100X.VC invests in companies and the team works closely with the founders on every aspect from scaling, financial planning, fundraising, their GTM strategies and most importantly help them raise their next round.
What made you quit your corporate job to pursue a VC fund?
VC might seem exciting, but it’s a challenging job that’s not for everyone. I always had an entrepreneurial mindset, a way of thinking that enables me to overcome challenges, be decisive, and accept responsibility for outcomes. Becoming a VC is like creating a positive impact on so many entrepreneurs’ lives. VC is brutally competitive and hard to do well. I had seen that while working with Bessemer (BVP), a global VC / PE Fund. The idea of 100X was worth pursuing as the goal was to impact 100 entrepreneurs’ businesses every year. An idea like 100X has never been attempted before in India. The scale, the magnitude of impact 100X can bring to India was exciting for me to jump ships. It was not just creating wealth but a meaningful outcome to shape the lives of entrepreneurs with exponential thinking, growth with capital and education at scale.
How did you initially start as an angel investor?
The reasons for becoming an angel investor vary from person to person. I am a farsighted person. I think long term. I know firsthand how financially and personally satisfying the experience can be when you mentor an entrepreneur, help raise capital and see them building their business ground up. I have done M&A, Investments & Exits in my past corporate avatar. This experience is what helps me engage and provide value to startup entrepreneurs besides access to capital. Angel investing is risky, but potential high returns and satisfaction from nurturing a startup can make it worthwhile. Portfolio diversification is another reason why angel investing was compelling for me. Investing in early-stage private companies has a different risk and return trade-off compared with investing in traditional stocks and bonds.
How many startups have you invested in a personal capacity?
I would have mentored and worked with 100+ startups personally but I have invested in 5 startups, in various sectors, at various stages. The pace of growth at 100X, commitment with an ongoing portfolio at 100X gives me very limited time to do personal investments. Venture Capital is a 1% business hence we have to evaluate thousands of deals before we invest in few.
What were the initial challenges that you had to face and how did you overcome them?
I have been part of large transactions where there is a lot of data and information to crunch before any decision. I am a curious person hence I love new avenues of experimenting. At 100X, we decided on the thesis to fund the first cheque, an idea stage, pre-revenue startup. There was a learning process to evaluate the idea and market size opportunity. It was very exciting. My strength is numbers, now I was able to apply finance principles to seed stage startups to give them direction on how to deploy funds. Making the startup investible for the next round fundraise was the biggest challenge I took on. It was hard work but results are gratifying with 100X portfolio startups being able to raise USD 211Mn dollars till date. There is a lot more to be done as we grow 100X but initial success is what I am proud of.
How did you start and how have you seen the VC landscape changing?
I saw 2 distinct problems in Indian startup ecosystem
● There are not enough lead investors to discover & curate credible deals
○ 100X.VC has become a launchpad where only companies with potential are selected. We enable them to get better in every segment of the business—from pricing and pitching to product and positioning. Founders reap the benefits of 100X experience and connections. We support ideas with the potential for multiple rounds of funding, 100X.VC Pitch Day is the showcase to 1000+ investors for startups funded by us where they are ready to raise a larger round of capital. Ideas are fragile. We nurture them at 100X.VC.
● The time to close a deal was very long, cumbersome and time consuming.
○ The use of iSAFE (India Simple Agreement for Future Equity) investing documentation was pioneered by 100X.VC in 2019. 100X.VC open sourced it for the complete startup ecosystem. Now a standard for seed-stage investing, it saves legal cost, enables quick-to-close transactions and offers founder-friendly convertible security note complying with all applicable laws in India. Since right valuation discovery is tough at the seed stage, hence iSAFE works for investors to fund a deal with a future right to equity in the startup. Pre-and-post-money valuations are no longer required. Earlier, SHA-driven transactions took 3-4 months, with iSAFE it takes around 24-48 hours.
We are in the so-called Startup 2.0 wave. The Indian VC ecosystem, I believe, has and is witnessing immensely interesting phases. We discovered during the annual 100X India Sentiment Outlook Survey that only 47% of the startups were experiencing growth. Nearly two-thirds of the founders (65%) were expecting seed-stage funding to increase. Even though 70% of investors said they were seeing business growth, 23% expected it in the coming months. About 68% have been asking their portfolio companies to be more aggressive while 30% were prompting them to maintain the status quo. My advice to startups is to find mentors who can help create opportunities amid crisis through innovation and pivots. Inclusivity and flexibility have played an important role in the changing landscape. We will see more and more unicorns emerging out of India. In 5 years, India will be the 2nd largest economy in the world owing to more and more funding that will come into India.
Tell us something about the fund and its model. How many portfolio companies?
100X.VC is a SEBI registered CAT 1 VC fund, we tend to differentiate ourselves by being pure play investors. Unlike other networks, accelerators, incubators we have no income from transaction fees, membership fees or any sort of free equity. 100X.VC invests in companies and the team works closely with the founders on every aspect from scaling, financial planning, fundraising, their GTM strategies and most importantly help them raise their next round. We have, so far, invested in 70 odd companies, across sectors, so far since 2019. We currently invest INR 25 lacs for a future equity with the help of iSAFE notes. Each class that we invest in, 100X follows a cohort based system, typically consisting of 10-20 startups. Post finishing program, we have a 100X VC pitch day where at least 1,000+ investors (consisting of VCs, Angel Investors, Family offices, Corporates) login, thus helping them with a follow on round. We are the discovery platform for Indian investors.
What does an investor see in an early-stage startup?
For investors who step in at an early stage like us, there are only a handful of things that you can judge a startup from. We look at
○ Founding Team
○ Market Size Opportunity
○ Business Model Strength
○ Unfair Advantage, Moat
○ Conviction of a minimum 20X returns.
How important is the first cheque for a startup in the long run?
It is a well-known fact that while raising startup capital, finding a “lead investor” is the most critical step. It is the first cheque to the startup. It defines the probability of success and helps startups to build their journey in the venture capital ladder in terms of raising your future round of funding. That is why securing a lead investor makes so much sense for startup funding as it helps to define the probability of success. At 100X, we write the first institutional cheque to the founder. It gives social proof to other follow-on investors and the founders then are able to raise larger sums of money with that first cheque and the stamp of 100X.
Your one piece of advice for aspiring entrepreneurs looking to raise seed funds?
Work with investors who are just not money bags but are accessible with their network & resources. A lead investor is a coach and a mentor who guides you through every phase of your business. If there is no guidance, it is just dumb money- not smart money. Find a lead investor who is a thought leader, somebody who is a brand and with a successful investment history. That would give success that rubs on you. You need to talk to investors who have seen enough of this kind of success. This would be my one piece of advice to find a credible lead investor.
How many investments (in terms of dollars) does the company intend to make in 2022?
We made 41 investments in 2021. We measure ourselves on the metric of our portfolio of startup raised funding through 100X.VC discovery platform. We plan to make 100 startup investments in 2022. Our aim is to ensure these startups raise close to USD 50Mn dollars through 100X.VC platform.
What are your predictions for the investment domain in 2022?
I feel the funding to startups will continue to be robust and the pace will only accelerate. I think we need to be prepared for anything in 2022, I am sure it will be bigger and better than 2021. The future is going to be about the accessibility of deals, flexibility in choosing investment partners and choice of sectors for investments.
According to 100X.VC, which sectors will see a boom in 2022?
Hybrid businesses will emerge, hence there will be a lot of room for innovation with the future of work. Top 5 sectors which we see emerging in 2022 will be
2. DeepTech & SaaS
3. D2C Brands
5. Web3 & Crypto
What lies ahead in 2022 for 100X.VC?
Our North Star is to impact 100 Startups every year. We are on that journey to achieve the same. We have a 2 part mission statement, first one is to simplify funding and the second one is mentoring unlimited. In 2022 we would like to add a 3rd part to our mission statement that is Happiness Amplified. We believe that the emotional quotient of an entrepreneur is equally important for success.
Our mantra is if the founders succeed, we succeed.
We have no compulsion for an exit, of a specific period of investment and hence can hold on to our investments for longer periods of time. Our VC partnerships are stronger than before. We work very closely with most VCs in India, and as our portfolio cos, we will help them to raise more funds from our valued VC partners.
By 2025-26, 100X.VC will have built a strong portfolio of 500 startups.
Source: Business World