[YS Learn]: WEH Ventures’ Deepak Gupta on what he looks for when investing in a startup
“While investing in startups, we are looking for answers to these four basic questions:
- What is the problem/use case you are solving? How does that manifest in the end-user behaviour on the product?
- Why is the problem interesting and important to the end-user?
- Is the team well equipped to solve this problem and are they driven enough to win?
- Why now? What is the dynamic/tailwind that might enable this?”
With over 20 years of experience in venture capital, investment management, and finance, Deepak Gupta, General Partner, WEH Ventures, was also an Investment Director at Intel Capital India.
Some of his successful exits include – Sasken (IPO) Future Soft, Tejas Networks (IPO), and Omnesys. He also co-founded Equity Crest, a deal funding platform that has helped numerous companies raise seed funding.
Explaining their funding thesis, Deepak says the firms are generally looking to build on sectors they have been doing well over the past three years – social/video content, fintech, brands, and of course, sectors like agritech and other specific ground-up opportunities that may have a tailwind.
He explains that the pitch structure and format may not be the key. The elements are important and how they are woven to create a compelling storyline makes all the difference. And if that storyline links back to the founder’s life experience, it could become a winning pitch.
On the current crisis
According to Deepak,
- We are more inclined to explore domestic economy focussed models – that's something we can model or understand better, and also support our connections and mentoring.
- We believe that the lockdown has fundamentally stepped up the use of the internet, not just for making social connections, entertainment, or reading news, but as a core utility for consumers and businesses.
- Whether to buy a large variety of goods, build supply chain linkages, or learning about a new wave of interesting businesses, such deep online penetration and innovation may make the crisis India's SARS moment.
Founders come in all shapes and sizes and there is no magic formula. So, one can't say whether it is the vision which is more important or the hustle. But there are few things we investors look for: Persistence, desire to succeed, the ability to see ahead as to how the business opportunity and landscape can evolve, and articulation – which should be good enough to raise funding and sell the idea.
- The key is to be forthright and confident, and the founder shouldn’t assume that the investors know better.
- Also, acknowledge the gaps or the unknowns.
- Have clarity on what hypothesis you are trying to establish with your funding. It is always important to ask.
- If you are not in the "hot" sectors and still raise money from quality investors in these times, you should take a bow.
“The bar is higher now, so your pitch has to sing. And make sure you have some proof points/traction to make the case,” says Deepak.