Sunil K. Goyal, YourNest Capital Advisors, talks to YourStory.in explaining his background, investment portfolio and his funding philosophy.
Sunil Goyal has two decades of corporate work experience, the first decade with Dabur India and the second with Bharti Airtel. Starting as Executive Assistant to Sunil Mittal, CEO of Airtel, he went on to become the COO for mobile operations in Madhya Pradesh and Chhattisgarh. Thereafter, he was the CEO for Beetel, the crystalline technology business of Bharti. He was also the director for new projects in Africa.
But while doing all this, he was an angel investor himself, diverting his savings into startup companies. “That experience was good,” he says, adding “Being a member of IAN and Mumbai Angels, I got the exposure as to what kind of companies, what kind of entrepreneurs are coming, what kind of opportunities are there.” He points out that “It is not that the people who have time at their hands, or the inclination to build or support the entrepreneurial system should only be angel investors. People sitting on the fence believe that this is the right opportunity. Now we have to enable them to become angel investors. This is what YourNest angel fund is doing. We are giving opportunities to the HNIs, who are busy in their routine jobs as successful professionals or entrepreneurs, handling jobs in technology, etc. but are looking to diversify their asset class. They know that they cannot just ride on the economic boom of the country. Entrepreneurial boom, I believe, will give them sustained and higher returns. So we just give them a platform through YourNest.”
The portfolio investments
I have personally invested in Jigsee and Zipdial on behalf of Mumbai angels, Mobiquest, Vayavaya and Gamiana on behalf of IAN. “YourNest angel fund is only a means of giving an avenue to angel investors to come together,” he says confidently.
Sunil Goyal has known Sanjay Pandey ( Director & Fund Manager) for 20 years now as he is the elder brother of one of Sunil’s batch mates when he was doing his masters. Sanjay graduated from IIM-A and had six to seven years of work experience in large corporations. Sunil takes us back in time for his association with Sanjay: “When I was moving from Sunil Mittal’s office into the COO role, that’s the time Sanjay Pande came and met me for some leadership development assignments in Airtel, and he could, in my interaction sense that I was quite nervous about my new role. So, by default, he became my executive coach. For the last 7 years, Sanjay has been my executive coach.” Sanjay is involved with more than 70 corporations in India and the Middle East. “I wanted him to do the same he did with me to the entrepreneurs that we invest in,” says Sunil because he feels entrepreneurial teams need guidance, mentoring and coaching. To bring in technological and analytical knowledge, Girish Shivani came on board. Sunil tells us, “I’ve known him for 17 years. He was the head of strategy for Dabur Finance when I was the head of strategy for Dabur India. And after I’d made an announcement on LinkedIn about YourNest, he was interested to work with us.”
The sweet spot: investment and sectors
The investments range from Rs. 1 to 5 crores for the first round, but the sweet spot would be Rs. 3 crores. Sunil adds, “But we’re open to 5 crore as well. The next round of funding can be upto 9 crore. We’re open to subsequent rounds. By default Internet, and mobile has to be there, but it is not only that, you can have technology implemented across any other services business. Hospitality, financial services, marketing, etc.”
The deal sourcing
“Obviously the angel networks give us the idea as to what is happening in the environment. Largely it is the incubation centers. Our website which is reaching out to all the budding entrepreneurs is giving us a very good deal flow. Social media is also giving us deal flow. Our friends and our angel investors also give us a lot of deal flow,” Sunil dishes out details.
We now ask, which incubation centers are these? “The IITs, IIMs and ISB. We keep a watch on them,” points out Sunil.
The investment mantras of YourNest in Q&A
Three things that Sunil would look in the entrepreneurial teams before considering to even talk to them for investment
1. It has to be a right mix of team with complementary skill sets. If all three are techies, it is very difficult to make up our mind to invest in them because we are going to build an organization at the back of them. If there is one techie there has to be somebody with business development experience, somebody has to have the operating skill set of managing the operations and going through the tough phase.
2. The will power to stay in the business through the ups and downs. So we test their leadership and entrepreneurial ability.
3. We look for entrepreneurs who can put us to shame with their actions. We should be looking at them and saying, “Oh god, why couldn’t we think of any of this.” We need to be surprised by their team, by their actions. These are the people who have nothing to lose, because they bet everything of theirs on their venture. So if they have nothing to lose, they just have to go, break free, and do something so different and win the world based on that.
In cases where the founders don’t have any experience per se, how do you evaluate the teams and startups?
In such cases, the judgment becomes tougher, our process would be longer with them and our interactions would be many. First, the idea has to be the market size that they’re addressing has to be large enough. If it is, then we will be spending time with them and if they’re able to conceptualize their business model to a certain extent then we’ll do the rest. The element that we have to judge is that are they demonstrating those leadership capabilities which we have a checklist for, so it’s the people capability that we have to assess and that can’t be done in one meeting. When we become entrepreneurs, it’s not only us as individuals who have to be totally convinced, we have to be capable of convincing our friends and family that we’re giving up on the luxuries of life and instead of contributing to the family, as we would need contribution and support from them. So we would like to talk to the spouse or the parents sometimes as well.
Challenges that early phase companies in India face
The real challenge for the early stage companies is to be able to think of the market opportunity by detaching themselves from the business that they’re in. At least the founding team should be able to consistently evaluate, if they’re in the right space, is it large enough for them? Is it an incremental solution for the end customer or a disruptive solution for the end customer? There are many such questions that the entrepreneurs have to consistently keep asking themselves. If they are able to find answers to these questions, then we know that they have overcome the initial challenges. Many a times people are stuck there. Second, for any monetary gains, the proof of concept is just not enough many a times because they are very young at the age of 22 to 23, we need to see their ability to stick together and go and win clients in a very cost effective manner. If they’re able to demonstrate that and keep bootstrapping and building their business, that’s the time for us to walk-in. Meanwhile, we can advise and mentor but we invest when we’re a 100% confident that this is a team that has gone through the tough phase already.
How many investments do you plan to make this year?
We’re targeting a Rs. 100 crore fund to be invested over the next two and a half years. The average investment would be about Rs. 4 to 5 crores. So that’s 15–18 investments and about 6–8 in a year.
For further details, please visit http://yournest.in/