(Warning: "don't try this at home, stunts performed by passionate professionals and imitating them may lead to harmful side effects")
There is a good reason why funds such as ours are called "Superangel Funds" in the valley (even if the bigger VCs seemingly don't like that term and call them micro-VCs). There has to be a method to the madness of attempting a $20 million type fund and a good necessary condition is to have enough of a bank balance to be a 'Superangel' in your personal capacity, even if you don't have the gumption to start and run a fund (that comes later). It's not as much about having your own capital to deploy, it's about being nonchalant about the need for an income.
This became quite clear to us back in 2010 when we visited the Valley, broadly understood the dynamics of similar funds and (YET) decided to start this fund. We were (and probably continue to be) under the influence of some drug, in attempting to build a fund of this nature. Building one is fine, but seems silly to do it a) in India (NO respect from investors, VCs and even most entrepreneurs!!, even post-investment!!!) and b) without a hefty bank balance earned from google/paypal shares/family fortunes or such riches.
In the absence of a bank balance, there is only one other drug that works - passion!....and of course, optimization (Ergo, the Warning above - this is no 9 to 5 gig and attempt it at your own peril.)
Here's a snapshot of what a first year of a Fund like this can look like....
[* all stats for period Jan 1 - Dec 31 2011 Only * not counting the 6 months that it took to get the initial setup/groundwork done in H2, 2010 * not recounting the details of our portfolio - they're public enough for everyone to see * not adding Sanjay and Adit's stats for this post]
- # of Flights - somewhere between 75 & 85, 15 of these required a passport for ID - ALL flights on cattle class but optimization means windows/exit/front rows a lot of the time
- unfortunately, only about half of them were on Jet Airways, and so JP Gold happened only this month, but given Jan's scorching pace of 9 flights, Platinum is definitely happening in 2012 (are there a lot of folks who do Silver -> Gold -> Platinum in 6m window after flying only Economy? Just thinking aloud....)
- all domestic tickets booked with a credit card and online only (discovering the pleasure of huge savings on certain airlines sites with certain credit cards)
- ah! flying is a breeze and all looks rosy so far, ain't it
And now, the 'fun' stuff:
- # of auto-rickshaws taken: dozens
- # of car breakdowns: 3
- # of times that I pushed car in traffic to curbside: 2
- # of times car was driven ON the curb to avoid traffic: 2
- # of times I ran from cab into B'lore airport thinking I'll get bumped off the flight: 8
- # of flights missed: 1 (from Mumbai, web/tele chk in didn't work for some reason and there was an unseasonal thundershower at 5:30am and the stupid call taxi guy stopped for CNG!!!....and I was 42 mins to takeoff and they bumped me!)
- # of times I had to hit the ATM to pay cabbies: 5 or 6, the most dramatic one being the one where I had to go inside B'lore airport, check-in, run back out, and have the entrance security guard pass the 650 bucks + 50 tip to the tolerant driver
- # of times I checked in luggage on a 2 day trip in this entire period: ZERO
- # of times I carried a laptop on a trip: ZERO
- Average take-off time from Mumbai: 6:25 AM
- Average landing time in Mumbai: 10:45 PM
- # of times I've paid more than 999/month for iPad/iphone 3G data: ZERO
- most expensive acquisitions in the last 18m: iPad1, iPhone4, watch - all gifted by more privileged family members
- 10 year wedding anniversary trip to Europe: gifted by wife
- # of coffee shop meetings: around 250 (most at a stretch in same shop - tied at 5 - Cafe Noir and Costa, 80ft road, K'mala) - also, this is explained by lack of a proper shared office till late 2011 (btw, coffee shop bills far cheaper than office rent)
- # of times I saw a pay cheque: ZERO (this stat should hopefully get off the mark sometime this year!...with us getting to final close soon...else the marriage is going to be in danger!)
- # of days (on avge) to short-term burnout: 21 days
- # of startups that we've funded that had a monthly burn rate LESS than us: ZERO
- # of emails in my mailbox that have been read, not trashed and put in folders: 24577
- # of nights spent in a hotel on an overnight biz trip when traveling alone: ZERO (over 25 overnight trips) - I do have some friends and family who still seem to like me enough
- # of meetings in a day (avg) in a city other than Mumbai: 6 (Max: 10, Min: 4)
- # of visiting card boxes of 100 each that were exhausted: 8 (No, I don't throw out cards in events like confetti - I hardly make it to events)
- # of distinct investors pitched: over 200 â€“ not counting multiple meetings with same investors
- # of companies reviewed: over 300, over 150 met
- # of times an entrepreneur has driven me to next meeting: between 10 and 15 (mostly, these are guys already in the fund portfolio)
- # of times we've done entrepreneur meetings in a car: dozens
- # of meetings that my 3 yr old attended: 1 in outside venue, 1 in a cab and a dozen or so at home
- # of times we got beaten to a seed cheque by a big VC: maybe 5-6
- # of people/organizations who wanted to buy a stake into our fund or sought to influence the decision-making of the Fund: 8
- # of times we said NO, Thank You (since it would've changed the way we run our vision): EVERYTIME!
You've heard of company policies that restrict too many employees in the same aircraft - How often have you heard of 2/3rds of a VC Fund team riding on a 2-wheeler the night before their biggest event of the year?! We pulled off a 100 person internal Investor-Advisor-Startups event last week and it was satisfying to see everyone who believed us - investors, advisors and most importantly, the startups we backed, all under one roof. That said, 3-member teams (even with all the extended help we got) should NOT be attempting 100 person events.
Whenever we get told by a startup how difficult running a startup is, and we say "we know"â€¦.trust us, we know!
There have been days when the lack of understanding amongst start-up entrepreneurs in what we do and why we do it has been far more acute and overshadows that of ignorant or indifferent "potential" investors. And that hurts more when you wake up the next morning trying to get back on the trail with the same energy levels.
As in every startup, the first year of a micro-VC fund was (and will continue to be) as much about hard work, hustle, communication, selling, marketing (a vision, not a product or service), and trying to be omnipresent, without altogether collapsing.
Much like the story of the bumblebee, there are more folks than not, who think this model WON'T fly and sustain as a species. Whenever you spot a bumblebee next, remember to check back on us for an answer!
(Karthik Reddy is the founder and Managing Partners at Blume Ventures, an early stage investment firm. He is also a member of Mumbai Angels.)