Episode 87 / October 18, 2020
Shanti Mohan, Founder, LetsVenture on the rise of Angel Investing in India
In this episode, we bring Shanti Mohan, Founder, LetsVenture on the 100x Entrepreneur podcast who has been enabling Investors & Entrepreneurs to meet each other and make the best investments happen.
Shanti with her experience at LetsVenture of seeing over 260+ funding rounds, helps us understand what distinguishes the good vs bad in terms of founders, investors, and deals in great detail.
Listen to this podcast to learn about:
00:28 – Building LetsVenture being a 2nd-time entrepreneur
05:35 – Solving the problem of ACCESS
15:05 – Serving as a marketplace for founders to fundraise
16:12 – Enabling first-time investors to co-invest with Lead investors
17:42 – Building LetsVenture Plus for family offices and HNIs
18:58 – Building MyStartupEquity for founders to manage their Cap. table & ESOP
23:31 – Helping founders and investors with legal compliance and due diligence
31:12 – What leads to failed transactions
38:22 – Insights for angel investors
40:39 – On competition from platforms like AngelList
46:07 – Angel Investing as an asset-class then and now
Read the full transcript here:
Hi, This is Siddhartha Ahluwalia. Welcome to the 100x Entrepreneur podcast. Today I have with me Shanti Mohan, founder of Letsventure. LetsVenture is an online platform that connects startups to investors. The vision is to digitize and organize private markets in India. Welcome, Shanti to the podcast.
Thank you, Siddhartha. Thank you for having me on this podcast.
Shanti would love to know your journey, how you came to start LetsVenture and much before that, what were the seeds in your mind that led you to this journey?
Yeah, so actually, it has been a very interesting journey of LetsVenture, you know, we were founded in 2013. And this is my second venture did my first venture in 2000, which was more a product embedded system company based in Bangalore, where we raised seed funding, we raised series A, and then sold the company. And then I worked with HP, and then worked with HP in India and the US in a product management role. And the very interesting thing was in HP, I worked as part of the, you know, personal Systems Group of HP, where we launched HP App Store in 2009. So the marketplace kind of understanding was very deep for me. And when I moved back to India, I think, I think at that point of time, the ecosystem was still very nascent. And, you know, I had started volunteering for a nonprofit. And then there was crowdfunding and MOOC, which was, which was emerging technologies and 2012, like very emerging trends, where everybody was talking about, you know, how you could actually go raise money online and, you know, create a lot more efficiency in the process. And the intent was to build a platform to connect nonprofits to help them raise funding because I was working for a nonprofit. And I actually found it very, very challenging to just talk about the story to so many people one on one. And I wish that there was someplace where I could go to kind of help them connect to people who wanted to donate to this nonprofit. And, you know, the journey was very incidental, and how it moved into the startup space. Because having been a founder, I actually had a very large founder network. And a lot of my founder friends would actually tell me, you know, that since you have networks in the US, and since you have networks in India, why don’t you connect us to people who might want to invest into us. And that’s where the seed of creating a platform to connect startups to investors was sown, right. And then I went and met with about 20 founders, met with about a lot of angel investors. And I think the one thing which I heard back from everyone was, if we have the platform, today, we will use it to connect to entrepreneurs, we will use it to connect to investors. You know, this was in 2012, late 2012, early 2013, right, and that, and that point of time, the ecosystem was still very nascent. There was no startup India, you know, which was organizing so much of the information as what we have today. And it was very, very hard as an entrepreneur to find the right investor. And when I say right investors, it is, you know, it is very hard to go and ask an investor, tell me about yourself, tell me what your existing investments are, before I tell you about myself, that conversation is a little uncomfortable as a founder, right. And as an investor, it is very hard to go find founders whom you want to invest in. And really, you know, LetsVenture at that time, the vision was very simplistic. We said, we want to create a marketplace, which will create transparency, which will create access, which will make the process of discovery easy for founders and for investors, and bring that entire ecosystem into one online marketplace. Right. And, you know, it has been very interesting, Siddhartha, because a lot of people said, you know, how, how do you think founders are going to open up so much information online? And Why do you think investors are going to come online and invest?
It was a private market. I believe. Information was completely hidden. Sharing information was not considered to be the norm. Investors wanted to have their own not disclosed to others.
Yes, yes. And I had more naysayers and people who thought this would work, right. And I remember, you know, one of the investors Shara, in fact, he said, you know, if you can make this work, if you can execute what you’re saying, I think it could be very valuable. Right, but people still had a little bit of a little bit of a concern because it meant a behavior change and how people looked at founders and how founders looked at investors but You know, fortunately met with Sanjay Jha. And he was also looking to start something on his own. And you know, Sanjay is one of those very, very brilliant, you know, product guys who can actually just build out anything based on what the requirements are there on technology. And I was coming from the business side. So we really complemented each other. It was a very strong kind of passion for both of us to build this out. And we launched our first beta in 2013, September 9, which was Ganesh Chaturthi day incidentally, and, you know, we had done our first transaction in January of 2014. Right, which was, which kind of checked all the concerns which people had one is, how are you going to attract the high-quality founders to your platform? How are you going to bring investors who want to invest into this high-quality founder and that first transaction, we had about 13 investors invest, five of them were in the US, five of them had not met the founder, they had just spoken to him on Skype, right, about three of them came from my own network. So that entire validation of online space, just to remove information asymmetry, to actually create transparency, create easy discoverability was starting to kind of playout for us.
I was myself a founder in early 2014 2015 when I was building my first product Addodoc to get 20 investors to close 2 Cr. I had to do 60 meetings and all 60 meetings were in person, three meetings with one investor each all in person, getting extremely painful for a founder, even thinking of small, some today, like two three Cr to go independently and collect, you know, X number of investors. And then it becomes another challenge as a founder to manage these 20 investors because they have put the skin in the game and it’s your duty to send them the update, but then talking to 20 investors every month, is a challenge, because I’ve gone through that and getting every new round paper signed by 20 people who might be sitting in different time zones becomes a nightmare for a founder.
And investors don’t want to cause a nightmare, but just the function is so much, you know, I would say operation is complex.
Exactly. So basically, you know, we take care of so we connect the startups to the investors and we do due diligence, we do paperwork, right, we only call for money when the DD has gone through, right? So we almost look ourselves, like the back end infrastructure for the angel investing, right? So you have to just do the things what you love, as an investor, where you get to meet a lot of amazing founders, and then when you decide to commit, then we take care of the entire process of the compliance governance, right. So, there is a lot of things outside just meeting a founder and making the commitment, right, like, like you rightly said, and I think that is what we have created with LetsVenture. So, the intent is that we want to create more efficiency and transparency in the process of angel investing.
Shanti, more anecdotal, I say, between 2013 and 2014, I was almost been like eight months dedicated to fundraising, and investors from fortis family office family office and all committed, but then around three, four months, I gathered around 10 investor, but they all said, you know, get a lead and then we will sign the term sheet.
So, another four months, five months, you know, it took me two to get a lead investor. So, the rest of the investors could go behind the lead, who could give me a term sheet. For a founder, it used to be a nightmare.
Yes, absolutely. Absolutely. And I am actually a founder first and then an investor, right? Because we are building out let’s venture and I can just, I can just relate to everything in the founders journey. Right? Like, like, literally, and that actually is very, very good. Because you can relate to what you’re doing from directly the role you’re playing an organization.
And Shanti, help me you know, understand the evolution of LetsVenture over the last six years. How have you evolved the product and platform?
Yeah. So, you know, probably the last six years has been the most interesting part of you know, the journey of flex center, I mean, every day is a new day for us. But like I said, when we started the vision was very simplistic. The vision was how do we become the platform which connects early stage founders, to investors who are looking to invest into early stage companies in India, right and that point of time, the cheque size was about maybe 1.5 crores to about two crores was around size. And we always kept the minimum check sizes five lakhs because, you know, we want to be a platform which is compliant to companies at law, we want to ensure that, legally we are correct, because we want to protect our investors who are investing through us. Right. So that was how it started, then, you know, over the first three years, we also raised our own Angel round. We also then raised our series A so we got some amazing investors who invested into LetsVenture and, you know, we have Anupam Mittal, we have Accel, we have Rajan Anandan, we have Ratan Tata, Mohandas Pai, Nadan Nikelani, Sharad Sharma. I mean, a lot of very, very good people who have supported us in the journey in the true sense in the sense that, you know, they kind of help us through, because this is a very complex space, Siddhartha. Because it is not as simplie as it looks today. And, in about 2017, the evolution happened is that when we started LetsVenture, you know, the first question which people asked us is that, you know, angel investing is an art, you know, how are you to create a marketplace out of it, right, and literally, we converted that art into a science. And because we believe that at the end of the day, there is a science behind how people think about investing, and how angel investors actually behave when they when they look at investments, right? So really kind of started building out the algorithms into capturing a lot of the user behavior. So, we’ve always stayed as a technology first platform, Siddhartha. So even in 2013, when we launched, we launched a tech platform. So we did not do our first transaction offline. We actually launched our tech platform in September 2013. And then did our first transaction on the platform in January 2014. So right, we have always been technology first, because we believe that if you want to think of your venture, you have to think about how are you going to scale your ventures, right. So really, kind of took that model. And in and in about, you know, about march of 2016 is when we launched lead syndicates on the platform. And the and the reason why we did the lead models was because we realized that there were a there was a lot of new investors coming to the platform. Right? Today, if you look at LetsVenture, we have about 50% of investors are new investors. And when I say new investors, they are not new investors to investing, right. They already are investing in public markets, like they already are running successful companies, they are probably CFOs of organizations, they are probably second generation family businesses. But they are new to the private market asset class. Right. So just to understand the nuances of angel investing, they are new to that. Right. And if you look at a new angel investor, I think a best way to start your angel investing journey is to one is to meet a lot of founders, right. So a lot of founders listen to a lot of pitches, which the online marketplace provides you that opportunity because you can go login. And you can look at a lot of startups, which are fundraising, so you get access to a lot of startups, and it helps you understand the business model. It helps you understand how entrepreneurs of building businesses and private markets, that is one step. The second step is to also follow the thesis of some of the existing very successful angel investors who are already getting a lot of very good exits. Right, that is one. But I think the more important part is these successful angel investors also get some of the best access in the ecosystem. I mean, you know it Siddhartha, right? That if when you are connected deeply into an ecosystem, the founder will always reach out to people whom he knows first. So the intelligence of that deal origination happens first with very successful people, and not just successful in terms of angel investing, people who work with founders and help them connect, right? People who are actually intrinsically very engaged in that ecosystem.
Yes, it is a very narrow pyramid,
Yes, it is a pyramid, right. And there are about top 50 influencers of the ecosystem who get the intelligence, who get access, they may not be investing in all the deals. But among that 50, the coverage is pretty wide, right? And that’s where we formed the lead syndicate because we wanted to help our new investors and we wanted to help our active investors find access to the transaction which they otherwise would not get access to,
So, Shanti, help me understand in LetsVenture, what are the products you have built in what are the services angel investors and entrepreneurs can use today?
Yeah, so if you look at LetsVenture right, we started with, like I mentioned earlier, we started with being the marketplace where an early stage founder could connect to investors and could raise early stage rounds. And from there, you know, as we started building out the platform, and just to make a kind of take a step back, we’ve always envisioned being a technology player, right. So being a technology marketplace, which would enable all the services. So it has always been that has been the underlying thesis of how we thought about bringing new products to the ecosystem. And like, like we launched our technology platform in September 2013, then we kind of did our first round in January of 2014. But going forward, you know, in 2016, is when we started seeing the lead investors kind of emerge as a very focal point in how we could enable new investors to invest. First, you should meet a lot of founders before you write your first check. And LetsVenture as a platform allows the new investors to meet with a lot of founders, right, the second thesis is that you should try and follow the existing active lead investors who have already been engaged in the ecosystem, because there are two aspects to that lead investor right one is that because they have been investing in the ecosystem for a long time, they have very good network, right, and they get access to some of the very good transactions, which typically will not be available in open in networks of which will not be typically visible. Right. So that is one. And second is that because they have been investing for a long time, they understand the process of diligence, they understand the process of looking at evaluating an investment from an angel investing criteria, right. And the angel investing criteria is that you have to basically look at it from a return perspective, like just not from a profitability perspective, but from a scale perspective, from how will I make money when I exit this venture. So as a new investor, it is good to go back and existing lead investor because that gives you the understanding and and that derisks your initial capital. So that is the second kind of product we launched. And, you know, in 2000, late 2017, we also looked at family offices having a very similar challenge. But they were looking at the private market asset class that there was a high information asymmetry, there was price arbitrage, they’ve all no transparency in how these were being showcased to family offices. And from that perspective, you know, we built out LV Titan, which was a family office platform. And on top of LV Titans today. We have built LetsVenture plus, and LetsVenture plus basically brings in growth stage allocations to family offices, and also helps in bringing ESOP allocations to family offices, that is our third product. And the fourth product is the the most interesting product, which kind of aligns with our vision of digitizing and organizing private markets is our cap table and our ESOP management product. So, as a founder, sometimes everybody today in India, most of the founders VC is managing their investments through the I mean, they’re managing their investors by with an Excel sheet. And, you know, the idea is that you want to give them a product, which will now enable them to manage their cap tables, but also help them do round modeling when they are going to raise a round. So how will this dilution effect? How will a convertible note, when it converts, what would my cap table look like? So a lot of aspects around cap tables, and of course the complete product to manage ESOP allocation. So you know, giving allocating ESOPs, granting ESOPs and an employee leaves, ESOPs coming back to the pool, issuing grant letters which is digitally signed both by the founder and the employee. So, really the cap table and ESOP management product is more like HR product which we today work with the startups in order to help them manage the equity which is the most expensive and the most valuable instrument for a founder.
So Shanti, help me understand the products which LetsVenture offer to startups and investors.
Yeah. Well, that’s a great question, Siddhartha. Because I think, you know, LetsVenture today, after six years actually has built the entire private market stack, the way we look at it right. And let me kind of start from the beginning, we started as an old age platform, helping entrepreneurs connect to investors. And that’s our early stage business. And as we started building out, LetsVenture, I think a lot of people came back and told us that angel investing is an art and it’s not a science. I mean, it was a challenge, which we had to address about no really taking angel investing online. Right. And that is the early stage platform. So, LetsVenture has always been our technology first company, in the sense that we we first built the platform, and then we started doing the transaction on the platform. So, we launched our first version of the platform in September 2013. And we did our first deal in January of 2014. Right, by about 2016, we had done already about 30 transactions on the platform. And what we noticed as a behavior was that, LetsVenture had about 50%. Investors. And when I say new investors, they are not new to the investment behavior, right? This new to private markets, and they were people like cxos of organizations, they were entrepreneur term investors, they were second generation family businesses, who did not really understand the basic tenets of angel investing, right. And as LetsVenture, we actually started to engage with them. And we had two recommendations for our new angel investors. One is before you write your first check, talk to at least about you know, 15 to 20 founders before you go and write your first check to a company. And the second is to follow the thesis of existing active lead investors, right really to kind of look at because as an existing active lead investor, you actually have two to two kind of strengths which you bring them. One is your network or your access to founders who are fundraising. And the second is just your ability to evaluate startups because the angel investing evaluation is based on a very different evaluation, it is not about just about profitability of a company. It’s also about the ability of the company for their next round the ability of that venture to scale. So from that perspective, we actually built out a lead syndicate on the platform where we were looking at, you know, how do we allow our new investors to follow the lead investors as well as to meet the number of entrepreneurs on the platform. The third product, which we launched was, again, listening to the market, we were meeting a lot of family offices who are looking to invest into private markets. I think they had a very similar challenge with family offices, like the early stage investors, where there was price arbitrage, there was information asymmetry, there was a lot of reference, but there was most structured way to get a macro view of the private markets, right. And looking at the family offices, we built out LV Titans. And then we’ll build out LetsVenture plus, which is a technology platform, which allows ultra HNIs and family offices to access growth staged investment into the Indian private markets. That is the third product. And I think the most interesting product, which we have launched in the last one year is my startup equity, which is the cap table management and the ESOP management product, which truly aligns with our vision to become India’s first player to organize and digitize private markets. Right. And what I mean by that is, the cap table allows a founder to manage his investors through a cap table, but also allows to do round modeling to look at how does the dilution look like when I raise a particular amount of capital? How does the dilution look like when I convert a particular CCD I have raised, right? So, just those views that are available to the founder. And the ESOP management tool is the product that helps you manage the ESOP allocations to employees right? You can actually use the tool to look at how much ESOP has been allocated like when is the ESOP vested if an employee comes back to the pool. Right as well, as you know, you can issue grant letters signed by the founder and the employee digitally, to the employees in the organization. So that is the fourth product we have built out.
And does this forth product allow selling a vested ESOP of employees to private markets independently.
Yeah, so that is a very good question. So the product is a SaaS product, right? The my startup equity is a SaaS product, which today allows you to digitize and manage ESOP, the LetsVenture plus platform allows you to do exactly this, right, where we allow the ESOP liquidity so if a company has a particular pool of companies, where they want to create structured liquidity within the organization, LetsVenture is a platform which allows them to do that. Because really, today, if you look at it, though, the founders have the intent of giving ESOP to their employees, no promise of liquidity, right. And that is what we call it is the predicted promise of liquidity to your employees. Right? And how do you do that, because that could become a very, very time consuming process for the founder, if it is not coupled with a primary fundraise, how to do off cycle ESOP of liquidity to your employees. And LetsVenture plus creates a complete solution for that,
And it takes care of the entire equity what I will say for the employees.
It takes care of entire process, right from finding the right, so from working with the founder, getting the founders’ consent, getting the founder and the board to set the price. So we don’t do price discovery, so we don’t do, which would emulate the stock market, right, this is still thing of a private market transaction, right? Where you actually allow the founder and the poll to decide the, the modus operandi, right, we actually have the rules engine running on top of the ESOP, and Capital Management product. And then we actually identify investors who would then be applicable to the company, just from a Companies Act law just from getting consent from founders. So we find the right investors. And we enable the transaction. So, Letsventure plus platform is more like a matching platform, which connects the staff, the ESOP and the and the private market participants,
and helped me understand Shanti, in this whole value chain, who is your customer, entrepreneur, the lead investor, or the rest of the investors who are coming on the first time and following the lead?
Yeah, that’s a great question. You know, and that’s also a very complex question to give out in one line, right? Because we are a marketplace, right. And the way we look at it is that at the end of the day, in a nutshell, the founder is our customer, right? Because in my mind, the investor should not have a preference of which platform we invest through, as long as he gets access to the best transactions on the platform in a very regulated, transparent, compliant way. Right? Those are the three elements of investing, right? One is access, which is transparent. So you know, exactly, you can talk to the founder, you have all the details, you have enough time to make your decision on the investment. Once you’ve decided you should have completed paperwork, you should have complete DD done, so that there is a diligence done on on that investment, right, because we know that angel investing is a high risk asset class. And we want to ensure that people are committing knowing fully the complete the DD and the health of the company, right. And third is of course we want to be compliant with the regulator in the sense that you want to follow Companies Act law. And SEBI has truly gifted us this angel AIF, right, which makes it very, very easy for an accredited investor to invest into a startup because now everybody is fooled through one vehicle on to the cap table of the company. But there is a lot of compliance required in order to run tech savvy, Angel AI, which LetsVenture follows to the tee because as a founder, I believe I want to build a business which is within the regulatory framework of the region we’re operating in. We don’t want to do anything quickly. We want to do it the right way. Because this is an investing space we are in right this will give us returns in the next five to 10 years. But we have to do it in the right way so that when the investors exit, they don’t have a challenge on the investments they have made. Right? So really looking at it, looking at that perspectives, Siddhartha, we believe that we want to maximize our marketplace for the founder, but we want to optimize it for the investor, right? Where we actually protect the rights of the investment and we work with the investor to do the investments and the right way. Today, there is a lot of noise in the ecosystem, right? So there is a lot of urgency, there is a lot of noise, right, in that noise and urgency, we don’t want to try to do anything which will put the business which is fundraising on the platform at risk, even from a founder perspective or an investor perspective.
And Shanti, how do you think about exits because we are all believers in the Indian startup ecosystem and investing you know, and you have now right now, I believe 800 investors who invest in a year on LetsVenture platform, but how do you ensure that you know these investors are not investing in a story and ultimately, they see single return at the end of the day or end of a cycle of three to four years?
One is we cannot guarantee exits, right. So that is the nature of angel investing. And nobody and if somebody tells you that he is going to guarantee you exits, I will tell the investors stay away from them. Because when a good VC, very good investor does not know because there are other factors outside the company, which help them succeed or which bring, or which you know, don’t help the business. Right? So, there are a lot of macro factors which play, right, but in spite of that, there are still ways to assess a business for the probability of success. Right. And what we try to do with our kind of processes on the platform is we’re trying to increase the probability of prediction of success. That’s all we’re doing. Right? We cannot say that this will become successful, I think, I think nobody knows that, when they are investing. That is the first point. Second is, we have been lucky, Siddhartha. So, we actually seen some very good exits on the platform. Right? We have seen a company which raised an angel round, which returned 7x to our its investors.
Can you share exomple if possible?
So. then this particular I would rather I don’t know if the founder would actually like us to talk about it. Because I think this we can kind of send you one note separately, so that you could attach to the podcast once I get permission from the founder. Right. But but we will not give you data points, which is again not correct, right. So I’m not saying it just for the sake of kind of having the conversation. But you actually seen a lot of good exits in the sense that we have seen about one company give return about seven x in about 10 months, we’ve actually seen another company after four years return three x, right. But like I said, I think the exit on angel investing is about a five to eight year time cycle, right? Sometimes you get lucky and the exits happen early. What we have also seen that where there are opportunities for exit angel investors don’t want to exit right because there are larger investors coming in and saying I want to clean up the cap table. Now, no investor wants to exit because he feels maybe hold it on for another three to four years, I might see a much better exit because the company would have grown and then I can actually see a better return on my investment. Right, I know a lot of angel investors who are still angel investors in Ola, right? who have not exited because they just feel like probably will just wait for the company to kind of give us a much higher multiple on what we have invested. But we are seeing conversations around exit, we are seeing investors, you know, focus on that part of it. And we believe that exits happen when a lead investor is actually working with the founder to help him build the company. We actually see that data shows us that that companies which do well are where the investors are actually supporting and working with the company to help them build out the business because you know, at end of the day building a company is a very difficult journey. And I’m not saying that the investors are responsible for the exits or are responsible for the growth of the company. What I’m saying is that the partnership with the investors is building the building the venture becomes an important element of creating scale and thereby creating exit for investor
Shanti, I assume, would there be you know total number of exits through LV platform be in single digits or double digits till now.
So, we have actually had about 64 of our companies out of the 260 have gone on towards their next round. 26 of them have got acquired, like acquired, merged, gone into bigger companies for that. So, the ratios are pretty good in terms of just healthy in terms of what an early stage platform can return in terms of IRR to the investors.
Okay. Let’s see what would you term you know, as a success percentage of every hundred fundraisers launched on LV, like the every fundraise have happened, whatever deal gets launched.
So I think it’s about about 90% success. And when I say 90% success, I’ll tell you what we don’t define as success right? The 10% like, what is the failed transaction in our mind, a transaction is one where the money has been committed, but the DD did not go through we will not go call for money because like I said, we believe in protecting our investors, right. So, there was which came up as a DD in that which was a red flag at a very core level, where there is you know, too many cash transactions happening in the company. So, there is a doubt in the lead investors mind on the ethics and the governments of all the companies in run, like there is falsified information on customer information. So, there could be things which are a red flagged, and that’s where we don’t do call for money. The second one is where we have not been able to even raised that minimum amount. Sometimes when a founder is looking to raise suppose 2 crores for him to hit the milestone a little too less will actually put that less money also at risk right. So, if he is able to raise 50 lakhs we do not typically do call for money on that, even if that 1.5 crores was supposed to come from outside, they know of some networks or platform where they say you know, I will go give you that 50 lakhs and then you go raise the 1.5 crore, what happens if the founders not able to raise that 1.5 crores? Like because that 50 lacs goes into high risk. That is how we define a failed transaction, Siddhartha.
and then you must be very choosy on getting, let’s say, what would be the ratio of the number of deals coming to you and the number of deals that go live on LV?
That ratio is about 2%. And yeah, it is not because I am choosing to display a deal on the platform. So, let me explain to you because I think this will help you understand how that process of filtration happens, right? At LetsVenture at the core, we believe we cannot represent the thesis of 7000 investors on our platform, we have 7000 investors from 55 countries who have heard about us who have reached out to us and who we curated and onboarded. So we also reject about 40% of people who come to become investors on the platform. And the other rejection is more from your understanding of this asset class, or whether you are an A credited investor who has enough allocation to invest into private markets, like so those are two criteria. Now, if you look at it, since we cannot represent how the 7000 people, the people kind of would look at investing, what we do is we curate the startup for information, we also do a call with the founder, we do business diligence on the company in the sense that, you know, we actually talk to customers, we actually do a bit of a diligence on the company, the team really works very closely with the founders. And then we list them onto the platform and we put them under trending. That is one part. The other part, Siddhartha, which you have experienced also is when a minister directly brings an allocation to the platform, where the lead investor does this right where he does the business diligence, he already knows the founder, there is already a term sheet or there is already a commitment happening. And now we are getting an allocation to the platform. Now we put this under trending the second one directly goes to become a featured syndicate where we open it up to all investors on the platform. And they can choose to commit to the startup or then goes to trending based on investor interaction or investment engagement with that founder, it is then put as a featured syndicate on the platform that helps us ensure that we are involving so we are actually using the market tools to actually curate transaction. So it’s really leveraging the intelligence of the investors on our platform to help us bring the best deals to the investors
But still, you know, what’s the criteria of rejecting the rest in 98% of the deals which come on the platform?
Yeah. So basically, we would not reject 98%, we would reject about 60%. Right? The 40% goes into that 2% funnel, right? Because that is where the marketplace intelligence comes in. But if we look at the first 60%, they could be very early stage founders, who’re just going to launch a beta. So we don’t curate them on the, in my mind, on their ability to build a business, you rate them on their timing of fundraise. You could be a little bit early into your fundraising, when you come to LetsVenture, like you could be launching a beta in the next three months, I know that if I go put you onto the platform, it’s going to be very, very difficult for us to actually find you an investor who is not willing to wait for the next three months, right? The second is that very, very early stage ideas with no experience, they’ve just come to the platform, because there is a marketplace available. They want to go check out investors, right. So we I mean, because our team has been curating startups the last five years, we get a sense about we know what founders are going to have the ability to build companies or to be able to raise funding from investors. The third criteria, Siddhartha, is about scalability, right? You might be a venture, which will become profitable, you could be a cafe, you know, or you could be a very, very offline business as that offline business, you could be very valuable. You could be building something very valuable. But you may not fit the principles of angel investing. I think, you telling entrepreneurs, you have to understand why an angel investor invests to know why and who will not raise or you will raise money, like an angel investor, invest in your venture, because he wants nonlinear returns. If you’re going to tell him, I’m going to give you two x return in 10 years, it does not fit the definition of angel investment. That is all, right, it has no reflection on the business you’re building as a founder.
Agree with you, Shanti. And, Shanti, tell me about your own journey. How have you evolved as a person in the last six years? Because you are already a second time entrepreneur with, you know, have seen all the world? What was new for you?
Yeah, so for me, it has been actually very interesting, because when I started LetsVenture I came at it as the founder lens, right? I did not come at it with an investor lens, which actually was very good. So that because I did not have any biases on what would not work, if I would create an online platform, because a lot of investors when they looked at the idea, they were very skeptical. Right. And that has been the biggest learning is that I think you have to build your company from your own context. That is one and believe. And you think through that context, right, it does not mean that you be blind to the, to the reality of the space in which you’re building your venture, just lose that you have to be very, very aware of the aware of what what you’re trying to build, what is the problem you’re trying to solve? I think over the last six years, what has been my biggest learning is listening to the market, that is only what matters, right? It is irrelevant about who is your competition, who are the other players, I think they are more validations of the product you’re trying to build. If the competition is starting to build up in your space, it’s a validation that that space is becoming more relevant and more valuable as a space to be in. right but really building a company, building a product is about really looking from the market perspective constantly staying in touch with your market, constantly evolving your company based on what you’re listening from your customers, right that has been key. The second is which I iterated and which I’ve started to believe in more is that employees don’t work for you, they don’t work for the company, right some they work for themselves, because they believe that their passion is getting aligned to the passion of what the organization is trying to deliver to the market. I think if you know that, you will know that your employees can actually take high accountability in how they could help you build your company. So I have actually a firm belief that, that you know you have to be the enabler in their own journey of you know growing as a person and then you are able to attract and retain some of the best people you’re able to build a very good thing as a person for me personally. Some days have been difficult, because the space is very competitive, it is very crowded. But at no point did I ever regret being an entrepreneur never not a single day. Did I regret having built LetsVenture? Because I’m actually grateful that, you know, I started it at the right point a little early before this entire euphoria started, right. So 2013 was still a little early. And we got in early, you know, we made some great friends, we’ve got some great believers, we’ve got people who came out of their way to support us. So, overall, it has been a very happy, very satisfying journey for me.
And what would you say you know, there are platform like Angel List, which have come up in India? And how it has helped or not helped LetsVenture grow?
Yeah, I would not say it has not helped letsVenture grow. See, we built product for the Indian market, right? We understand the Indian psyche very, very well. Right, in terms of understanding the Indian investors and founders.India is not a do it yourself market, Siddhartha, right? Investors still want to hear a voice. They still want some help when they’re making an investment. And I think that somewhere, we under emphasize the value of the angel investor, right? Because this is a large check they are writing and five lakhs is not small amounts of money. Right? And you can’t just make it completely tech enabled. That is my belief, right? Angel list was actually originally built for the US market. And they bought that model to India. And I’ve actually not personally tracked so much of what is happening on Angel list besides knowing from the investors and the founders, but I think we both play a complementary role, because this is not a winner take all right, this is a market where they will be multiple players. And the day Angel list announced they’re coming to India was the biggest validation of what we started, we knew that we were on the right path, right? Because till then we were the only player like, everybody would ask me, you know, but what do you think of LetsVenture? Why have you built letsventure? And my question back to people is what would happen if LetsVenture is not in the ecosystem? I think we are able to answer that, we will answer we will be able to answer why has LetsVenture been created? Honestly, it is not just AngelList, but a lot of other players, right? And who collaborate, you know, because like I said, at the end of the day, investors don’t have loyalty so that they will go to where they get the best transaction, they get the best support, and they get the best compliant process of investing. And if you are able to execute on that, I think there is enough space for everybody to be in this market.
And as you rightly said, it is the job of the investor is to find the best companies out there wherever they may be, or whichever platform they may be on.
Exactly. So I think this entire narrative of you know,oh you have a competition, I just think it’s overplayed, you know, it is just very interesting to put two people together and that is not where we spend our days thinking. We are very, very execution focused as an organization, we are very market focused, right. And it just happens that because we listen to our market, we kind of develop products, and that product also happens to be there with other people. I think that that is how I look at it. So our obsession is really with execution.
As you rightly said Angel List coming to India was the best validation that believe LetsVenture could have because a US company was so large coming to India means the market was really right. And the timing was really right for them to come in.
Absolutely. And Utsav has done his first leed investment on LetsVenture. Yeah, so it is good because I think like I said, this is not a winner take all right. This is about creating efficiency. This is about creating access. And it is good if there are more players because from an investor perspective, I think it is great. Right now there are more access to more transactions happening.
I think you together with Angel List and other platforms are helping build this early stage ecosystem where there was nothing existing six, seven years ago.
Yes, yes. So, for me, Siddhartha, just one point which I actually would love to make. We kind of see Angel list as one part of what we are doing at LetsVenture, right? Vision is much bigger. In the next five to 10 years, we want to organize and digitize private markets in India. And we have three business verticals, right. We have early stage platform, we have LetsVenture plus, which is the growth platform. And so have LetsAccelerate which is actually working with incubators, accelerators with corporate innovation program, where we’re looking at the very early stage ecosystem, because I believe from the view I have of LetsVenture, I can actually create a lot more playbooks, a lot more standardizations, and how incubators and accelerators can run, as well as create a lot more value for corporate innovation programs. So really, the vision is to bring capital to bring customer to bring community together in a very digitized technology led process.
Fantastic. And Shanti, just to summarize our podcast, how do you think Indian investing has evolved as an asset class? do maximum angel investors still see return at the end of the cycle?
So it has matured a great deal. I believe that the next decade is the decade of the Indian ecosystem, right, just in terms of angel investing in terms of exits and secondaries, which will happen, right, we’re already seeing a lot of that starting to happen. Right? But if you look at the maturity of the angel investing ecosystem 2013 that you can imagine seven years back, right? We literally used to go talk to people and say, do you want to Angel invest? And they would ask, What do you mean by angel investing, right. And we used to run workshops, online master classes for people to understand this asset class, we would have run like not the angel investing master classes and Bangalore Bombay, we have done it at every of our LetsVenture events, because I believe it was about creating awareness that there is a private market, you cannot stay away from, I believe today you’re an ultra HNI, you do not have an option not to invest into private markets, I think because if you really want to diversify, you have to invest in public markets and private markets, you have to keep aside the small allocation and create a plan in how you start to invest into private markets. So I actually see that maturity. And because the numbers have grown like on our platform, today, we have 7000 investors. You will not believe this, but I have not spent a single dollar on marketing. We don’t have a salesperson who’s selling angel investing to people. Because I believe I cannot sell angel investing, it has to be organic, it has to do through referral, you have to bring people through their circle to start investing, because that is the best way to create awareness. And in the last seven years, you know, we’ve reached 45 countries, I’ve never been in any of those countries where I have investors from.But people have found us, and they have actually invested through us. So I believe that this is actually a great time to also start investing even during this downturn. Because you know, data shows us that company with a bill during the downturn actually built much stronger, because one is, as a founder, it is much harder to raise money. But I think second is that you are already thinking of what could go wrong in your venture as you’re building it out. Right? You cannot go lower than that. And you know, I mean, this is probably a very good time to set aside some money because the quality of deal flow is great today, right? It is actually among the best we have seen in the last 6 year for the last six months, we have done about 50 transactions on the platform. Out of that almost 30% of them were growth stage companies who were actually giving us allocations, right so it is not like very early stage only right. So there was actually a lot of growth phase companies where there were already VCs who came to the platform.
Thank you so much. Shanti it’s been wonderful to have your wisdom and experience on early stage investing and how you built one of India’s largest private markets. Thank you so much, and it’s been a pleasure.
Thank you so much, Siddhartha for having me.