1Mby1M Virtual Accelerator Investor Forum: With Shripati Acharya of Prime Venture Partners (Part 4)

Sramana Mitra: What did Cuivviv come to you with?

Shripati Acharya: They actually had the product. They were seeing initial traction. They might have had a hundred thousand questions in total. Today, a billion questions are solved on the platform. What I really liked about it is, they had an understanding and connected with the teachers.

Sramana Mitra: They have a teaching background?

Shripati Acharya: They didn’t. The best way to approach a company or a startup is to not be prejudiced about it, because you end up learning something. In this case, there are two persons that have a deep technical background. Somehow, they are just nuts about education.

They have gone ahead and created a game about math wherein there were wizards killing demons. The challenge was to keep on creating content. When they crowdsourced content creation, they suddenly had infinite sources.

Sramana Mitra: In a situation like that when you’re evaluating an investment opportunity, the monetization is unproven. It’s a thesis. It’s a hypothesis. How much of that kind of risk are you willing to take?

Shripati Acharya: That is the hardest risk to take. What we are taking is a business model risk. Business model risks are hard, because it’s out in the future. It is a higher degree of risk. To the extent possible, we need to have some idea about some evidence that this thing could work.

In this particular case, it was a risk we took. We felt that the way in which they were acquiring folks who were increasingly using that platform demonstrated deep insight about how to work with teachers and deliver value to students. 

Sramana Mitra: What I’m observing in the way you’re talking about your investments is you have actually more risk appetite than many of your peers, which is interesting. In your business, everybody wants to do things that are already proven and validated to a large degree, including paying customers.

You may be able to bring to fruition innovation that cannot be proven so quickly. It will take a bit of time to build out certain innovation and monetize. It’s good that you have that appetite. I’m going to switch the line of questioning to what is your philosophy about how much capital you are comfortable with a concept needing to become successful.

We are in an era where there is this unicorn-chasing going on with companies flushed with capital on the one extreme. Even the entrepreneurs often exit in those rounds.

On the other extreme are investors who recognize the fact that you can build companies very capital-efficiently today by applying the bootstrapping principles. In some cases, bootstrapping to exit opportunities are arising where you make a very good return on certain investments as long as you build them in a capital-efficient manner.

Most of the enterprise exits happen in the sub-$50 million exit price range. To make money out of those exits, you’re going to have to build these companies for under $5 million. Where in this continuum do you sit? How much do you like your companies to need?

Shripati Acharya: SoftBank are funding companies which are in the much later stage. It’s just a different philosophy and a different way of evaluating those opportunities. We are looking for what is it that we need to get to the next stage. It’s super important not to overcapitalize the company.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Shripati Acharya of Prime Venture Partners
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