

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

Amount Raised: ₹2cr from Friends of PadUp, Villgro USA, Vinners, LetsVenture, SINE IIT Bombay, and DERBI

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.

 

Name: YoloBus

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!

My Funding Picks For The Last Week (W24)

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.

 

As most of India reopened, so did the funding lords! There was a marked increase in the number of startups that raised capital with 19 startups raising $92 million. Out of the 19 deals, 13 were in the early-stage rounds, which made the cut for my weekly analysis.

After sifting through the news (aggregated from Tracxn, Inc42, and YourStory), I picked out these three as my favorite funding news from last week!

 

Name: Cube Wealth

Amount Raised: $500k from Beenext and Asuka Holding

What does Cube Wealth do?

Edited from Traxcn: Cube Wealth is an automated investment management app which, offers personalized recommendations from financial advisors. Users get provided with an option of goal-oriented financial management. Users can set their financial goals, and Cube Wealth saves for the same via EMIs. It invests the money in diversified asset classes, including liquid, MFs, equities, P2P lending, and gold. The app is available for iOS and Android platforms.

Why do I like Cube Wealth?

The Indian wealth & investment management space is broken. A user must struggle through a multitude of apps to gain a full understanding of their exact financial positions. The decentralized information works against the middle class as they cannot seek better deals for their investments. Besides, the power of wealth aggregation that the larger family offices platforms utilize to get access to closet deals or better negotiation terms aren’t available to a middle-class family. Platforms like Cube seek to address this imbalance by using technology & scale to provide premium services at an affordable cost. With 500 million people set to enter the Indian middle Cube has a bright future ahead of them!

 

Name: Credgenics

Amount RaisedUndisclosed from Titan Capital

What does Credgenics do?

Edited from Traxcn: Credgenics offers cloud-based debt recovery solutions to banks and lenders. Its features include collection strategy, analytics for profiling & collection, automated communication for customer engagement, and more. It provides solutions for alternative dispute resolution, insolvency & bankruptcy, fintech laws, and more.

Why do I like Credgenics?

Collections are an art, and while it is easy to lend money, not every fintech company can build a strong collections team. Therefore I am excited that there are startups like Credgenics that we can get our fintech companies to outsource their collections operations too. And it isn’t a surprise that bad debts make excellent business sense!

 

Name: IVF Access

Amount Raised: $5M from Vertex Ventures SEA & India

What does IVF Access do?

Edited from YourStory: IVF Access is a Bengaluru-based healthcare startup focused on providing In Vitro Fertilisation (IVF) treatments in India. Led by an experienced management team, IVF Access is setting up a chain of IVF centers in India, providing Assisted Reproductive treatments such as IVF and IUI. They offer nationwide access to IVF treatments with an innovative technology platform and state-of-the-art labs.

Why do I like IVF Access?

Babies are a multi-billion business opportunity. Therefore, it is not a surprise that the business of making babies is massive. Due to lifestyle-related issues & an increase in the age at which couples have babies, there is a marked increase in IVF clinics. While the market IVF market size is small, it’s going to grow to $1.50 billion by 2026.

IVF Access is an early player in providing a single brand for IVF clinics and could capitalize on a deeply fragmented space!

My Funding Picks For The Last Week (W22 & 23)

Every Monday, I sit with my team to review the funding activity of the previous weekFrom that list, I pick out 3 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 

 

Another week for the lockdown to end (probably more for metro cities) should improve investment spirits. Deal activity continues to temper, but it hasn’t completely stopped. Last week saw 13 startups raise $50 million. Out of the 13 deals, 11 were in the early-stage rounds.  

I expect deal activity to pick up over the next few weeks as the economy reopens with founders and funders finally get to their rubber meeting the road moment.  

After sifting through the news (aggregated from TracxnInc42, and YourStory,) I picked out these 2 as my favorite funding news from last week!  

 

NameRemedo Clinitech 

Amount Raised: Undisclosed from AngelList, Mohit Satyanand, Mitesh Dagaand Aditya Vij 

What does Remedo do? 

Edited from TraxcnRemedo Doctor is a cloud-based platform for medical record storage. It allows patients, doctors, and clinics to connect with each other and access relevant data. It enables patients to upload and store their medical records online. Available on Android and iOS platforms. Also, it allows doctors to generate insights through dashboards based on analytics. 

Why do I like Remedo? 

My thesis on telemedicine and recordkeeping has undergone a significant shift during this economic lockdown and its aftereffects. Platforms such as Remedo will become the mainstay of Indian healthcare as we practice social distancing but with better record keeping and tabs on our health.  

 

NameSwifLearn 

Amount RaisedUndisclosed from Stellaris Venture Partners and Venture Highway  

What does SwifLearn do? 

Edited from TraxcnSwiflearn is an online platform that provides live tuitions for K-12 students. It offers classes in small batches of 5 students. It offers crash courses for math & science for the upcoming year-end exam. 

Why do I like SwifLearn? 

Another product accelerated to the market due to the COVID lockdown. I like their premise, i.e., replace the in-person tutor experience by creating the same experience online. It increases the productivity of the tutor (and they don’t have to leave home!) but also provides them a more significant reach.  

There is better control over the learning experience online, and the broader reach makes it affordable for students. Their pricing policy is exciting too. Definitely, one to watch out. 

My Favorite Funding News of Last Week (W16)

After a lull in funding to gauge the impact of the Covid19 pandemic, the fundraising activity is starting to pick up. Most of the rounds are investors topping up their investments into their investee companies to ensure survival through this period. However, a marked drop in valuations has also encouraged investors to return with the cheque books.

My team and I shortlisted the deals for week 16 from Traxcn, Inc42, and YourStory, and we jointly picked out the following as the best funding picks for the last week:

Name: AknaMed

Amount Raised: $7 million from LGT Lightstone Aspada

What does AknaMed do?

Edited from Traxcn: Technology-enabled supply chain platform, which increases transparency and optimizes costs for both hospitals and manufacturers.

Why do I like AknaMed?

I expect a significant shift in supply chain logistics in the post-COVID19 world with platforms like Zilingo, Coutloot, and Aknamed acting as the tech bridge to reduce cost and increase transparency for retailers or service providers. A significant impediment for the B2B supply chain space would be providing credit for the last mile. Whether Aknamed intends to solve that inhouse or through a financial institution tie-up will be interesting to track.

 

Name: Joynt

Amount Raised: Undisclosed from SOSV’s MOX accelerator

What does Joynt do?

Edited from Traxcn: Joynt is a social selling platform. It provides a platform that allows users to create content and connect with the audience and make money through sell subscriptions, digital products & more. It also provides an Android app.

Why do I like Joynt?

Joynt is the excellent cross between an artist discovery, artist booking platform with additional features like booking video lessons & video calls with your favorite performers. They rely on short videos instead of text to help buyers to discover artists, which is a step above the text-heavy platforms today.

 

Name: Plop

Amount Raised: Undisclosed from Better Capital, EaSyndicate, Rohit Chanana, and others

What does Plop do?

Edited from Traxcn: Plop now is a platform for fiction stories. It provides stories under various categories, including horror, romance, mystery, drama, and steamy. The stories are told in the form of messages or text, and Plop monetizes its platform through subscription.

Why do I like Plop?

Content platforms are making hay in the COVID19 lockdown, which explains the 400% rise in Plop’s traffic. However, I choose Plop over other content platforms for their unique delivery style over reading a book. I will keenly follow whether Plop can maintain this engagement in the post-COVID19 period.

 

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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My funding picks from last week (w05)

There were 15 deals in week 5 of 2020 that were available on Traxcn, Inc42, and YourStory,
I sat with our funding team, and after some enlighting discussions, I have shortlisted my picks to:

Name: InterviewBit
Amount Raised: $20 million
Investors: Tiger Global Management & Sequoia India
What does InterviewBit do?
Edited from Traxcn: InterviewBit is an online platform for tech interview preparation. The platform offers gamified lessons with video tutorials, primer problems, and guided solutions for programming, scripting, databases, system design, puzzles, etc. The platform also enables the candidates to get connected with the right companies worldwide based on skills and preferences.
Why do I like InterviewBit?
I like focussed vocational plays. Last year I had picked out GreyAtom as a funding pick as it provided an upskilling platform for data science and web development employees. Therefore picking it isn’t a surprise that InterviewBit got selected even though the $20 million round from Tiger & Sequoia is bigger than a typical Series A round in India.
InterviewBit solves an exciting problem of finding, interviewing, and evaluating tech talent, which is the Achilles heel of the best of Indian start-ups. The CAC for such plays is quite high, but considering the 18-35 lakh rupee salary bracket they target, the rewards may outweigh the costs.
Only request – can someone create a platform for finance and accounting employees! 😊

Name: AdonMo
Amount Raised: Rs. 21.4 crores
Investors: Bace Capital, Astarc & Mumbai Angels
What does AdonMo do?
Edited from Traxcn: Adonmo provides an in-transit cab advertising platform for advertisers to reach their target audience. It enables advertisers to place their ads on top of the cab and select the target location and relevant time slots to display advertisements and track their ads in real-time. It uses a proprietary computer vision and hyper-local technology to identify its viewers and advertise.
Why do I like AdonMo?
It was unbelievable that I had created a business plan to provide contextual ads based on geo-location on top of taxis during a 6-7 months stint in Kolkata in 2012 or 2013. I had reached out to taxi-top display manufacturers in China who could provide the hardware required for this service. These plays were very popular for advertisers in Africa as most homes did not have electricity – therefore, taxi-top displays were the primary distributors of advertising. But AdonMo is precisely doing what I could not i.e., EXECUTE on the idea.
I am excited about AdonMo as it disrupts the hold billboard owners have enjoyed for several decades. A moving billboard provides better and deeper reach to advertisers with exhaustive reporting and must work out to be of much better value than a billboard.

Name: YoloBus
Amount Raised: Rs. 4.28 crore
Investors: Undisclosed
What does YoloBus do?
Edited from Traxcn: Yolobus provides an online-based platform for booking intercity tickets. Users can book tickets by giving details like location, date, time, etc. It offers features like real-time tracking, in-cabin Wi-Fi, Toilet, Pantry, CCTV cameras, etc.
Why do I like YoloBus?
There are several intercity bus services. So what is interesting about just another intercity bus service?
There are several intercity bus ticket booking platforms – So what is interesting about just another intercity bus ticket booking platform?
India is home to the world’s largest and fastest-growing middle-class population. India’s growth pulled 271 million people out of poverty between 2006 and 2016. It is only a matter of time before India’s per capita income will cross $4000 with and a majority of the Indians will belong to the middle to upper-middle class i.e., aspirational class.
This vast majority of people will have a very different consumption basket and preferences compared to the sustenance living Indian, and services like YoloBus cater to a growing section of the Indian audience.
While Yolo may get considered a bit ahead of its time, if it can keep its costs of operation and customer acquisition in control and sustain – there is a big market for it to capture!
One question, though – why are the investors undisclosed? The first time for me to see a release in which the amount gets disclosed but not the investors!  

Family & Friends – Please Save Your Capital!

A couple of months ago, I found my jaw hitting the floor during a start-up pitch. The founder of an early-stage B2C startup revealed that he had previously raised a family and friends’ round of the princely sum of 5+ crores (~$900k). That capital was exhausted in less than 18 months; the monthly burn was over 50L per month with a double-digit staff strength. All this effort was delivered less than 25 lakhs in sales – since inception!
Runaway spending, low traction, running out of cash are situations that I regularly encounter as an early-stage investor. What worried me was the lack of oversight the family and friends had on how the founder invested their capital and their lack of experience steering the founder from avoidable expenses.
For example, precious and expensive capital found itself funneled into:

  • A massive PR & Branding campaign which wasn’t delivery but continued to burn a hole every month
  • Lobbying for international “paid awards” that cost a bomb but did not deliver results.
  • Massive allocation on R&D, but it was a ruse. The money got spent on traveling to different countries to find manufacturers to white label their products to the company
    • I have seen others do it at 1/10th the cost & time

I cannot hold the founding team entirely at fault here too – part of the blame should be on the investor class. They infused excess capital into the business, thereby encouraging the founder to burn the money on things that don’t matter, ultimately setting up things to fail.
My presentation of these entrepreneurial misadventures is not an attempt to rub salt on the wounds of the family and friends’ investors or the founders.
I want to point out something fundamental. Except for unusual situations* family and friends must limit the amount of capital they commit to an entrepreneur. Leave the larger rounds of capital to the professionals. Not only will it save capital for generous family and friends, but it will also save founders from committing hara-kiri with their startup ambitions.
If this were a one-off situation, I would not have written about it, but I am witnessing a marked increase in the number of ventures backed by family and friends and coming to us for a seed round. We like family and friends supported investments because it shows that those closest to the founder also believe in them, but like healthy foods – too much green can be injurious to health.
Most of the time, family and friends judiciously put in a small amount of capital, just enough to get the venture started. However, there were many examples where family & friends have drowned a lean start-up culture with a deluge of capital – killing the enterprise and blowing away the capital.

So, the obvious question that arises is, how much should a family or friend commit to an entrepreneurial family member or friend?
The good news is that a family or friend need not look too far.

The best accelerator programs in the world, i.e., Y-Combinator or TechStars, commit $150,000 (~₹1 crore) for a 7-10% equity stake in pre-seed ventures. Similar programs in India like 100x.vc, Indian Angel Network accelerator, or VentureNursery (in the past) invested between 25-75 lakhs for a similar equity position.
All the branded investors mentioned above have many good and bad investments; therefore, with their experience, they can guide founders on promoting the right and shunning wrong behaviors in their start-ups. So, for inexperienced family and friends’ teams, the correct amount of capital would be between 50% to 75% of what these guys invest, i.e. anything in 40-75 lakh range.
Family and friends can decide where to invest in this range based on the domicile of the venture but ensuring that the founder has 6-9 months to find a professional investor while they continue to grow their start-up. It is the founders’ responsibility to consistently update their investors whether things are going well (or not). Developing this habit is vital but critical in case things are going well, but finding a professional investor is taking time. Family and friends could opt to put in some more capital IF they are comfortable with the start-up’s progress and are objectively taking the additional risk.
However, the family & friends’ capital tap must end at that.
 
* While It is still advisable to leave the more giant cheques to a professional but in certain situations, it makes sense for a more significant allocation from family and friends. These are exceptional situations, not the norm.

  1. If the family and/or friends have in-depth domain knowledge and are objectively backing one of their own
  2. In Meditech or Healthtech like start-ups that require more massive upfront investments and the family and friends’ investors have in-depth domain knowledge

The art of how much to raise

In the past several weeks, I have been astonished at the size of seed rounds that founders expect to raise in their first round. My jaw hits the table when a founder blindsides me with requests to raise seed rounds of $1 million to as high as $3-4 million!*

These are the start-ups that have

  • Opened their doors for business within the previous 12-18 months.
  • Have an ARR of less than two crore rupees ($300k).

Surprised at the massive requirement of capital, we go through their financial model. Within a few minutes of looking through the model, the spreadsheet would give out a chilling fact:

The founders first decided the amount they were raising; then, they decided how to utilise the amount that is raised!

It may seem like smart scheme when pitched to novice investors, but it is a foolhardy attempt to do that to an investor with experience.

For instance, to show full utilization of the amount the founders pad certain numbers. So, a close inspection of the fund utilization plan exposes the founder’s true intentions, i.e. that they wanted a reverse calculated an ego-boosting valuation for themselves. To achieve that goal they were willing to misrepresent facts. How does a founder come back from that image?

The good news is that – there is a better way.

My advice for founders that are creating their fundraising plans is to start with a well thought out answer to a famous Peter Thiel question

What is the one thing you know to be correct but very few agree with you?

In simple words, what do you need to prove to your team, your advisors, investors, etc. to elevate their belief in your idea? Whatever you need to do to gain their confidence that is the goal of your fundraising efforts.

For example, if everyone in your inner circle does not think that your company cannot sell x number of your whacky widgets in a specified period – then that is precisely the thing you must prove! Your goal must be specific, measurable, attainable, and realistic, and time-bound so that you aren’t on a wild goose chase.

Second, estimate the time and the resources (servers, people, space, travel, etc) required to achieve your goal. Pay close attention that your estimations do not have un-utilized or under-utilized resources. In fact, I advocate allocating 20% fewer resources than your start-up needs. It forces your team to innovate, after all – scarcity is the mother of innovation!

Third, figure out the exact cost of your resources over the period of their requirements. This exercise is a crucial step. Because if you had correctly estimated the resources and the time they’re required, you will (now) have the EXACT amount you must raise to achieve your goal.  

Fourth, add 25% top of the number you had in the previous step. The extra amount is your buffer, i.e. it is the extra cushion you’ve kept to account for any mistakes you may have made in your calculations. The extra cushion gives you the breathing room to commit errors – an essential fail-safe for an early-stage startup.

Now you have the exact amount your start-up needs, not a paisa more and not a paisa less. Next, go out there and raise this amount!

This proper prior preparation will give you the confidence to answer questions about the “why” behind your fundraising efforts. Your confidence will impress your prospective investors as you come off as a professional founder instead of a novice founder who thought they could pull the wool over the eyes of a seasoned investor.

As an investor that has sat on the other side of the table for almost eight years, this level of preparation and maturity from a founder is rare. But, when I meet a prepared founder it invokes confidence that the founders will utilize my precious and expensive capital judiciously. In fact, I may be swayed to give a premium valuation to such well-prepared founders – exactly what the founder wanted but now he/she earns it with respect!

* – Oddly enough, the high expectations were from founders who spoke in millions of dollars instead of crores of rupees. It ignites the patriotic fervor residing in Vinod – a sight to watch!

The Investment Banker Pandemic

Time and again, I have warned early-stage founders to steer clear of using the services of a banker to help raise money but unfortunately, that pandemic has overrun our ecosystem. Many bankers have made a comfortable lifestyle out of fleecing unsuspecting founders. The false dream that these 1-star bankers promise founders make my skin crawl, as many of the business models that they push to me aren’t even eligible for venture capital, and the bankers are aware of it.
I would also like to acknowledge that there are many bankers that are doing some excellent work and every penny paid to them is worth their weight in gold. Some of these bankers have worked with our portfolio companies and I have interacted with a few for fundraisers, but NONE aka ZERO were for raising amounts below $5 million (Rs. 35 crores).
Then there are angel networks that reach out to us about their portfolio companies and while I am disillusioned with the concept of angel networks, the angel networks do not (or should not) charge their portfolio companies for connecting them to funds; it is a part of their duties.
Raising outside money is the toughest and most gruelling of exercises (I had to endure this myself while raising $6 million for my fund) and no banker is going to make it easy for you. I too have had investors drop out or reduce commitments at the last moment and while I understand that it can be frustrating, the cold-calling, the rejections, the ‘getting close’, are all part of the process. FYI, I reached out to over 5,000 people for the first close and will be reaching out to 5,000 more for the next one. Every founder must do this; persistence is key.
If you still feel that you need the services of a banker, I have compiled a few articles that could help with the selection process. Eventually, it is up to the founders to decide to ‘banker’ or not but choosing an advisor to delegate the fundraising process without doing the required due diligence to select them is truly just “abdicating” the responsibility, which is simply unrewarding in every sense of the word.
How to Choose the Right Investment Banker
By David Mahmood, Founder, Allegiance Capital
The Art of Selecting an Investment Banker
By Katie May, CEO of ShippingEasy
7 things to consider when choosing an investment banker
By Martin A. Traber, Chairman of Capital Markets Group of Skyway Capital Markets
10 Questions to Ask When Choosing an Investment Banker
By Dan Lee
80/2018