CBA announced the launch of Startup2Startup (S2S) in Mumbai through a pre-launch event on 7th November 2014. The event was attended by a focused group of CBA Members (Tano Capital & Hiraco Ventures amongst others) and Entrepreneurs who discussed Best Practices of Angel Investment from Silicon Valley. Kaushal Chokshi, President of CBA and Marta Emerson, CBA Manager, opened the discussion by sharing their experience of investing in the West.
The round table deliberated on various models of angel investment that have evolved from the West and how they are becoming increasingly exit oriented. Ventures in India are also moving away from the IPO route towards an exit via an acquisition. A few takeaways from the discussion were.
Invest or not to Invest?
The time to validate an idea in India is much higher when compared to the same in Silicon Valley. Investors in the West get on board for an idea much faster than other countries.
Too Many Cooks Spoil the Broth
Best practice for an angel round would be to have a Lead Investor on board, who would represent the angels on the Board of the company and also work actively with the startup in obtaining its objectives for a successful exit.
The entrepreneur and the investor should connect socially, outside the work environment to form a stronger bond.
Local or ‘Glocal’?
Entrepreneurs everywhere are now coming out of their cocoon and spreading their wings to take on the global markets. If the product is indeed scalable to international markets, then get on board a local investor from that market to scale up.
One of the startups at the event in the education space at first targeted the local market. But once they went digital, they explored the opportunity of going international and applied to Startup Istanbul and other similar programs. Another Indian promoter spoke of his startup in EdTech, which was incubated in Chile, followed by an acceleration program in Estonia and how he is now targeting the global market.
Investors highly encourage entrepreneurs to get rolling on obtaining IP. IP can help the startup monetize powerfully, increase the valuation and act as a strong differentiator from the competitors.
Financial or Strategic?
To tackle this, entrepreneurs clearly need to understand the current stage of their business, funds required and what objectives can be achieved by pursuing a strategic and a financial investor. A vital difference between a strategic and a financial investor is that the former is focused on the startup’s growth and a faster exit, whereas the latter is focused on the ROI.
Investor A, B or C
In the event of multiple options available, it is recommended that an entrepreneur considers having on board an investor with whom they share the same frequency.
This was one of the few events where entrepreneurs had a neutral platform to exchange their views & challenges with the investors and understand their perspective.
Startup2Startup is a Silicon Valley based event where entrepreneurs, geeks and investors committed to educating and helping the next generation of startups, meet to share their experiences and discuss relevant topics in technology innovation and entrepreneurship. Startup2Startup was founded in 2008 by Dave McClure (Founder of 500 Startups) and Leonard Speiser (Clover, Trinity Ventures, Yahoo, Ebay).
CBA along with Josh Becker (VC and Entrepreneur) and James Cham (Bloomberg Beta, Trinity Ventures) are the current Partners for Startup2Startup.