My lead investor experience – a very humbling self realization

If you are trying to raise a seed or angel round for your startup, one of the most important things you need to do is to find a lead investor. The lead investor is a person who a) trusts you and your team b) believes in your vision and c) is vested in your success and shows that by putting her money and time towards your startup.

Lets talk about me as an example in particular.

I have done a few investments in India, but never have been a lead investor. It is not because I have not tried. When I see a good team and a great market, I have reached out to other investors I know to let them know that the startup is worth investing in. Not one of the companies I have tried to invest in has been able to raise money from the folks I put them in touch with. I have always been a part of a syndicate, where the founder has brought other investors together.

That’s very humbling.

So, if you think I have some “influence” you are off the mark.

My “influence” stops at getting people to take a meeting with you. In India, that’s not worth a lot. Most folks will give you time to setup a meeting and get to know entrepreneurs.

There has not been a single case when I have led an investment and found other investors willing to co-invest because of me.

In many cases I have followed.

So I have stopped referring companies to other angel or seed investors. It is very humbling to know that I am unable to help get companies funded. I can put my money in, but that’s about it.

So I have been giving excuses (some of it is true) that I dont have time for due diligence, or dont have market knowledge in certain areas. They are excuses unfortunately.

So I tried to do some analysis as to why I am unable to get others to rally behind my investment thesis. The answer is simple and complicated at the same time.

The simple answer is I have not made money for anyone other than myself. Once you make money for someone they are more willing to invest in you since you are “proven”. I am only proven to myself.

The complicated answer is that its hard to understand Indian investors and I have not understood the motivations of Indian angel and seed investors yet. Its difficult since I have been here for only 5 years and even though I have a lot of friends, I dont have enough deep relationships built on a consistent theme of doing business and making money.

What’s the takeaway for you?

1. I personally dont think there are more than 5-10 real lead investors in India who are the “taste makers” or the “Pied piper’s” of India. Get them on your side first and then try to have them help you round your angel or seed round.

2. Else be prepared to meet 40-50 “investors” and convince them individually and try to land 3-5 investors to co-invest. This also means you should expect to take 2-3 months to raise a small $100K to $250 round.

3. The alternate strategy is to get one investor who can lead and fill out the round. There are a few folks who can do that, but they are rare and they will be able to write you a check $100 – $250K

9 thoughts on “My lead investor experience – a very humbling self realization”

  1. Mukund,
    The more importatnt point (which probably you could not say out loud) was that in the 5-10 real investors that you pointed, i could not find any on the ‘angel networks’ specifically IAN, mumbai etc. bold enough to take a call or lead.
    what is your take on these ‘angel networks’ and groups and ‘leads driving them.

  2. Indeed a humbling experience. Mukund, its interesting you count money in $ inspite of Indian context 🙂 Or do all investors speak same language?

  3. Mukund – I think its very humble of you to write this piece and take the blame. And at the same time shrug off responsibility of connecting people (no offense). I think its a tremendous help to most who receive it (irrespective of the outcome).

    I remembered a comment of yours (and have been able to dig it) which i am quoting below. I think that was a much better belief system for the ecosystem and you should keep helping those in need 🙂

    “1. I dont assume that I know what opportunities exist when two people connect.
    2. The value of the network goes up several times when two people in the network connect.
    3. There may be some “not so good” introductions, but that happens. Its like saying every date you went on (introduced by a friend) has to be great. Else dont introduce.

    I dont look at the introduction as an obligation. I look at it as a way to connect two folks who are inherently good and need to know each other. Leave the rest to serendipity.”

    1. Simran I will still introduce people. I have never shied away from that. If i however don’t believe in your plan or idea I will make fewer introductions.

      I am not shrugging away the responsibility to help with no expectation on return.

      1. Great to know Mukund & thanks for the reply.

        On a side note, I wish other investors in ecosystem were also a lot more humbler.

  4. Mukund – right on the money. What I have noticed as an angel (I lead a cohort) lead that it takes me a lot to convince others on an entreprenuer / idea / market etc over tons of calls / web sessions. But if its just me as an investor, it’s straight forward just like a stock investment – loss or gain, i take the blame.

  5. Dear Mukund,

    Appreciate the candor and humility in your post. Makes me respect you more than before. While it sounds cliched, these traits are definitely at a premium these days. And thanks for the introductions you have made. I have gained immensely from them, just as so many others would have. Keep your posts coming…thoroughly enjoy them.

  6. Hi Mukund, an unrelated question. For an $100-200K seed round in a consumer services company,typically angels look for what kind of monthly run rate range)? (not necessarily your outlook as an angel) Thanks

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