“There has never been more capital for startups in India than there is now,” said Sarbvir Singh, Private Markets Adviser, JPMorgan PEG, moderating the session,“Investors Envisioning the Future: What am I betting on today?” At the NASSCOM Product Conclave North 2017. Investors from different backgrounds explained what works and what ticks them off in today’s startup ecosystem.
The mentality of investors
Since the last 2 years Sashi Reddi, Founder and Managing Partner, SRI Capital, President, TiE Philadelphia has been investing in enterprise technology and deep-tech startups, and has been helping them approach the US market. He says that his mantra is not to get into the intricacies of the business but telling the entrepreneurs to procure a minimum of three customers/ clients in the US who will use the product/ solution being offered.
Sanjay Mehta, Angel & PE Investor, Director, CORE Media, claims that he has a three-pronged approach before he invests in a startup. “I ask: Is there money to be made? Are there committed people who can make the money? How much money can be made? I chose founders over markets and disruptors over differentiators,” said Mehta.
For 4 years Ashish Taneja, Managing Director of GrowX Ventures has been investing in deep-tech and states that the the real value has been derived by getting one’s hands dirty. “We feel that we are also a startup, we also are in a learning phase as there have been so many pivots we have experienced. Therefore, we don’t have an investment thesis,” he said.
What do investors want?
Mehta states that when it comes to crypto currency, India is way behind. “Even if you see alt-coin, which is a listing of all alternate crypto currency, India is nowhere to be found. I think we need more startups focusing on that sector.”
“I have yet to see startups focusing on Blockchain technology, home interior automation and health tech, which goes beyond listings and discovery. Most players these days are developing platforms and are promoting the same, I feel one should look into the business use case rather than the technology,” he added.
Agreeing to the same, Taneja also stated that apart from deep tech, computer vision and AI, he is looking at health tech devices/ solutions that can improve patient data. “What we would be interested in and have not seen are insurance tech and core blockchain technology startups.”
“I am bullish about the Indian startup ecosystem, with the demonetization kicking in; I feel there will be a lot of new startups who will cater to the pain points of the industry,” added Reddi.
Customer Use Case for a pitch
Both Reddi and Mehta point out that investors today are looking at right customer use case from the startup and how entrepreneurs are putting a value to the use case, they both feel that is what is imperative in today’s investor pitch and will go a long way.
Keeping it simple
There was a general consensus amongst all the investors that entrepreneurs should present their case and pitch in a simple fashion. They should consider the pain points and talk about solutions that would solve the pain points.
He also stated that what ticks him off during a investor pitch is when entrepreneurs use big technical terminologies and further complicate what they are trying to explain.
“If the pitch is clear there is absolutely no reason not to invest,” added Mehta.
Another point raised by Taneja was that “Apart from having a simple pitch, the idea should be about going local first, test the waters in a cheaper market and demonstrate success the think of going to a larger international market later.”
“I am not interested in investing in tech startups who do not have entrepreneurs who do not have a tech background. It is a world that is run by mobile and internet and one needs entrepreneurs to think from that angle,” added Mehta.
Taneja feels that there should be a balance, maybe a person who is not core techie can bring in a different opinion. Maybe the entrepreneur can have a different approach for strategizing and is able to think through the market.
India vs US
Reddi’s take is that there is no difference in the maturity of the US entrepreneur and the Indian entrepreneur. What he feels strongly is the fact that entrepreneurs, be it US or India, should be ‘all-in’ when it comes to their startup if they expect Investors to be ‘all-in’.
Disagreeing with that Taneja states that, “US entrepreneurs are very different from Indians. There is a drastic difference in clarity. If you talk to entrepreneurs from the US they have a sense of focus, discipline and rigor. Indian entrepreneurs are butterflies, there is a lack of commitment that I see.”
In a previous session at NASSCOM Product Conclave North 2017, Kavin Bharti Mittal, Founder & CEO, Hike Messenger had stated that “The biggest problems of a startup today are that they are in the race to become sexy and cool among peers, which is hard to do. Hence, the Series A and B investment rounds become a milestone. After this, the entrepreneurs try and become mentors. It is important for startups to understand and get to the core of the product and keep at it.”