In our latest episode of Understanding VC, we talked to one of the biggest angel investors of India, Rajesh Sawhney, who is also the founder and CEO of GSF Accelerator. GSF Accelerator’s portfolio includes numerous successful companies like Emitrr, EazyPG, Whatfix, ClinchPad, and Browntape. Rajesh has a splendid record of investing in over 100 startups. We talked to him about his journey towards that mark, why founders should be talent-magnets, his reasoning behind 80% of GSF’s portfolio founders being IITians, some essential precepts to follow while building your pitch, and his version of an ideal relationship between founders and investors.
As GSF Accelerator’s motto suggests: “a platform for the founders by the founders”, its founder and CEO started his own career as an entrepreneur. Soon after India was introduced to the internet, Rajesh identified the immense potential it held for the future of businesses. In 1999, he built IndiaTimes.Com. Half a decade later, he also became a founding partner at Reliance Entertainment. He is also credited with pioneering the digitization of news media with the Times Group. Recalling the early years of his career, Rajesh reflected how the Indian market has evolved over the past few years. He called Jio, 4G and UPI as “game-changers” for Indian entrepreneurs and investors. As the internet’s accessibility has expanded, opportunities for product development and distribution have grown at an exponential rate with an unprecedented diversity.
You only need one believer to succeed in fundraising.
According to Rajesh, increased accessibility, cloud and capital have liberated tech entrepreneurship. This evokes several questions: has the liberation been equitable? If so, why are most of the founders IITians? Is this a consequence of elitism and unequal opportunity? Rajesh’s response was rather optimistic on the issue. He thinks that the seeming dominance of IITians in tech startups is primarily due to the effusive network of 23 IITs which sifts through the best talents of the country in order to create extraordinary entrepreneurs and individuals which is for the larger benefit of the country’s development. Rajesh emphasized the edict, “success belongs to everyone.”
In such a tremendously competitive space, it certainly becomes difficult to find the right person in whom one would be ready to invest faith as well as money. We asked Rajesh how exactly he recognizes which founders have the potential to make it. Rajesh confessed that there is inevitable risk associated with the first couple of years of a startup’s growth, but there is no shortcut. In order to identify true potential, experimentation is necessary, but of course not without appropriate due diligence.
On being asked the reason behind his interest in early stage investing, Rajesh said, “If we commit enough mistakes, we’ll make money.” In his opinion, making money is one of the several benefits of early-stage investing, while others include the invaluable learning experience through experimenting, trial and error, and a test of resilience for all the stakeholders. But as stated before, going head-on into a maze without any prior planning would only result in getting lost. There are a few things which entrepreneurs should keep in mind during the pitching stage to win the investors’ trust and interest.
Founders should be talent-magnets, more than money-magnets.
Trust is achieved by a dependable and competent team, early-traction, and most importantly, positive customer feedback. Rajesh thinks that “getting love right” is of paramount importance. Entrepreneurs need to focus, more than anything else, on creating a product that would gratify the customers’ needs and wishes leading to a chain of referrals purely based on the benefits of the product. Rajesh also surmised that the sign of a competent founder is also located in how they build their core team. He normally expects the first five to ten employees from the founder’s network which also strengthens the founder’s credibility as a leader.
Secondly, in order to capture the investors’ interest, the founders need to have a story to tell, and a riveting one at that. “I want to be surprised,” Rajesh told us, underlining the impact of skillful storytelling complemented with just the right amount of facts and emotions. Furthermore, a pitch can be drastically improved merely by adopting the right method to present it. Storytelling is a useful ingredient for pitching but it should be used with caution in the right measure. Being clear and concise about your goals is indispensable. Beating around the bush would only lead to faltering interest and lesser chances of success. Establishing credibility in the first few minutes of your pitch is a requisite for achieving your goals.
But what happens once you manage to get investments at the early-stage? What is the ideal method of executing your startup plan? And how involved should the investors be? Rajesh personally prefers to be uninvolved in the company’s decision-making and administrative processes. So we asked him how GSF handles the post-investment stages with a startup. Rajesh informed us that GSF’s customary procedure includes helping the company prepare for subsequent fundraising, providing external validation and encouragement because building a company from scratch can be testing for even the most competent founders. And lastly, if there are any organizational challenges which would adversely affect the stakeholders, GSF steps in to attempt and resolve those issues.
Towards the end of the episode, we urged Rajesh to share his vision of the future and what are the things that excite him. Space, tech evolution, and climate change seem to be of enormous interest to him. He is excited about the technological developments that the world is yet to witness, but he believes that climate change is also a grave issue which requires compromise and attention. Rajesh definitely champions sustainable development, whose cornerstone according to him, is composed of better education and gender equality. He accentuated the value of gender equality by saying, “make women respected at work”. In order for India to really grow, the “make in India” slogan needs to be manifested not just in terms of production but also in nurturing talent and retaining it through equal opportunities and fair treatment for all.