Learning as an early stage investor!

A little over a month into my role at Malpani Ventures seems a reasonable amount of time to pen down my thoughts on my experience as an early-stage investor.  While I have had the opportunity to learn from founders and senior management at my previous stints as an investment banker and forensic investigations professional, the insights I have gained over the last month have been enormous due to the sheer amount of interactions with entrepreneurs on a daily basis.  Further, working with an enormously helpful colleague in Siddharth, who I can freely bounce my thoughts/ ideas by, also goes a long way.

Here are my (admittedly early-stage) learnings from the 1st month:

Being a generalist

While sounding contrarian, one of the earliest realisations of my role is that I have to become a very good generalist! By this, I do not mean being ‘a jack of all trades’ but someone who is able to take a step back and see the bigger picture to connect the dots while assessing a new idea. As a largely sector-agnostic investment firm, we get pitched ideas across the board – from a meme-generating company to a mental wellness product, a SAAS product for building communities to a manufacturing as a service solution. One has to be a generalist to broaden your thinking while making any assessment for such wide-spread ideas. Further, the fast pace of technological advancements is ultimately making us all generalists in the long term!

Sticking to basics

Discussions with founders and researching on a varied topics can very easily result in decision paralysis particularly when there is little financial history of the business in question. Technical jargon and outlandish claims in pitches further compound this problem – sticking to asking the basic questions has helped me assess opportunities – What is the problem that the business is addressing? How big is the market? Is the startup’s idea really the best way to solved the problem… and the likes.

In an investment role, where a fixed template cannot be developed, asking & answering fundamental questions is the best way to my mind!

Consistent but disciplined experimentation is key

Listening to pitches and discussions with portfolio companies makes one quickly understand that entrepreneurs are by nature very curious and experimentative. One discernible teaching to me was that early-stage founders who experiment periodically and measure its impact tend to grow non-linearly. I noticed that some entrepreneurs tend to stick a fixed formula which led to a ‘1 to 10’ growth in their business but has not helped them scale as quickly from ’10 to 100’, while others tended to experiment too often to really understand/ derive full scale benefit of the pivots. Striking a balance is key – I am actively seeking to incorporate this in my way of working as well.  

Writing regularly

Lastly, penning down my thoughts (courtesy Dr. Malpani’s regular follow-ups) has really helped structure and frame my narrative on businesses and ideas. Loads of reading and research simply leads to consumption of data and information and only when I put pen to paper does the information become really insightful to me and hopefully to others as well! I hope to be more consistent with my writing over time.

We would like to hear your feedback. Do write to Dhruv or Siddharth with your thoughts

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