We watch shows like Shark Tank, where the world of angel investing and venture capitalism is glorified. The idea of collaborating with serial investors and entrepreneurs is so fascinating and learning about startups has become mainstream media. Neeraj Tyagi is a force to be reckoned with. He is a managing partner at Venture Catalysts, which is India’s first and largest integrated incubator. He is truly passionate about the world of entrepreneurship and has undertaken multiple roles towards the same.
Neeraj started by educating us on how funding for startups works. Essentially, there are multiple stages at which a start-up decides to fundraise. Some come when there is only a conceptualization, and the project is just a seed and not really a business. After which, comes the angel round. Where essentially the company has launched the product, and there are between 6 to 12 months of traction. After which begins the VC round, or the Venture Capitalist round. These are usually numbered as Series A, B, C and D. Neeraj focusses primarily on the seed stage of investment, up to the angel round.
He does this in multiple ways. First through India’s largest Angel Investor network, which is Venture Catalysts. For the years 2017, 2018 and 2019 the highest number of early-stage investments were done by this group. Last year, about 48 companies were funded, which means a company was invested in every week. On a personal level, during the pandemic, Neeraj created a platform to bring successful entrepreneurs in contact with newer fresher startups. This is called We Founder Circle and already has over 300 people have registered, who speak and connect at a one-to-one level. This network has already funded 6 companies and is growing at an exponential rate.
Neeraj speaks about the fact, that investing in startups is still considered an alternative way to invest your money. Individuals or institutions entering the start-up space as investors must have a loftier goal and must consider money a byproduct. Entrepreneurship ventures are inherently risky and insecure investments, however, they also have the potential to be most rewarding. People with strategic knowledge, entrepreneurship experience or with a passion to create a new product or be part of the journey of creation are a critical part of the start-up circuit. Exclusive giving capital is not enough.
As somebody who works with young startups, and seed-stage ventures it was interesting to learn the basis on which Neeraj makes decisions. Given that, on a mathematical level, the decision cannot be made, simply for want of data and experience. Neeraj says, that the primary focus is the founding team. The people who are creating the project, their drive, their competence, their perseverance and their vision. As far as the idea is concerned, investors look at the scalability. In the entrepreneurship space, to survive one must thrive at an incredible and fiercely rapid pace. The idea must have the potential to scale their impact, their business model.
The race to become the next Bill Gates or Mark Cuban is intense. Startups are slowly becoming a critical part of the Indian economy, and people like Neeraj and companies like Venture Catalysts have a significant role to play in this process. The democratisation of the capitalist society is a national responsibility and it is inspiring to see people like him take charge.