Srijan Capital is a seed stage incubation and investment firm started by Ravi Trivedi that works on a rather unconventional model. Ravi also works as a Principal at Southeast Interactive Technology Funds, an early stage technology venture capital fund headquartered in North Carolina, USA. He is a charter member of TIE Bangalore and a Mentor/Advisor to IIM-A’s iAccelerator program.
We caught up with Ravi to know more about Srijan Capital and their activities:
YS: What prompted you to found Srijan Capital?
Ravi: Having been based out of the United States for quite some years, last year, I decided to move back to Bangalore for personal and professional reasons. At that stage, I started focusing more around angel investments in startups. After spending time looking at investments in India, and over time, I felt that the model in India that would work requires a deeper operational involvement. During my venture capital role at Southeast Interactive, I had an opportunity to manage a business unit P&L at a portfolio company. The hand on experience was a great learning experience, and reminded me to stay closer to the operating level.
With my prior cross-functional experience, I decided to focus on incubation model. In this model we test several ideas, and double down on successful ideas. We pay a lot of emphasis on Customer Development i.e. validating the idea with potential customers upfront before writing a line of code. The validated idea itself may come from a single founder entrepreneur, or our-selves. If we believe in the potential of the idea and more importantly our ability to execute then we take it up for incubation.
YS: What is the duration of the incubation? Also tell us about the team at Srijan Capital.
Ravi: We will run the idea in the incubator from 3 to 12 months, and decide on its fate. If an idea succeeds, depending on the cash need, we might look to raise external funding, and build a bigger team to execute on it.
We have some strong team members, in our incubation team. Vivek Garg, who was the co-founder of eventNu, and well known in Pune Startup circles, leads our technology efforts. Sai Sarkar who has an MBA from SP Jain, and experience with e-commerce startups and experience in mobile domain, leads our marketing effort. Vikram Mishra is a young hacker in our team. We are continuing to build our team in technology, design and online marketing areas.
YS: Throw some light on your investment philosophy. What do you look for in a startup personally?
Ravi: In terms of a typical angel investment, I focus on
- Team – Co-founder chemistry, Level of commitment and opportunity cost for team, Business savviness. Prior Experience of the Team in the domain. Ability of the team to execute in the market
- Attractiveness of the Opportunity – How big is the market? How big can be the #1, #2, #3 players in the space.
In terms of incubation related investments, we focus on – (1) Size of the opportunity, and (2) Our ability to build and execute with a team we can attract.
YS: Srijan Capital is currently incubating a few interesting companies. CouponRani is an interesting one. What’s the deal behind that one?
Ravi: CouponRani is an incubated company in our portfolio. We are bullish on the Ecommerce affiliate space because –
1) We believe as the internet penetration grows, we will see the ecommerce spend to grow rapidly. Further, I believe that just like more developed economies, we would see several hundred niche ecommerce sites come up. These would be likely lifestyle businesses, but built on a business that gives cash flow. These would require different channels to acquire customers, and we believe performance based affiliate marketing as a tactic works very well.
2) In developed economies, we notice a 15 to 20% of customer acquisition budget is being allocated to performance based affiliates. Currently, we are underweight this allocation in India and as we mature, this would only increase.
Couponing as a customer acquisition technique would increasingly become popular among online and offline retailers. Apart from this, we have some breakout ideas (validated with customers) in Couponing, which we feel would help us differentiate in the crowded space.
YS: What are your plans? How many investments are you planning to make a year?
Ravi: In terms of angel investments, I would continue to make between 2 to 4 investments every year. For our incubation activities we like to incubate 2 to 3 startups every year.
Future plans/ambition – Build a successful startup from ground up in India. Through our incubation activities we would like to see 2 successes out of every 4 we incubate, i.e. a 50%+ success rate.
YS: Who puts in the money Srijan Capital invests?
Ravi: I am deploying my personal capital, cash from the business, and from consulting activities into the fund. I do some consulting with venture capital funds and mid-size internet startups. Hence, we don’t have a fixed corpus to deploy. But, at a high level we have allocated 5 to 15 lakh per angel investment, and 25 to 50 lakhs per incubated company.
YS: What trends do you see in the internet segment? What do you think entrepreneurs should concentrate on?
Ravi: I would encourage entrepreneurs to focus on wherever they feel they have an edge and can differentiate from competition. E.g. If you are a video conferencing expert, then pick something in that space. That being said, doing completely different thing is possible, but then be ready to spend at-least 1 year to just understand the space.
More specifically, we believe more & more global SAAS companies would get built from India. We also are bullish on Ecommerce Affiliates, Platforms that tie the online research to offline transactions and analytics companies.
YS: When do you think, will India start seeing more and bigger exits?
Ravi: In next 2 to 3 years, I expect that the companies like InMobi, Pubmatic, Flipkart, Redbus, Yebhi, and others will grow to be large enough to exit. This will create several employee millionaires, which will act as a positive catalyst for new folks becoming entrepreneur, and improved social acceptance of being an entrepreneur.
M&A exits will also likely increase. If we have more global focused world-class SAAS companies, then we would likely see some cross-border M&A activity. That being said, I think a lot of these would be small/mid size deals in $2 – $50M range. These exits may be great for angel investors, but may not fit a classic venture investors.
YS: What advise would you give to startups? Any Book recommendations?
Ravi: India as a market has several opportunities, and several green field areas, so an entrepreneur has several opportunities to be the first mover. We see a lot of first time entrepreneurs, and I recommend them creating a trusted set of advisors or mentors for your company. These advisors could be those who have gone through the experience, of have industry experience, and can help you in navigating the journey.
If you are an entrepreneur, these 3 books are a must read in my opinion
1) The Founder’s Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup – By Noam Wasserman
2) The Lean Startup – By Eric Ries
3) Little Bets – By Peter Sims
Website: Srijan Capital