The Most Valuable Startup Advice From VCs

This year has been interesting for Southeast Asian and Indian startup ecosystems. We say interesting because, depending on who you ask, the answer will oscillate between a great year and a challenging year.

Stakeholders from Southeast Asia would call it a challengingly interesting year. Challenging because startups struggled to raise money—48% lower than last year—and interesting because they really persevered through the funding drought and came up with peculiar ways to survive and thrive. At the same time, the Indian startup ecosystem not only saw a jump in VC funding but there were successful IPOs as well.

In the past 12 months, we discussed all this and more in our newsletter Hedwig.

We interviewed investors from Southeast Asia and India on a wide range of topics, such as how founders can build sustainable businesses, what founders can do to get their money (we asked nicely), and other aspects of running a startup. We also talked about specific sectors, including AI, finance, clean tech, consumer brands, and many others.

Here is a recap of this year’s top interviews with VCs, along with their most valuable advice for founders. 

Arun Pai, Principal at Monk's Hill Ventures 

Arun Pai / Monk's Hill Ventures: In this interview, Arun Pai explained why Monk’s Hill Ventures invests in only six to eight startups a year. As a sector-agnostic investor, Arun Pai is interested in exploring companies that use technology to disrupt an industry. Sectors like electric vehicles, financial services, e-commerce, GenAI, and ESG excite Arun. 

He believes that in the next 30 to 50 years, the top 10 companies by market cap would either be GenAI companies or incumbents who would have utilised this technology extensively.

Talking about the startup ecosystem, he said Southeast Asia needs more serial entrepreneurs who can tackle new problems with a new lens but with the learnings of the past.

Key Takeaways:

1. Focus on the fundamentals: Building a sustainable business requires more than just an attractive pitch deck. Entrepreneurs need to focus on the fundamentals, such as identifying a genuine pain point, developing a viable business model with positive unit economics, and executing their plans effectively.

   
   

2. Success isn't linear:  Building a sustainable business requires the flexibility to reassess, pivot, and sometimes deliberately slow down to build stronger foundations. Be prepared to take strategic steps backwards because that will enable you to take three steps forward. Entrepreneurs must adapt and learn from their experiences and those of others.

   
   

3. Build strong relationships with customers: Solve real customer pain points and focus on relationship-building rather than chasing trends or valuations. When you do this consistently while maintaining sound business fundamentals and out-executing competition, capital and growth will come.

Read the full interview here: https://www.linkedin.com/pulse/startup-investing-pure-science-lot-art-involved-too-srivastava-o4r1c/

Craig Bristol Dixon, Co-Founder and General Partner at Accelerating Asia.

Craig Bristol Dixon / Accelerating Asia Ventures: During our talk, Craig Dixon opened up about Accelerating Asia’s evaluation strategy and how they arrive at the decision to invest in a company. Factors like how efficiently a company implements technology, presence in the right market, and founders’ openness to changes, weigh a lot on Accelerating Asia’s evaluation scale. 

The most exciting part of Craig’s job, according to him, is talking to founders. That is when he learns of the most unheard-of problems and their innovative solutions. Accelerating Asia backs only B2B companies, which puts it in a very unique position compared to other funds. In this interview, Craig talks at length about how founders can build a sustainable business. Hint: don’t sell everything to everyone. Instead, find a large enough group of users ready to pay for a product that solves a large enough problem.

Key Takeaways:

1. Target a specific niche: Instead of trying to sell everything to everyone, focus on a specific demographic with a specific problem. The problem should be quantifiable in terms of time or money saved, making it easier to demonstrate value to potential customers. This allows for more efficient marketing and customer acquisition, leading to higher customer lifetime value and lower churn.

   
   

2. Validate your solution: Don't assume your solution is needed. Test your solutions with hundreds of people who match your exact target demographic. Only after confirming that these customers will pay for the solution should the founders look to expand. This methodical approach helps ensure sustainable growth rather than premature scaling.

   
   

3. Track key metrics: Monitor customer lifetime value (LTV), customer acquisition cost (CAC), and churn rate. These metrics provide crucial insights into your business's health and help you identify areas for improvement. By focusing on these key metrics, you can attract VC funding naturally.

Read the full interview here: https://www.linkedin.com/pulse/selling-everything-everybody-recipe-failure-moulishree-srivastava-fueec/

Chalinda Abeykoon, Managing Partner at nVentures

Chalinda Abeykoon / nVentures : Chalinda is one of the most dynamic investors we interviewed this year. He has had a colourful career as he built a strong venture ecosystem in Sri Lanka with platforms like Spiralation, the first startup incubator in the war-torn nation, and The Lankan Angel Network, the country’s first alliance of angel investors, among others. 

As a managing partner of nVentures, Chalinda believes founders in the current era can’t be totally reliant on venture capital to build great companies. He loves businesses that focus on revenue instead of venture capital. Chalinda, whose 90% of portfolio companies come from tier-2 and 3 cities in India, Bangladesh, and Sri Lanka, believes in backing founders who aren’t averse to taking risks. His advice to founders is to fall in love with failure and the chaos that follows.

Key Takeaways:

1. Focus on revenue from day one: The era of building companies solely on venture capital is over. Entrepreneurs need to think about monetization and revenue generation from the very beginning, rather than relying solely on fundraising. This creates a more sustainable and resilient business.

   
   

2. Establish clear roles and responsibilities early: A sustainable business needs three core functions covered: someone to build the product, someone to sell it, and someone to keep everything together. Many startups fail because all founders focus on development while neglecting critical responsibilities like sales, cold calling, and business development. Clear role allocation among founders is essential from the start.

   
   

3. Build a strong support network: Entrepreneurship can be a lonely journey. It inevitably involves hardships and failures. Surround yourself with a trusted circle of mentors, friends, and family who can offer support and guidance during challenging times, rather than chasing social media followers. This support system is crucial for long-term sustainability and personal resilience.

Read the full interview here: https://www.linkedin.com/pulse/era-building-company-only-through-venture-capital-gone-srivastava-lnb9c/

Gaurav Thakkar, Principal at Rockstud Capital

Gaurav Thakkar / Rockstud Capital: This Mumbai-based fund is one of the few early-stage VC firms that has returned the entire capital to LPs from its first fund. With its second fund, Rockstud Capital is ready to lead the rounds, rather than just being a co-investor. Companies that have a clear path to profitability and don’t always rely on external funds for growth have a special place in Gaurav’s heart. 

Gaurav says it’s very important for companies and founders to create a strong brand image and content is one of the strongest tools to do that. The trend of premiumisation or consumer companies that make premium products for the masses makes him sing. He believes that new-age consumer brands that align with customers’ rising demand for sustainable and healthy products can give stiff competition to legacy companies.

Key Takeaways:

1. Prioritize profitability and clear unit economics: Not thinking about profitability at early stages is considered a red flag. While rapid growth is important, focus on building a sustainable business with a clear path to profitability. This means understanding unit economics and tracking key metrics like repeat and return ratios. Early-stage companies may not achieve EBITDA-level profitability immediately, but they should at least show progression through contribution margins. 

   
   

2. Never give products away for free: Giving products away for free will make it difficult to charge customers later and verify genuine demand. Instead, founders should always put a price on their offerings, track key metrics, be strategic about discounting, and understand if their sales is driven by discounts. They should utilize data to understand customers’ needs, determine if they have a "push" or "pull" product based on customer behaviour, and adapt product and strategy as per customer feedback and market trends.

   
   

3. Leverage content creatively: In competitive markets, especially for consumer brands, content plays a crucial role in building brand awareness and customer loyalty. Founders should use authentic storytelling and creative content to differentiate their brands and connect with the target audience.

Read the full interview here: https://www.linkedin.com/pulse/mass-premiumisation-new-play-consumption-category-srivastava-jhnbc/

Nikhil Kapur, General Partner at Grayscale Ventures 

Nikhil Kapur / Grayscale Ventures: Grayscale Ventures is a niche fund that backs developer infrastructure companies–those who understand the pain points of the developer community. Nikhil’s interest towards investing in dev infra companies was aroused when he was a partner with STRIVE, a Japanese fund where he led the funding in Hasura, a dev infrastructure unicorn. With Grayscale Ventures, he is backing dev infra companies that are building great products from India for the world. 

In this interview, he shared his learnings from the time when he worked with the Hasura team. He said startups in the dev infra space must learn how to jump through the hype cycle and catch the tailwind trend of the current hype. For a company from India to make a product at a global scale, he believes it must ace its distribution game. When funding a company, all he needs is a well-identified market gap and a founding team with the capability to build a world-class product

Key Takeaways:

1. Be mission-critical: Develop a product that is essential to the developer's workflow. Avoid creating "nice-to-have" tools that developers can easily bypass or build themselves. Your products must solve fundamental problems and become embedded in customers' critical infrastructure or workflows to create sustainable value and revenue.

   
   

2. Ride the hype cycle: While addressing genuine market gaps, align your product with emerging technologies and trends, such as AI and LLMs, to capture the attention of developers who are eager to experiment and adopt new solutions. 

   
   

3. Focus on global distribution: From day one, think about how to reach a global audience. Cracking distribution on a global scale is crucial for success in the dev infra space, and it requires a well-thought-out strategy and strong execution. Moreover, success comes from the ability to quickly understand market requirements and modify your product accordingly, rather than sticking to your original vision regardless of feedback.

Read the full interview here: https://www.linkedin.com/pulse/india-needs-more-sector-focused-funds-moulishree-srivastava-bklrf/

Govind Mundhra, Founding Partner at Paradigm Shift Capital

Govind Mundhra / Paradigm Shift Capital: The prime thesis of Paradigm Shift Capital is to back Indian companies that are building tech products with global relevance. Their task is a challenging one as Govind and his team invest in pre-seed & seed stage companies. And yet, all the companies that the fund has backed have products targeting overseas markets.

This interview gives a clear picture of why Paradigm Shift Capital has the perfect team to achieve this feat. All three founders have built products or worked with companies that have global products. Such a rich experience works in their favour. While choosing startups to fund, Govind looks at the founders' intent, their clarity about the market they want to expand into, and how logical their product is for that desired market. His advice to founders is to learn what they are not good at, accept it, and find someone who excels at that.

Key Takeaways:

1. Know your purpose and stay true to it:  Having a strong purpose is crucial for sustaining a company long-term. When founders face inevitable obstacles and challenges, it's their core purpose that helps them stay committed and push through difficult times. Without this fundamental "why" behind their venture, founders may question their path when things get tough.

   
   

2. Build for global markets: When building a product, don't treat any market as just a testing ground for eventual global expansion. Be crystal clear from day one about which market you're targeting and why. This requires a logical, research-driven reason for choosing specific markets, conducting thorough research to understand market gaps, and being aware of cultural differences and operational challenges in target markets. Understand that product strategies and solutions may need to be fundamentally different for different markets.

   
   

3. Focus on your strengths and fill the gaps: Identify your weaknesses as a founder and build a strong team with complementary skills. Rather than trying to be perfect at everything, successful entrepreneurs acknowledge their limitations and hire people who complement their skills. These hires don't necessarily need to be the best in the market but should align well with the company's culture and vision.

Read the full interview here: https://www.linkedin.com/pulse/building-world-decoding-paradigm-shift-approach-moulishree-srivastava-xf9sc/

Vishnu Rajeev, Investment Principal at Speciale Invest

Vishnu Rajeev / Speciale Invest: While building futuristic technology, one always needs someone who believes in their dreams. Speciale Invest is the co-dreamer of all the founders who are working on making the things of science fiction, real. From nano-satellites and nuclear fusion to electric flying taxis, Speciale Invest has dipped its fingers in all the possibilities that make the future exciting and to look forward to. 

Vishnu backs deep-tech startups that are rooted in science and technology. He is not really worried about the long gestation period that deep tech companies generally tend to have.

He leans towards backing the founders more than their ideas and wants companies to have more than two founders so that they have complementary qualities. 

He believes it works in everyone’s favour if founders are not married to their idea. If one thing doesn’t work, they should be open to working on plan B and work fast. This interview is also special because Vishnu talks about why the government and big conglomerates should work more with deep tech companies to fast pace India’s dream of becoming a global industrial powerhouse.

Key Takeaways:

1. Build a balanced team: A balanced team is crucial for navigating the challenges of building a deep-tech company. Assemble a team with diverse skill sets, including technical expertise, strong communication and storytelling abilities, and operational experience. This balance will ensure all critical aspects of the business are covered by people with the right expertise.

   
   

2. Focus on early commercialization: Deep tech often involves long gestation periods. Here, knowing how to turn your tech into a commercial product and create a sustainable business around it is the most difficult nut to crack. Hence founders must identify opportunities for early commercialization and revenue generation to demonstrate market viability and attract further investment. They also need to be adaptable and willing to pivot based on market demands rather than staying rigidly attached to their initial idea.

   
   

3. Storytelling is a critical but underrated skill: Successful founders must be excellent communicators who can sell their vision - whether to customers, potential investors, or future employees. It's not about the language you speak, but rather your ability to communicate your idea and make others as excited about it as you are.

Read the full interview here: https://www.linkedin.com/pulse/what-takes-grow-deep-tech-startup-ecosystem-india-srivastava-w2a5c/

As we enter another year, we hope these words of wisdom can offer some guidance to those who have embarked on the entrepreneurship journey. 

Here's hoping the next year brings everyone immense joy, money, and at least one chance to board that flying taxi.

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