This Investor Wants to Invest in 100 Startups Every Year
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Principal Investor of Mehta Ventures family office, Sanjay Mehta, is famous in the investors’ circle as a serial startup investor, and rightly so. “I meet an average 15 aspiring entrepreneurs every month,” he says. This practice has resulted in over 130 startup investments in the last eight years—through the family office and direct investments.
US-based Mehta Ventures has made 23 investments in Indian startups in the last two years alone. The family office’s portfolio includes an interesting mix of startups across sectors—the popular cloud kitchen startup Box8, home-grown QSR brand Wow Momo, logistics management software provider LogiNext, blockchain solutions unicorn Block.one and the latest addition is Piggyride, which provides safety cabs for kids.
“I’m always on a lookout for unique products with unfair advantage of intellectual property and have a large market opportunity. The idea is to pick a market validated business model that customer is willing to use,” says Mehta. Going forward, Mehta is betting on sectors of B2B software services, fintech and media and entertainment.
Focus on Angel Investments; Exit Strategy Important
Mehta is focused on investing in startups with small bets rather than pick a selected few winners by investing large amounts. The reason being that early stage funding lets him patiently stay invested for the long-term. “I don’t lose patience and expect high yields within three year of investing. I have long-term horizon,” says Mehta.
But at the same time, as an early stage investor he constantly focuses on building his portfolio towards exits and has worked out the math for it: 1X returns typically to be expected with acquihire exits within 2 to 3 years, 10X returns is expected with corporate acquisition exit after 4 to 5 years, 30X return can be expected with VC, PE exit that can take 8 years or more and finally, a unicorn with a block buster IPO exit will take at least 10-15 years from the date of investment.
“While an investor’s duty is to support his startups at every point, yet one should also be keen on creating exit opportunities, as startup is an illiquid asset class,” he stresses.
Because of the risky nature of startup investments, Mehta Ventures has allocated only 8-9 per cent of their total portfolio in startups, but look to increase it over 10 per cent in the future as their investments so far have yielded rewarding returns. The average ticket size of their investment is Rs 50-60 lakh and the family office also does series A and B financing along with seed funding.
Simplifying Funding Process
As a full-time investor, Mehta’s macro mission is to ease the funding process for entrepreneurs. “Most early stage teams view building the company as their only goal and raising capital as something that they’re forced to do. We want to change this status quo and make funding process simple,” says Mehta.
To fulfill his mission, Mehta started 100X.VC, a first-cheque investment fund and advisor backed by Mehta Ventures, in July with a target of investing in 100 startups every year. “After investing in a startup, 100X.VC effectively becomes their coach, strategy consultant, investment banker, business mentor and trusted advisor to help them get to the next round of funding and beyond,” he explains.
Assist Entrepreneurs With Managing Cash Flow
Most importantly, he helps entrepreneurs build strong balance sheets, which would mean that rather than an investor’s capital, there are actual cash flows in the business. Deals with positive cash flows have higher valuations compared to those with just investor’s money but zero cash flows. In the latter’s case, acquisitions happen but they tend to go cheap, according to Mehta.
“I constantly help entrepreneurs to pace and focus on cash flows, than just thinking about the next round.”