Getting Bigger, Getting Better
Better Capital started small and is now accelerating big time. The recent raise of $15.28 million now makes it Pune’s largest investor. With 75 seed investments in Indian start-ups this year and Slice, a fintech start-up (a Better investee) becoming a unicorn last week, has elevated Better Capital’s profile among entrepreneurs and VCs considerably. A tête-à-tête with Vaibhav:
What is the secret of your rapid growth vis a vis the others?
At Better, we created an independent view of how we want to build it and how we wanted to invest and overall, that combination has played to our advantage. With a clear view of investing only on product-first and distribution-first companies across categories, we picked several categories early and went all in – Neobanks, Fintech Infra, SME Digitization, Distribution-first Edtech and others, and we were fortunate that our view was correct. The advantage that this gave us was that we had proprietary data and insights in these segments from our founding stage investments that others didn’t have. It helped us to hone our views in these segments and pick even better.
The second thing we did was to disconnect capital structure from our investing process, which allowed us to take non-consensus bets and stay aligned to the market instead of being constrained by capital structure. For example, we believed that 2021 will spawn the best in ed-tech with the best teams, and we took multiple bets across the category. Within 6 months we saw great success with many of them like Teachmint, Filo, BitClass and others.
So, it is less of a secret and more of a system we established and iterated to improve our thinking, access to insights and ability to invest with an independent view.
How would you differentiate Pune start-ups with other city start-ups?
I don’t believe in discriminating start-ups by cities, and never thought about it that way. Pune’s start-up scene is evolving fast, and we are seeing strong activity in Fintech and SaaS – our local funding ecosystem will continue to be crucial in ensuring it thrives. We have backed multiple Pune start-ups like Privado, Markk, BuyerAssist, SuperGaming and others here.
As an investor do you see a difference between founders that become unicorns and the rest?
One can always look back and analyse, but that doesn’t help you spot the next unicorn founder because there is no such thing as a unicorn founder. The best founders learn rapidly and evolve faster than others – that’s the only thing I am looking for when we invest at the founding stages of companies, and we’ve been fortunate to have partnered with stellar founders at Slice, Open, Teachmint, Khatabook, Filo and many others.
How do you manage your risk of investing vis a vis returns? After all, money must beget money?
Early-stage investing is as risky as it gets, but if you know what you are doing and if you know the nuances of turning an idea into a business – been an operator for long enough – then you have a mental model to constantly de-risk in the early stages, and it is a key part of our play book with our founders. When you are able to get to PMF and de-risk early on, we ensure we can help our companies raise follow-on capital and have worked hard to build global relationships to enable this at scale. So, the risk management is part of our system at Better – but we do assume that we will fail in spite of all efforts in many cases. We’ve been fortunate to see rapid follow-on funding and de-risking across our portfolio based on stellar execution by our founders.
Vaibhav is known to have met start-up founders and in two hours taken a decision to invest in it. We speak to Roby John co-founder of SuperGaming who was one such fortunate ‘victim’ of Vaibhav’s on-the-spot decision.
We were in a round of investing when Vaibhav dropped in at our office one Saturday afternoon at 11. He heard us and by 12.30 he had decided that he would invest $200,000 in our company. He is the Conviction Capital type. If he is convinced about your business, he will invest. He is not interested in knowing who the other investors are? Which is a pleasure for founders. Also, he invests in start- ups that are focussed on community building, be it the under-banked, teen banking or gamers’ community.”
Money, money, money … send in your applications by Dec 16th
Looks like the Govt is serious about making India into a start-up nation. They are opening up their coffers to start-ups in specific regions, and those who fit the bill can get funded. So, check out if you do.
Nidhi Prayas will give a Rs. 10 Lakh grant to any adult Indian citizen whose company is less than seven years or/and has an Indian holding minimum 51% stake in the company.
MeitY-Grant TIDE 2.0 offers funding up to Rs. Seven Lakhs to ICT based start-ups to build a prototype, MVP and go-to-market strategy in the field of emerging technologies. Meity is also extending this to validate an idea or develop POC