angel investors

Utsav Somani’s microstartup iSeed helps startups in India connect with Silicon Valley entrepreneurs

iSeed is named as a bridge between Silicon Valley entrepreneurs and Indian founders. The Silicon Valley entrepreneurs are those already established entrepreneurs and Indian founders are those who are in search of money as well as expertise and knowledge of startup.

Utsav Somani, a well-known name familiar in Indian start-up environment is strengthening the investor ecosystem in India with yet another early stage fund. Somani who is already being credited for bringing AngelList to India, is now all set to launch his own micro fund ‘iSeed’ to help Indian startups to get their initial investments.

Somani revealed, “The fund is going to be sector agnostic but will invest mainly in startups leveraging technology for SaaS, remote work enabling tools and tech enterprise software. The new fund is going to invest in around 32 to 35 Indian startup at an average check of $150K. The fund will be deployed for around three years.”

Bridge between Silicon Valley entrepreneurs and Indian founders

Somani added, “Founders of Silicon Valley can interact with their peers in India while Indian founders can get the expertise. The aim of iSeed is to build a bridge between these two. We are not talking only about capital but also about knowledge sharing.”

Not only capital but knowledge sharing too

The US market has a good lot of investors who are in a place where they can easily write from $100K to $500K cheques for Indian startups. Many of them have been eagerly waiting to participate in Indian tech boom so that they can access the early stage deals.

“Investors selected based on their knowledge, network and willingness to help portfolio companies scale. These investors can also guide Indian startups looking to target International customers and investors.” Somani said.

Some of the notable investors in iSeed include AngelList Naval Ravikant, Hike founder Kavin Bharti Mittal, Thumbtack’s co-founder Jonathan Swason, WikiHow’s CEO Jack Herrick, Polychain Capital’s general partner Niraj Pant. DSG Consumer Partners MD Deepak Shahdapuri, eDreams co-founder James Hare, NBA star Matthew Dellavedova, 500 FinTech founding partner Sheel Mohnot, and Spearhead’s partner Jake Zeller have backed the fund. Bolt’s Eric Feldman, Flutter founder Josh Hannah and TaskUs confounders Bryce Maddock and Jaspar Weir, along with senior leaders at DST Global, Matrix Partners India and Xiaomi also pooled their capital in the fund mop-up.
Somani said “iSeed is powered by AngelList back office, which makes it easy for full time founders to run venture funds on the side. My day job remains CEO of AngelList India while I run iSeed on weekends.”

COVID-19 pandemic and the side effects

“I would have raised more funds if it would have launched your earlier as investors have also taken hit in their investments in public markets, portfolio startups and private placements.” Somani on how covid-19 situation has complicated fundraising for iSeed.

Somani considered himself lucky because the investors have trusted his judgement to some extent which helped iSeed raise funds for the next couple of years or three.

“I have already invested in more than 40-50 startups personally and this fund powers me to give larger cheques in 30-35 startups. Raising the fund was much easier than what’s coming next.” Somani said.

However, a larger fund would have spread the investments and would force Somani to step out of his comfort zone which is to work with VCs and angels rather than compete. ” I think I like this space where I operate $100K to $150K cheques. That’s a sweet spot to play,” he added.

‘Crisis never stops innovations.’

Somani urged startups to use this time to build while focusing on continuity and creating market value.

“Crisis never limits innovations but it’s actually the opposite. The last decade was exemplary of capital abundance but now people need to make Ventures where they a don’t buy users but will make products that users will love to buy without much incentive attached to them. It was a much-needed reset for the ecosystem.”

These angel investors could help you make your idea bigger

Here are a few angel investors who might be interested in financing your idea.

Setting up your own venture requires capital and Venture Capitalists are not always supportive or appreciative of your idea which is why you can approach angel investors in India. We have got you a list of the most popular and sought after angel investors in the country.

Here are a few angel investors who might be interested in financing your idea:

Rajan Anandan

Rajan Anandan is the managing director of Google India and has been financing projects since 2006. He invests mostly in projects which are e-commerce or cloud-based.

Sanjay Mehta

He is a very active member of the popular angel investment groups like India Angel Network, Mumbai Angels and Venture Nursery. Till now, he has invested in almost 50 start-ups which mostly deal with big data and consumer services.

Zishaan Hayath

He started his series of angel investments with Ola, a cab-booking service. He also founded the Powai Lake Ventures and has funded more than 30 ventures till now.

Sunil Kalra

He is the founding member of University of Petroleum and Energy Sciences, Dehradun and an active member of India Angel Network. His affair with funding start-ups began way back in 2002 and he has financed more than 50 ventures till now.

TV Mohandas Pal

The ex CFO of Infosys is currently an active angel investor who has made almost 40 investments in ideas so far. He is also the chairman of Manipal Global Services which manages the Manipal campuses in Malaysia, Dubai and Nepal.

Rehan Khan

He is the founder of Orios Venture Partners which is an investment agency and has made over 20 investments so far. The areas Khan makes most investments in are mobile technology and e-commerce.

Sharad Sharma

He was formerly heading the R&D sector of Yahoo India and founded the think tank called iSPIRIT. He makes his investments if he thinks an idea is attractive enough to capture the software industry.

We hope this makes your process of finding an angel investor easier!

Reasons budding entrepreneurs should stop looking for venture capital

Here are seven reasons for budding entrepreneurs to give up the hunt for venture capital and angel investors.

Every year, about millions of new businesses are started, and fewer than one percent successfully raise venture capital (VC).

Whether it’s the feeling of acceptance into this elite club, or the misconception that it’s impossible to start a new business without millions in capital, many startup founders find themselves hypnotized by the pursuit of VCs and angel investors.

Perhaps the adage is true: We want what we can’t have. And yet it can be argued that your chances of success are greater if you stop looking for VC money and focus your energy on bootstrapping your business and attracting customers.

Here are seven reasons for budding entrepreneurs to give up the hunt for venture capital and angel investors:

1. You haven’t proven your market need

Sure, you’ve put together a pitch deck, business plan and financial projections, but those are all just that — projections. You’re basing the future success of your company solely on hypotheticals.

Before looking for VCs, prove that there are customers out there who want what you’re selling. Spend time talking to your users, and focus on giving them what they want. Invest your time in finding a place in the market before trying to convince investors to give you their money.

2. You lose control

Once you secure VCs, you’re at their mercy. Even if you maintain a majority stake, you’re giving up a percentage of equity, profits and control to a board that may have a different vision for your company than you do.

In most cases, your VCs will ask for one or more board seats giving them the right to vote on or veto key decisions that will directly affect the future of your company. These same people also have the right to fire you or members of your team, which means you could be ejected from the company you started.

3. You’re focused on the investor – not on your customer

Giving up control means you have a new responsibility. Your first priority is no longer to your customer, because your investors expect to come first. Among other conditions that are negotiated in a deal, venture capitalists can ask for anti-dilution protection, dividends, liquidation preferences, mandatory redemption and other perks that the founding partners may not even get the rights to.

In some extreme cases, VCs have the right to sue you for everything you own in the case you forget to tell them “bad news,” according to Bloomberg Business.

4. Instead of trying to make money, you’re trying to raise it

The irony of trying to raise venture capital is how much time you waste chasing down investors – when you could be chasing down customers. There are only so many hours in a day and only so much work you and your team members can take on. Every minute you spend chasing down a flippant VC is a minute you’re not working on creating a great business.

That’s all to say you’re putting a lot of your eggs into a basket that the statistics say you’ll never obtain.

5. Your burn rate is higher than if you were to bootstrap

What’s a burn rate? It’s the amount at which a company spends money, especially venture capital, in excess of income.

You may know the now viral story of CEO Maren Kate and the downfall of her company, Zirtual. She abruptly shut down all operations due to a glitch in the books that was overlooked. Basically, the company did not have a handle on its burn rate – and it ran out of money. This also supports the next point that…

6. You lose the hustle required in running a lean business

When playing with someone else’s money, many startup founders admit that it becomes less real. It’s harder to stay lean and savvy with the false impression that you’re rolling in the dough.

Investor and entrepreneur Gary Vaynerchuk writes: “Twenty-five to 50 percent of all the businesses I have ever looked at were more than capable of being a little scrappier.”

7. Your end goal is focused on an exit rather than building a company that will last

If your end game is growth over profit, then you are forever stuck in a cycle of having to raise more money. As soon as you’re no longer able to secure more from VCs, then your company will likely implode.

You’re relying on other people’s belief in you – based on hypothetical projections – rather than relying on a solid business model that turns profits and creates happy customers.

Author: Shannon Whitehead

Shannon Whitehead is the founder of Factory45, an online accelerator program that takes sustainable apparel companies from idea to launch — without raising venture capital. Committed to improving the fashion industry, Whitehead launched what was at the time the most successful fashion project on Kickstarter and now helps other fashion entrepreneurs bring their ideas to market.

Image credit: www.fortunebuilders.com

This article was originally published in Entrepreneur.com

Four important facts while evaluating an offer for funding

If you build something that’s promising, you’ll find lots of potential investors and many doors will be open for you. But before taking big actions, it’s best to keep the following considerations in mind.

Valuation of the Advices You Get is Key

It is really critical to work with experts in your specific industry. You have to be picky when it comes to taking advices. Knowing the right people has been invaluable every step of the way.

Your Story Is Important

Accepting an investment is a landmark event in the history of your organization. Your selections will show the world what kind of company you aspire to be. This selections are being watched and by, customers, competitors and even inside your organization. Stay aware of your own story and let it become your great strength.

You Must Know Your Partners

Consider each investor opportunity carefully. You must know what is important for you, what the key factors are for your company. Do you need a brand name, do you need control or do you need more cash reserves for example… Ask questions to your potential investor. Your relationship will need trust, so the questions and answers are important.

You Can Be Successful At Any Size

The goal of every company doesn’t have to be bigger and better. A spark can become an out-of-control wildfire without the right supervision. Commitment to responsibility and knowing the capabilities of your organization is maybe the most important, and frequently overlooked aspect of accepting investment. So be careful and don’t get ahead of yourself.

Image Credit: silverlaw.com

When is the best time to raise money for your startup?

Before you read this, you should be aware that I am an entrepreneur who has never raised money from VCs. Two of my three companies were bought while we were still closely held. In the third, we were unable to raise money and eventually got acquired before we could raise institutional money. Therefore, if you are looking for advice on how and when to raise money from VCs, I am less qualified than hundreds, perhaps thousands of entrepreneurs who have raised funds from VCs in India.

That said, there were times in my entrepreneurial career when I asked my mentors when is the best time to raise money. Some said that the best time is when you do not need it, and that made a lot of sense at the time. On the other hand, some said I should not raise money unless I needed it, and that made sense as well. However, some of the people who gave me the first advice were the same as the ones who gave me the second advice. And both times, they made sense. There are times I have said the former to an entrepreneur seeking my advice and the latter to another entrepreneur, or to the same one at a different time.

How can two exactly opposite things make sense? Welcome to the world of entrepreneurship. Here’s how!
We are currently in a time when actively raising money is going to be perceived as a sign of weakness. Liquidity is low, markets are volatile, there is a backlash of the hyper-funding of 2014-15, the pendulum is swinging the other way and the momentum is in the opposite direction. It is taking longer to raise money and you have to part with a larger portion of your company for the same money as the same time last year. Trends suggest it might get worse. If you know money is not as cheap anymore, why would you expose yourself to that environment unless you absolutely need the money? And if it is true that you do, investors would obviously have leverage over you and are likely to dictate terms. Therefore, do not raise money unless you really need it. If you need it, force yourself to come up with a plan in which you don’t. And if you still need it, be prepared to dilute.

When markets were up, up and away in 2014-15, there was a lot of new money and liquidity floating around. Tech companies were getting listed, stocks were flying, and money from entrepreneurs and investors was flowing back into the ecosystem. Investments were chasing entrepreneurs. Money was chasing ideas. Lesser so now. It is more likely that investors over-allocated last year and are waiting to sell off some shares at the right price, than investors who are still chasing deals with a fear of missing out on the next big thing. If you are one of the rare startups that is on fire right now and you are being called upon by multiple investors competing to invest in you, it might be worth raising money at your own terms. Because if you do, it would be a bigger competitive advantage than the same time last year. Besides, today’s non-event of raising money quickly would mean you are over-achieving the target and saving time and effort of a planned event in the future. Therefore, raise money when you do not need it.

Hopefully, this context helps understand how two exactly opposite things can both make sense.

Most entrepreneurs reading this would fall into neither category above. Most startups will neither be desperate to raise money nor will they have a bidding war escalating in their parking lot. Then what should their fundraising strategy be? For what it’s worth, my answer is don’t raise money right now. Build your product, build your team, build your user base, build you revenue pipeline, build whatever it is that is most important to your startup right now.

Last year was about putting your mouth where the money was. This is the year of putting your money where your mouth is.

Author: Kashyap Deorah

Kashyap Deorah is the author of recently released book – The Golden Tap, the inside story of hyper-funded Indian startups. Kashyap is a serial entrepreneur who has spent the last 15 years in India and Silicon Valley. During this time he has started and sold three companies. He is an angel investor in over 20 companies in India and Silicon Valley. Deorah founded Chalo, a payments app which was acquired by OpenTable in 2013. Prior to that he founded Chaupaati, a phone commerce marketplace, sold to Future Group in 2010.