Conversation with a venture capitalist
Can you tell us a little about AdvantEdge?
AdvantEdge is an early stage fund based out of Delhi. We have been around for 2 and half years and we have made 24 investments, 3 exits. We typically come in pre-product market fit. We come in at the seed round or/and the angel round. We typically lead in the areas that we have a deep domain knowledge in, which includes automotive mobility, gaming which is in the consumer tech space, and fintech. We continue to be opportunistic to look for startups outside our domain as well.
AdvantEdge's Portfolio include :
Shuttl, TrulyMadly, Tripoto, ScoopWhoop, Coho, Rapido, IIMJobs, GamingMonk, Zophop, etc.
What kind of startups do you usually fund?
As a fund, we are relatively sector agnostic. We look for very early stage companies, pre-product, pre-product market fit. We are focusing on 2-3 specific sectors. We like the whole mobility, automotive, auto after-market space. We like fin-tech and we like consumer tech based startups.
We don’t do a lot of deep techs. We have made a few investments in B2B, but that is not our focus area.
How important is for an entrepreneur to be from one of the premier institutes?
People coming from good universities have already gone through a stringent selection process so we assume that the talent is still there. In some ways, we assume that there is a causal effect, students from good institutions will probably have the right rigor, the right understanding and the right knowledge to pursue entrepreneurial ventures and achieve success but only when you are a young founder.
With experience, I don’t think it is as important. But people from good institutes, typically if they have achieved success, they will always have no problem in raising capital from investors.
But that is one of the many factors that we take into account before we make our funding decision. We also look at the balance in the overall team, how big is the opportunity and also the kind of domain knowledge and understanding that the founder has in the space in which they are trying to innovate or create disruption.
What are your suggestions for an early stage entrepreneur?
It is never too late to understand what entrepreneurship is all about. My request is, anybody who is interested in pursuing entrepreneurship must spend enough time trying to understand what is entrepreneurship all about.
We believe that more than 50% of all the entrepreneurs get into the startup industry with the wrong objective in mind. The objective of entrepreneurship should not be wealth creation, it should be an outcome of the effort and the effort should be focused on trying to solve real world problems, something that one should be passionate about. So, become an entrepreneur not only for the right reason but more importantly pick a space where you may have a competitive advantage as compared to others, which will increase your probability of success.
What is the importance of having a growth mindset for any entrepreneur?
In early stage ventures, the probability of changing the business model is very high. I think successful entrepreneurs are those who are willing to change and adapt based on continuous learning from being in the market. Typically, companies very rarely succeed on the first iteration or the first business plan. It is typically on the second or third.
There is a saying in entrepreneurship that if you have to fail, fail fast. So, don’t be married to your vision or what the original thought process was. If anything, you should be consistent about, is your passion and your desire to succeed rather than the idea itself because like I said, there is a high probability that the idea may change not once, twice but many times before you actually achieve success especially in a complicated and complex country like India where there are a number of factors that are at play and I think an Indian customer itself is so fragmented and complicated to understand that it takes many attempts to get the right market fit.
What according to you is the importance of failure in the life of an entrepreneur?
There is no such thing as failure in entrepreneurship. You are either successful or you are learning. I have been an entrepreneur many times. I have achieved success and I have also achieved failures many times and I can tell you about my learnings, I am a much better investor today because of the number of times that I have failed. You cannot succeed in life or in entrepreneurship until you have failed a few times.
If anything, we as a fund and me personally, we love to fund failed entrepreneurs, for 2 reasons, At least he won’t make the same mistake twice. He will make new mistakes and that is alright.
Second and more importantly, like I mentioned that a majority of entrepreneurs get into the startups with the wrong reason. Once they fail, most of them will go back to the corporate world and may start working on a fixed salary. It is the entrepreneur who is going to stick around and try for the second time, is going to be twice as more passionate and hardworking to make sure that he/she will succeed this time because he has a lot to prove to himself, his friends and his family.
We are one of the few funds, who give preference to failed entrepreneurs than the successful ones.
How can a student become an entrepreneur?
Read. Read as much as you can. The Indian education system is still not teaching entrepreneurship in school or in college. There is enough information on the internet.
One may start following the successful entrepreneurs on twitter, subscribe to podcasts that are published by leading VC firms like Andreessen Horowitz and Sequoia, read books on startups whether it is 'Zero to One' by Peter Thiel, 'Value Investing', etc. There are so many books that may teach you about entrepreneurship, but ultimately entrepreneurship is going to be ten times tougher than getting a job. The rewards, on the other hand, are also ten times more rewarding if you succeed but be prepared to fail on your first or second attempt.
There is no shame in failing, but if this is something that you truly want to be, it is never too late to start. Entrepreneurship can be of any form, whether it is a funded startup or you may start doing part time jobs on the internet making money on the side. Start as early as you can and hopefully one day you will achieve success.
AdvantEdge is an early stage venture capital fund, which also runs a pre-seed program and a startup incubator. We back entrepreneurs who are passionate about solving big problems and support early stage companies that have a strong growth potential with funding upto $500K.