Seed Capital From Angel Investors: Amit Grover, Member, Mumbai Angels (Part 3)

By guest authors Irina Patterson and Candice Arnold

Irina: Do you require that the entrepreneurs you invest in have previous business experience?

Amit: In terms of running a venture of their own, no. In terms of having some experience of at least being in that sector, understanding the nitty-gritty details of what they are getting into, there we always look at what kind of experience they have.

They do not have to be serial entrepreneurs before they come to Mumbai Angels. There are people who have left their jobs at McKinsey or Microsoft to start their companies. That kind of commitment matters more experience. What kind of commitment do they bring to the business?

There are people who might have maybe fifteen or twenty years of experience, who might have run their businesses for the past few years, and they are not committed. That could also be the case. There are people who will say, “First, give us the funds, then we will start a company.” For us, that is a strict no-no.

Irina: Do you look for specific character traits?

Amit: We don’t look at a single character trait or a single entrepreneur. We go for a good team. Our belief is that single-person entrepreneurship has more risk at an early stage – or at any stage of a company.

We always look at at least two people in the team who have complementary skills, sales skills being the key, finance skills maybe being the second most important part.

The rest are technology, efficiency, and HR skills and so forth. There are certain hard-core skills that an entrepreneur should have. We try to understand how good an entrepreneur is and how good his or her team is. Of the past few deals that we’ve done, almost all twenty-five deals have had more than two promoters in the company. That is one part of it.

The other are traits like flexibility and analytical ability to weed out the noise from the business . Those are things we are always looking for. There will be people who are very aggressive, there will be people who are very conservative, but you need to be flexible to identify the opportunities and change your business model.

We have seen instances where in every three months, the business model changes. Your largest customer may leave, your best employee may leave, your competitor might come out with something new, or customers may not accept your pricing or your product. So, it is very important to be flexible and have a deep understanding of your business. Those are the key parts of our criteria.

In fact, for example, when mKhoj (now InMobi) started, they wanted to build a SMS-based search network. That didn’t work. Then they decided to build a deal-based SMS-based search network. That didn’t happen.

So, within three months, they went all the way back to their new business model, which is what is currently working, a mobile advertising network. The team had the flexibility to identify what the was opportunity and act accordingly.

Irina: What happens to the companies you don’t invest in?

Amit: A lot of these people are at a stage where they need mentoring, and we are starting to bring them to a certain stage of Mumbai Angels acceptability.

There is one company that has a good model of sales expertise available. Then, there is another company that has product expertise available. We try to connect them so that they are able to use each of their skills and build a business together. It could be molded into one company, or they can use each other’s expertise to tie up. There are a few companies that come to us which are actually at a VC stage, so these few companies we refer to our VC friends.

Then there are a few companies where the concept is exciting but the team is not exciting enough. We try to help them, maybe to network with other team members and try get them on board.

There are other few companies that we believe are not ready. We try to give them some time to come up with new concepts and develop a bit more. We give them clear guidelines on what they can do to make themselves eligible.

This segment is part 3 in the series : Seed Capital From Angel Investors: Amit Grover, Member, Mumbai Angels
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