1Mby1M Virtual Accelerator Investor Forum: With Gaurav Jain of Afore Capital (Part 5)

Sramana Mitra: How much total money did the company raise? How much revenue did they do?

Gaurav Jain: They raised sub-$10 million. It’s relatively small for a food delivery. Their numbers were not that far off from some of these bigger companies. A big reason for that was because they were based in Winnipeg where the cost structure is phenomenally different. They had 200 employees.

Sramana Mitra: It’s also a matter of culture and philosophy. Part of the problem we have created in this industry is this burn lots of capital and chase hyper growth at all cost and make yourself unsustainable for the

 off chance that you may get a big exit. This is not the way to build companies.

Gaurav Jain: I agree with you. That’s what we tell entrepreneurs. The challenge is, there’s so much capital chasing so few good opportunities that investors push these companies to raise more than they should. Unfortunately, the amount of money you’ve raised becomes the barometer for how successful they are.

Sramana Mitra: What is your read of your cohorts in the pre-seed segment of the market? Are there other players who are thinking the way you’re thinking? Are you finding good syndication opportunities in your stage?

Gaurav Jain: You mean are there peer investors?

Sramana Mitra: Yes, who share your philosophy.

Gaurav Jain: It’s an emerging category. That might change in a couple of years. I see three to five funds that are serious about pre-seed. Some of them also do other stages. They are seriously thinking about pre-seed and have the same philosophy that we have, which is do more with less. We do syndicates sometimes with them, though we’re not dependent on the syndicate.

We like to lead where we can. We’re not waiting for somebody else to price the round. We’re very comfortable being the biggest check. Typically, these founders can finish off the rest with just angel investors. In all the cases, we were 70% or more of the round. A lot of times they want angel investors involved in the company for strategic reasons. We’re not dependent on syndicates.

The other thing is if you think of a funnel, there’re a lot of companies at the pre-seed. There’re just a lot of opportunities for all our peers to invest in. There’s no consensus a lot of the time. It creates a lot of value for founders because now they have more options to raise money.

Sramana Mitra: Awesome. This has been a very interesting conversation. We have talked to a couple of pre-seed funds. We will keep the dialogue going and hope to work with you moving forward. Thank you.

This segment is part 5 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Gaurav Jain of Afore Capital
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