Fast Forward 2021: How do we decide so quickly?
A key tenet of the Fast Forward seed funding program is to give founders a yes/no decision within a week. Here, we expand on what our selection process is and how we strive to meet this response time expectation
As an early-stage VC in India, we are looking for large market opportunities with a dominant India angle. Tech-led disruption is the core horizontal layer in all our investments — it could be a game-changing technology product or tech solving for inefficiencies or solving an important pain point for a large group of customers. Meaning that you either are building in India and selling to Indian consumers or enterprises, or you are building from India to sell globally (We have backed global SaaS as well as global B2C plays out of India).
Our goal with a fully online and remote process and the compressed application and selection window is to reach and seek out the most prepared founders and ask the most frequented and relevant questions in the application itself, so the pitch meeting can focus on getting to know the founder(s) better. At the seed stage, there often isn’t any revenue, a meaningful customer base, and business metrics that can be measured and analyzed. We are “crystal-ball gazing” and as we peruse your application, we aim to get convinced of your vision for building your company and why you are best suited to solve for it (founder-market fit)? What are the unique customer insights gained (especially if it is post-launch) and inflection points in market opportunities that you are betting on? So we are fundamentally trying to form a view on:
(A) the founding team — their opportunity cost and learnability index
(B) founder-market fit for the market you are building for — how well do you understand the market?
(C) approach you are going to take (unique insights or evidence of deep customer love)
We will discuss your view on the market size but we also come with years of experience in understanding market expansion opportunities as well as inflection points that create new markets altogether.
(A) We believe in backing missionary founders and put founders ahead of markets
Founders are pretty much the only tangible part of a seed-stage business. We have no positive or negative biases for gender (striving for more, but we have 7 women founders across 20 active portfolio companies) and educational pedigree (yes, we have backed college drop-outs) and only choose to focus on what your “right to win” in the market of your choice is?
We’d like to understand how your prior experience — whether as a tenured professional or (previous) start-up founder or even as a student best sets you up to start this business. Are you, as a founder, also scalable? As your business matures from seed to growth orientation and you move on from managing limited resources, teams, and stakeholders to managing many and multiple of them, how does (or rather will) your role and ‘entrepreneurial personality’ evolve?
What is your unfair advantage and how will you keep it unfair for a really long time? We gain these insights, not just from our founder pitch calls but also by proactively asking you for references of people you have worked with and can vouch for you. We also work with an extended network of like-minded seed funds, accelerators, VC’s and other business partners (full list) and would love for them to introduce you to us. We believe in network effects of not just your product but also a founder’s network and how that can be amplified for your start-up’s success.
Hot off the press last week, Ried Hoffman recommended reading “Backable” and wrote about
“…how being backable isn’t just about lighting up a boardroom with your confidence or charisma. Instead, it’s about conveying your idea with such conviction that others come to share your belief in it too — and also believe you are the person to make that idea a reality…”
(B) What are our sector preferences?
In a country with a rich demographic dividend, diverse customer personas, and a burgeoning internet economy, one could argue that several sectors and business models could reach venture scale. At WaterBridge, we are thesis-driven investors, and our team brings in sector expertise deepened by being in these sectors for decades as operators and investors. We often write about our point of view and preferences (Our Insights) and can appreciate with a nuanced lens what it takes to build lasting businesses in these markets.
As a philosophy, we do not invest in sectors where we cannot value add. We believe the first 12–18 months of a start-up’s journey are the most critical and we see ourselves not just as investors, but also as partners in helping you grow from seed to scale. We define our value add as The 5Cs — Community, Competency, Cap Table, Cross-Border, and Compliance (more here).
With tech-led disruption is the common denominator across all our investments to date, we look for compelling opportunities in these sectors:
In the end, we believe there are ambitious and audacious founders out there who set out to create markets for their products/services. If there is any doubt, consider this — disappearing photos, monetizing an extra room at home, and mobile live-streaming were all supposedly crazy ideas when we first heard of them. But these were conceived by founders who looked at market evolution completely differently than most and this helped create multi-billion-dollar revenue streams and trillion-dollar market-caps in areas no one imagined.
As an early-stage VC that typically spends 5–10 years in a company aiming for the moonshot, we recognize that it is important to sometimes look at opportunities with a sector-agnostic lens too, so as to avoid blind spots. For example, while you will note that Consumer IoT is not part of the sector preferences mentioned above (as we generally believe that hardware is hard to build and scale), we seed invested in Nymble which is a remote-controlled and automated, fresh food cooking robot. With CoVID impact and consumers preferring to eat fresh food, every day at home, devices like Nymble’s Julia will replace a whole lot of small kitchen applications and serve as the single cooking kitchen robot.
( C ) Finally, we (try to) understand your chosen approach or business model
As VCs, we literally receive 100s of pitches each month. Each pitch has the heart and soul of a budding or serial entrepreneur. While it is our task to search for diamonds in the rough, we are in a business where you say “no”, a lot more than we say “yes”. Just like we expect of entrepreneurs, we keep our learning hats on (and yes we learn a lot from passionate founders), and it is our eternal optimism that keeps us going and gives us renewed energy to hear the next pitch and meet the next founder.
Our profession gives us the vantage point of seeing emerging business models and catching new trends early. While studying a business model, we often ask founders, customers (and potential customers), and ourselves (yes, we churn a lot in our mind) questions like:
- If this is a must-have or good-to-have product?
- Is this a top-of-mind, critical, problem your customer is grappling with?
- Is this a daily or multiple times-a-day use cases (‘toothbrush test’)?
- Is this a replacement, supplementary or entirely new product you’re selling?
- Where do you fit in on the value chain and what are the revenue and profit pools you can tap into?
- Are you enabling your customers to increase their revenue or optimize their costs?
- Are you driving value, convenience, and efficiency to your customers?
- What is the delta between your customer’s willingness to pay and ability to pay?
- Is your competitive moat driven by “tech and product” or “pricing and scale-driven operational efficiency”?
We encourage you to think about some of these questions today (short-term) and at-scale (mid to long term)?
Conclusion:
As you begin to fill out the Fast Forward application, you will note that most of our questions aim to seek answers around these three big pillars of founders, markets, and business model/approach. We believe that founders and markets are most critical (founders more than markets for us if we have to pick one), and if you back a stellar team they will pivot and prevail and not just survive but thrive and find a way to building an enduring, value-accreting business.
It’s also pertinent to understand that while we have a digital-first, remote process, we have human judgment as a critical part of the evaluation. We have to be willing to work with a group of founders in realizing their vision, as should founders wanting to partner with a VC. We encourage entrepreneurs to not just find the right investor (angel, VC or whoever else), but the right partner best suited to your business and stage of development. You want to benefit from the depth of experience and breadth of the investors’ network too aside from making the journey fun!
At WaterBridge, we always say good deals and founders grow on you and as we move from the application screening to 1:1 pitch session and deep-dives, we need to see a forward trajectory and be better convinced as to why you are worth backing. The best teams always leave us wanting to learn and know more about them and their business.
We look forward to reading through and knowing another batch of eclectic and audacious founders building from India. If we choose to work together, we can assure you that you are in very good company going by our existing founder partners (see Fast forward portfolio and full portfolio). We hope this note was useful and context setting as you set out to apply for Fast Forward or in general, raise your first round of external funding.
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