260 / May 29, 2024

VC Wisdom: Nansi & Siddhartha on Investing, Fundraising, and Growth

44 minutes

260 / May 29, 2024

VC Wisdom: Nansi & Siddhartha on Investing, Fundraising, and Growth

44 minutes
Listen on

About the Episode

From Podcasting to Investing

In this episode, we explore:

– The journey from running a podcast to investing in over 50+ B2B SaaS startups.
– The realities of fundraising and the challenges faced by VC fund managers.
– Insights into the Indian VC landscape and the B2B SaaS startup ecosystem.
– Lessons learned from years of building and growing Neon.

Tune in to learn about the ups and downs of building a VC fund, the importance of relationships in the investment world, the wrong reasons to work at a VC fund and much more.

Watch all other episodes on The Neon Podcast – Neon

Or view it on our YouTube Channel at The Neon Show – YouTube


Nansi Mishra 00:58
Hi everyone, I am Nansi, co-founder and head of marketing at Neon and your host for today. And don’t be disappointed, we have Siddhartha also joining the discussion here. So welcome to the show, Siddhartha.

Siddhartha Ahluwalia 01:08
Thank you, Nansi. Great to be on the other side.

Nansi Mishra 01:14
So guys, as you know that after running our podcast for two years, we decided to invest in startups. And we thought that it would be the right start to our new journey. And the idea of working with the most ambitious set of people was very exciting.

But the reality was way different than what we imagined. And considering our background, and the exit we had, it was not an easy thing to get into investing, right. But fast forward to 2024, we have invested in 55+ B2B SaaS startups.

And we have a community of 140,000 ambitious people who want to leave their mark on the world. Yet, it feels that the journey has just begun. There is a lot to do, there is a lot to learn.

There are so many ambitious founders we have to meet, there are so many interesting startups we have to back, there is so much to learn and build.

So, in today’s conversation, we will discuss how we are building Neon, what is happening inside the Indian VC space, especially in the B2B startup ecosystem, and what’s happening in our lives and what are the other work we are doing respectively. So Siddhartha, let’s start.

Siddhartha Ahluwalia 02:38
Sure. Excited to be here.

Nansi Mishra 02:44
So Siddhartha, we are raising our fund three for Neon. And we are meeting so many investors across the world, day and night. How’s this journey going for you?

Siddhartha Ahluwalia 02:55

I think it’s almost like being equal to a founder or even the hard work required is more than a founder. Because as a founder, you know, you raise one investment and then for the next two years, you deploy it, use your working capital, or try to make it profitable, so you don’t need money. But as a founder of a fund, you always need money to deploy into startups.

So I would say like 60 to 80% of my time always goes to fundraising. So I think that’s a different life change than a founder. When I was a founder, I was maybe raising six months in a year. Now I’m raising 8 to 10 months a year. That’s one change.

But I feel grateful to be doing it because recently, you know, I travelled to Singapore for the first time. I was there for 10 days, and met 30 folks across institution family offices. Before that, I was in the Middle East in Qatar. Last year, I was in Dubai. And before that, like two months in the US.

So this kind of learning, this kind of exposure to a vast variety of people, institutions. I couldn’t have got that as a founder of a company, I could only have it as a venture capitalist investing into startups. I’m grateful to have this opportunity.

And I know that the current environment is tough, but it’ll take me a little longer to raise, right? In a fund three of 50 million, we have already done the first close of 10 mil invested already in fantastic second time founders in five companies. Right? So the journey, I think it’s just 10% done.

Right now, as we have raised 20% of the fund and deployed in almost 10% of the companies that we want to eventually deploy. And the remaining 40 mil that we want to raise requires new relationships to build, new connections to get built, new people to believe in us.

I think that’s the most important part. And I think when new people believe in you, magic happens. Because these are the folks right that we don’t know, or we we have known yet.

And when they come, they come with their networks, they come with their intellect, they come with everything that they have built on board. As we invest in startups so these limited partners, future limited partners invest in us.

Nansi Mishra 05:20

And there’s a joke between us that it’s been 9,10 years knowing you and since the time we met you have been raising funds.

Siddhartha Ahluwalia 05:28

Yeah, first I have been living for my own company, which you are a founding member of and then co founders have been raising for the fund.

Nansi Mishra 05:36
So what’s the toughest thing about fundraising?

Siddhartha Ahluwalia 05:40

I think the toughest thing about fundraising is that as each scale of the fundraise the fund gets bigger, the last one was 10 million. This fund is 50 million. The last fund of 10 million took us almost seven months to raise.

And in this fund of 50 million, in the initial four to six months, we have been able to raise the 10 million for this fund. So what is unknown is how much more time it will take to raise. What is the new set of people that it’s going to take to raise from.

And at every new fundraise, the quality of people and institutions is very different, right? From a large fundraise people investing, USD $100,000 or 80 lakh rupees per individual.

In this fund, the minimum check that people are investing is $300,000 USD, and institutions are investing $1 million USD.

And as we are talking to more and more individual family offices, fund of funds and other institutions, I think we are not yet fully exposed to this cohort of investors, how they behave, how much time they take, we have only heard about them.

But previously, we haven’t, you know, been actively raising from them. It’s completely like a founder, when a founder is selling to a small and medium business, and then they go to mid market, and then they go to enterprise. So this is like going to an enterprise for us.

Nansi Mishra 07:12
And I think discovering the unknowns is also what makes it most exciting.

Siddhartha Ahluwalia 07:18
Yeah, it’s challenging and, and small successes on this journey make it exciting and worth doing it.

Nansi Mishra 07:28
Yeah. And since I know you as an overall person also, because I live with you 24/7. So how difficult it is for an introvert like you, like this job, meeting so many strangers.

There’s a joke in our family that you would never see Siddhartha speaking. And then I see a part of Siddhartha that is speaking all the time.

Siddhartha Ahluwalia 07:52

Yeah. So, I think I try to do what my role requires. And I think I’m always trying to do justice to my role. And as a co-founder of a fund my responsibility is to fundraise. My job is to educate people about the fund.

My job is not sales really, but educating as many institutions, individuals, HNI family offices about the fund. And if that role requires me to be in front of them, doing the same pitch day in day out 365 days a year, doing it five times a day, so be it.

Nansi Mishra 08:30
But I see you enjoying every bit of it.

Siddhartha Ahluwalia 08:34
Yeah, I enjoy it.

Nansi Mishra 08:35
I see you taking calls at six in the morning, before I and Kabir get up and then you’re taking calls one at night, like you’re so excited about each call. How do you do that?

Like, if you don’t enjoy speaking, then what makes it exciting?

Siddhartha Ahluwalia 08:50

I think rather than speaking, I treat it as sharing the journey of our fund with new people. I think that what keeps me excited and getting new folks who bring their networks, their own qualities to the fund and the potential of collaborating along with them. That keeps me excited.

So for that reason, I have to go out of my comfort zone and pitch the fund to these sets of folks.

Nansi Mishra 09:20
And Siddhartha like, as we mentioned that we’re meeting so many investors across the world, every other day, I would say. So tell me about one VC fund or one investor that you truly admire?

Siddhartha Ahluwalia 09:34

I think in India, I like Accel a lot, because they have maintained their very high reputation throughout the last 18 years since they started. First, it was Erasmic, which was acquired by Accel in the US later, and they rebranded it to Accel India. So they have always come out as super clean investors.

And they have been also part of the biggest success stories in India on both the consumer side and on the B2B side. On the consumer side, they were first investors i n Flipkart, in B2B SaaS side, they were the first investors in Freshworks.

So they have spotted trends much ahead of their time on both sides. I think that’s a quality of investors….everybody can follow the herd. And I think people don’t make money, either founders or investors when they follow the herd.

You get to make large outcomes when you can be a part of a trend or a movement before it becomes a trend or a movement. You have to see things, imagine things in infancy, and take a bet against the herd. I think that’s what Accel has done.

Nansi Mishra 10:50
And this is exactly what we are doing. And any investor you want to go to, like you really like that investor or what exactly you like about that?

Siddhartha Ahluwalia 11:00

Marc Andreessen said software is eating the world way back in around 14 years or 15 years ago. I really resonate with that because how software has become a part of our workflows, right? Most of our work is done through apps, which is software.

Our scheduling of carpenters happens through software. Food delivered eventually gets delivered to you through the magic of software plus logistics. I think Marc Andreessen was so right. So I think some investors are able to predict the future.

Nansi Mishra 11:36

And we also talked about the repo that Accel has built for them over the last many years. How important is building repo for any VC funds, especially for young funds like us? How do they do that?

Siddhartha Ahluwalia 11:50

Repo can’t be built or somebody can try to build repo. In investing or as a founder, when you are taking riskier bets, your true nature gets exposed, right? So if you are a very fearful person, and you can’t see the money becoming zero, then you should not become an investor because you have to see failures, you have to see your portfolio companies.

Nansi Mishra 12:20

But then there are things you have to get right from the beginning. You can’t, like, because it’s not one person running the fund. It’s a team effort.

Siddhartha Ahluwalia 12:30

It’s a team effort. But what I’m saying is, how you behave during failure determines your character. And as a person, that’s why we say that, operators and founders who have seen failure in their lives.

Nansi Mishra 12:42

How does a VC firm behave? VC firm is like, it’s a team effort.

Siddhartha Ahluwalia 12:50
Yeah, a VC firm is made up of individuals, right? And if those individuals haven’t tasted failures or haven’t tasted dirt, or tasted zero in their life in the past, their reaction to failure would be very negative.

And rather than, you know, backing the founder at the time of a failure, and the company has become zero when the company is shut down, and being able to be there for the founder, they are blaming the founder.

And we have seen it happen in the past, right? Large investors put the blame back on the founder, but nothing comes out of it. I think that the reason is that these investors haven’t tasted failure in the past.

And they haven’t responded well to failure. Once they’re seeing these founders fail in their failure, the failure of the founder, they’re seeing themselves fail, they’re not able to digest it. That’s why the adverse reaction comes in.

Nansi Mishra 13:42
I think being a VC firm, the least that you can do for a founder is be respectful.

Siddhartha Ahluwalia 13:46

Yeah, be respectful. Because ultimately, the asset is the founder. And if a founder keeps on trying, maybe in the first attempt, they are not successful, but in the 10th attempt, they’ll be successful. But if your relationship with the founder is great, they’ll always come back to you.

Nansi Mishra 14:05

And there are so many young folks who want to join a VC fund. And these young folks, when they join, they have to work on deal flow, they have to talk to all the founders who are reaching out to that VC fund, and working on other things also.

What do you think these folks should have in them? Like what makes them the ideal candidates for working in VC?

Siddhartha Ahluwalia 14:30

I think working in a venture capital fund is overrated. I think young people, especially from IITs, are super excited right after college to go into the VC world. Especially now.

Because now it’s become cool, or I don’t know the exact reason, but it’s among their peers, it seems to be elevating their reputation if they’re working in a VC fund.

But I think working in a VC fund is pure grunt work. 80% of the time the managing partners are raising capital or managing their LPs. 20% of the time is spent in finding the new companies to bet on. And you have to service then your founders in your sleep.

So I say that, right, if you don’t have the muscle to service your founders while you are sleeping, then you shouldn’t be a VC. So most folks are not prepared for it.

So that’s why I say, rather than just trying to become a VC right after college, because of the glamour that it’s portrayed to be, try being somebody… at least try being a founder or operator, where you take large moonshots and you can fail.

Because unless and until you have tasted a little bit of failure, you can’t become a good VC, you can’t behave great with founders, because they are pitching you day in day out.

And while founders are pitching you, you have to make sure that you are not on a higher pedestal with them.

If not equal, you are on a lower pedestal, because they are starting up, right? So how do you treat one right from the first call them with pure respect, irrespective of the idea or their building or the scale or the traction, just because they have put so much at risk on the table?

The first emotion that if you want to enter VCs, are you respectful of the fellow founders? Are you respectful of the journey irrespective of success or failure?

Nansi Mishra 16:34

Are you aware of the ugly part also, like the grunt work that goes into it?

Siddhartha Ahluwalia 16:44

I think most folks are not prepared for it. Most, especially I see right now in Gen Zs, which are recent three, four years of college graduates, they’re not prepared for grunt work. Maybe after COVID, they have seen easy money and because COVID enabled a lot of online work being available.

So they could do two or three jobs at the same time or two, three gigs at the same time. Work got relaxed, money was free. So I think behaviour got spoiled. People who haven’t built their character before COVID, it’s very hard for them to build their character.

Nansi Mishra 17:16
It has rather become a status symbol for, for some of the folks to work in a VC firm.

Siddhartha Ahluwalia 17:22

Yeah, it’s not a status symbol, I would say it’s a responsibility. It’s a lot of grunt work. And if you want to become rich, I would say, you know, and if you want to take a risk, try becoming rich, be a founder, because if you can go right, one out of 10 times, you will hit it right.

And if you still don’t want to take a risk, find a company that is rising right now, like a Meesho or a Flipkart, which is getting built right now from zero to one. And in the next five, six years, that can make you rich. I think being a VC is not the path to become rich in five to six years. We have been doing it for the last five years. I don’t think it has made us money, we do it for the pure love of it.

Nansi Mishra 18:06

It’s patience. It’s a game of patience.

Siddhartha Ahluwalia 18:10

It’s a game of long term patience and a lot of uncertainty. And you only make…,

Nansi Mishra 18:18

And like, since we have talked about the people that want to join the VC firm, here is something we want to share that we think it is a lot of grunt work, a lot of uncertainty, you don’t know when you will be making money at the early stage. So there’s only one luxury that you have is you can choose your peers.

Siddhartha Ahluwalia 08:34

Yeah, you can choose your peers. You can choose the founders that you want to work with day in and day out. I think that’s the only luxury.

Nansi Mishra 18:50

Luxury we have as fund managers. And we also talked about the relationship part of VC, how VCs develop their relationship with their founders. And there are moments that cause some kind of friction in that relationship, like founders sharing that they are pivoting.

So there are lots of videos on YouTube that teach people, founders, how to share this news with your investors. So how do investors generally react when people, because they, along with the founders, they also invest in the idea.

And then after some time, the founder comes and says that they are pivoting. So how do generally investors react that we have videos where people are teaching how to share this news with your investors?

Siddhartha Ahluwalia 19:36

So I think, first of all, founders should not be required to prepare for it. They should share it transparently, that they don’t know. And they’re not supposed to know it all. And pivot is a part of the journey. All large success stories like Slack, which started as a game and then became the messenger. It just started as a pivot.

So it requires more preparation. I think VCs should watch videos on how to be prepared to deal with pivots rather than founders watching these videos. And that’s why I say it’s very important for VCs to have been operators or founders themselves.

Because unless and until you have gone through the journey of pivot yourself, how would you empathise with a founder? It’s very, very, very tough.

Nansi Mishra 20:26
What are the other interesting startups that were building something else initially when they started and then they pivoted?

Siddhartha Ahluwalia 20:34

I think one of our portfolio companies is SpotDraft. So Shashank, Madhav and Rohit, when they started, they started as an accounting software for small and medium businesses. And then they later pivoted to a contract lifecycle management software.

And in the earlier avatar, they were selling it to the likes of Wipro, very large enterprises. And each enterprise required customization. And they realised that they’re not building a true product. And then they pivoted to the current version of the contract lifecycle management for mid market enterprises.

So it took them three to four years of hard pivots before they reached the current version that started to work. And they have been scaling like 3x since the time they figured out the right product, the right market since 2020. So as founders, if you can persist the first four or five years of hell, then you can see the growth in your venture. It’s not guaranteed still, but there’s a shot at it.

Nansi Mishra 21:38

Since we have mentioned our portfolio companies, what are the other companies that are doing some exciting work that we should be sharing with our audience?

Siddhartha Ahluwalia 21:48

For example, you know, Vijay, Rayapati, Kiran, and Parsu are co-founders of Atomic Work. That’s one of the companies, you know, I’m seeing that they’ll, they can become the next Freshworks or even bigger than Freshworks from India. The large VCs in the US have said that this is the best ever SaaS company that has come out of India.

And it’s surely because the founding team is so good. Beyond the founders, each member of their 30-member team is such that, if they themselves start a company, they’ll be able to raise a couple of million dollars just based on their own credibility of what they have built in the past at Freshworks and Nutanix and the other companies like Thoughtworks that they have worked at.

And the second thing is that they are trying to disrupt such a large incumbent, which is ServiceNow. ServiceNow is an $8 billion revenue company, growing at 30% every year on year, almost valued in public markets, mostly at 100 billion or more. So when a founder, such a good team is trying to build a product to disrupt such a large incumbent and has some early success in it. There’s a real shot that they’ll build a very, very large company.

If they are able to figure out the right product and the right GTM motion for it. And because these are founders who have taken companies to IPO previously, which is Freshworks. They know how to scale. I think the only challenge for them is figuring out the right product market fit, which the early signs have shown that they have been able to do.

Nansi Mishra 23:26

Yes. And let’s also discuss the journey of Infeedo because like the founder’s story is amazing and the work they are doing and because Infeedo is, we invested in Infeedo when we were just starting out, right? So that’s one more reason why Infeedo is very special for us.

Siddhartha Ahluwalia 23:46

So I think Tanmay started Infeedo in 2016 when he was just 19 years old. I met Tanmay in 2019. And 2020, when they were raising their first round, they had a term sheet from a tier one VC who backed out during COVID time, March 2020.

And then, I got an opportunity to put almost like a, from the fund half a million dollars in Infeedo. And they were very early, but I think what they had early on was a great product.

And they were building an AI-first product that was helping large enterprises like MakeMyTrip, Ola, reduce employee churn.

And improve the culture index in an organisation through using an AI chatbot. It was very early before the current AI wave in 2023, 2024. They were building it in between 2016 and 2020. So you can think that they were much ahead of their time.

And they kept on executing it even after raising funds. They have grown 2x almost year on year. Today regarded as one of the top HR tech SaaS companies from India, like just after Darwin Box and the likes.

Nansi Mishra 25:00

And one more interesting thing about them is the father-son duo.

Siddhartha Ahluwalia 25:06

Yeah. So a lot of VCs backed out because they said they don’t invest in family, this and that. I think they have proved everybody wrong. Earlier, people used to say they don’t want to back husband and wife.

And Varun and Ghazal from Mamaearth proved them wrong. So now people are okay backing them. So I think all these misconceptions are in VC heads only.

Nansi MIshra 25:30

Yeah. And the story of Karthik from Gallabox, he’s also an amazing founder we have backed. And he started when he was almost 50 years old, right?

Siddhartha Ahluwalia 25:44

He was more than 50 when he started Gallabox. And I think the most impressive thing that I have learned from Karthik is whichever company that he worked at previously,, be it Sify, be it Sulekha, be it Bharat Matrimony, he worked it as if his own name was there on the building.

Nansi Mishra 26:04

Yes, that kind of high ownership and high integrity and like, loyal to your company. So I was also thinking about it the other day that there are people who think that they can be careless when they are working with some other company because this is not their company.

I think that kind of attitude won’t serve you well in the long term. Because it doesn’t matter if you’re working with a company for two months or four months, the kind of work you do during that time, the kind of attitude you show leaves an impact and serves you in future, good or bad.

So I think the best quality that I’ve seen in people is their behaviour when they are working with organisations in tough times. How does it change? So you can decide not to work with a company, but when you are working, I think you should be giving 100%.

Siddhartha Ahluwalia 27:02

I think my learning is people who have a high bar for themselves, at least on their behaviour, wherever they are working, they do well in life.

I think this is the thing that I learned with Amazon when I was at Amazon Web Services. So these are people with high ownership. These are the Amazon leadership principles. They have a high bias for action. They’re continuously earning trust with internal and external stakeholders.

And these are people who are humble, they are respectful, and they’re coming out with solutions. They’re not just putting out problems. And these are people for whom they always work like their name is on the company.

So these are the few qualities I would say, the kind of people irrespective of whether you have skill or not, that do well in life.

Nansi Mishra 28:00

I think this is the bar our founders have set for us, take example of Vijay Rayapati from Atomic Work, Karthik from Galla Box, Shashank from Spodraft, you meet them, they’re so humble, and they’re doing some exciting work.

They always have some kind of exciting updates, yet they sound so humble. Small things about the way they operate. I think this is what makes them special, truly special. And I think the bar they have set for us, it’s not just the bar we see when we look for founders. These are the qualities we look for in all the people with whom we want to work in future.

Siddhartha Ahluwalia 25:44
Absolutely. I think that’s the joy of being a venture capitalist. You get to work with so many amazing founders that your learning is so high. As a founder, you are extremely focused on your own venture.

Nansi Mishra 29:05

And also the work is not very exciting every day. So working with these people makes it exciting. Like you stay motivated when you work with hungry people, or people who have high integrity, who are ambitious, yet humble.

So if a founder doesn’t choose us, what will be the reason?

Siddhartha Ahluwalia 29:32

I think mostly, I have seen a founder not choosing us, because they became aware of us much later on, after the round has got built, I have never seen a founder that when the round was getting built, and both founder and the Neon were eager to partner, we couldn’t partner.

So I think it, the reason to not partner would have been delay on our part of not reaching the founder early on in the journey, much before they started building their round.

Nansi Mishra 30:05

Okay. And like, is there any question that you ask all your potential founders?

Siddhartha Ahluwalia 30:12

I asked them right, their thought process on zero to $10 mil ARR journey. One reason it’s very important is because I was not able to achieve that. And that made me dependent on VC funding in my journey. And when I couldn’t get A series of funding, I had to sell my company.

So I want my founders to reach $10 mil ARR. And that’s why I want to be very sure, when they’re starting up, have they thought thoroughly about it. Because once they reach $10 mil ARR, they’re almost failure foolproof, right? And then it’s up to them whether they want to sell the company at $10 mil ARR, or they want to build for a $100 mil ARR company.

And even if they sell at $10 mil ARR, they would have generated great returns for themselves, their employees and all their stakeholders. I have never seen a company failing because of external funding at $10 million in annual revenues. So that’s why our entire effort is focused on making our founders reach there.

And before we decide to partner we ask them this thorough question and we are evaluating them from…

Nansi Mishra 31:15
Then there are founders who pivot.

Siddhartha Ahluwalia 31:18
No, they can pivot but at least when you start on a journey you need to have a framework of how I’m going to reach a certain milestone. And is that milestone important or not in my journey?

So you can change your way but at least whatever way you change your milestone is not changing. I want to first build a 10 million ARR company. So I think people who already have built a framework or thought through at least the first milestone which is $10 million ARR are much more likely to succeed than people who are just sitting in the dark and thinking that hey if I throw 100 darts in all directions one dart is going to hit.

Nansi Mishra 31:55

So people who don’t have clarity to this question?

Siddhartha Ahluwalia 31:58
Yeah, people who don’t have clarity on this question. They are doing injustice to themselves because they have given so much precious time and energy and sacrificing their life and their family’s life for a startup.

Nansi Mishra 32:12

What are the things founders should prepare before pitching to a VC?

Siddhartha Ahluwalia32:20
So for example, let’s say I’ll make a checklist of 5 to 10 things. And this is irrespective of whether you are building it for pitching to a VC or not. This is your business.

The first is what’s the market segment that you are building for. Have you researched that market segment thoroughly? What are the various players in that market? What are the various workflows or problems that they are trying to solve? And have you spoken to enough customers in that market?

And spoken to the customer about a single deep repeatable pain point that let’s say 100 of potential customers face and then you do you have a wedge that hey if I build this it solves the customer problems in this way and this is the exact value that the customer is going to get.

So I think most mostly I’ve seen they don’t know what value the customer is going to get. And they are not able to quantify that value. And if the customer is going to get x value how much can the customer pay to them. Because if you have generated enough value for anyone they should definitely be able to pay you. Because it’s a value based world.

And then if I have got let’s say 100 customers what is the motion that I can use to make thousands of customers educate them about the problem and make them aware about my product. So I think these are the basic things required in a business with or without VC pitching that a founder should be aware of.

Nansi Mishra 33:52

So if you have to list three metrics that you track as an investor what would those be?

Siddhartha Ahluwalia 34:00

The most important metric that I track is what’s your Annual Contract Value, which is like how much a single customer pays you annually. For us I think if you can’t have a customer paying you repeatedly 100 thousand dollars annually it’s very hard to build a $10M revenue company.

Either it’s a very different route which few companies have been able to crack which is PLG and charging thousands of users a very small amount but I don’t believe in that. The other route is, ACV is the first part.The second is what’s your current annual recurring revenue like total year revenue even if it’s zero that’s fine. What’s your path to the first 1 million dollars in annual revenue and what’s the unique wedge that you have to reach out to your customers?

How do you know where your customers are sitting? Who is the right profile? Who is the right buyer sitting within an enterprise or an organisation and what is your method to reach out to them? I think this is the question that we ask from the founder.

Nansi Mishra 35:12

Okay and if the founder is reaching out to a certain set of funds, what are the metrics they should be tracking?

Siddhartha Ahluwalia 35:22

So these are the same metrics that the founder should be pitching in their first slide deck. That hey this is a large market. This is the unsolved problem in the market. This is the unique distribution model that I have. And this product solves this one problem in this way.

Nansi Mishra 35:38

Okay, I think you have already answered this question: how do you decide to invest in B2B SaaS startups? And this has been a unique journey for you. You were a founder. When we started, we didn’t have many VC funds back then.

So if you can name like three to five people who really helped you in this journey you know reaching here and what kind of help they provided?

Siddhartha Ahluwalia 36:08
First is Kshitij right who is the head of the investment committee and he is a founder of Joveo. So he partnered with me when fund two was almost zero then we raised a 10 million dollar fund together. I think getting Kshitij really elevated the level of the fund.

The founders look to speak up to him during an investment conversation.

Nansi Mishra 36:28

Yeah, I remember in the launch event for Neon everyone was asking where is Kshitij, where is Kshitij.

Siddhartha Ahluwalia 36:36

Yes, I think second I would say Pallav Nadhani who really helped me in the fundraise for the fund two connected with various folks. And connected with Vijay Rayapati. And third is Vijay Rayapati himself who went out batting for Neon to every conversation that he went to and backed us completely.

Nansi Mishra 36:58

These are busy people, like all the names you have taken. Kshitij, he’s working all the time and Vijay and Pallav. So why do these people help people like us and how do you get the help from these people?

Siddhartha Ahluwalia 37:14

Common thing among these people is that they are all founders. And these are all folks that want to create value in the world. And they just don’t create value by only building the product. They help, they create value by enabling other people. So you have to be a person that people like these can completely believe in.

You have to be honest, you have to have very high integrity and you deliver on what you promise. So if you have these qualities you will find founders who want back you.

Nansi Mishra 37:50

And you also have to figure out how to continuously keep adding value to these people. So how would you define these relationships? These are not your friends I would say because these are very busy people solving high level problems but they are there when you need them.

Siddhartha Ahluwalia 38:12

I think it’s more of a mentor-mentee relationship. Whenever I have a problem I go to them. I’m also always thinking about how to add value in their lives. It can be a connection or it can be anything like hiring.

Nansi Mishra 38:28

So it is so important for anyone who is starting up as a founder as a fund manager to build meaningful relationships with people not just your LPs and founders that you invested but these mentors also. So how do you find them? How do you add value to them and then maintain the relationship with them?

Siddhartha Ahluwalia 38:50
I think as Naval Ravikant said, networking is useless. If you go to events for networking it’s completely useless. If you build something meaningful in our case it was a podcast and the fund. And if you have the if you build something then the right people will find you.

Obviously you have to reach out to hundreds of people to find these three four right people that will back you. If you build the right product, you are genuine, you’re honest and you’re continuously doing outreach.

Nansi Mishra 39:22

And is there any notion that has changed in the investing world because like we now have so many young funds and how do you connect. Like we are raising from people who are sitting in the institutions and people who are based in the US. We are raising funds then building a fund from India. Is there anything that has changed over the period of time since you started or in general?

Siddhartha Ahluwalia 39:50

I think it’s become a founder’s market rather than a VC’s market. When I was building my own company then I was going after VCs. Very few VCs used to entertain or give meetings and when they used to say no it wasn’t clear. Some day a VC would call me like 50 kilometres away just for 10 minutes.

So I think VCs used to waste a lot of time. I have seen all of those investors who didn’t value founder’s time, weed away. So the ecosystem is filtering, self-filtering and it’s a very small ecosystem so your repo goes a long way. So that has changed I think and you can’t build a repo. It’s your character either it’s there or it’s not there.

Nansi Mishra 40:42
And what’s that one thing that we should continue doing that makes us the best place for founders? If you have to point out the one thing about Neon that we get it right and we want to keep doing it.

Siddhartha Ahluwalia 41:00

One area is if we are able to always quantify how we are able to add delta. And quantify the delta that we are able to add between zero to 10 million our journey of a founder. What has Neon contributed? And the founder is able to wholeheartedly say to the world that this is the delta contributed by Neon to their journey.

And if we just keep our north star towards that and keep on increasing that amount of delta toward the journey of each founder that we back. I think we would have made a mark. It’s a continuous journey, there is no destination.

Nansi Mishra 41:40
Especially when you’re building an institution. I think it’s not just with our fund it’s just with our podcast also we never say that we will keep doing the podcast until we raise 50 million dollar and we never say that we’ll just keep hosting the founders because founders get us leads or investors get us lead whatever that sparks our curiosity we will do that. So I think that’s really important for us to keep going because otherwise it’s a tough journey.

Siddhartha Ahluwalia 42:12

Yeah, it’s a tough journey I think both for founders and for us because we are founders of the podcast and the fund. So both for you and me and the team. Then the north start should be how do we elevate a bar with each episode and with each founder that we back.

Nansi Mishra 42:28

Okay and one interesting question because I think the conversation was more about investing. So just one question that is fun for you also. If you are not an investor then who would you want to be?

Siddhartha Ahluwalia 42:20

I think I’ll definitely be a founder or if not a founder. Yeah and if not a founder then definitely somebody and if I had enough money would travel and explore the world travelling to different places each time.

Nansi Mishra 43:00

The last time I remember the answer was being a monk.

Siddhartha Ahluwalia 43:04

It has evolved.

Nansi Mishra 43:06

Cool it was very nice talking to you Siddhartha and one of the rare times when you are so patient with me so really appreciate that.

Siddhartha Ahluwalia 43:18

Thanks Nansi and I enjoyed this conversation so much.

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