[Watch] Accel India Founders believe investing is more about instinct and intuition
Since 2008, Accel Partners India has been an integral part of the Indian startup ecosystem. Co-founded and led by Prashanth Prakash and Subrata Mitra, the Indian arm of US-based Accel Partners, is largely known for its excellent portfolio of successful early-stage investments.
From Ola, Swiggy to Flipkart, Bookmyshow, and Freshdesk, Accel India has propelled several startups to success, and have even played a vital role in defining how a sector would pan out.
In an exclusive interaction with YourStory Founder Shradha Sharma, Prashanth and Subrata tell us about their investment playbook – from data and analysis to instinct and intuition.
[Watch the video here]
For Subrata, instinct works more towards an investor’s call of “how ready the market is”.
He explains, “You will still do the analysis and get the data. But, let's say in the Flipkart situation, I think ecommerce in India included a few thousand transactions at the time. So, if you base it on that data, you will probably not take the right call. Then, we can say that the company has a great team.”
According to Subrata, the question lies in whether an investor is ready to stick out their neck and take the plunge.
“That is the instinct. And, we'll not get it right every time. But, we don't need to get it right every time, you know? I would say, I've got it right maybe 40 percent of the times and that's a good position to be in,” he says.
Agreeing to this, Prashanth adds, “You need to use instinct and intuition in a guarded manner. Even if you think that you know a space very well, conditioning that can be counterproductive sometimes. So it's a little bit of that too. And that's the good part about being in seed (rounds).”
(From left to right) Subrata Mitra, Shradha Sharma, Prashanth Prakash
He explains, “We continued to do seed investments although we've a lot of companies that are large because I think that's where you refine your instinct and intuition. I've developed an interest in consumer brands over time and marketplaces and I think a little bit of instinct is a function of the experience that you've gained. So you balance it a little bit by understanding that it's not just going to be about that.”
Subrata says that in the six to nine months after an entrepreneur gets their first cheque, the investor needs to figure out if the founder’s vision is on track.
“A lot of it is self-improvement and learning. So it takes six to nine months to figure that out. So, unfortunately or fortunately, we are already there. But the good thing is that it's a small amount of capital. So even if it didn't work after nine or 12 months, it's not going to be a big, bad situation,” he says.
Last but not least, Prashanth says that it is important for an investor to have conviction in the space that the entrepreneur is going after. “But if for some reason, we think the startup is really in an evangelical phase of the business and ahead of its time, we may want to wait,” he cautions.