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VC10X - VENTURE CAPITAL PODCAST

Venture Capitalists (VCs) & Angel Investors share their investing thesis, screening process, value-add, exits, and more. Hosted by Prashant Choubey (@ChoubeySahab)

  • angel-investing
  • fintech

The Common-Sense Investor - Srivats Sivanandan, Angel investor

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Srivats is an operator-investor with a track record of improving organizational velocity. He's skilled at determining where to lay the train tracks (direction) and works with xfn teams to ensure that the trains run on-time (speed).

We talk about:

  1. Srivats' story & how he started investing?
  2. What do you look for in companies while you're investing?
  3. The 5 Guesses
  4. Commonsense over contrarianism
  5. How to build credibility as a new investor?
  6. The Enthusiasm Interview
  7. Rapid Fire Round

Srivats' story & how he started investing?

I want to say 2012 was really the starting point, and I was living in New York at the time, and Fred Wilson, who you may have heard of, who runs USB, runs a writes a daily blog, VC. It's just titled a VC. And so that really was my introduction to the world of venture capital and startups and private companies. And so it started there, and then from there, I think he blogged about brad Feld once runs Foundry and a book that Brad had written really kind of demystified venture capital. So I kind of read that book and intellectual curiosity.

And it just keeps taking you to the next step, and then you have one thing led to the other. And then just randomly, I connected with Gil, who was one of the earliest, I want to say, syndicate formers on angel list. And so Gil had this kind of vibrant community of folks who are interested in angels and angel investing and didn't really know where to start. Right. So we basically all just kind of got together and said, hey, you know what, Gail? We'll help you do some due diligence. We are all operators. We all work in different companies. I think I was on Amazon. It's time.

It was 2014, I want to say. And so we said, we'll just volunteer our time and help you do diligence companies, and we'll go from there. That, I think, was my first taste. At this time. I didn't have the cash, so I couldn't directly put money into startups just yet. But I got a good kind of under-the-hood view of what it takes to evaluate companies, how do they make the decisions, and what does it take to raise capital from limited partners if you're a VC? But yeah, that kind of is the genesis.

What do you look for in companies while you're investing?

I think caveat everything I say with the fact that I think VCs and private company investing, in general, is an apprenticeship model. It raises my view. So one of the things that I've kind of realized over time is that there is no real kind of truly unique angle. You're just building on the foundation laid by giants who came before you. So with that said, I think I have liberally kind of adopted techniques that I've heard from folks like Google Rajaram or Elizabeth at Hustle Fund, Fred Wilson himself, and Brad Feld. So specifically, what I look for has evolved over time. I've been angel investing very actively for three years now.

When I started out, it was all about, do I know this founder really well? Do I see patterns here in this founder straits that I can better match with stories of successful founders that I've heard in the past? That was my kind of solo lens. Over time, what I've learned is that it's not just about the founder. There's a little bit of weightage that you need to add to the market that they're trying to build a business in the actual product that they're trying to build to win market share. And so those two started taking some precedents as well. And so fast forward to today, I'm generally a fintech, B2B SaaS kind of investor. So in both those kind of verticals, if you will, I've kind of leaned more towards, can the founder understand that it's not just about the product, but it is also about how you distribute the product and get it into the hands of customers who are willing to pay for your product?

And I know there's a lot there, right? But if you unpack it, I've noticed there's a lot of first time founders. It's almost a cliche at this point where they just take the famous VCism right. You know, build something people want, they take it as a dogma. And that's one thing. People want it. But then I would just say, build something people want and they will pay for you. Pay for it. Right. And I think I've started to realize that combining those two is a good way to think about the health and longevity of any business. So I would say distribution is kind of really kind of where my head is at when I'm meeting founders today. 

The 5 Guesses

So I basically tell the entrepreneur, hey, tell me what are the five guesses, the top five guesses that you have about your business. Tell me how much each guess is going to cost you. And the cost usually at the very early stages is not just about money, it's about time, because that's the biggest cost to the entrepreneur. They're investing their entire life into this thing. Tell me how much time is it going to take to validate each of these guesses?

And then if you validate it, what does it mean for the business in the future? This is more of a more qualitative thought exercise. Are they navigated the idea maze to better phrase policies? When you ask an idea of ideas matter, right. It's not just about execution, so just making sure that they are rational and how are they going to derisk and de guess the business? That really is the crux of what I do.

Commonsense over contrarianism

I think the contrarian world has been so overused in the venture industry that at this point, I think being contrarian is not contrarian. There's a lot of post rationalization of investments where you just say, hey, I'm doing it just because I want to be contrarian, kind of thing. I would say I am a contrarian investor. I think I'm more of a common sense type of an investor. I want the business to be intuitively understood by, let's say, my dad, my grandma, or whoever.

How to build credibility as a new investor?

I might have been investing for three and a half years, but to really get any sense of feedback on how I'm doing as an investor, I probably need to wait another three, four years. I think the number one thing I would say if you're looking to get into investing in earnest, is to it might sound like a cliche, but be helpful. Be helpful before you get these opportunities knocking on your door.

I don't come from any credentials like Silicon Valley, Stanford Network, or any of that sort. So sometimes it's just be methodical and have grit and keep reaching out and doors start opening.

The Enthusiasm Interview

Sometimes a portfolio founder will ask me, hey, interview the candidate not from a technical fit or even a company culture fit, but interview the candidate for just enthusiasm. I feel like that's something that a company's kind of undersell. You need people who are enthusiastic. If you have a bunch of people who are enthusiastic about what the company is doing, magic can happen.

So I literally just tell the founder, hey, I will look for enthusiasm. That's my only job in these 30 minutes. And so that helped us get some really? You'd be surprised what candidates do when they're really passionate and enthusiastic about the mission of the business. Right. So that's something that I spend a lot of time doing.

Rapid Fire Round

What are the sectors and regions you invest in?

Southeast Asia, US India fintech sector B2B. Future of work.

What stage do you typically invest in?

Pre-seed & seed.

What's the typical check size?

I write up to five digits, so I've written very few checks that are five breakers. Typically, my sweet spot is four digits.

Where can founders pitch you?

You can find me on Twitter. I'm pretty public. My DMs are open. I'm on LinkedIn.

Where can I listen to follow you?

Twitter is probably the best place because I amplify other investors and I also share my own thinking there. My handle is at Srewats on Twitter. And follow me there and let's have a chat.


Follow Srivats on Twitter- https://twitter.com/srewats

Follow Srivats on Linkedin- https://www.linkedin.com/in/srivatss/

Hosted by Prashant Choubey- https://twitter.com/ChoubeySahab

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