Prominent lead investor Anupam Mittal explains the nuances of actually being a lead investor and addressing the business and governance issues that arise post an investment.Shanti Mohan
Every startup founder wishes to have a value-added investor who not just puts in capital but also supports them in strategic thinking and business decision making. One such investor normally leads the fundraising effort of the startup by also setting terms of the round. We had earlier shared some key insights on who such lead investors are, how investors can become leads, and what role they play before, during, and after the fundraising process.
But finding a lead for a round is just half the battle won. The challenge begins after the investment and when the lead starts working with the founders.
The LetsVenture team sat down with Anupam Mittal, one of the most prominent lead investors in India, Founder of People Group (Shaadi.com), and an early investor in Ola, to understand the nuances of actually being a lead investor and addressing the business and governance issues that arise post an investment.
Watch the full interaction here
According to Anupam, there are two major issues that arise post investment against the directional working of startups:
1. Lack of product-market fit
Most of the startups at the early stages of their journey struggle to find the product-market fit. The lead investor’s primary job is to work with the founders and help them align the product to scale.
2. Defining the milestone for the next round
The lead investor ensures that the team understands the right metrics to achieve before they go to raise the next round of capital. They spend time working with entrepreneurs in defining the real metrics and not run after the vanity metrics.
Anupam also talks about some key challenges that co-investors face when a VC wants to invest in the next round. They have to jump in when they feel they or their co-investors’ rights are getting compromised.
Being a lead investor who has been involved with the company for a long time, it is their primary responsibility to highlight the importance of governance to the founding team:
1. Scheduling business reviews
2. Defining the key metrics to be tracked
3. Keeping investors informed about the updates of the company
Therefore, a mutual understanding between the lead and founders can essentially help in building a successful company.