Pitching Investors

Having the Last Laugh

Having the Last Laugh
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Former Features Editor
7 min read
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Ask any investor, evry pitch and interaction with entrepreneurs, right from an elevator pitch to over months of discussions, will reason around the famous five - team, idea, scalability, execution and market size. Now, flip the coin to hear what entrepreneurs tell you of crazy questions from investors that might tickle your funny bone. Entrepreneur got five start-up founders together to share their LOL moments during interactions with investors that otherwise are the most serious and perhaps toughest and most challenging discussions for a start-up.

What! You Don’t Sell Cinnamon Seeds Online???

It was my first interaction with this venture capitalist (VC) that apparently did some homework about our business, but the nature of the random questions he asked was quite funny. He began with telling me that he was disappointed that we are not selling cinnamon seeds or don’t have articles about flax seed on our platform.

I think that he had recently moved back from the US where he must have had a favorite store from where he could buy cinnamon seeds etc. He assumed that we are filling that gap for him, and he perhaps didn’t know that in India cinnamon seeds do not have much of a demand, given that it is not a common ingredient in Indian cooking. So, he got disappointed even before we could get a chance to explain him that we focus on digital health and medicines, and as of now have not gone after the wellness or supplements category. The meeting never recovered from that weird start. 

Prashant Tandon, Founder and CEO, 1mg (Gurgaonbased online pharmacy). It last raised $15 million in April this year from Maverick Capital Ventures, Sequoia Capital India and Omidyar Network.

Renting out? A Vacant Property?? Are You Kidding Me???

During one of my interactions with an investor who happened to be a new joinee in the fund, had little idea about online realty market, but he still threw questions to me during the meeting to impress his new bosses.

I was explaining all the investors about how homeowners who spend money on brokers come to us for savings that we offer. So, he abruptly jumped in the conversation and said that his family has four vacant flats, but they never care about even renting them. I had no idea how to answer his point. I gathered myself and said that perhaps he is an exception and according to my knowledge, generally owners want to earn money by renting their vacant flats. Thinking about his comments makes me laugh even today.

Amit Kumar Agarwal, Founder and CEO, NoBroker (Bengaluru-based online realty marketplace bypassing brokers). It snapped up $10 million in February this year in its last funding round led Singapore-based BEENEXT venture capital firm.

So You Mean Entrepreneurs are Risk Takers?…Rubbish

After one of the interactions with investors, one of them came back to me and asked whether I have an investment portfolio and if yes, then what are the assets for e.g. shares, mutual funds, gold etc. So, that was pretty amusing to me and to everyone whom I narrated this later. That’s because while I think it was an interesting question as he tried to gauge my risk profile, but he didn’t realize that it was a wrong question to ask an entrepreneur and that it made more sense to a banker. However, I replied that my company is the only asset I invest in, so if you (investor) consider that to be quite risky, so be it, that’s what I do.

I showed him my level of commitment and confidence in my business and that I don’t need to invest anywhere else. If I ever get an entrepreneur telling me that he/she has an active investment portfolio, then I would assume that he/ she certainly believes that those assets are better than his/her own business.

Anish Williams, Co-founder and CEO, TranServ (Mumbaibased digital payment platform). It secured $15 million in April this year led by IDFC Spice Fund and Micromax Informatics.

We are Real Investors…Unit Economics is Old School

We consciously built our business right from the beginning that balanced growth with profitability. We never sold products at a negative gross margin to chase vanity metrics. So, during the peak of the funding boom last year during our Series B round, I recall a prospective investor telling me, “If your unit economics are so strong, you are not growing fast enough, which means your addressable market is small.”

I stared across the table at the team of investors confused. I wondered whether growing 700 percent annually was not fast enough for them, and why focus on profitability was hurting my prospects with investors. It was quite funny though when I later thought about it. But, with the recent correction in the private markets, terms such as unit economics and profitability are finally part of every conversation between VCs and early stage companies.

Rahul Anand, Founder and CEO, Hopscotch (Mumbai-based e-tailer for mothers). Facebook’s Co-founder Eduardo Saverin led a $13 million round in Hopscotch in February this year.

We Bet Only on Copycats

This meeting wasn’t funny, but was quite different from my regular meetings with VCs. I was talking to a premier investor in Bengaluru to raise Series B round. Everything was going fine till he asked me about my start-up’s valuation. Obviously as every entrepreneur knows, this question is usually
a catch-22. If you quote a little low, it verges on pessimism for investor and if you go little high, then
you sound overconfident. Fortunately, I had this question prepared and told the investor that my product can be a couple of $100 million dollars’ worth in five years. Hearing this, his expression changed and he seemed quite taken aback by the figures. Clearly, I knew that it was going to be a deal breaker in next few minutes.

Finally, in my last effort for redemption, I gave him an example of a similar Chinese start-up with over a billion dollars in valuation. Much to my surprise, his behavior made a U-turn even
faster this time. He became so encouraging about my product’s valuation and even put a premium on it that I was actually the one trying to value it down. Would anyone imagine an entrepreneur valuing down his own business. In the end, it was one of those funny incidents where you don’t know how fast things can change from good to worse or the other way around.

Manish Tewari, Co-founder, Koovs (Bengaluru-based fashion e-tailer) and Pokkt (Mumbai-based mobile video advertising platform). London-based Koovs plc, parent company of Koovs.comm got $32 million in April this year and Pokkt raised $5 million in November last year.

This article first appeared in the Indian edition of Entrepreneur magazine (June 2016 Issue).

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