Anuj Srivastava stepped into angel investing in 2010, when he was still working for Google. “There’s no doubt that Google did play a huge part [in my becoming] an angel investor because of the prevalent entrepreneurial culture in the firm,” he said.
He said that being in the San Francisco Bay Area back then also helped him understand the risks a bit more. Srivastava was surrounded by many of his friends who were then building their own companies. “You understand how to value trends, ideas, patterns matching. At least that helps you get in front of many deals. Over time, you learn it. I don’t think you can learn angel investing anywhere,” he said.
KrASIA recently spoke with Srivastava to learn about what he looks out for in a founder before making an investment, and to hear about what type of startups interest him in Southeast Asia right now. The following interview has been edited for brevity and clarity.
KrASIA (Kr): How and when did you first start as an angel investor? And why did you decide to become an angel investor?
Anuj Srivastava (AS): I got my start in angel investing as early as 2010, when I was still with Google. At that time, the angel investing circuit wasn’t as active as what it has become now in India and Southeast Asia. Google generally is—at least at that point in time—a very entrepreneurial company. So, we actually have a steady stream of entrepreneurs visiting the company. It was impossible, if you were a part of that circuit, to not appreciate all the great ideas that originate from great entrepreneurs.
Over time, I figured out a way through my network to get the chance to meet these great entrepreneurs, and through a mix of trials and errors, you start to figure it out. That’s how it started. Like everything else, it was curiosity and interest. I just wanted to learn, more than anything else.
Kr: What’s the first company that you made an angel investment in?
AS: Among my first investments was ZipDial [a marketing engagement and analytics platform]. I knew the founder through multiple connections—through some common friends who were part of my team at Google, eventually Jungle Ventures also invested. There were all common connections. Zipdial was sold to Twitter. I have invested in over 50 companies now.
Kr: What sort of startups do you typically invest in? Can you share with us some of your most memorable investments over the years?
AS: There are spaces that excite me or spaces that I understand reasonably well, such as vertical marketplaces. I like complex supply side platforms and I have dabbled a little bit in small and medium business automation. Another vertical that I like is the travel space.
Internet-first, omni-channel brands, payments, and financial service automation are also interesting spaces.
ZipDial, obviously, is one of my most memorable investments. I have also invested in Pharmeasy, and the more recent one is Purplle, which is in the online beauty industry.
I am also interested in the mass transportation space, B2B search. There are a couple that I am evaluating in the Southeast Asia region—one in the social commerce area and the other in online consumer brands.
In terms of my collective portfolio, it’s about 20% in the United States, 50% India, 20% Singapore, and 10% Indonesia. I am very new to Indonesia and I am excited about looking at a few ideas to understand the market, not necessarily just from the internet perspective, but also to give me opportunities to understand the market from Livspace’s perspective.
Kr: How do you decide what to invest in?
AS: I don’t have a personal team that helps me with evaluating deals. I rely on a network of trusted friends, prominent institutional investors, my co-founder, and other founders who can help me vet a deal pretty quickly. For example, if that recommendation comes from one of my own investors, then I would definitely look at it more carefully. I would trust it because I understand the regulatory processes that they would use when evaluating their own investments.
At the end of the day you are investing in companies at such an early stage, there is only that much research and investment thesis that you can have. You ultimately are investing based on your gut. And the gut is a very personal thing.
Kr: What do you look out for in a founder before you decide to invest?
AS: First and foremost, I really like to work with people that I can be friends with, whom I can have a lot of fun with. At the end of the day, I myself am an entrepreneur, so it’s not like I am a passive investor. Ultimately, you will try to inculcate some kind of relationship with that person and, hopefully, it’s fun along the way. If I don’t have a value system matching with the founder’s, then most likely I won’t invest because there are so many choices.
Secondarily, I like to invest in entrepreneurs who are great problem solvers, meaning they focus a lot on input functions—they can break down problems really deeply and at a minute level. A founder should have thought about his or her idea like ten or 20 times more than anyone else, because it’s their idea and they should be super passionate about it. People who are able to do that will not be scared when they face problems, because they will treat those problems as opportunities—break down the problems and experiment. These people also have very tiny egos, and they are not afraid to fail.
Thirdly, great founders are also a great magnet for talent. I like to see who else they are able to attract, whether it’s other great founders or institutional investors—I think that’s another great signal. The other thing is whether they are able to attract great employees to come work for them in the early days.
Obviously at that stage [angel investing], you know very little about the company or the idea. But what you can actually do is build a hypothesis on the quality of the founder, the founding team, the uniqueness of the problem and the approach. I also like to focus on the size of the entrepreneur’s market, the problem’s uniqueness, and at some point in time, the company’s understanding of unit economics.
Kr: Do you have any predictions for the startup scene in Southeast Asia and India?
AS: My guess is that in the next ten years, there will be about 200 to 300 great companies that will be built—unicorns apart. Some of them will be in the core internet infrastructure, like payments, great internet-first brands, enablement of small and medium-sized businesses, and others.
The fact that markets are so young here and the cost of starting up has become so cheap—I think there will be a lot more appetite and risk for failure. It’s ok to start something for it to not work out and treat it like a learning experience.
I think I am very excited to be participating in this economy, as I had the luxury and good luck to actually see this happen in the US.