As early-stage investors, we spend a significant bulk of our time (~30%) meeting and learning from founders. We have summarized below our thoughts which have helped us make meetings more effective for all participants. Note that although the below views are largely written in the context of pitch meetings, we believe these practices can be employed across the entire spectrum of discussions:
While setting an agenda appears clichéd, we the tendency of speakers is to get straight into discussions about the business/ idea. Very often, this results in an unstructured meeting where we end up understanding too much about a particular aspect of the business and making little ground on others. Developing and defining a broad agenda especially with a planned time frame at the outset enables the speaker to maintain an inherent discipline during his discussion and encapsulate all points of priority in a concise manner. More importantly, the speaker receives a buy-in from the audience and can gauge their expectations as well. Budgeting for a spare 5- 10 minutes to allow for some spill-over questions is always a plus!
Einstein’s famous words should serve as a barometer whilst presenting during a meeting. Whilst communicating with a deck certainly provides a framework for the discussion, cramming it with explanations and minutiae tends to distract the audience. A concise deck also does not result in giving the impression that the presenter is simply reading from the screen. Send a detailed deck separately if you must but use a summary version or the very least select slides for the meeting. The best communicators always explain more with less!
Writing down quick and precise notes is a skill not recognized by many of us. We tend to over-estimate our memory and power of recall – resulting in important bits of the discussion not being recorded. Especially, in virtual meetings, notes ensure that everyone in the meeting group is on the same page. Like with any other skill, making notes appears lengthy and unnecessary at first however is certainly a life-saver once mastered correctly. A good practical tip is to send out a short summary on the meeting post every meeting for feedback.
The importance of summarizing the discussion cannot be overstated; it is the must-have dessert after a good meal! A succinct rundown of the discussed points helps listeners understand the bigger picture – a key trade secret here is that this allows the speaker to control the narrative of the discussion. Ending the discussion with a clear call to action (CTA) ensures clarity on the next steps. A precise summary with a CTA plan is often the tipping point of a decision!
We would love your thoughts on making meetings more efficient.
The level of detail in the Zomato DRHP vs DoorDash S-1 filing
While researching the Zomato DRHP, we were surprised to see the level of inspiration drawn from DoorDash’s S-1 filing and yet DoorDash provides additional details & metrics to better analyse the business! (DoorDash is the market leader for food delivery in the US) What do you think about the level of detail provided by Indian companies while listing?
Check out how Zomato describes its cohort growth vs the level of detail provided by DoorDash
The financials, contribution margin and money made by each member of the ecosystem is also evident through the DoorDash S-1 filing:
Transparent financials with clear insights into vectors of growth are signs of robust business! We, at Malpani Ventures, encourage our founders to identify and define select metrics which must be rigorously tracked across all times - good & bad.
We've been investing for quite some time now, and we have seen ups and downs like most investors. Early stage is a 'hits' game - one free hit compensates for five dot balls - if we were to use T20 speak.
Everyone talks about the free hit sixes, but rarely does anyone talk about first ball ducks! It hurts reputation and credibility in the industry they say. We understand, however, if we do not document our learnings, share it with others for feedback, and try to learn from them - there is no point of being a growth investor. A growth investor is one that not only grows wealth, but also their knowledge base.
Today we will share what has gone wrong for Malpani Ventures in the past, what have we learned from it, and what are the steps we are taking to avoid these mistakes
Founders feel their core business (the one we invested in) is not sexy enough for growth trajectories, and hence try to experiment, or pivot. Often this happens when they see peers in their industry going out to raise multi million dollar rounds from large VCs. This is bound to happen. But the solution is not to follow the business model of that company and become a me-too player. Smaller experiments should always be undertaken to understand the pulse of the market. But that is to be done from the cash flows of the core business, for even Jeff Bezos has said that any new product line takes 5-7 years to become meaningful to the overall topline of the business.
This is unfortunate, but it happens. There are mavericks in the startup space who can create fantastic products, however the commercial viability of these products may not develop.
We want to reiterate, we are not in this business to find and fund the next unicorn. Having said that, we understand that most venture companies require larger VC backing to reach to scale beyond a point. In such businesses, if there is no clear roadmap towards breakeven without VC money, no matter how much on track the business is, it may die.
a) Co-invest rather than going alone. Double the backers, longer the runway in case things go wrong
b) Start small, and build up. We signed larger first cheques in the past. Today we start with 50 lacs - 1 cr, and will support companies with follow on funding
c) Engage with founders who want to work with us. Founders need to be comfortable talking to us monthly, sharing financials, cash flows and updates. This is a non negotiable. Else, we will pull the plug
d) Take time with due diligence. We will spend our time to probe on commercial viability and practicality of the business
Have we learned our lessons? Yes
Are there more lessons to learn? Also, yes
We wish to work with founders that are aligned with our thought process. We can not tell a founder how to run their company, but we are clear in our mind what we are trying to achieve.
We receive a lot of pitches by emails. By a lot, we mean a lot - some bad, some good, some spectacular. To get to the crux of this post, we will share what exactly we love to get in pitch emails.
You don't really need a warm intro to receive funding from us. But if you have a warm intro, please make it count. Warm intros are familiar. Mention that person in cc. Or best - have the person write to us with a short brief introducing you to us! If you just say X introduced you - but you were to lazy to do step 1, this makes us doubt if the intro is actually warm.
We mention our emails almost everywhere. Still, we get some emails on our personal ids (which we have the right to discard without opening). Open our LinkedIn, check our bios, and write an email to the correct id.
Please do not say you are looking forward to 'Fruitful relationships' or 'Lets explore synergies'. We are all past MBA-speak. Be open. You are looking for capital. We are looking for equity investments. Simple. Do not expect us to come to you with a time. We will, but at our leisure. Instead, suggest a slot or two, and ask if one can work.
Best intro emails are less than a page long, in bullet points, key words in bold, sharing relevant data (but not overly disclosing everything).
How much do you want to raise? You ARE raising money. We ARE going to ask you. Might as well save some time. Please do not say between X and Y, its not fixed yet - this shows you are unsure. If you're not sure, how will we be?
A 10-15 page deck on what the company does, your business model, your ask should suffice. No need for 30 slides when key message can be conveyed in 10. This is an initial deck, not an in depth presentation. Please use Guy Kawasaki's 10-20-30 rule. It always helps. If this does not help, there are multiple websites online that help you with this information.
a. Its easier to open
b. Its difficult to modify if in the wrong hands
c. No links to drives please - clicking 3 times does not really incentivize people to open decks
Please know who you are talking to. Please understand the investment thesis of the investor. Mention relevant past investments, try to find similar themes in our portfolio. Best ones we've seen already had plans to collaborate with portfolio companies and also asked for introductions.
If we have met in the past, we can pick it up from there. If we passed in the past, remind us why. Show us how you've improved. Pick up from the last thread, don't create a new one. We love to be proven wrong.
Always pitch with a co founder or an ally. You can do the talking, the ally can take notes. This is to ensure you note down our body language, questions, comments, all of which can be used to hit us up the next time or proactively address queries.
It is super hard to be a founder. Fundraising is even harder. But simple practices like these will help you stand out.
This guest article is based on experiences shared by the founders of Creditas Solutions, Anshuman Pawar and Madan Srinivasan. Creditas is a technology company that provides delinquency management solutions to banks, and financial institutions via a digital medium. We are investors in Creditas.
Pick one (and only one) metric that defines your current business. Resist the promoter urge to want simultaneous perfection across everything. Track that metric relentlessly and in great depth, and pursue growth of that metric aggressively. This focus seeps in to your organization as well so you can avoid problems where people are pulling in different directions. In certain cases, you might want to ask your team to drive a subset of your main metric but it should be directly and linearly correlated to what you are really looking to drive
Revenue was our metric. We invested in tracking it in detail with our CRM tools and MIS function. We created a 'Revenue Predictor' that, working on past trends and daily data, would provide us a daily prediction of revenue expected for the month. This was our early warning system to tell us whether any drastic course correction was needed
Most times, your metric will not be achieved exactly as per plan - the benefit of relentless focus is that when plans go awry (as they often do), you have thought so deeply and often about the metric that alternative plans spring to mind immediately and can be implemented with minimal organisational resistance
Build your second-tier organization consciously and deliberately. This takes time, so do not expect to get it done in a rush. Ensure your key team members are also thinking about redundancy. One good way to execute this is to ask them whether they plan to be doing the same tasks a year down the line. If not, then they must hire and groom people to take their place
Our first step was to hire a CFO who proved invaluable in helping us focus on Sales and Growth and at the same time who ensured that governance did not take a backseat. Another massive benefit was the comfort in knowing that we had a trusted person overseeing the cash situation on a daily basis as well as giving us the confidence that we were set for a further 12 months of runway. Our second step was to hire people who we found extraordinary even if we did not have a direct role for them. Our belief has been that such people create value on their own, especially in a growing organization
Make your hiring a grueling process. Beyond the obvious benefit of better screening, it filters out candidates who might not survive the start-up grind. Lastly, candidates feel valued when they undergo a rigorous assessment rather than a slapdash Yes/ No interview
In an ideal work, good work will speak for itself. In real world, not so much. Never assume your clients (especially senior folk) know all the amazing stuff you've done for them. Ensure you market your achievements to them aggressively and in a manner that your stakeholders within the organization look good too. Everyone loves to talk about great initiatives they've taken so they will take your marketing narrative and promote it further to capture brownie points for themselves
Circulated all minor and major successes to clients in a well-designed format which they could forward to higher ups within the organization. Doubled down on this by sending success snippets over WhatsApp which again benefited from easy 'shareability'
The marketing rule also applies in inverse. If what you're doing cannot be sold internally as a success story, it will be a long arduous scale up within that organization
Analogous to the top metric you are driving - pick the top clients you wish to drive. Its far better to go in-depth with the top client and create robust case-studies than to have a wide portfolio of indifferent results. This will cause somewhat risky revenue concentration in the short term but the confidence you derive from results and word of mouth of performance will even things out in the longer term
Focused on Axis bank - our top client. Ensured we understood as many of their problems as we could, crafted a solid platform to solve those problems and began to market our performance aggressively to other clients
A client who is a strong advocate of your business model is likely to give you 10x the value of your remaining client list put together. Find and cultivate client advocates and not necessarily client lists
There are no quick results. Sales, Organization building and Business performance have an organic growth curve that resists hacking. This is not an argument for inaction but for constant, incremental action towards building people, relationships and processes
The longer we’ve stayed in the game, the more the market is rewarding us with unexpected opportunities. This is akin to monthly compounding of reputation which yields dividends periodically and a massive payoff down the line
Whether you win or lose daily, it is crucial to filter the noise out and focus on the long term. External blows are rarely fatal, it’s the internal loss of confidence that will kill you. As a corollary, composure is a much better skill to cultivate than excitability and keeps you team on even keel as well
Creditas will aim to close this year at 100 cr in revenues, and is aiming for 1000 cr revenues in 5 years with a focus on global expansion. You can read about their plans here.
Our primary thesis at Malpani Ventures is to back early stage founders who want to build business frugally (read – in the most capital efficient manner). In fact, we actively encourage our portfolio and potential investee companies to think about building lasting businesses which add value and don’t require to raise beyond 2 -3 rounds. In the era of new unicorns galloping out of VC stables almost every day, this prima facie appears to be self-limiting and contrarian. But is it really?
As per the India Venture Capital Report - 2021 by Bain & Co., India had about 1 lac start-ups of which 10,200 have been funded. More significantly only 30% of the companies which were seed-funded from the year 2000 onwards have managed to raise subsequent capital (Series A or beyond) while only 220 companies have managed to raise a Series C round (~USD 20 Mn or beyond). This implies that VCs and late stage investors only take a shine to 2% of funded start-ups ever. The above numbers essentially necessitate that founders plan to become self-sufficient or at least extend their runway to its maximum.
What would you choose? A galloping horse or a mythical unicorn?
It is important to note that this thesis does not preclude companies from chasing growth (We wouldn’t be in the business of investing if it did). Rather it urges founders to maintain a lead shank on their galloping ponies. Too often, companies chase the Series A round before having their unit economics in place – this is often disastrous in the long term with founder having to consistently raise funds.
In our experience, the best start-ups from our portfolio actually had periods of limited growth before experiencing a rapid spurt in their toplines after having identified the most efficient business model. Note that there are certain exceptions to this line of thinking – companies in certain sectors such as EV, deep-tech, etc. need to raise several rounds to achieve a scale required to generate a positive contribution margin.
However, it can be dangerous to classify most start-ups in this bucket. While execution speed for early stage start-ups is crucial, raising money to scale faster usually betrays a lack of a strong moat developed. Founders who achieve positive margins with the right business model fit and then press the accelerator to derive the most from operating leverage are best placed to succeed – This is the essence of frugal innovation.
Frugal innovation also lends itself to founders making money by holding a significant stake in case of liquidity event in the future. Building frugally requires a gestation period. We at Malpani Ventures offer patient capital with a focus on building sustainable value rather than chasing the next VC who can provide us an exit. We wish to work with passionate founders across all sectors who align intrinsically with this vision. Are you ready to build frugally with us? Then reach out to Dhruv at email@example.com with your pitch.