From Founding to Funding: Find your Pitch

TRANSCRIPT

Smriti Sharma: 00:01

‘There's plenty of fish in the sea’ was perhaps written for the ‘Startup-Verse.’ In an era of startups taking birth by the day and dying by the night, pitching is anything but effortless. The days of pitching in VC space as a mere submission of a business plan are over. Those were the days when a VC will listen to your pitch, get excited, and after brief research on the industry, the idea is sold. Today, it means visualising the future and asking the right questions to yourself before you pitch an idea. Like, how will a scaled-up version of your venture look like? What challenges you are likely to face? And, how to overcome those? How will the teams align with changing priorities in future? And will you be able to make an impact in your chosen space? Hi, I am Smriti Sharma, representing ISB’s Management Rethink—an online management practice journal published bi-monthly, by the Centre for Learning and Management Practice. In today's session, as we discuss the thriving startup ecosystem in India, and answer some of these burning questions, we at Management Rethink are excited to have with us Priya Mohan, founder turned investor at Venture Highway. Welcome to ISB’s Management Rethink’s podcast, Priya.

 

Priya Mohan: 01:14

Thanks a lot. And I really appreciate you guys being patient with my time and I am finally glad to be here.

 

Smriti Sharma: 01:21

Yes. Likewise. I will start with the questions, and first things first. So, how has pitching evolved over the past few years? And in what ways has the growing competition affected pitching an idea?

 

Priya Mohan: 01:35

Actually, let's take a step back. I think, pitching to me is a tactic. Let me put it out there. It's part of the process of fundraising, it's part of the process and pitching actually is not just about fundraising. You pitch to all the important stakeholders as a startup founder. You pitch to an investor for fundraise, you pitch to your first few team members and if you want a smart person joining you, they need to be convinced about the idea and convinced about working with you, you pitch to customers. To me, all of this comes under pitching, where one pitching is a pitch to investors. And I feel you can't be good at one, alone and not be good at the other two. And how has pitching evolved over the last few years? A couple of interesting data points I would like to share with you. I think the first thing we need to note is the culture of startups has really taken off in India. Five years ago, the pool of first-time founders or the pool of founders itself was small. Our risk appetite culturally, as a country, was more towards either going abroad if you come from one of the top institutions, or, and if you see, almost all the top engineering talent are from India and some of the biggest unicorns in the US, all joining a corporate, or joining a consulting- the McKinsey or a Bain.

 

Smriti Sharma: 03:05

True.

 

Priya Mohan: 03:06

But today where I see, just the number of people building companies from their dorm rooms, and we have two of our portfolio companies where the founders raised money even before they completed college. And we have been in touch with them since. And to me, it signals a change of culture—which is, risk appetite is increasing. The younger folks today, are willing to take bolder, bigger bets and they're actually completely fearless compared to what I was when I started off as a founder. So that translates into the pitching as well. They are able to present a big picture. And it also translates into the number of people coming into startups and hence the number of pitches that we see as VCs. So, these are the two differences that I have seen in the startup ecosystem from when I was a founder about five-six years ago, to now being a VC sitting on the other side and hearing pitches. The other part is that the quality of the founders has also significantly gone up. And this is largely to do with the ecosystem. Earlier, when the pool (was) smaller, the number of first-time founders, literally, you had the number of founders you can count on hands... like you look at Sanjeev Bikhchandani of Info Edge and Naukri or you look at Paytm, or you look at Ola and literally few companies, which raised multiple rounds of funds. And when the pool is small, the access to all founders to reach out to these guys are also limited. But today as the ecosystem is evolving, you see companies spread out from seed series A, series B, so there is enough depth at each of these stages. There are enough number of failed founders as well for the ecosystem and the newer founders to leverage and learn from. So, they don't have to always call the guy who's become a unicorn, who has raised series D. They have a friend who has just raised a seed from Sequoia, or they have just raised a seed from Elevation or Venture Highway, and they can take tips and they can learn. They have a friend they can call, saying, boss, how do I structure my first ESOP^[1] ? So, that’s the depth of the ecosystem has also gone up. So, the quality of founders has increased, the depth of the ecosystem has gone up. Now, what else? When you're talking about growing competition affecting pitching as an idea, I think actually, it's not a negative thing. It's a positive thing, which I explained, which is, as the ecosystem has increased in depth, and number of or the high-quality founders have increased, I think the quality of the pitching will increase because today, you don't have to be the...you don't have to go to an investor without actually speaking to five of your network, or your friends. So, I think the depth in the ecosystem actually will make pitching even better.

 

Smriti Sharma: 05:58

So, the current competitive environment allows everyone to thrive?

 

Priya Mohan: 06:04

I wouldn't say that there is room for everybody. Obviously, when you are pitching an idea in a competitive market, then, you know, there are certain factors that you have to keep in mind. There's the quality of the team, the quality of the idea itself. Overall, (the) quality of founders and overall quality of ideas, and pitch has gone up.

 

Smriti Sharma: 06:27

Got it. So quality is the key word here.

 

Priya Mohan: 06:31

Yes.

 

Smriti Sharma: 06:32

Are there any common pitfalls that startup founders should be mindful of? And if we just look at your experience, what are some of the do's and don'ts that founders need to know before they get ready with their big pitch?

 

Priya Mohan: 06:46

Look, I think the first thing I would advise is, for founders is, and I'll break it down into two parts: one, some interesting tactics that they can adopt before they come and pitch an idea. The other part is what do investors look for in a good pitch, I think both of these will be useful. The first part is: look, always have a set of critical friends, or experienced folks, if you can access, to give you initial feedback. People who will tell you what you don't want to hear and give you critical advice. Because it's very important to kind of, and this I'm addressing to (the) first time founders, not the second time founders who probably have had the experience and who bring in that… having learned from their mistakes before, or their successors before. So, always reach out to an ecosystem and fine tune your pitch based on… with your friends and your network who probably can give you relevant advice in this. The second thing is, always remember, when you go to an investor, and again, I'm only talking about seed, the first-time pitch, in the seed, which is where I have experience in. I think the goal is, how do you peel your story like an onion? Don't come with an information overload to anybody.  Your first goal is, can I impress this person enough that they are going to be giving me a second meeting. So, always do a top-down, thinking, big picture. And, there is a great segue into one of the most important things that investors look for in a pitch, is clarity of thought. You will be surprised how many founders take at least till five, six slide, seven slide to say what they are doing. So, building that story, can you talk? Can you tell me a story? Can you build a meaningful chain of thought of what you're building, the problem statement? What is the gap the customer is facing? How are you planning to fix it? And why do you have the right to win in this market? To be able to stitch together a story like that, is very important. And in all this when I am sitting on the other side listening to you, I look for a couple of things. One is, what is your unique insight? What is it that you're telling me that very few others know? And what is your right to it? Why are you going to succeed in this? What is your spike? And the third thing, is what is the kind of team you have assembled? Because I evaluate founders together. What kind of capability is baked into the founding team? So, these are the three-four things that has to come out in a pitch.

 

Smriti Sharma: 09:32

I think every founder has to bring a novelty or a USP along with the idea as well as the team for it to be a successful pitch.

 

Priya Mohan: 09:44

Yeah. What I would say is clarity of thought. That's very important.

 

Smriti Sharma: 09:48

Okay, great. You switched from being a founder to an investor and a mentor, if I may say so. So how challenging was the transition and what learnings would you like to share?

 

Priya Mohan: 10:00

It is a very… two very different roles. While it's a very tough job, because with all due respect, when I was on the other side, as a founder, I've heard so many ‘nos.’ Often I wonder, I had quite a few funny things to say about my current brethren in the VC space. But now having come this side, I know the challenges. And one thing I'd like to start with saying, just because you're a great operator, does not necessarily make you a great investor. There are very different frameworks, they are different mental models. But being a founder gives you certain advantages, which you can use, which is, I think, today, I'm able to relate to some of the challenges that founders go through because I've gone through that. Now, does that mean that I am going to be (the) person in picking the right company that's going to become a unicorn tomorrow? Not necessarily. That’s probably going to give me better access, better communication, better engagement with my founders. But the framework that I need to adopt as an investor, in evaluating my companies, is very different. So that's one of the biggest lessons I learned. The second thing: the first six months, transitioning from a founder to investor, is that as a founder, you are generally optimistic. Right? Unfortunately, you can't have that exuberant optimism all the time as an investor. Because when I used to meet founders, I am always thinking, how would I execute this? How can I make this work? But as an investor, what you need to understand is you are not in the driver's seat. The girl or (the) guy is actually going to be on the driver's seat and your evaluation is, is this team going to be the team that's going to build the next big thing? So, these are some of the things… it took me a bit to kind of transition. But what I realised is (that) there are some learnings from me being a founder that I could bring in as a VC. And I hate to use the word empathy- it's almost like people use empathy, as if it's a special thing. Everybody should have empathy. Everybody should have like… safe spaces and being able to help founders. So, I am not going to talk about empathy. But what I can talk about is the fact that I have done B2B sales, that I have made mistakes in hiring my first five people, or the successes that I have seen in hiring, the successes I have seen in sort of building certain partnerships… these failures and successes are something that I am able to relate, from an operating perspective when founders pitch to me. And there are some common stuff, even though we are at different industries and different kinds of sectors that one can apply… at least from the common joke I have with my founders is, at least I can share the 500 mistakes that I made if I can't give you any good gyan (advice). And I think that's something that I personally leverage when I speak to my founders. And the last thing is for me, that I'm very respectful of founders’ time. And I have been on the other side, I think it's a very vulnerable position, right? You have no validation. It's a very, very hard job. You are alone, most of the time. You are like setting your own path. When you come and pitch, I think it's very important for me and the Venture Highway team, we are very aligned to saying that, how do I make sure that that half an hour or one hour that the founder spends with us, we give maximum value, and we actually elevate the quality of the conversation, regardless of whether this is going to lead to a transaction or not. So, I think these are the few things that I bring on, probably with my own experience as a founder. But I also humbly state that look being an investor, is a very different ballgame. Also, I realised, we underestimate some things from a founder’s (side). See, when I was on the other side, the founder is not expecting you to agree with what he says all the time. What he wants to know is your feedback. What he wants to know, or she wants to know is, if you are saying a no, can you give me two reasons why you are saying no, so that I can go back and work on it. Those are nuances that if you actually bring, they really appreciate it.

 

Smriti Sharma: 14:15

So, feedback is very important...

 

Priya Mohan: 14:18

Absolutely. You yearn for feedback.

 

Smriti Sharma: 14:21

Yeah. And also, do you really have to consciously pull yourself, you know, from your thought process, like you said, you have been on both the sides of the table… where they are coming from, their struggles, and the validation that they are seeking? That no, you know, I'm not in the driver's seat, like you rightly said, you're just sitting at the backseat, but you just need to know if the car is moving in the right direction.

 

Priya Mohan: 14:42

So, that's a great point, right? Like, I think it's hard to kind of break down and say that look, this is step one, step two, step three, step four that I do. But what… and I can talk about my personal journey again, with all humility and I am four years (old) as an investor and investing is a long game, right? Some of the guys are veterans in the field and they have seen booms and busts and cycles and all that. So, I am just going to say that in my limited experience, some of the things that I use is that, I am not afraid to kind of… in a board call, to say things which I feel, you know, need to be spoken about, or bringing to fore… because at the end of the day, founders also look at the board as a sounding board. But having said that, you need to do that with full respect of the fact that, given the ultimate decision makers are the founders, we will take your data point and do what they think is best for the company. But for you to be able to say your mind, and to be able to kind of sometimes bring some challenges or ask the right questions, you need to build a safe space and trust. And founders need to respect you and know that you are coming from the right space for you to ask those questions. And that's something that I personally try and build with, at least my founders and my teams, to say that look, whatever I say, you can know that I am coming from a place of caring, and I am deeply invested in the growth of the company. And I think most investors aspire to do that. The second thing is, I am very happy to work with founders on specific projects or areas if they need me. So, for example, having built teams before, like, if they want to take my view on an org chart, or do a couple of interviews—love doing those, love doing customer dipsticks and giving my perspective on founders. That is why we are very wedded to zero to one. Zero to one is something that I enjoy. I think the DNA, the kind of journeys that you go through in zero to one is very, very different from the rest. Because it's a path that you are setting for the first time. Very often, you are yet away from product market fit (PMF) right? So, you are firing on 100 cylinders there. You are experimenting, that's the part that I love. And in specific areas, on a need basis, I am happy to roll up my sleeves and help. And that's where kind of my execution needs, also get satiated, to some extent.

 

Smriti Sharma: 17:10

How do you deal with difference of opinion? I am sure, there are difference of opinions that also happens within the investors group as well. So how do you reach to a certain middle point? Is there a framework there as well? Or do you just think, at the spur of the moment, and just go with your gut feeling?

 

Priya Mohan: 17:29

No. So I think investing… at... an investing very early, very early… when you are evaluating a company, it's a combination of gut...and I think it's an art and science. There’s no real…You have to listen to your gut, some of the best outcomes that come from… when you listen to your gut. I don't think board calls or speaking your mind can come from like... you can't speak off your gut, and you can't speak off your head. I think most of us are…like…Fairly, I would say my experience of my fellow investors and founders, they are fairly seasoned. So, these are thought through points, they don't just get spoken off the head. The other thing is, I have been incredibly lucky, Smriti. Like, I have had the privilege of sitting on boards with investors who are veterans. And at least in my experience, I have never had a feeling where I have not been able to say my piece and it's not taken in. Now, that is important. As a board, your job is to democratise points of view. Your job is not to constantly work on a consensus, because you can't build companies with just consensus. But you need to democratise point of views. You need to hear everybody's data points. Ultimately, it is left to the founders to do what is best for the companies. And where there's been difference, I think, it depends on how big those differences are. How does it impact the company? How does it impact the stakeholders, before you take a call on how those differences are handled? Generally, any difference, say in an operating matter or a thought process on how a customer is handled, is best left to the operating team. Because as an investor, you are not sitting on that seat, they are sitting on that seat. But there are certain other areas on… where it's important to address every other stakeholder and I think that's handled very contextually. So again, like I said, my personal experience, even though I am a fairly newbie in this, I think I have been...I have had the privilege of working with some of the best minds and it's always been very open, safe space and people say their piece without fear of any kind of... being (mis)taken or misunderstood. And I think founders are very open and generally if the right kind of chemistry is created in a boardroom, I think you can create magic.

 

Smriti Sharma: 19:51

You know, that also brings me to the point that, how important it is to have a purpose in one’s entrepreneurial journey and create an impact in the chosen space?

 

Priya Mohan: 20:03

I mean, that's a rhetoric. I think it's very important to have purpose in life. But look, having said that, very honestly, I think purpose is a very big word. And I can tell you the purpose that I defined as a 20-year-old self, is very different from the purpose I am defining at a 40-year-old self, and it will be very different when I turn 50.

 

Smriti Sharma: 20:24

True.

 

Priya Mohan: 20:25

So, each of our life experiences and the stage we are in life, we will redefine purpose. But when you are starting a company, whatever age, I think even the youngest founders... like my youngest founders are 23-24, their purpose statements are phenomenal. They want... they start with a very large vision, they want to like…for an entire customer segment. It's not… what I've realised... And that's what I said, the quality of thinking, and fearlessness has certainly increased, that people are looking at very broad, bold statements. So that itself to me is a purpose. Then, as you grow older, when you combine it with a purpose of self, and purpose of what you want to be as an individual, I think it becomes deeper. So absolutely, I think there needs to be purpose. But you just have to understand that purpose is different at different stages of your life.

 

Smriti Sharma: 21:22

True. Do you think young entrepreneurs are more risk takers? And when rubber hits the ground, it becomes different?

 

Priya Mohan: 21:31

Not at all. I think there is no generalisation, or age based... at least in my experience, I have a fairly diverse group of founders across age groups in my kind of portfolio. I don't see a big difference. I think, look, it depends on the founder’s personality. As a founder, you need to be as good in execution because idea is just one percent. But having that big idea is very important to execute to a large outcome. That's why I say very often to some of my friends in close groups, that not every business needs to be a VC business. You can build very good wealth by building a small business which is extremely profitable, and where you can build your personal wealth. It takes a certain DNA to build a very large outcome business. And there's no right, or wrong. I think so one of the things that I personally feel is, it is important for an individual to realise, what is their personality suited for? And going back to your purpose question, what do they really want to do? And not really get carried away because x people are doing x things. So that's what I would like to see.

 

Smriti Sharma: 22:45

Great. How did you find your purpose after your role reversal? Being a founder, one is thrifty, while as an investor, one seeks returns on every single dime. So how were you able to switch modes and adapt? And also, if you can share an example from your journey where you found yourself in a fix as an investor, even though you fully, I would not say empathised, but related to the founder’s plight?

 

Priya Mohan: 23:10

Oh. Well, let me answer the first one. Like for me, let me step back, when I joined as an investor, I am an accidental VC. I think like, and I say this to almost everybody, it's not like I planned to become an investor. It happened. I loved working with Samir and Neeraj and the Venture Highway team. The platform has been phenomenal to me, I loved building this platform. So, it all happened organically. But to me, the purpose is, frankly, like I said, the stage and age that I am in, I don't think one can set monetary or returns as a purpose because that's incidental. You do the right thing, that will happen. I think the purpose for me, is to become or make Venture Highway the go-to destination for seed funds. Anybody with zero to one, good quality founders, to be able to partner with them, and work with them in tandem and be witness to some amazing, impactful organisations coming out of India. That's my purpose. And the purpose is also how do we, as a fund, work hard and building that trust and work hard in working with our founders, in kind of helping them create great companies? And imagine creating great companies means thousands of employment and the way it impacts the economy as a whole. So that's my purpose. Personally, also for me, as an individual, couple of areas or value systems I am very particular, that we want to foster, I want to foster, at least in the VC ecosystem, and I can say that we do that at Venture Highway is that, look, it's very important to own your vulnerability, it’s very important to be able to be comfortable in your skin and say, I don't know. And you will be surprised how people actually open up when you are as transparent and as open and upfront about things. And I have seen this with my fellow investors, I have seen this with my founders, I think you go with the right intent, people… I think we underestimate that. So that's personally a purpose, which is, create safe spaces, be open about what are your own gaps, be open about... see at the end of the day, we are all humans, and we are all fallible. And I think if you are open and transparent about it, I feel like you can build some amazing, real, authentic partnerships. So, authenticity is another piece, that's very important. And I think we should really incentivise people to be more authentic in the ecosystem. Some examples, many times, there will be cases where the alignment of interest, or the purpose of a fund kind of, can diverge from the personal goals, or the things of the founder. I think in all this, it comes back to, like I said, the quality of relationships that you have been able to build, the ability to kind of be open and honest, and solve it in a contextual manner. So, I have gone through this and like I said, I have never been afraid of saying, my thought process with the founders. And fortunately, I think our relationship has never weakened, despite that. So, I think it's important to set that culture and set that stage upfront, when you are partnering with them.

 

Smriti Sharma: 26:37

Do you also think being vulnerable in front of investors as a founder...does that work always, or sometimes things can go downhill as well?

 

Priya Mohan: 26:49

You see, when I say vulnerable, the first thing people think is you are like exposing your weaker self. It's not that. It doesn't mean you are not strong if you are exposing your vulnerability. When I use the term vulnerable, it is to say, that look, I can make a mistake, too. I have bad days, too. I have made mistakes before, I have screwed up too. I think, it really for me, personally, removes the need to put up a bravado, and put up a front all the time. I can really focus on problem solving. Like I said, I am very comfortable, or at least the stage that I am in, I am fortunate and lucky to say I am comfortable in my skin. And I say what is truly needed to be said then, without having to put up. And I have been very fortunate to have stakeholders who accept it. It is just that I urge people to not mistake vulnerability or being authentic as a... it’s not mutually exclusive to from not being brave or showing your weakness. That's not the way to assume.

 

Smriti Sharma: 27:58

Yeah. I think it takes courage to admit where you may falter, or you can falter.

 

Priya Mohan: 28:06

Absolutely. And I think if you are... you have the power to steer that.

 

Smriti Sharma: 28:12

What is the most coveted piece of advice you would want to share with those at a very crucial juncture of scaling up?

 

Priya Mohan: 28:18

That's a very interesting question. Scaling up means different things to different people. Again, like I said, two important things: please be intellectually honest; don't stick on to an ideology, be nimble. Be willing to change your point of view when new data presents itself and be clear about what you want to build, and the kind of metrics you want to follow. And, more importantly, when you are thinking of building for the company, this original vision that you had, or what you want to do from a customer perspective or a problem solving, make sure that you stick to that original goal. While as people who sit on boards and important positions, you are forced to navigate multiple stakeholders and multiple needs of various things, I think it is very important sometimes to come back to the drawing board, go back to the basics. And think about what is it that you really want? So, in some cases, it could be growth, in some cases, it could be engagement. That's why I said you need to be intellectually honest and stick to what you really want to believe. I know it's a little abstract, because it's very hard to give a framework. There are different needs for different businesses. I think that's what I would advise founders to do.

 

Smriti Sharma: 29:47

No, I think that's very authentic and very real piece of advice. Are there any parting thoughts that you would like to share, something that you think our listeners should know?

 

Priya Mohan: 29:57

Two things: one is, I have already highlighted, please be authentic. I think it really helps cut out a lot of mindshare and building a certain image that you don't really have. The second thing is, I have always followed this policy and it's really worked. Ask, clarify! What is the worst thing people will say? No... So what?

 

Smriti Sharma: 30:19

How much do you think luck really plays (a role)?

 

Priya Mohan: 30:23

Oh. Huge. Huge… When people say I have had an outcome I have… of course, we are all here because of a certain amount of merit, hardwork, and all the fancy colleges we went. But it will be really naive of me, if I said luck doesn't play (a role). Of course, life is probabilities. But the more hard work you do, the more doors you open, the more people you ask, you increase the probability. But definitely, luck plays a role. And that also constantly reminding yourself of that luck, randomness, God, whatever you call, it is important to stay humble, because you have to reset that probability every time you do something. And we say that in the investment term… you learn more from failures than success.

 

Smriti Sharma:  31:07

True. And luck maybe called as serendipity. But it's definitely not fluke, right?

 

Priya Mohan: 31:15

Well, in some cases, it can be a fluke, Smriti. But in most cases where it is well deserved, or people perceive it to be well deserved, it is a combination of people knocking on multiple doors and serendipity happening. It's important to see a person's behavior after that has happened. And I think that kind of takes you to a different path.

 

Smriti Sharma: 31:44

As Priya says, when you are thinking of building a company, be authentic, be intellectually honest, and stick to your original vision as you navigate multiple stakeholders. It's about knowing what you want to do, be it from a customer perspective or a problem-solving perspective. And sometimes it is okay to come back to the drawing board and think about what is it that you really want? It could be growth, it could be engagement, or even both. Being authentic, asking the right questions, clarifying helps cut out a lot of mindshare. Succeeding in the entrepreneurial journey is a combination of people knocking on multiple doors and serendipity happening. And it is important to see a person's behaviour after that which leads one onto a path of growth. On that note, we come to an end of this podcast. Thank you so much for joining us.

 

Priya Mohan: 32:39

My pleasure, Smriti. Thank you so much.

 

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^[1] Employee Stock Ownership Plan (ESOP)