Entrepreneurs looking to raise a seed round, especially founders starting a venture straight out of college, should first figure out what their competition is, before getting the pitch deck ready, according to Vinod Shankar, co-founder and Partner, Java Capital.
Most founders think that they are the only ones to get the idea. It is better to sleep on the idea for some time, figure out what the competition looks like, study the sector in depth to get good insights and then work on how the venture will be differentiated. The pitch deck will then stand out, he said, participating in a webinar on ‘A guide to seed funding’, organised by Renous Consulting, a mid-market investment banking firm.
“Go deep into the sector and come up with a differentiated pitch deck, then you will get everybody’s eye,” Shankar said. Java Capital is an investment syndicate that is run by career venture capitalists. It focusses on angel, pre-seed and seed stages with cheque sizes of ₹1-1.8 crore ($150,000-250,000). Its focus sectors are deeptech, fintech, healthcare, consumer internet and brands.
Adith Podhar, Managing Partner, Gemba Capital, said it was important that founders figured out how defensible their idea was and whether they could create a moat around the idea and convert it into a viable business. Gemba Capital is proprietary capital (family office) with an average cheque size of about ₹75 lakh ($100,000). It invests in angel and seed rounds in tech-enabled start-ups focussed on the India consumption story and cross border SaaS.
What is it that they look for in the founders before deciding to invest in their ventures? Podhar said they looked for founder-market fit. And, if there is more than one founder, whether they had complementary skills and how they worked together in the past. With their experience of meeting so many founders, Podhar said they would get an idea of whether a particular founder was good for a particular business or not. “We know which ventures need higher thresholds and (levels of) maturity,” he said.
According to Shankar, they kept looking for patterns. “I am okay with a single founder, couples as founders or brother-sister as founders. We are open to pattern breakers,” he said. He would keep looking for that little spark in the founders – where have they come from, why are they doing this, staying power, resilience – to invest in the ventures. The attributes they looked for were staying power, integrity and whether the founders were frugal.
Founder matters more
Both Shankar and Podhar said the founders mattered more than the idea. The idea was important, but execution was key and it was up to the founder to take the idea to the next level, said Podhar. And, since as investors they came in at a really early stage, the founders should have it in them to pivot the business, if needed.
Shankar added that the founders were of paramount importance. If you look at the outcomes, it was always the best founders who won. A good founder would always figure out a good market.
By: N Ramakrishnan
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