Interview of Ashwin Raguraman (Founding Partner – Bharat Innovation Fund)

Ashwin Raguraman is the Founding Partner at Bharat Innovation Fund. He had a very non-linear path into startup investing. But now that he has been doing it for a while, he hooked to it. Interacting with good entrepreneurs is quite heady for him now.

What is your investing philosophy?

 There’s a quote by Wayne Gretzky (leading ice-hockey player) that I love.

I skate to where the puck is going to be, not to where it has been. I have realized that this defines my investing philosophy well and fits well into the mandate of our fund, which is to invest in disruptive technology startups.

What has been the most important investing lesson you have learned so far?

I’ve learned a few lessons along the way. In early-stage investing is that there is not a lot of information and data that can be used to make an investment decision. The key is to understand the core of the problem, and the proposed solution and determine if it will be a gamechanger. To do this its important to trust your instinct. It’s also important to ask how complex the problem being solved is, and whether the team sitting in front of you has the legs to execute

I’ve also realized that the startups which take the least time and effort to manage are the ones that provide the best returns.

In evaluating a deal the best entrepreneurs are those who have unparalleled knowledge of the intricacies of space they are trying to address.

Which has been your best investment till date?

Sedemac Mechatronics, a company that builds powertrain solutions for small engines and improves its fuel efficiency. Their products are now in over 18 million two-wheelers and approx 270,000 diesel generator sets. I invested very early when they were very small and barely had a paying customer.

Can you share any investing mistakes that you made and the lessons we can learn from it?

If you decide to make an investment you must back it well and the funds I have been a part of have been guilty in not doing this well. Until you say ‘yes’, evaluate it, put in the hard effort on diligence, but if you decide to invest, back it well.

The other mistake I’ve made is to have some clear negative signals, especially on founder team chemistry and then ignore it. Startups fail for many reasons and you can never always get it right with risk capital. However, ignoring clear signals telling you not to invest is sacrilegious

Is there any particular investor or author who has had a significant influence on your investment thinking? 

Not authors necessarily, but a couple of investors and partners at VC firms that I’ve co-invested with. Their ability to influence founders, the way they support the entrepreneurs, freedom they provide and back their portfolio companies.

What would be your advice to Entrepreneurs seeking funds?

Do you really want VC capital? Answer this question before you go out to raise money because the capital comes with strings attached

Once you decided you want to raise money from VCs, find the right investors, and focus on the chemistry with them as your key decision point

While fundraising, there is attrition if the efforts prolong and therefore the time you’re fundraising well.

Do you invest in specific sectors? If yes, then which are the sectors?

Yes, specifically early and deep tech startups, fairly startup agnostic. Broad areas include Enterprise tech, healthcare, fintech media tech, etc in emerging technology areas like AI, AR/VR

What is your outlook for the present startup ecosystem in India?

Extremely positive. For the last 12 years I have seen:

  • The number of high-quality startups is increasing. The top talent which used to aspire for jobs in Information Tech in the 80s and 90s is gravitating towards entrepreneurship.
  • Earlier many startups were not addressing global problems and unable to compete with their global peers. Now early-stage startups are targeting many more markets outside India.
  • The number of Unicorns and Soonicorns is increasing. Earlier scalability used to be a question but now they are demonstrating their capability to scale

According to you what is more important (Team, Idea, Traction, etc.)?

When I evaluate an investment opportunity, I focus on three vectors:

  • Team: which includes quality, experience, dynamic, compliment.
  • Technology, Product or solution
  • Market: includes whether it is ready, big enough, and easy to reach.

Different startups are at different points on each of these vectors. 

Sometimes the team scores well; the product has less potential or sometimes it’s vice-a-versa.

I evaluate how these three come together to assess the overall opportunity and risk, to see whether the startup is investable.

According to you what is the perfect time for a startup to raise funds?

It really depends on many factors, but the common aspect around rounds is when there is momentum. Investors like to see momentum. On product development, product validation, customer acquisition, revenue scale-up, team augmentation, etc – based on the stage of the company, any or all of the above

What is the value add that a founder gets, along with your investment?

I honestly believe that the best founders are those who need the least support. Having said that, we, as most funds do provide strong support in the areas of market access and follow on fundraising. However, I believe where we add the greatest value is to be a sounding board to startups.

Would you like to share any of your recent investments and why did you select them?

About a year back, we invested in Entropik Technologies. They use AI applied to brainwave mapping and facial coding to provide a granular view into a customer’s emotional and non-emotional responses to any form of digital media, including video. How happy are they, how angry, how attentive and so on. We liked the fact that it was cutting edge, futuristic and went to the core of a human being’s emotional state through the use of deep technology. They had also demonstrated early validation of the technology and I saw a high-quality execution capability in the team.

The second was Detect Technologies. They have a patented IoT product used by oil and gas companies to monitor their pipelines. They identify corrosion in gas pipelines and are the only product in the world that works at high temperatures. Postgraduates from IIT Madras, they are a clever team of young guys. It is a globally cutting-edge technology solving a large, expensive problem. We also saw early customer response to the team and how they were able to overcome challenges.

Answer in one line:

Share your  original quote: Stay Young, Stay Entrepreneurial

First 3 slides that you look in a Pitch Deck (in serial order): In outlining the top 3 things I look for in a pitch-deck, not necessarily the first 3 slides, which are:

  • How complex the problem is?
  • The uniqueness of the product, team, revenue, and growth.
  • What will you do? How is your product going to change the way in the future? Is your product going to change the way I live my life

How would you define Startup: an early opportunistic, commercially viable effort to solve a real-world problem or a pain point.

What are the attributes of an Entrepreneur:

  • Perseverance – staying power
  • Tenacity – the ability to face and handle the challenges bombarded on him or her on a continuous basis
  • Ability to think big and have a large vision and act small on execution.

What are your views about StartupLanes?

It’s a great platform to help disseminate startup related insights