Three things Kunal Bahl looks for while investing in startups
Kunal Bahl, among the country's most prolific investors through Titan Capital, revealed the three primary factors he looks for in a startup before making an investment decision:
- Quality of team: The founders should show they've done or built something in college or school, or taken some sort of initiative.
- Futuristic: The market the startup is solving for should have a lot of friction, and founders should be able to get investors to crystal-gaze.
- Unit economics: The company should be able to generate solid unit economics, and have a decision on whether it is a 10% margin business, or 50%.
Kunal, who co-foundedin 2010, said category-creating companies excite him, as do solving for problems no one else has. He was speaking at YourStory's flagship startup-tech event, TechSparks 2022.
Kunal added that when he shows up for meetings with founders, he does so without any preconceived notions or biases. "The mindset I go with is 'I have no understanding about anything... 'I meet with the founder, ask them what they do, and then we have an interesting conversation around that," he said.
Via, Kunal has invested in startups including , , , , , , , , and . The VC firm was founded in 2015, and is headquartered in Gurugram.
Having been on both sides of the fence--as a founder and as an investor--Kunal says the only way to get through the imminent funding winter is to not lose hope, acknowledge the fact that a crisis is upon us, and channel founder passion into coming up with a solution.
He also recommended identifying 'islands of profitability and islands of unprofitability', and taking the hard decision to shut down projects that are not working.
"The only thing that matters during tough times is the solution. Be very missionary about "doing the work" instead of reminiscing about the good times. And don't give up," he said.
As both an entrepreneur and investor, Kunal said it's made him a compassionate investor.
Operators have a very nuts-and-bolts mindset... a very "no job is beneath me" approach, he said, adding that entrepreneurs are also long-term oriented, and know the value of working with a community.
All those traits make for good, hands-on investors that can work with founders to iron out creases, Kunal added.
Finally, Bahl also cautioned against a popular ecosystem thinking that growth solves all problems. "In the current environment, there's an acceleration towards profitability, especially for investors. Do whatever it takes to get there; scale is not a constant."