Rajan Anandan, Google India MD, Prolific Angel Investor and Mentor shares his Investment Philosophy among many more not-to-be-missed insights with us.
The unprecedented growth in the Indian entrepreneurial eco-system is being driven by multiple factors, and one such key factor is the presence of a new breed of investors and mentors. Rajan Anandan represents this new breed of game changers, who are committed to building the Indian Startup eco-system.
Rajan has made 20+ investments so far in India, and swallows the hard fact that a third of investments don’t pay in venture investing. For those of you complaining that risk capital which is really risky is not available, you have been blown out of the vision by Rajan Anandan’s firm commitment to back entrepreneurs even though many may not make it, just to try and encourage the killer idea or the potential of the team to make it happen. We at YourStory believe this is exactly what our startup ecosystem in India needs, not just encouraging words but putting money where your mouth is.
Here we bring to you excerpts of our conversation with Rajan on the sidelines of ISB Digital Summit.
“I invest only in technology companies in India and I especially look for interesting software and mobile companies. I do not invest outside of technology companies in India.”
StepOut, Aurality, 24/7 Techies, Exclusively.in (acquired by Myntra.com), Instamojo, Emo2, HashCube, Taxspanner.com, Digilogues, Hungryzone (acquired by Justeat), Druva.com, Innovize, Buytheprice.com, Jigsee.com, Webengage.com, skoolshop.com, wiziq.com, MyShaadi.in, Capillary Technologies, etechies.in, ReachAccountant.com, authorstream.com, idubba.com, peel-works.com and Viedea Capital (acquired by Allegro) (click on the links to read their detailed stories on YourStory)
Things that you look at while investing in companies…
First, I look for interesting ideas in technology that can create an impact.
The second most important thing is the team; except for two companies, all my founders have a technology background. I almost never back a non-tech founder in technology business, because in technology startups you have to iterate really really fast and for that you need a strong understanding of technology. Outsourcing is always a bad idea.
Number 3 is engineering + product expertise.
The Number 4 criterion is I look for commitment to the idea in founders. They must have left their secure jobs, must have faced several setbacks but should have never given up.
Also, I believe two co-founders is always better than one founder. Startups are about too many ups and downs, and having partners helps. Also, having co-founders with complementary skill sets is very very important.
I have also funded companies at a b-plan level, but only in cases where I knew the founders very very well. Otherwise, having a prototype really helps.
I back very early stage companies, hence some level of validation is very important. Having a few users, or buying customers is really important.
Lastly, scalability relative to valuation is really important. Also, I am not particularly focussed on Rs. 100-crore exits. I believe in India we will have a large number of niche businesses that are being built frugally and would be highly successful. There is a huge opportunity in the long tail.
How do you meet these companies?
I am active in IAN. I think they have done a terrific job. I also co-invest with Blume and India Internet Fund. We are a group of 10 angel investors who are very active, including folks like Sunil Kalra, Ravi Gururaj and Sharad Sharma. This open architecture is working out very well for us. Also, I would love to attend a lot more startup events, but most of the times at least one of us is present looking out for what is happening.
Also, over a period of time, entrepreneurs have started reaching out directly to me. But, I like it when someone I know introduces me to companies. There is not much time for too many LinkedIn requests that I get.
I am superbly excited about each and every company I have invested. If am not superbly excited by a company, I don’t back them.
Also, you have to understand that this is a very risky industry. A third of the companies you back almost never make it and are not going to be materially successful for you as an investor. In fact, I am a very big fan of my founders who have not done well in the past or have failed in the past. They have higher chances of getting backed by me again. Most of the times, founders fail because the timing was not right and the pivot was too hard. Pivoting is easy to write about but in reality very hard to make. Take e-commerce for example. Subsequent funding is very hard in the sector. Only the top few guys make it to the subsequent rounds, but so many amazing entrepreneurs are doing e-commerce companies in India today. These founders have been at it, and are just going at it!
What makes a successful entrepreneur?
They have a unique combination of product and engineering. And, they have to be exceptionally fast. Ability to be agile is very important. Pivot is very hard to do.
Deep product sense is very important, and for it you have to be able to be open to change.
Ability to attract top talent is very important. For example, Druva is a perfect example of sales + product + engineering. Right founding team is very important. Look at Capillary; they seem to be having an amazing ability to attract the top talent. The best of people are wanting to work for these founders.
Also, as a founder, you need to know that different skill sets are needed at different stages of the company. And, knowing when to bring in what kind of talent is important. What is the right time to bring in your first sales guy, and first marketing guy, is important.
Finally, persistence matters. It takes 10 years to build companies. It took 13 years to build JustDial, 12 years to build MakeMyTrip and 14 years to build Info Edge. Many people don’t have that kind of stamina, and they get exhausted too soon. I like to back founders who are willing to be at it for years.
Rajan’s secret sauce to success
Most important thing is to do something that you are very passionate about. I am super passionate about Google, technology, startups and entrepreneurship. You will always overcome all barriers with passion. If you are not passionate about something, don’t do it at all, because there is no way you will excel at it.
Also, I believe in the 10,000 hour rule. I have been angel investing in companies since 1991 (started in the US). Consistency and working hard over a long period of time is very important.
Being self-critical along the way is very important; it is extremely difficult to be self-critical, knowing what you are good at and what you are not is very important.
We at YourStory.in learnt a lot from this conversation, and are rooting for thousands of successful startups to bloom in India, thanks to the drive of entrepreneurs and the guiding vision of industry leaders like Rajan Anandan!