India Quotient (IQ) may be the new investment firm on the bloc but the experience it brings with it is humongous. And why not; when its founders are the big wigs of the corporate and the funding world. Started by Anand Lunia, ex-Seedfund; Madhukar Sinha, ex-Aavishkar- the Mumbai-based venture capital firm; Jaydeep Burman, Founder & CEO at fast food chain Faasos; and Lizzie Chapman, Country Head at UK based short-term cash loan provider Wonga; the company has launched its first fund and a committed corpus of about $5 million.
IQ has raised corpus from a group of established entrepreneurs that include Vishal Mehta, Founder – Infibeam; Kashyap Dalal, Founder – Inkfruit; Mohit Dubey – Founder & CEO, Carwale; Jaydeep Barman, and Vikas Kumar – Founder, Brainvisa Technologies. And another 10 per cent of the corpus comes from Lunia’s personal resources. This fund will be invested in pre-revenue start-ups that need funding between the stages of Angel and Series A, and plans to deploy them over a period of 18-24 months. It will invest between $50,000 and $500,000 per company, picking up stakes of as high as 20 per cent.
Pluggd.in spoke to Lunia about his venture and what IQ looks into before taking the investment plunge.
Pi: Why the name India Quotient? What were the factors that led to the birth of India Quotient?
IQ: The name signifies that India needs a different way of doing things. Dozens of fund managers have burnt their hands trying to just localize ideas from the rest of the world. We are Indian investors, investing in innovation from India. India Quotient is born out of our desire to be something different, daring, against the norms. Something that we would expect our entrepreneurs to do.
Pi: Are all founders full time into India Quotient?
IQ: Currently Madhukar and I are dedicated full time to IQ. Lizzie and Jaydeep help us on the investment committee. The advisors help mentor the companies. The entrepreneurs help other entrepreneurs. Frankly, the people who committed money to the fund on just one phone/meeting are the real people behind the fund.
Pi: How much funds do you plan to raise over the next six months?
IQ: We are raising 25 crores and looking to wrap it up very soon. The regulatory clearances will perhaps take longer. Currently, we are warehousing using the GP contribution.
Pi: Which are the companies already funded by India Quotient? What is the amount invested in them?
IQ: IQ has invested in five companies as of now. These include iimjobs.com – a recruitment portal for business school grads, mystery shopping network Red Quanta, at-your-doorstep beauty and spa services – Belita, THE APP KIOSK – home to the best Utility Apps/ Games/ Music apps for mobile phone and Engrave – the engraved plaques and canvas prints online store. The amount invested in each of these range from Rs 30 lacs to Rs 1 crore.
Pi: What kind of start-ups is IQ looking to fund?
IQ: We see people, consumers, around us buying all sorts of stuff. Basic needs like food, water, housing, healthcare, education, financial products and a little bit of discretionary spend. We prefer to see businesses which somehow leverage the consumer demand boom, target a large market and use technology to its advantage. We don’t like ‘the Indian version of xyz’
Pi: What are the factors you will look into before investing in any company?
IQ: Some of it is our secret sauce. But one thing is for sure- the company should be breaking some norms and hurting some businesses badly.
Pi: What is the typical process that a funding company follows when they are approached by a start up?
IQ: Again a secret sauce. We bump into people. Then we get a mail, with a neat introduction. If that’s interesting, we click on the ppt. Then we talk on phone to some. Meet some of these. Then meet again. Then other people in the team meet. Then the team meets each other. You decide doing a deal in your mind. Then sleep on it. See how you feel when you wake up. If you still feel like it, call the entrepreneur and close the deal very quickly.
Pi: You invest in companies and at the same time are looking to raise funds. How does a Start Up get the confidence that you can help and sustain them?
IQ: They should look for bigger funds to sustain them forever. Surprisingly, there is a myth that once you get VC money, they will be forced to sustain the company. Very few VCs do it, and very rarely.
Usually if a plan says we need money for 4-6 months and then we will need another round quickly, it’s not for us. Very rarely. We believe in perfecting the product, or whatever we serve the customer. Perfecting is a function of time and effort. Not money. Too much money means too little time, and hence compromise on perfection.
Pi: These days Start Ups’ don’t look for money alone before asking for funds. There are many other factors involved with the same. What is the extra edge that India Quotient brings to the table?
IQ: There is no edge particularly. We are patient. We do less, put less pressure. We like to give room. Yet stand by for help. We have been entrepreneurs. We know entrepreneurs like to take their own calls. We not over eager to prove an edge.
Pi: What is your advice to Start Ups looking to raise funds?
IQ: Focus on getting started. Then build some and ship some. Take feedback and iterate. Keep iterating. See if you like doing this. If you really like what you are doing, you will by this time realize that fund raising is just incidental.