How Thriving VC-Founder relationships lead the path to a Unicorn | Watch, Read Excerpts

 /  By Antje Thoms

In 2022, India was home to 108 unicorns. Their numbers are growing frenetically. Unicorns are what venture capitalists or VCs call, startups with $ 1 billion valuations or more. It’s not a coincidence that the number of such startups in India is rising – the ingredients to feed such an ecosystem are in place.

BII brought together three unicorn founders from its portfolio, at Techsparks 2022 (Watch here)

Pankaj Makkar of Bertelsmann India Investments (BII) was a part of the panel for ‘Demystifying unicorns: Decisions to help you win’. The other panel members represented the unicorns from some of the Bertelsmann-backed startups: Shiprocket’s Saahil Goel, Pranjal Kumar from Eruditus, and Licious’s Abhay Hanjura. The panel discussion centred around the factors responsible for creating unicorns. Among the main points discussed, was bringing the right startup founding teams to the table, as well as choosing the right investor. Pankaj felt that the relationship between a startup and an investor was no less significant than a marriage. Backed by a 185-year-long legacy, BII, the Sector Agnostic Unicorn Investor, are responsible for providing stable capital to chosen startups. While BII prides itself on working hard alongside its founders, the management also enjoys hike, play snooker and badminton with their portfolio founding teams. BII is a conviction-driven VC that according to Pankaj has its DNA in Series B funding and constantly keeps an eye out for ventures that are building value. The right set of founders, with products that make a difference and are carried forward by successful business models, define value for a startup as well as for BII.

Pranjal Kumar said being a recipient of funding allows a company to be a category leader and set an example for others. Abhay however felt funding can reduce the fire in the belly of an unaware startup; he stressed, startups mustn’t take it easy after funding. Saahil felt it was important to think small in the early stage of funding, and yet be able to create something of immense value. Abhay’s aim centered around building a special company with a great culture. Some of the other thoughts that came out had to do with staying true to one’s mission. The founders felt that once the playbook was established, replicating to scale fast was the preferred route. The general feeling was that it was encouraging to see the ecosystem shift. More startups were getting funded, with an increasing number of them making it to the unicorn category with the help of conviction driven investor.

Choosing the right finance option for startups

The debt option and the bootstrapping option are both high on personal risk. Since personal funds are used in bootstrapping, there is restricted access to capital. The risk of losing one’s savings can be high. Bootstrapping a unicorn may be the stuff of dreams, but the challenges of building a billion-dollar business without external funds are also very real. So, it’s not just a coincidence that startup founders prefer the venture funding route. It allows the founders to work toward alongside experienced capital providers and long-term partners.

BII believes that the venture funding option is all about building better and building big. There is greater capital availability, with global access to markets. Easier talent acquisition into the business becomes possible. Founder Vc route provides an opportunity to build one. Solid shot at getting there. Every founder should look for a VC that invests in the founder’s vision.

What VCs look for in startups

The panelists discussed these three key takeaways,

  1. In terms of startup teams, a VC will look for relevant experience and networks
  2.  Total addressable market (TAM)
  3. A clear revenue model and within it, a clear path to profitability.

There is enough funding in the winters for a great product, and a well thought out business idea. While this is not an exhaustive list of what VC’s look to back, Bertelsmann Investments team can be reached for a conversation anytime. Arnav Mohan Gupta Aarushi Sharma Naman Wadhwa

Wrapping Up

BII focuses on early growth stage investments (Series A to D) in tech-driven start-ups, fluently establishing itself as a prominent sector-agnostic fund. However, the chief element that sets BII apart, is the firm conviction in the founder’s vision.

BII is ready to deepen its engagement within India and expand further with a structured agenda. We are very pleased to be more than doubling our investment under the new Bertelsmann Boost program. Based on our increased allocation of $500 million, we expect to make eight to ten new investments a year until 2025.

Reach us on BII Website and BII’s LinkedIn page. Watch the Panel Discussion here.