The Malpani Ventures team made a short but sweet trip to Chennai yesterday. We met some amazing companies and want to share 2 key learnings from our trip:
Early stage companies need validation - and the best form of validation comes from paying customers. We learned that when companies are open and transparent with their customers about their product development process & future roadmap, customers become involved in the journey and help the company build the product out.
This not only reduces the amount of trial & error in product development, but also deepens the relationship between customers & the company. One of the best ways to do this is to build in public (or semi public, if in beta stage).
Further readings:
SaaS Public Product Roadmap and how to build it
11 Public Roadmap Examples for SaaS Companies
It is imperative startups have a clean cap table - this does not just mean a pretty cap table with very few names, but one which has accorded for all updated transactions & accurately reflects the true & fully diluted ownership of the company.
Firstly lets understand what causes a messy cap table?
Stock swaps in early days instead of cash payments mean a random vendor is sitting on your cap table occupying precious real estate.
Raising too much money from angel platforms or small angel investors mean you are suddenly looking at 20-25 small entries on your cap table. Do remember, every one of them may have share certificate, compliance and related requests.
Vague or no agreements between & among co-founders and their potential exit means their (often significant) equity sits on the cap table which is now at par with common shareholders.
It is very important for founders to keep cleaning up the cap table at regular intervals - by trying to offer exits to smaller investors, pooling smaller investors together as a single entity, having co-founder agreements in place with defined events and actions in case of a co-founder exit, avoiding stock swaps etc.
Further readings:
Founders – Use Your Down Round To Clean Up Your Cap Table
How a clean cap table helps you with an acquisition
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Chennai was kind, and we hope to be back soon! This time with a surprise!
We are pleased to announce our investment in Nesa Medtech, a healthcare technology company focused on transforming women’s health through micro-invasive treatment for uterine fibroids. Malpani Ventures led the seed round in Nesa with existing investor CCAMP also participating.
Health-tech is a core area of focus for us at Malpani Ventures and we strongly believe in the need for core innovation toward developing value-based healthcare in the country. We are proud to partner with Sreekar Kothamachu and his team on their mission for developing a low-cost, minimally-invasive treatment for uterine fibroids in India and globally
Uterine Fibroids are non-cancerous growths from smooth muscle tissue that originate from the muscle layer of the uterus also commonly known as myoma or leiomyomas.
1 in 4 women in the reproductive age group have fibroids and about 30% of affected women are likely to have one or more of the following symptoms: abnormal uterine bleeding, severe acute abdomen pain, infertility and abdominal lump. Thus, an estimated ~120 to 140 Mn women around the world suffer from healthcare challenges due to uterine fibroids.
The following stats astounded us as we researched more on the space:
As we understand, most patients are initially recommended medical therapy which includes symptomatic treatment such as oral contraceptive pills, and progesterone-only pills, amongst others; while some are recommended size-reduction treatments for the fibroids. However, a limited number of women benefit from such medication and eventually most undergo surgical solutions.
Present treatment offered by gynaecologists is surgical options including hysterectomy and myomectomy. However, these surgeries are invasive and involve potentially detrimental effects of surgical treatment - including cutting & suturing, leave for 5-7 days, and application of general anaesthesia.
Nesa has developed Gyide - a real-time ultrasound-guided navigation platform technology to map fibroids and guide treatment. GYIDE is a scar-less safe, effective and uterus-preserving technology to treat symptomatic uterine fibroids. The planning workstation integrates with the ultrasound machines (commonly available at gynaecologists’ clinics – thereby reducing Capex costs) to help identify the exact location of fibroids in the uterus. Gyide also includes a navigation arm that couples with an energy needle to deliver thermal energy to ablate fibroids with the workstation guiding the gynaec in real-time. The entire tech stack for Gyide is completely developed indigenously in-house.
Nesa hopes to offer several superlative outcomes versus the existing procedures:
Nesa is led by Sreekar Kothamachu, CEO who has 12 years of experience working in R&D/ new product development teams at Siemens & Philip Healthcare. Sreekar started out as a software specialist in 2006 at Siemens before moving to Philips Healthcare in 2009 where he worked for ~6 years. At Philips, Sreekar had global experience working with the Israel team developing next generation CT Scanners.
Sreekar is ably supported by Suraj Rajan, the CTO of the company. Suraj has 17+ years of experience largely in New Product Development specifically in Medical devices. Suraj was part of the global design team at Johnson & Johnson involved in the design and development of orthopaedic implants and instruments, while he was part of the team to design and develop new safety products at 3M.
Dr Usha B R, Chief Medical Officer of Nesa, lends her expertise to the team having performed minimally invasive surgeries for the last 10+ years.
Nesa also works with a host of renowned consultants including surgeons, technology and compliance experts as they seek to commercialize their offering.
Nesa began operations in 2016 and has frugally managed to develop its technology and is in line for its Indian CDSCO approval this year, while it has formally begun its US FDA initial phase 1 submission process. Further Nesa has been granted primary patent family in India and has also published in US, EU & China. The team continues to file for additional patents. Post its approval from the Indian authorities, Nesa shall kickstart clinical adoption studies across the country
Malpani Ventures is pleased to support Nesa on its journey towards providing women a better alternative to traditional surgical approaches with the promise of less morbidity, short recovery time, faster procedure time, and at a lower cost.
Founders,
We must stay close to the ground reality.
Global winds have changed:
Many proclaim this phase to be similar to the dot com or Lehman Brothers bust and many of you would have experienced it first hand.
While things are bad, early-stage India should not be affected. Why?
We will not be affected if we have:
What do we need to action?
Reality:
It's not bad yet, but it may become. We will be better off if we're prepared in advance.
Best,
Malpani Ventures
Malpani Ventures is a family office funding frugal innovation in India.
We prefer investing in B2B SaaS, Healthcare, and Education.
We invest in pre seed & seed stage startups in India.
Pre seed: Healthcare (will prefer a working prototype backed by intellectual property for pre seed).
Seed: B2B SaaS, Healthcare, and Education (will prefer traction in users, and MRR of 5-10 lacs for seed).
We invest between Rs 1 - 2 cr as the first cheque. Our average ticket size for the last 3-5 deals has been north of Rs 1.5 cr.
Yes we do. We reserve approx. 2x the amount of our first cheque to participate in follow ons. We have made follow on investments in 1 out of every 3 portfolio companies, and over the next 2 years see this becoming 2 out of every 3.
Our preference will be priced equity rounds or priced CCPS rounds. Being a family office, we can offer flexible structures. We have offered revenue based financing, non convertible debt without collateral, structured financing, and milestone based funding to portfolio companies.
Valuation is a dynamic construct. Valuations in our last 3-5 deals have ranged from ~15 cr post money to ~35 cr post money for first cheque.
Yes, we are comfortable being lead investors. And also comfortable co-investing.
We have ~20 companies in our portfolio
B2B Software: IKS Health, Creditas, Callify, Clodura, Vdocipher
Education: Avaz, Bibox, Dux Edu, Multibhashi, HabitStrong
Healthcare: Plus91, Biomoneta, Stealth (unannounced)
Consumer: Stay Vista, Fab Box, Leaf
Mobility: Garageworks, Ajjas
Proptech: Zipgrid
Supply chain: Tessol
Apart from direct investments, we are also LPs in select VC funds we respect - Aavishkar Bharat, Inventus, India Quotient, Sketchnote Partners
We honestly believe investors can not add a lot of value to investee companies. However, what we can offer is patient, long term, and flexible capital. We do not have to return money within a fixed time frame allowing us the liberty to stay invested. We offer better financial reporting, tracking metrics and discipline to founders which can enable them to be prepared to raise follow on money whenever they are ready. We can offer a sounding board, and a mirror to founders and relay inputs from other founders, investors in the ecosystem. We can offer introductions to other investors and funds for when founders are ready.
We have a motto - "Founders know how to run their business best, for everything else we can offer our assistance".
We expect complete alignment of interest. We expect to meet founders in person once a quarter. We expect to see monthly updates which take care of finance, team, key issues, etc. in a timely manner. We enter investments with a learning agenda and would like to exit not only financially richer, but intellectually richest.
Finance & metrics- Company was trying to expand into multiple cities. Our team sat down and created a burn plan by city to help understand cash flows, cash utilization, peak burn per city, breakeven points, and consequent funding requirement. Company has since raised $1mn, crossed $1mn in run rate, and currently trying to expand to multiple cities.
Ecosystem views- Company was trying to raise a large Series A which we were unsure of considering stage of the company. We tried to understand the point of view of Series A investors and investment bankers to see if the company will be able to do what it wants to. Relayed back the information, connected with multiple investment bankers, and prepared a fresh fundraise plan.
Short term capital- Two companies were trying to fund significant orders which required working capital. We offered a very short TAT of working capital which enabled them to close orders.
Storytelling- Company trying to raise a Pre Series A. We sat with the founder to crack the story and narrative of the company from the point of view of company, customers, and customer advocates within large organizations.
Recruiting- We often conduct interviews of key team members before founders issue the final offer letter providing an added external perspective.
Dr Aniruddha Malpani- He is the founder, principal investor, and sits on the investment committee. He is an active angel investor since 15+ years.
Manish Gupta- He sits on the investment committee and runs a public equity fund Solidarity. He has worked with Boston Consulting, and ran Rakesh Jhunjhunwala's private equity investments before starting his own fund.
Siddharth Shah- He worked with Solidarity in public equities before moving to Malpani Ventures in 2019. He has an experience of 4 years as an investor.
Dhruv Sane- He started his career with 3 years at Deloitte in Forensic Accounting, and 3-year stint in investment banking with Lodha Capital before joining Malpani Ventures in 2021.
We recently ran an anonymous NPS exercise where our founders gave us an NPS of 46. You can read more about it here. Over the next year, we'd like to improve this metric to 50.
If you feel we are the right investors for you, please feel free to reach out to Siddharth or Dhruv with your pitch or one pager.