What was it that made me support a certain start-up?
It’s a question I get asked a lot. Kalaari has had the privilege of working with many great founders at start-ups such as Myntra, Snapdeal, Dream Sports, Simplilearn, Upstox, Urban Ladder, Zivame, Cashkaro, Bluestone, Magzter, Creditvidya, and others. We got involved when they were still in their early stages of development, and funding was scarce at the time they came to us.
More often than not, the reason we get involved with a start-up is that we connect with the founders and like them as much as their ideas, if not more. Ideas evolve, people less so, at least in a compressed timeframe. So, investing is about betting on people as much as on businesses.
The business bet is easier to evaluate: there is data, spreadsheets, market analysis, customer surveys, product and technology evaluation, and so forth. The people bet, to be honest, is not an exact science.
Sure, there is a method involved in assessing founders, but there is also a generous dose of intangibles. A lot of instincts come to the fore depending on their responses and flexibility to explore personality alignments.
Founder-Investor Alignment
A lot gets talked about the relationship between founders, which is understandable. Some co-founders last a long time together, whereas some others go their separate ways as stress mounts. Disagreements between co-founders as the company scales up or withers away are common. So, you must choose your co-founders carefully.
You must choose your investors just as carefully. Differences of opinion are inevitable when you work together closely for a long period of time to make business success of what started as an idea. Founders and investors need to work together, and with the board, for the common goal: the growth and success of the company. Mutual evaluation of this tenet is critical.
Take, for instance, Kalaari’s decision to lead both the Series A as well as Series B rounds for Dream Sports, which is now a Bonafide unicorn. Its property, Dream 11, is a household name and the country’s largest fantasy sports platform with more than 100 million users. But back in the day when I first met its founders (you can read all about it here), there were not a lot of people ready to bet on the success of fantasy sports.
However, from the first time I met Harsh Jain, and in each subsequent interaction, I was struck by his maturity in handling probing questions, getting past differences, and building a relationship of deep trust that fostered mutual respect, strong communication, and a sound framework for decision-making. This — along with compelling products, an interesting business model, and a razor-sharp understanding of a largely unexplored opportunity — contributed to their success.
Common Threads
That maturity is one of the things common to our founders, even though as individuals they might appear to be vastly different from one another. There isn’t a ‘type’. But, in their own different ways, they have common traits, some of which are:
- Ability to understand and interpret what is coming and be prepared, like surfers on the beach geared up to ride the waves rising in the distance
- Insight into the existing scenario and a desire to improve the way things are done
- Clarity of thought and belief in their ideas
- Ability to put together a good team and carry everyone along
- Ambition: as a venture capitalist, you need your founders to build extraordinary companies
- Good listeners and calibrated, not unbridled, in approach
Too Much To Ask For?
Good founders can be complicated, like artists. As artists, they can be creative and possess maniacal energy to keep working at a speed sometimes hard to keep up. They might not slow down even when they need to. They can be temperamental. They are usually sure of themselves and ready to push the boundaries.
Is it too much to expect all these qualities in a person?
We have been fortunate to find such founders, who chose to be part of the #KalaariFamily.
I say fortunate because, when making early-stage investments, the founder dice is the single most unpredictable factor. Therefore, our relationship with the founder is the backbone of our investment conviction.