Investment behavior of venture capital firms over a period of time establishes an image of the firm in an entrepreneurs’ mind regarding the kind of investments they make. We recently conducted India’s first VC Perception Survey the results of which shall be out soon; to know what the entrepreneurs’ mind beholds. In an effort to drive home a point, Matrix recently announced the launch of its Seed Stage Investing Program focused on the internet and mobile segment. We caught up with Avnish Bajaj, MD, Matrix Partners to know more about the program. Edited Excerpts:
YS: What is the main purpose behind the announcement?
Avnish: Matrix Partners India has thus far invested predominantly at Series A or first institutional round of funding. However, there are entrepreneurs who need a small amount of money to start and then need more as the business builds quickly. That would be our focus and with this program we want to establish that we're highly interested in such entrepreneurs and ideas. We’ve have recently announced an investment in Twist Mobile and another stealth mode Internet company. You can expect more early stage investments in similar spaces in the coming times from us.
YS: How many investments does Matrix Partners plan to make in early stage startups this year? In what range can we expect the investments to be?
Avnish: There are already many investors and angels funding startups in the seed stage and there is no big dearth of capital. Our focus is to back companies which we can support through the business building and capital raising cycle - from seed to Series A to subsequent rounds of funding. We won’t be very aggressive in terms of numbers, our focus would be to look for very high quality entrepreneurs and companies. The program has just taken off and we’ll be flexible in terms of strategy. The ticket size can range from quarter of a million dollars to a million dollars.
YS: What are the selection criteria for early stage investments?
Avnish: There is no hard coded methodology but putting it broadly, we’re looking for outstanding entrepreneurs and companies with strong product focus and a differentiated approach to engaging users. In terms of entrepreneurs, the criteria is no different from what we look for in our current investments - high drive and desire to succeed, track record of achievement or charting their own path, strong understanding of the market, strong focus on a product which can penetrate the market, unique approach to bootstrapped business building etc. The big difference here is not the change in criteria of the entrepreneur we like, but rather the stage at which we're looking to get involved (which is much earlier stage) and the fact that we're looking to back entrepreneurs in markets which we believe can be very large and that we can help fund through the business building cycle.
YS: Who will be leading on this front from Matrix Partners? What kind of support can a startup expect?
Avnish: The entire mobile and internet team will be involved, which includes me and Rishi Navani. Apart from funding, we will be with the entrepreneur throughout the lifecycle. We can provide help ranging from setting up the Company including the structure, legal and finance functions to core business issues such as team building, business development, strategy etc.
YS: What do you expect from the entrepreneurs in return?
Avnish: We fund a company only if we believe in the team and the idea, and we believe in entrepreneurs that have an outstanding devotion to create something of very large value.
Please visit Matrix Partners' website here. We shall bring you all the latest updates from Matrix Partners, so stay tuned!