I started angel investing in 2015 and have made 15+ investments to date. It’s something I’ve not written or talked about except in my Linkedin Bio mainly because I don’t feel I have achieved much yet in Angel Investing.
I have lost my money in 2 of the first investments I made and am currently invested in the rest of them. I haven’t seen a single exit so far. But today I want to share my angel investor journey for two reasons.
- To share my learning with other angel investors and to-be angel investors
- To convey the reason behind why I have started PlanB along with Nataraj.
☑️ The Start
I’ve graduated from BITS Pilani in 2010. The placements environment was less than ideal because of a recovering global economy. I got recruited by the last company to visit the campus – Hindustan Aeronautics Limited (HAL) – a PSU. After surviving at HAL for 2 years I have decided to move to the startup world in 2012, when there was hardly any startups around and little to no buzz about them. I joined a BITSian startup, TopTalent. My paycheck fell from 40K per month to 10K. But I was happy. I was doing something new and more importantly constantly learning. Even to date, I believe Top Talent laid a great foundation for my overall career and am grateful to Varun Deshpande for the experience and opportunity.
🛑 The Stop
I eventually started my own startup in 2014 called MyWash along with another BITSian, Raghu. We raised a Million dollars, spent it to grow the company, struggled to raise, and finally got acquired.
After the MyWash exit, I had the opportunity to invest in 2 startups. Both of them were founded by BITSians. However, neither of them raised any further money and have shutdown under difficult circumstances in under 18 months.
At this point, I’ve lost about 10 Lakh rupees and thought that angel investing is not my cup of tea. I stopped angel investing and diverted every rupee I had to Public Markets. Until this message came in my LinkedIn inbox.
🎬 The Restart
From 2016 to 2019, I have received a lot of pitches in my inbox and have rejected them all. But when Darshan messaged me what caught my attention was 2011B2A2768P. A BITSian messaged me and asked me for mentorship or to angel invest. Having been in the same shoes myself couple years ago, I thought I should help him out.
Their startup was into crypto currency space and was doing just about OK.
I have been investing in Bitcoin since 2013 (a blog on this later may be) and was following the space closely. I personally could relate to the use case for which they were building. A Bank for crypto currency hodlers which pays out an interest just like a regular bank like ICICI or HDFC pays interest for rupee deposits.
I was hodling my crypto and could use a service that earns interest while doing so.
I had several calls with him and met him and the team twice in Bangalore before I decided to restart my angel investing and committed a small check in the $250K round he was raising at a $3 Million valuation. Even though I felt the valuation was high, I was in no position to decide or change it so I went along for the ride. This single decision changed my entire life (coming to this soon).
While Darshan was raising this round I connected him to other investors I know. One of them have committed but dropped out in the last moment while the others have passed on the deal.
As far as I know there was no other BITSian investor apart from me in Vauld (it was called Bank of Hodlers back then). Fast forward to six months Darshan called me and asked “hey we raised $2 million at a larger valuation and our investors want to give you an exit do you want to take it?“.
It could have been a 3x exit in just a few months but it didn’t excite me enough and passed the exit opportunity.
Fast forward six months he called me again and asked “hey we raised $25 million at a larger valuation and our investors want to give you an exit do you want to take it?”
This time the original investment turned to a 30X in under 2 years. I said no again, I know this is onto something bigger and of course I am waiting for his next call. 😉
🗒️ Learnings
This experience of investing made me realize few things:
- Startup investing is risky, hard and has to be for long term. To make good outcomes in early investing one has to have the ability to stay the course regardless of early failures. Startup investing work by power law and one hit is enough to give great returns for the entire portfolio. The best way to stay in the game is to approach it with the lens of building a portfolio in the best way possible regardless of the outcomes. And most importantly invest only the amount you are willing to lose.
- Gut feel is good. Not everything is clear in the early days of a startup and an angel investor s should not wait for everything to be clear because by then the opportunity would have been lost.
- 1000X is a really an awesome number. If you can achieve 1000X on $1000 it is a 1 MILLION USD. And it is not very hard. If you invest in a startup at $1 Million valuation it has to be a Unicorn to give you 1000X return. It is as simple. if you invest 1000 USD in 100 startups and lose everything in 99 and get 1000x in one, your net return is about $900,000 or 9X. This is power law. The trick is to get early into these big winners as early as possible. Fun fact, Info edge made close to 1100X on their investment in Zomato.
Vauld was my 3rd startup investment (after the first 2 failed) and since then I have gained a lot more confidence and am now actively investing in Indian and Global Startups. In the last 1 year I made 12+ investments (list in my Linkedin). My goal now is to find that 1000x return.
✨The Vision
There are few more things I want to share on why we started Plan B. About 50% of the investments I made are into BITSian startups and in most of them I am either the only one or one among the very few BITSian investors. Most of them struggled in closing their first rounds. Slowly a bunch of us BITSians got together and started investing more actively and there are several groups like this operating in Silos. The intent behind Plan B is to get active and soon to-be active BITSian angels together and substantially increase the impact.
- To write the first check into startups (BITSian startups are priority but not restricted to these) and help them in their journey from 0 to 1.
- To give BITS alumni an opportunity to participate in the wealth creation process. Even if one has capital and is keen to invest in startups, it is not easy to angel invest. It requires a combination of capital, network & time. With abundant capital chasing too few startups we realized that we need a network force like Plan B to get access to good deals and write a bigger checks to create bigger impact. Imagine Plan B writing a 25L check to Vauld. That 25L would now be worth ~7.5 Crore and likely heading towards 75 Crores in the next few years, all while helping BITSian create and run a great startup. Talk about a positive sum game!
- The BITS alumni community has operators, founders and investors across the globe. There is a great opportunity by connecting the capital & expertise of this network to the next generation of companies that needs to be funded.
This is the goal of Plan B. We are constantly on look out for our next Vauld. But its important to remember that, you never make a viral video, you only make videos and one of them will go viral.
To find the next Vauld, we will look for good startups with exponential possibilities and hopefully in the process will hit the bullseye. Our latest bet DOTO is based on the thesis of backing great founders, building exponential value at a very early Stage!
If you are building something cool, you can send your pitch here.
Checkout PlanB if you are interested in co-investing with us.
— Silus!