What do investors look out for in start-ups? [Prantik Mazumdar-Managing Director of CRM Group]
Updated: Oct 15, 2020
What does investors look out for in startups? How can I, as a startup better present myself to maintain a positive working relationship with investor? In this blogpost, we have Prantik to share with us his thoughts on startups from an investors' perspective !
Prantik is an entrepreneur & venture investor and acts as a Digital Transformation Catalyst in organizations to drive sustainable change and impact. In this interview, we have Prantik to share with us his perspective as a founder turned investor, on start-ups who are seeking funding.
1) Prantik, would you like to share more about yourself, your passion and how you got started as an investor?
I have spent my last 20 years in Singapore. I was in National University School of Computing and Minor in Technopreneurship. It was a game changing initiative which gave me a good exposure to marketing in the business world.
After graduating, I started working with International Enterprise Singapore which was renamed to Enterprise Singapore today. This gave me the opportunity to understand more about government grants, we had to manage various industries from telecom, mobile & technology startup groups to help them internationalise and build connections with other relevant industries in Japan and other countries.
Afterwards I started the Happy Marketer. And we sold our business the company to Dentsu. We are part of the largest brand in Dentsu also known as The Merkle media management platform. And we are becoming more involved, as an angel , investor and mentors to many Southeast Asia Start-ups.
2) What are the 3 main factors investors look out for in startups?
There is alot of literature around this. From my point of view, here are the 3 main factors I look for in start-ups:
Ideas come and go, it is very rare that you succeed with the idea you started with- eventually you need to have the personality to pivot, as well as the conviction of the founding team and the structure of the team.
The background and the personality of each and everyone in the team matters as well.
Personally, I do tend to favour certain industries. For the domain areas I am looking at
is education and healthcare. These are industries driven by macroeconomics
factors. I would question, whether the problem these startups are solving, is it a million
or billion dollar problem? How large is the problem and what is the equity structure? I
am also more skewed towards B2B than B2C structure, as B2C takes time to mature
and more expensive.
3. Experience of Co-founding team
I would prefer working with co-founders who have some serial entrepreneurship
background. Someone who been there and done that, they probably would have
mature experience in not repeating certain mistakes.
But we understand that odds are always against startup. These are just some of the
criterias I look at.
3) What is a crucial leadership skill that you have learnt yourself and how can a CEO / Co-founder apply that to their start-up?
One crucial leadership skill is to understand the values of each and every founding members. Whether the values are similar and in terms of skill set wise, team members should have complementary skill sets. Also, I look at whether they have requisite experience and interest that build that up.
The team should have common bonds, that can be driven by common values.
I think it's also important to know each and everyone's stories and understand what are their challenges, failures & what their conviction. Conviction is so important as this helps me as the founder to know whether he/she is willing to give 3-5 years of his/her life to be part of the founding start-up as a full timer.
This is logical because I don't think that it is fair to seek funding from anyone else if the founding team themselves are unable to put in the equivalent effort to earn that funding.
4) How often should start-ups and investors meet up after funding?
As an investor, I would be happy when start-up provide me with an update once in a quarter or 6 months with an email update.
In some cases if I am part of their advisory board, I would be more actively involved, to be updated on a fortnightly to monthly basis in order to really ensure that they are growing.
Otherwise, as an investor, I understand that founders would not want an investor breathing down their neck. One crucial lesson that investors need to know is that, once they have invested, they need to learn to let go and realise that they are not the CEO anymore. Once they have evaluated and invested, they need to believe in the start-up and let the startup manage and grow.
5) As a founder turned investor, what's the big difference between being the founder and investing in start-ups?
I need to know which hat to put on in different situations.
When I am the investor, I need to look mainly from the financial standpoint and what I require is a quarterly update or so. As an investor, it is crucial that one learns to manage expectations and control opinions that are unsolicited.
However, when I am the advisor, I need to be a bit more involved, and absorb a higher amount of responsibility. I would communicate with the start-up in a structured way. It is important to trust the founders to make mistakes on their own too.
I would say that as an investor, one main factor that investors should have is a strong conviction in the team that they will give it a good fight. Angel investing is a risky business but you should let them go, and allow start-ups to make their own mistakes and learn. Of course when they need you, you should be there to help them as well.
6) What interests you to be an advisor of NUS Angel Ventures (NAV)?
Whatever success I've had, NUS has played a huge part, and I have a lot of fondness in my heart and respect for NUS.
As an NUS Alumni I feel that the NUS alumni doesn't come together as often as other close knit groups. I have always wondered why there's no collective structure or group especially in the start-up community.
Thus, when the NAV team reached out to me, I was happy that there was finally a group for NUS alumni that brings together the network, job opportunities, angel investing and more.
I am happy for this formal network to help foster and guide startups.
Thank you Prantik for taking time off to have this interview with us!
We are grateful to have you as an advisor of NUS Angel Ventures.
If you have any other follow up questions, do email your questions to email@example.com
Watch the full video HERE
Listen to the full talk HERE
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