Episode 2: Masterclass with Mentors – How to Raise Investment During Pandemic by Sanjay Mehta
Hello Folks! We are back with another mind-blowing episode of Masterclass with Mentors, this time, with Mr. Sanjay Mehta.
As we are still following the theme of effects caused due to global pandemic. However, in our second episode, we along with all the attendees learned how we can take our business ahead despite this pandemic. The Masterclass session with Mr. Sanjay Mehta on Thursday evening at 6:00 P.M. The topic on which he shared his views and educated all the attendees “How to Raise Investment During Pandemic”.
About Mr. Sanjay Mehta
Mr. Sanjay Mehta is the founder and partner of 100X.VC and a huge Venture Investor. In Jan 2020, he was inducted into the ‘Hall of Fame’ as an Outstanding Angel Investor by TiE Mumbai. He was also honored with the Super Angel Investor, Forbes India List of Investors, 2017 Investor of the Year, by Let’s Venture. He also handles a family office through a proprietary fund named as ‘Mehta Ventures’. Mehta Venture is a family grown business privately-owned which that provides comprehensive startups, estate, and crypto co-investment opportunities to trusted networks of HNI families globally.
Till now, across India and the USA, he has successfully invested in more than 150 startups. He has also invested in reality show web series “PitchRight” Season 1 in 2017, and Season 2 in 2019, having 13 episodes in each season. The reality show web series has attracted a huge number of viewers online through social media. He is also very active in writing and a quality blogger. In his long list of being an angel investor, few of the startups which made a good name from India and USA are Block.one, OYO Rooms, Box8, LogiNext, Wow Momo, Coolberg, CoinDCX, MechMocha, and many more.
Small Brief of Presentation by Mr. Sanjay Mehta where He Explained Some Points to be considered to Pitch their Business to Raise Investment
- Firstly, he explained how the companies financed by him have shifted their business with respect to the changing environment and the changed requirements of customers during this pandemic scenario. In this, he explained how the small ventures are taking their businesses ahead of and keeping their pace and grabbing the market with their innovative and quick market adaptive business strategies. He very well narrated how these companies are converting everything into a good opportunity.
- After that, he goes on and explains about ‘What is the reason for your Company’s Existence’. First, Define your “Mission” properly i.e. What is the problem for which you are going to provide the solution to the public Second, Define your “Value Proposition” i.e. What quality of Solution are you providing? Third, Design the “Elevator Pitch” i.e. Ask what is the unique concept you are following and it will attract a good amount of users or customers?
- In the next step, Mr. Sanjay Mehta explains ‘Why do people want this product more than any other product in the market’. He said, there are products which sell on their own like painkillers whereas some products fill the gap and people need it occasionally. But, you need to be aware that your product is non-linear and requires a proper method to promote or sell or generate its demand into the market.
- Afterward, he talks about ‘Why is the right time to build a Startup’. He said, to introduce any business selection at the right time is very important i.e to look for the economic scenario of the market which allows introducing the business in a better way. Next is to analyze the requirement and the evolution in technology. The up-gradation in technologies will allow more innovation and use in a much better way for the building business. And last but not least, Cultural Acceptance. With the evolving technology, customer behavior also needs to evolve so that the market can also improve.
- Next, you need to ‘Understand where You are Now’. Analyze your business metrics i.e. what tractions you are following. Then analyze how much funding or capital your business requires. And, analyze your competency gap i.e where you are lacking in different aspects. Accepting your flaws or inefficiency at the right time will be a great boon for your business.
- There are many Venture Capitals which think ‘Why isn’t everyone working on it’. Hence, it becomes necessary to analyze the ‘competition’ and know about the market precisely. As well as, learn what ‘unfair advantage’ you are facing i.e. why the investment is done in another company instead of yours. Learn about your ‘Disruption or Entry Barriers’ that is why you are not being able to enter the place where the other competitive company is. These types of questions are typically asked.
- The other question can be asked is ‘Why will you do better than established incumbents’. Define what business ‘execution’ plan you are having. What product or service you are providing. Define your distribution and sales channels that how you can take your business ahead while having other business giants in your path.
- After that, he explained about ‘Convert Product to Business’. For example, ‘I have built a 128-bit Encryption’. You will say, what is new in that. I am providing you ‘unbreakable security’; you again say, so what. BUt with the use of the product, I can assure you that it can transfer valuable Credit Card data safely without any data theft.
- Apart from that, when you get the opportunity to pitch your project in front of any Venture Capital or Angel Investor for fundraising be prepared to define a few questions very appropriately. “What is your Dream?” and “What is your Goal?” Define both the questions very intelligently and also take the help of numbers to define what you did till now and what you are aiming to achieve in a period of 3 years or 5 years, etc.
- Apart from that, always keep in mind to use a single metric in terms of money. Using more than one metric causes confusion and represents an irresponsible attitude towards work.
- Sanjay Mehta said, don’t be hesitant in analyzing and questioning yourself i.e. ‘Do you have what it takes to become an Entrepreneur’. An entrepreneur is capable of taking instant decisions while analyzing the requirements. One who is capable of making his decisions right. One who is comfortable with everyone and has irrational perseverance.
- ‘A Good Entrepreneur builds Wealth, not Income’. If you are serious about learning how to get funding for startups, then always try to get funding for the business purpose not for the founders’ salary.
- After pitching the business idea and no objection has been raised by the Venture Capital or angel investors then also it requires minimum of 7 meetings with the VC to close the investment deal.
- In case VC puts forward any objection, then it might be possible that he doesn’t believe that your idea can scale ahead; he might not believe in your unit economics and pricing ability to make money. And there will be other different reasons too for the VC to object over your business plan.
- On the other hand, if the angel investor or VC questions you about the Market Size, team size, then it gives you a hint that they are liking your business concept. So, be prepared with answers for these types of questions along with your financial projection, terms of investments i.e. you are capable of making how much money.
- In addition to that, it is very important for every business to learn about the reasons why startups fail. He explained many reasons whereas, few are like, you are building something which no one wants, lack of focus, improper investment, lack of team, too much pride and unwilling to learn from others or listen to others, and many more.
- However, in his closing note, he explained about learning the art of Investor Conversations, Build your network of Startup Founders, and Solo founders have a tough time.
Recommended Reading: Non-Tech Startup Founders Who Built Great Tech Products
Now, let’s move ahead in this session where the Question and Answer round takes place.
Question: Your 10X.vc venture used to invest against only on safe mode, then what are its benefits, and how much is safe and beneficial for investors and entrepreneurs both?
In this respect, Mr. Sanjay Mehta said yes, the 100x.VC venture used to invest only in safe mode business. However, as an investor, the process of fetching investment goes with an agreement. The investor invests over the shareholder agreement where equity is issued and fixed valuation is done. It is usually a 5-7 pages long agreement between the fundraising startup and the angel investor or the venture capital. On that agreement, all the shareholders’ sign as their affirmation and then the money gets transferred to the fundraising company bank account.
If we talk about business valuation, for that, Mr. Sanjay Mehta said, usually, the venture capital try to push forward the analysis of business evaluation for the future days. The angel investor will give you money but this can be pushed forward as this time will give you time to show your business skills and the VC also gets the time to look over it as well.
The benefit for the entrepreneurs is that they look forward and try their hand to raise money from a lot of investors and issuing in safe mode as well. As well as, can raise money from multiple sources at a time.
Question: What kind of Valuation the Startup should go, as entrepreneurs used to be confused about it a lot? (Question asked by multiple attendees)
To fetch the good investment opportunities, Mr. Sanjay Mehta said, if you are going for an angel investor then the valuation may typically range from 7 Crores to 15 Crores. The range of fundraising investment ranges this much because of a few factors. Basically, it depends on at what stage of business you are, and what kind of fundraising you are doing, what are your plans and future aspirations for raising so much investment.
However, the dilution of money is considered, then in 1 Crore of amount about 15% to 20% of the money gets diluted. Likewise, in an Angel Investor grounds, the dilution percentage is never expected to be more than 30%. As there is not enough equity left for the investors. The way to work on Angel Investors’ ground the businesses need to focus over managing their expenses and try to maintain it last for approx 12-18 months. As well as, during this period with this investment try to set a milestone in case you need to raise another round of good amount of fundraising opportunity.
Question: Post Pandemic which industry is going to have a great number of Startups and in which Domain one should go for Startup businesses?
For the answer to this question, he instantly replies to any business. Mr. Sanjay Mehta believes any business can be a great choice which is having No Touch or Low Touch with humans are going to see a lot of benefits and engagement. Though, choosing your business intelligently and thoroughly after having rigorous market research will be a great business opportunity. As your business needs to be a solution provider to the customer if the user feels their problem is getting sorted then the growth of your business will be great.
In terms of domains which could be fruitful for the entrepreneurs, the number of sectors which he believes are going to be a good business opportunity is; Subscription Economy for Homes where reach can be increased to a hell lot of peoples and is going to be a very valuable business opportunity.
Apart from that, Health and Wellness is another good industry, Agri Tech will definitely go huge in coming times, a SAAS company will do a lot of adoption as India’s market is growing rapidly and evolving in SAAS adoption, Online Enabling Technologies will be going to be very helpful and successful as well, Edu Tech will be a great growing and interesting industry, and there are many other as well.
Recommended Reading: We Work with Startups and We are Happy
Question: What are your views on the upcoming E-Commerce Startup post-COVID? (Question Asked by- Founder of Moms Card)
In this regard Mr. Sanjay Mehta said, The E-Commerce is a great platform and always tries to be as a whole. But it depends on what you are going to build. Like, you are building a product next to Flipkart, then no one will like to invest over such a business concept. Try to build the product and utilize the e-commerce platform to reach the market and then it would be a good and attractive market strategy.
Mr. Mehta further said, always try to focus on a single product at a time because anything with multiple products is a bit scared for me.
Question: What do you think is the scope of Edu-Tech or Education Technology in the coming scenario or post pandemic? (Question asked by an Attendee)
Without wasting a second Mr. Sanjay Mehta said, it’s huge. The Scope of edu-tech is huge and having a lot of opportunities in the coming scenario of post-pandemic. As, if you see the current announcement which is going all over the globe, due to this quite a lot of edu-tech are going to be funded as well. Anything having remote connectivity, remote access, or remote engagement; everything is valuable and a great platform in the coming future.
Question: What is the particular ticket size of 100x.vc? (Question asked by many Entrepreneur Attendees)
For this question, Mr. Sanjay Mehta very precisely said, 100X.VC invests a minimum 25 lakhs to a maximum of 1 Crore. He also said we are the most transparent VC in this scenario, as you can find every single detail along with terms and conditions on the website only.
Though it is not the end, there are many questions that have been presented by the host and the attendees to Mr. Sanjay Mehta. But it is not possible to put out every word in the form of writing. Therefore, here now I am summarizing the event along with the guidance for all the entrepreneurs about how to get funding for startups during and post-pandemic.
All the best to all the business ventures and you are welcome to 100X.vc for fundraising and grab a good investment opportunity.
Last but not least, I would say, stay connected with us for another round of valuable and educational sessions with the experts and take your business to the next level.