private boom v/s public gloom

how startups need to adapt in such a capital cycle (India)

August 2019

the India market is in a unique spot for early stage tech entrepreneurs, at least in recent history. with this post, I’ve attempted to explain the disconnects in the market, and a shared a few pointers for founders on how to navigate in the short-term.

public markets are cautioned by a slowdown in consumer spending across many sectors; banks & nbfc’s are going through a prolonged correction cycle; and between the India/Pak + USA/China + UK/Brexit geo-political complexities – there is enough caution in the winds globally.

Apr to Aug 2019 MMI data from
relative scale legend: Green is Greed, Red is fear

here is some evidence: auto, garments, FMCG, real-estate.

what might this lead to? —> consumers will likely delay non-essential spends, enterprises will likely delay capex & try to reduce opex. effectively, purchases & upgrade cycles will be delayed. there are many spiralling effects to this which are unpredictable even to the most sophisticated market observers.

on the contrary, private markets (at least in tech) are at a new local-maxima of optimism. Seed & Series-A rounds are closing faster than I’ve witnessed in the past 5-6 years. Repeat/successful founders are raising outsized first cheques, and Series-B+ rounds are happening at rich valuations! … almost as if private tech investors aren’t even looking at what is happening in the public markets & the global macro.

to a large extent, I get why private tech investors do not worry about short term pessimism in public markets – they are backing entrepreneurs & ideas that will take shape and grow over the next 18-24 months – hoping things will turn for a positive very soon.

for Founders, here is what worries me

  1. when you raise capital, there is an urge to rack up costs – team, infrastructure, marketing, etc.
  2. one or two quarters in, you will start to feel the pressure to show “hockey stick growth” to your oft impatient investors
  3. in a negative sentiment cycle in public markets, there is little you can do to change that, despite our best intentions & strategies.

public market sentiment is a real-time reflection on the broader economy (beyond the tech bubble), and when/how that turns and what brings it back is an N dimensional multi-variate calculus problem. Ultimately, both markets are connected, and so when public markets are in crises, private markets won’t be left far behind.

as Entrepreneurs, what should you consider doing?

  1. manage your fixed costs carefully
  2. look for structural ways to extend your runway
  3. set expectations with your investors/board — have that tough conversation sooner rather than later (the good ones will be supportive/accommodating)
  4. get laser focused on quality metrics over vanity metrics
  5. some companies/products thrive in such environments, if you are one of them, double down and get more aggressive (but this is rare)

I don’t mean to be an alarmist, but you have to regulate your behaviour when the external environment has fundamentally changed – and for most of born in/after the 1980’s we haven’t really seen a true recession in recent memory. If we end up in one, don’t let that kill your startup!

(discount-led products/services could see an artificial surge in usage, but that could be a double-whammy to your burn rates & possibility of surviving the cycle)

thx to Mona, Tarun, Sai, Aakrit, and Soaib for feedback

being awesome at Corp Dev

abridged thoughts on how to excel at Corporate Development

did a podcast with my friends at IVM Podcasts on this a few months ago.


Limiting angel investors’ upside

I am speaking from personal experience here, so please read this note with that caveat.

Over the past 3–4 months, I’ve encountered a disappointing trend among a few tech entrepreneurs (in India) towards their early stage angel investors.

The argument goes,

hey, i need to clean up my cap table as I want to raise a lot of money, and I need to reduce founder dilution …it’s something my current big VC investors are pushing me to do. Please can you take an exit at a multiple of your invested capital?”

In most cases, this should be cause for celebration. How often do angels get exits in early stage tech deals in India after all.

But recently, I’ve found myself with the short end of the stick. Founders approach us saying, “please take an exit since you’ve already made X-times the invested capital and that should give you a healthy return”. Another version is, “you’ve invested in that other company that vaguely competes with us, and so we are worried about information rights you have and you may leak our secrets to them.”

In each case, the offer on the table is a “market rate discount to last round” … without an upfront disclosure about an impending big-up-round on the horizon. Because there is no way for the angel to truly know that a new round may happen, and even when it does, the disclosure will happen much later anyway, why not “clean up the cap-table”.

I see it as nothing short of theft.

When an angel investor invests in your company, it is often at a stage when your company is at the formative stages, and has little to no evidence of achievement. The risk factor of the angel investors investment going to ZERO is pretty high. In other words, unlimited downside risk on the capital invested.

So, on the other side, when you start achieving great success, just as Founders have unlimited upside potential; early investors should have the same opportunity (to the extent of their investment) … unlimited upside potential.

Thought I’d share this for the benefit of fellow angel and early stage investors in the India startup ecosystem. Don’t fall for this trap.

PS: if you want solutions for how to protect against such practices (i.e. safe guard yourself against such malpractice), feel free to email me.

startup culture — where does it come from ?


One of the most mysterious elements of startup culture is question that Naval Ravikant posed in his tweet above.

So, where does it really come from ?

Culture is mostly intangible at the earliest stages, and tends to be dictated by the relationship amongst the founders (or the founding team). In my time at Feeva, and my startup project at Virginia Tech, the culture of the group could primarily be described as a function of the relationship the group shared among themselves.

At the same time, culture morphs at various stages of team size and the product lifecycle of a startups offering. In the very beginning, everything pretty much happens around the one and only conference table (if you have one that is) and all decisions around hiring, strategy, fund-raising, marketing, tactics, etc are made. I think this changes at somewhere around 15 people or so, when the company needs to start to institute a basic abstraction of decision making by a few for the collective. This evolution in a young companies life (or need for change) is a seminal moment for the long term culture of the company.

And naturally, a company and its organization continues to morph at 50, 250, 500, 1000 employees and upwards and onwards! It is critical for the founders/founding-team to think about their culture at each of these stages to define how they want to make decisions and conduct business. In the long run, the relationship between the founders/founding-team really drives the culture of the company.

There are umpteen examples of this: Google (with its college campus lifestyle), Facebook (the hacker way), Twitter (and its emergent chaos), my own experience at Feeva (though not public), and several others out there.

what do you think?