Interview of Pavan Kumar (Partner at F50 Elevate)
An Entrepreneur is a lone warrior, walks away from the crowd, thinks differently and dreams big – Pavan Kumar
Pavan Kumar is a partner at F50 Elevate, a Silicon Valley-based accelerator for pre-Series A startups and co-founder at 3pmVentures. Prior to this, he founded two startups and spent three decades with MNCs and large enterprises in India, the Middle East and the USA. For the past 6 years, he is an angel investor and mentor in India, the USA & UK. Since his first startup in 1996, he stayed connected with startup ecosystems in India, the USA and other parts of the world.
What is your investing philosophy?
I fund very early startups. ideating or with MVP, with a strong founder team. My expertise and experience should be a key contributor to startup success. Finally, I believe any business can be converted to a platform play, keeping the team lean and focusing on core technology competencies. Once these principles are met, I fund the startup. In most of my funding, I was the first and only investor backing founders based on PPTs.
What has been the most important investing lesson you have learned so far?
Avoid impulsive or emotional investment, before evaluating the founders. Funding a great idea or startup with traction before doing the due diligence of the founders is a huge risk. Evaluating founders in terms of their values, vision, attitude, and commitment is very important. Four of my investments in healthtech, deeptech& wellness failed as I was emotionally driven to do something in this space rather than being objective in evaluating the founders. Though great ideas with a good amount of funding, the founders let me down and I learned the hard way.
Which has been your best investment till date?
Not one, but few in my portfolio are doing really well. Mishipay.com, UK, is disrupting retail with self-check-out and recently got funded by AmEx Ventures. GigWage.com, USA, is creating an impact in FinTech by enabling 1099 tax code payments and is backed by the Revolution Fund of Steve Case. Flutin.com, a music startup that moved to Austin last year is funded by Sega Games, Japan. NewsBytesApp.com, GetFitso.com and few other companies out of India are doing really well.
Can you share any investing mistakes that you made and the lessons we can learn from it?
I always believed that healthcare has a lot of opportunities to disrupt. In 2016, I founded a school dropout and a well-educated co-founder with good years of professional experience abroad. With my funding, the company was incorporated and a team was hired as well. I release funds based on milestones and these guys managed to build a great story to get most of my committed money. Eventually, I realize that the co-founders are not on talking terms and both were having a jolly ride, spending the fund. The startup shut down in a few months and to my great surprise, the school dropout relaunches with a different name and tried to fool a new set of investors. The great learning out of this incident was to heavily focus on founder credentials before committing any funding.
Is there any particular investor or author who has had a significant influence on your investment thinking?
I am a stock market player since my college days. I did my first investment at the age of 18 and built a strong stock portfolio over the years. The financial world always fascinated me and after launching my first startup, I followed many entrepreneurs, investors, and VCs to understand the dynamics of the startup world. I closely follow Vinod Khosla, Kanwal Rekhi, and many other investors & funds.
What would be your advice to Entrepreneurs seeking funds?
Many begin with the misconception that startups can attract easy and good funding. Investors have turned cautious with the recent debacle of WeWork and poor performance of uber, lyft, etc. in stock markets. The days of easy money are gone, today investors only back startups that have traction and business models with proven cash flows. Founders should study the market, identify the niche, bootstrap in the initial phases and focus on making money before attempting to raise funds.
Do you invest in specific sectors? If yes, then which are the sectors?
For personal investments, I am sector agnostic and primarily focus on founders & ideas. However, at F50 Elevate, we consider HealthTech and FoodTech as the sectors of the decade and fund pre-Series A startups in the space. In this decade we are going to see a lot of innovation in curing decreases, extending healthcare to masses, DNA driven treatments, longevity, etc. Similarly, with the growing population and shrinking landmass for cultivation, disruptions are imminent to optimize the space and improve yields. Plant substitutes for meat and other animal products will be an interesting space to put money.
What is your outlook for the present startup ecosystem in India?
It is heartening to see a spike in Startups in India. Many early and experienced professionals want to take an entrepreneurial path to give shape to their ideas and create an impact. Indian startup story has just begun; it has immense potential in B2C, B2B and integrating masses beyond major cities. Many women entrepreneurs too are taking the plunge and creating an impact. In this decade, Indian startups are poised to deliver many low-cost models and next-generation technology innovation to the rest of the world.
The typical timelines for a startup to either get funded or become financially stable are much longer in India. We need lot many incubators, accelerators and mentors to support the first generation entrepreneurs. Industry veterans and thought leaders should associate with an early-stage startup to provide guidance and support.
The government should bring in policies to provide concessions and encouragement to develop Angel investing as a new asset class. This would bring many middle-class professionals not only to fund early ideas but also to contribute to the founders through their experience. The M&A activity is very low and Industry needs to play a pivotal role by integrating startups into their business process and fostering innovation.
According to you what is more important (Team, Idea, Traction, etc.)?
The success of a startup is defined by the team, especially the founders. Not just their knowledge, experience, passion or commitment, but the culture, communication, attitude, and agility define the outcomes. A team with strong synergy can overcome every challenge to be successful and create an impact.
According to you what is the perfect time for a startup to raise funds?
Ideally, startups should avoid funding unless they cracked a good business model and need capital induction to scale the business. At an early stage, founders should get the right investors who can add value to the business through their network and domain expertise rather than just put money. Getting professional funds & VCs is way different than getting individual investors who are mindful of protecting their investments and gaining early returns.
What is the value add that a founder gets, along with your investment?
Early startups don’t have every competency they need to be successful. I fund only those ideas where I can get involved in the initial phases of business by filling the competency gaps. Also, I am not emotional about the idea like founders and will share a candid outsider view to keep them on track. My long years of experience in B2B, business strategy, sales, partnerships, customer experience, etc. bring a lot of value to the funded companies. I help my startups to convert the business into platform play, stay lean and quickly get to positive cash flows.
Would you like to share any of your recent investments and why did you select them?
For the past two years, I spend a lot of time in the USA and all my investments are into startups there. I founded GigWage.com, founded by Craig Lewis. We were together on a global podcast, I liked his views and market knowledge and I decided to fund him.
I did office hours in Capital Factor, Austin, USA and met Christiaan, founder of TheCarSavior.com. I liked his passion for car, the algorithm he developed to remotely diagnose car breakdown and decided to back him.
SentientDB.com is a cloud SaaSproduct, launched by industry veterans with long years of industry experience. I liked the team and the disruptive product. I not only funded them but got on board to set up a global partner network.
Answer in one line.
Share your original quote: No substitute to hard work.
First 3 slides that you look in a Pitch Deck (in serial order): Market Insights, addressable market, how to become a dominant player
How would you define Startup: Not a business. Disrupt, innovate and take a risk to create an impact.
What are the attributes of an Entrepreneur: Lone warrior, walks away from the crowd, thinks differently and dreams big.
What are your views about StartupLanes?
Shishir Gupta and the team are doing a great job by helping founders in India. Building a platform with 1.2 million reaches is a huge accomplishment and endorses the relentless efforts of the team. StartupLanes is unique in providing all the services under one roof and bringing together the complete ecosystem. I hope the company extends the reach to tier-2 and 3 cities to help lot more startups and founders to realize their dreams.