[Watch] Accel India Founders on the right way to invest: 'You need to have an open mind, but also a prepared mind'
The Indian startup ecosystem is very familiar with Accel Partners India. One of the biggest early-stage investors in the country, Accel has backed over 200 startups so far.
While the global company was formed in 1983, and is headquartered in California, US, the Indian arm was founded in 2008 by Prashanth Prakash and Subrata Mitra, and is based in Bengaluru, Karnataka. And since then, the duo has been instrumental to the success of India’s thriving startup ecosystem.
Some of the most successful and well-known startups have been funded by Accel, including Flipkart, Ola, Bookmyshow, Myntra, Freshdesk, and Swiggy, among others.
So, how exactly do Prashanth and Subrata decide which startup to invest in? And how do they stay away from the herd mentality? Once a startup in a certain sector works, how do they choose another sector to bet on?
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According to Prashant, it is a balance.
“You need to have an open mind, but also a prepared mind, one which absorbs things that are important by thorough research and understanding."
One has to know what scenarios can play out, where the profit pools are, where revenue shifts are happening in a sector so that once you've met an entrepreneur, you already know what to do.
Prashanth explains, “We try to spend a little bit of time working on these teams and I think this helps us prepare ourselves better when we meet entrepreneurs. And I think it's also important that you experiment. We are able to do that with the seed approach.”
He added that Accel is able to facilitate these movements with small amounts of capital. Each and every initial investment by the company helped the sectors they invested in to grow. In fact, some of Accel’s portfolio startups have now become category-defining.
The duo emphasises upon their instincts but says they had no way of knowing if each investment would really succeed.
Reiterating the need for an open mind, Subrata says, “I think it is our own self-learning. You have to understand that we will not get everything right, but are we open enough to stand up and say that, you know, here's the assumption that I made and because of that, this specific situation – dimmer or brighter – happened.”
Mind refinement is the key, say the two investors.