Archive for May, 2013

Muscle Capital : Delivered

I am not a car guy. I had my last car for 15 years and put over a quarter of a million kilometers on it, but a couple of months ago I bought a Tesla. It felt like a piece of history so I had to have it. It is thrilling to be able to go 0-100km/hr in 4 seconds with only the hum of the tires and no engine roar. It is also fun to lift up the hood of the car to show off its “engine” when there is nothing there.

Elon Musk, the founder of Tesla, is an amazing guy. He is fearless, going after goals that defy conventional wisdom. His brain doesn’t register risk the same way most folks do. Even more fascinating is the fact that he is one of the few company builders that can focus on multiple spaces simultaneously and do a good job. Many entrepreneurs are able to build very different companies in sequence but few can do it simultaneously. His ability to attract and deploy human capital is outstanding.

When we started Tandem our biggest motivation was to be able to work side by side with passionate founders and help them be successful. Tandem was designed to be different from other forms of capital. We are company builders with capital rather than financial investors that can guide and connect.  We really roll up our sleeves and get to work.  Unlike Elon, we don’t have the ability to work simultaneously on many distinct spaces so we have chosen a narrow focus on a segment of mobile first companies. This focus and our ability to provide company building ‘muscle’ alongside patient financial capital – “Muscle Capital” – is what defines and differentiates our approach.

We have always wanted to work with Indian entrepreneurs and have been doing an Indian company here and there over the last many years. However a little over a year ago it became clear to us that the Indian market was becoming primed for significant activity in our space.  We have decided to actively seek Indian entrepreneurs looking to launch in the Indian and US markets

We will unveil more of our plans shortly, but as we begin this journey, Rohit Bhagat (my partner at Tandem) and I are visiting India from now through the 1st of June. We will be in Delhi, Mumbai, Bangalore and Pune. We would love to meet people who are passionate about the startup ecosystem.  Founders, Funders, Bloggers, Mentors, Angels etc.  Please send us an email at tandem.in.india@gmail.com if you think it would be useful to meet. Please add a link to your Linkedin profile in the email.

If you are a founder who would like to be considered for funding, please complete an application http://www.tandementrepreneurs.com/apply. and then send an email at the tandem.in.india@gmail.com address with your company name in the subject line.

Sunil

TLabs is organising startup mixer in various cities, applications open for Batch 4

It’s that time of the year again when TLabs goes to a lot of Indian cities and meet early stage startups and budding entrepreneurs. TLabs has now opened applications for 4th Batch (Fall 2013) and is calling all start-ups/entrepreneurs/founders/co-founders who have awesome ideas and are looking for support in nurturing their products into sound businesses.

TLabs plan to travel across the country over the course of next few weeks to meet future game changers, so please come and meet TLabs family for a casual mixer in your town!

What is TLabs mixer?

Mixer is an open forum that provides an opportunity to the budding start-ups to share their ideas, stories, concerns, challenges etc. from left, right and center with TLabs team, founders of portfolio companies and its mentors. There will be a few TLabs portfolio founders at each mixer to offer you some candid insights into how their acceleration experience helped them get to where they are today and what it takes to create successful ventures, manage challenges and raise money. Team would love to answer any particular questions about TLabs and Batch 4 application process.

Who can attend? 

Tech, mobile and Web based entrepreneurs who are interested in joining TLabs Batch 4 program and are looking to discuss their ideas, share their stories or ask specific questions about the program. Any founders/co-founders who wish to bounce off their ideas and are seeking some constructive feedback on the same from the audience are also welcome.

How do you register?

Here is a schedule of our May mixers, kindly fill this form to let us know when you would like to attend. In June we will cover Hyderabad, Kochi, Pune and Mumbai and will confirm the logistics for the same by the end of this month.

Date City Venue TLabs team
18-May Delhi TLabs office All
22-May Chennai Influx Interactive office Abhishek
24-May Bangalore Dataweave office Abhishek/Abhimanyu

Each mixer will be about 2-3 hours and the confirmation will be sent about participation. The mixers will be small and only up to 30 people so please grab your slot ASAP.

TLabs is kicking off its 4th batch in Aug 2013 and is currently accepting applications for the same. Your deadline to apply is 30 Jun 2013. Here’s the schedule in more details. If you haven’t yet applied to TLabs, please do so here: Batch 4 Application

Accelerator->Angel->VC flow is still struggling to find its equilibrium in India

I had fun moderating the panel on early stage financing at India Internet Day. Vccircle has an interesting article.

Deal progression

The key issues are as under:

1. Too few deals are progressing from accelerators to angel, and from angel to Series A. Only 5% of deals going from accelerators to Series A might not be very different from success rate without accelerators.
2. Angel stage valuations are stretched relative to Series A valuations. At 20% success in getting to Series A, a Series A valuation of 35 cr would be a breakeven point for angels (7 cr angel valuation is typical). At 20 cr, the stage is not paying back for itself.
3. Its taking too long for deals to progress. While accelerators (admittedly apart from Mukund’s Microsoft accelerator :-) ) aim to get to next round of financing as the startup graduates from the accelerator, it is taking an additional year to get to angel financing. Angel to VC is another 2 years on average. This slow progression may also be responsible for higher failure rate. Accelerators might do well to extend the runway.
4. Lot of “recycling” – the same company going from one accelerator to another, from one angel round to another. Again points to the time it takes to build companies, and the need for early stage investors to keep supporting the good ones.
5. Too little mortality – “fail fast” seems to be good advice, but little practice.

Of course, the above applies only to startups which are in the funding play. Note that the data was gathered from about a dozen “premier” accelerators/incubators and angel funds – so while I believe this is directionally right, its not the most comprehensive survey.

The role of venture capital in growing Indian ecosystem

Iamwire published this article by me around the broader impact of venture capital. I believe venture capital has had a defining role in getting first generation entrepreneurs out in increasing numbers, at the same time benefiting from that trend. In addition to entrepreneurs, the capital-exit model of venture backed companies also creates the right incentives for top quality talent to join startups. Other benefits abound – read on…