1Mby1M Virtual Accelerator Investor Forum: With Shripati Acharya of Prime Venture Partners (Part 2)

Shripati Acharya: The reason we say we’re the first institutional check is that we are fairly comfortable in ambiguity in the company. This dovetails into your second question, which is what we are looking for.

We are looking for a thesis from the entrepreneur – a conviction of what they’re trying to build, which exhibits 10x insight. By 10x insight, it could be 10x in terms of the value proposition. It could be 10x in terms of how the product is going to get distributed out to the consumers and customers.

It could even be a target segment which has really not been addressed at all. It could be a completely neglected area of the market. We are very comfortable with any of those. We are not necessarily looking for analogs. What we are looking for is whether it is solving a problem in our point of view.

The second thing we are looking for, which all VCs talk about, is the quality of the founder. It’s really an entrepreneur-opportunity fit. It could be a great idea, but why you? I encourage our entrepreneurs to answer that question for themselves.

Sramana Mitra: What is your unfair advantage.

Shripati Acharya: Often it is, “This is a problem that I have faced.” That’s usually good, but not enough. You need to also have an insight about how to solve that problem. We have a thesis about a particular space.

For example, we are very active in FinTech. We have a thesis around how this space operates. I often say that the best entrepreneurs will come and debunk about 20% of your understanding of the space. That is the conviction and the insight that we are looking for. That’s the entrepreneur-market fit.

Single founder companies are hard companies to fund not because they cannot pull it off. Ideally there should be a couple of co-founders with complementary skills. Even with overlapping skills, having a co-founder makes for better decisions. We look for, at least, two.

Finally, it’s the market size. Companies can have markets in India. They can have market globally. We do look for the market sizing from a bottom-up perspective. How do you construct the market size bottom-up?

Sramana Mitra: You don’t necessarily need to see any product in place. You don’t necessarily need to see customer traction. If you resonate with the team, market size, and the conviction, you’re willing to do concept financing. 

Shripati Acharya: That’s correct. Of course, there is a higher risk and higher mortality when you do that. When the insight is there, you really get this aha moment. At that point, you like to look for proxies to validate what they’re saying. 

Sramana Mitra: That’s unusual these days. It’s good that you’re doing that. Geographically, you’re focused on companies that are born in India?

Shripati Acharya: That’s correct. Frequently, the entrepreneurs will move to where their market is. The reason we want India-based companies is based more on what Don Valentine said when he started Sequoia. He ideally would like to cycle to his companies.

When you are investing in the early stage, you really need to have lots of interaction and an understanding of who the entrepreneurs are. That is very difficult even with the best media conferencing available. It’s really not quite the same as a face-to-face interaction. Of course, as the company grows, they have to be close to the customers.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Shripati Acharya of Prime Venture Partners
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