It is inexcusable to have founders who cannot get along run a company, says Sasha Mirchandani of Kae Capital

In this episode of 100X Entrepreneur Podcast, Sasha Mirchandani, Founder of Kae Capital, talks about his transition from angel investing to starting a seed funding firm, what he sees in a potentially successful founder, and some market theses that didn’t pan out as anticipated.

Sasha Mirchandani has a Bachelor’s in Business Administration from Strayer University, and did his Management Development Programme from IIM Ahmedabad. Before starting early stage VC firm Kae Capital, Sasha worked as a Managing Partner at BRV Advisors from 2007 to 2010, and co-founded the angel investing network - Mumbai Angels in 2006, along with Prashant Choksey.

In an earlier chat with YourStory when Sasha was still with Mumbai Angels, he spoke of his knack for seed investing, which once was a weekend passion. After a conversation with his father Gulu Mirchandani, Chairman and MD of Onida Group, he surpassed his own reluctance to go into seed investing, and started Kae Capital in 2011.

Sasha Mirchandanai, Founder of Kae Capital.

He says, “So, I basically translated my enjoyment and passion for angel investing into a full-time career, and also realised there was a big need for seed funds as well. As the ecosystem started maturing, quick-moving seed funds was an opportunity that I made sense out of. And they kind of co-exist, they don’t have to compete with each other. So, there is a big synergy between what Mumbai Angels does, and what Kae Capital does”.

After buying his shares back from Onida, Sasha personally put his money in the likes of Myntra, InMobi, and Fractal Analytics. Kae Capital’s debut fund was of $25 million in 2012, while the second fund was worth $55 million, which had participation from Ashish Hemrajani of BookMyShow; Deep Kalra of MakeMyTrip; Pranay Chulet of Quikr and Kris Gopalakrishnan of Infosys.

Siddhartha Ahluwalia, Co-founder of SHEROES, caught up with Sasha Mirchandani in this episode of 100x Entrepreneur podcast, a series featuring venture capitalists and angel investors.

Tune in to listen to Sasha Mirchandani in conversation with Siddhartha:

What makes a successful founder?

Talking about the determinants of an entrepreneur’s potential success, Sasha says he and his team had done some research around the subject, and arrived at choosing those only based on ‘how determined he or she is as an entrepreneur’. He further describes his focus, which is strictly on 100x returns, which he subtly calls home-runs, but not 10x returns anymore.

He says, “While doing our due diligence, we would only consider the most determined entrepreneurs through our referrals. It is also a part of our mission. Our most successful portfolio companies have extremely determined founders. If the founder is any less than that, we would simply pass on the transaction”.

Speaking of how he does his evaluation, he says that it’s all about the founders who think big and go after large markets, and also co-founders who have known each other for a long time. A common problem he quotes from the current startup ecosystem is when the founders do not understand each other well enough, and fight over issues like cash.

He says, it is inexcusable when the founders cannot get along.

“Part of our due diligence is to understand how much the founders understand each other and more importantly, respect each other. Any company will have a lot of ups and downs, in fact more downs than ups. How aligned the founders are to their shared vision during the down time, and fight it through to move to another day with fresh hope, is what keeps the company going forward,” he says.

Kae Capital’s first cheque sizes range from $750,000 to $1 million, and he says the firm is mostly the lead of its rounds. However, he is open to partner with other VCs and share the rounds with them, which he plans on doing during the third fund’s corpus, aspired at $75 million.

The theses that failed

Calling himself an impatient person in the past, Sasha says this job has made him extremely patient, which, according to him, is the most important virtue for any VC. Considering the lifetime of the investment before the returns arrive is 10 or more years, he refers to the VC industry as a hampered one.

Sasha proposes evergreen funds because sometimes the best companies take time to slowly grow and scale, and by the time he would have to sell the stock in 12-odd years, the investors would also want their money back.

“We do all the hard work, and then hand over the company to a private equity fund or someone else who makes the real money on these investments,” he says.

Speaking of some theories that didn’t work for him, he talks of analytics, which seemed to be impressive and hot in 2002, but was ahead of its time. At the time, the founders were also good enough to take the plunge, but he calls the whole idea of investing in analytics startups in 2002 ridiculous. Another example he gives is home services, a segment where many players died, barring UrbanClap, which is now a unicorn.

“The industry might look hot and the founder fraternity was really serious and clear about what they wanted to do, but the bottom line was that the category was hard to survive out of. I truly commend UrbanClap because they crawled through all the possible hardships and have now entered the growth phase,” says Sasha.

(Edited by Megha Reddy)


Updates from around the world