This VC believes in funding start-ups at the seed stage

Navin Honagudi, partner at Kae Capital, says it is hardest to raise money at the early stages.

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Raising capital during the early stages of a start-up is the hardest for any entrepreneur and it is the biggest pain point. Often entrepreneurs give up.

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Kae Capital addresses this issue. "Once you establish your product market, a lot of investors are keen to invest in you. We wanted to solve the problem of providing funds for great ideas at the early stage of their entrepreneurial journey," says Navin Honagudi, partner, Kae Capital.

Kae Capital is an early-stage venture capital fund that backs tech-enabled companies during the seed round and also does a follow-up round for some of them based on their performance. The venture capital was founded by Sasha Mirchandani in 2012.

The Tech Advocates

"We are sector-agnostic but a firm believer in technology. We only fund start-ups who use technology" says Honagudi. The team at Kae Capital believes in bringing disruption in existing systems by deploying technology.

According to Honagudi, Kae Capital's entrepreneur-friendly nature and early spotting of trends make it different from other funds. He asserts, "We are 2am friends of our entrepreneurs and we spot trends early before they become mainstream."

Ritesh Agarwal founded Unicorn Oyo Rooms is one firm that Kae Capital missed investing in. "There are so many companies that pitch to us, so sometimes we do miss investing in some interesting start-ups. But there are no regrets," claims Honagudi.

Factors examined before making an investment

According to him, the three things that Kae Capital checks before investing in a start-up include a thorough analysis of the founding team and its vision and capabilities; how large the market size for the product offered is; and what is the value proposition of the product or service that is being offered.

Honagudi believes it is safer to place bets on second- or third-time entrepreneurs even if their previous start-ups may have failed as they have a better hands-on understanding of the start-up space. "I see a lot of repeat entrepreneurs, that is people who are second time or third-time entrepreneurs, successfully raising funds. It is because investors tend to believe in them more."

Kae Capital is going to raise its third round of funding and has previously raised two rounds—$25 million in 2015 and $53 million in 2017. The company has a portfolio size of 60 companies and an average ticket size of $500,000. It has made 10 exits so far, the biggest one being Fynd. Some of its well-doing investments include Healthkart, 1mg and Portr.