SPEAKERS:
Sanjay Mehta, IAN Member
Topic: 'Pitching it Right to Investors'
Dhruvil Sanghvi, Founder, LogiNext, IAN Portfolio
Topic: My journey - Making Loginext the Google of Supply Chain Logistics
ABOUT:
Indian Angel Network: The network looks at a total of 16 sectors to invest, The Network looks at investing upto USD 1 mn, with an average of about USD 400-600K and exiting over a 3 to 5 year period through a strategic sale. The Network may consider investments over a million dollars but is only likely to do so through syndication
Sanjay Mehta: Since 1993 he has been a technology entrepreneur with 2 successful exits, since 2011 he is in the private equity space, with a portfolio of 70+ startup companies. His early investments are OYO Rooms (exited), Consure Medical Device, Box8, LoginNext, AdStringo, Instasafe (Exited), PrettySecrets, Zippr, RepUp, Wrig Nano Systems, 47 Lines (Exited) Orangescape, GoCoop. He was voted & honored as Angel Investor of the Year 2017 by Let'sVenture.
Dhruvil Sanghvi: After graduating from Carnegie Mellon University, Pittsburgh, USA and actively advising some of the Fortune 500 companies on technology and data analytics, Dhruvil, along with Manisha Raisinghani, started LogiNext in 2014. He is also among the prestigious Forbes 30 under 30 list.
The session kicked off with Sanjay Mehta, Sanjay says that he invests on an average in 1 deal a month out of the 200 odd deals he is pitched. He pulls off a parallel saying Angel Investing is an asset class and more risky than investing in stock markets. He says that he likes to invest in the future but also iterates that not all ideas are investable and many wouldn’t be requiring growth capital. He tends to invest in ideas/companies which generate large alpha but not the ones who are looking for loans, game changing opportunity is something that really pulls his interest.
He says, having the right presentation for pitch is important, 20-30 pages/slides on Market Statistics is absolutely not necessary and he feels 1 slide for Market Statistics should do the job. He iterates the investor should get the grasp of, what problem are you solving and what your differentiation from the first four to five slides. He says the ideal elevator pitch is something as follows:
I INTEND TO OFFER [INSERT PRODUCT/SERVICE] TO A [INSERT NAME/TYPE OF A CUSTOMER] SO THAT THEY WILL BE ABLE TO [INSERT THE VALUE TO THE CUSTOMER]
He usually avoids investing in single founders companies, atleast two founders show that they are open to share wealth. He stresses that entrepreneurship is a lonely journey and having a partner is always good for the startup. He iterates that having a lead investor brings credibility to the startup. A non-equity, non-investors from academia or corporate forming an advisory board makes fundraising a little easy for the startups. He is comfortable investing in pre revenue ventures but a built product should be in place.
He says the three important things an Angel Investor looks in a Business Plan is:
1. Is there money to be made?
2. Are these the right people to make that money?
3. What Deal Valuation is right for this proposition?
Sanjay is looking for Hustlers with Irrational Perseverance, always remember life starts at the end of comfort zones. So the 8 things you need to ask yourself before a pitch to Sanjay are:
1. Why are you building this?
2. Why people want this product? What’s your unfair advantage?
3. Why this is the right time?
4. Why is your team the right team?
5. Why isn’t everyone working on it?
6. Why does it get powerful over time?
7. Why can’t some bigger player do it?
8. Why is this Investor the right partner?
(Says, shows the amount of homework one has done in understanding what value can investor bring to the table)
LOGINEXT solutions is a SAAS enterprise, it expertise lies in organizing logistics and field service management. It is one of portfolio companies of Sanjay Mehta. In the end of 2015 they have raised series A from PayTm and Alibaba. Dhruvul takes center stage and says you cannot hire a cofounder, no matter this must be a love marriage. He says, rather than hiring 5 people who are mediocre at what they do hire one who is excellent at what he does and never ever outsource your core product which he says is one of mistakes they did early in his journey.
While in the Ideation Stage he says bounce off ideas with everyone you come across and do not worry of anyone stealing your idea. He also mentions that timing is critical and going with the market flow is something to be kept in mind, finding an opportunity in to be hot market will easily attract Angel Funding is what he believes in. He reminiscences his pitch to IAN saying, one will be given an one hour time slot with 15 to 20 people in a room and most toughest part is the Q&A, where everyone usually rips the startup apart. From the day pitching is done it usually takes 4 to 5 months for the money to come into the bank so he says to plan well in advance.
He reiterates Sanjay’s view that not more than a million dollars is angel’s sweet spot. During his initial days he spent 80% of his time in Sales, Marketing, Fund Raising. He says, coming up with a Term sheet can take anything between 2 days to 1 year depends on both the parties and during Angel funding, TS is usually made by the investor but in the Series A, the startup has also a larger say. But once the TS is set, 4 weeks to 8 weeks is typically what it takes for the money to come in. With an equity of 10-20% investments of 0-2 crores and 20-35% investments of 2-4 crores come in respectively. Pre revenue fund raising usually does not exceed a million dollars but post revenue raising can go as high as 2 million USD is what he opines. Responding to a question did your work experience before startup help and he gives a big YES that learnings from Deloitte and I can see many faces in the audience lit.
Now it’s time for Networking and some food.
