Guardian an­gels: VCs now fund founders’ bets in other star­tups

Sequoia and other VC firms help ex­pe­ri­enced en­trepreneur­s make an­gel in­vest­ment in new ven­tures

The Times of India (New Delhi edition) - - All That Matters - Mad­hav.Chan­chani

sup­port from an out­side net­work of en­trepreneur­s with ex­pe­ri­ence in man­ag­ing a startup is in­valu­able.

Ac­cord i n g to First Cheque’s Bha­gia, in­vestors are look­ing for two types of ‘edge’ in mak­ing their de­ci­sions at that level. “When a com­pany is start­ing out, there’s not a lot you can judge it on. An­gels know the founders as they were batch­mates or em­ploy­ees at a firm, which is one edge. The other edge is mar­ket un­der­stand­ing. As an­gels are al­ready run­ning a busi­ness, they are closer to users and can see trends be­fore they become main­stream,” Bha­gia said.

The net­work which VCs are try­ing tap into through these an­gels can be clas­si­fied un­der three ‘Cs’ — col­leges, cities, and com­pa­nies. Con­nect­ing with a CXO-level fig­ure at uni­corns like Flip­kart or Byju’s, or other suc­cess­ful star­tups, can help VCs get in­for­ma­tion about de­par­ture of ex­ec­u­tives look­ing to launch a new ven­ture. VCs can use the in­sights to decide if they want to back their new ven­tures.

For in­stance, Fa­rooq Adam is one of the ven­ture part­ners at First Cheque. He is the co­founder of on­line-to-off­line startup Fynd, which was ac­quired by Reliance In­dus­tries ear­lier this year. When former Fynd ex­ec­u­tive Sha­keef Khan co-founded cloth­ing brand Dis­rupt, Adam and First Cheque came in as early back­ers.

“By adding other an­gels, we are able to do deals of Rs 50 lakh to Rs 70 lakh com­pared to Rs 15 lakh to Rs 20 lakh ear­lier. And First Cheque also makes in­vest­ments more struc­tured and helps take care of the pa­per­work, which can be a hassle,” Adam said.

Peo­ple out­side Sequoia’s port­fo­lio firms are also a part of its net­work of scouts-an­gels. “The mar­ket has ma­tured. Founders busy build­ing their firms are seen as role mod­els, and new crop of en­trepreneur­s is ap­proach­ing them for cap­i­tal and ad­vice. The former are men­tor­ing the new crop,” said Mo­hit Bhat­na­gar, man­ag­ing di­rec­tor of Sequoia Cap­i­tal In­dia. He is over­see­ing the Scout ini­tia­tive. “That’s why Scout makes sense, as it helps the ecosys­tem get built out by those who have in­valu­able ex­pe­ri­ences to share.”

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