So who is one?
“A good seed investor can work closely with founders to help them deduce product-market fit for their offering,“ said Abhishek Goyal, cofounder of Tracxn. Startup analytics firm Tracxn aims to strike 50 investments in early-stage companies globally every year. “More importantly , do so by asking questions and not preaching,“ said Goyal.
It is very important for an investor to believe in a portfolio startup’s vision, trust the team, and give them the freedom to work independently , said Paavan Nanda, cofounder of ZO Rooms, a budget hotel-rooms chain that was backed by early stage investment firm Sol Primero. “The trust factor is very important because a company can go anywhere after the seed round,“ he said. This is true in the case of wealth management startup Scripbox, which has raised early-stage or seed capital from VC firm Accel Partners. Sanjiv Singhal, cofounder and chief executive of Scripbox, said Accel bought into the firm’s concept early and helped shape its business model. “A good seed investor is available for strategic inputs, provides connects into their network, and where relevant, serves as the `beta customer,’ as our investors did,“ said Singhal.
Such support from an early investor is critical in helping a startup scale quickly. Viral video network PressPlay took advantage of seed investor Sequ oia Capital’s expertise, reaching 5 lakh users a month in six months, cofounder Ge orge Abraham said.
“We received interesting ideas about how to tackle different problems that came up while building PressPlay from our investor as we never had another company to emulate and were building our own path and trajectory.“
In a survey of funded entre preneurs by ET and Tracxn, seed investors in India were rated high for their ability to open doors for partnerships, back founders’ judgment, and reach out to other investors for the next funding round. Conversely, seed investors scored poorly on their ability to help recruit key hires or market a startup’s product.
Operational support has become a critical need for early startups, and institutional funds have risen to the challenge. Marquee firms with a newfound emphasis on seed investing, including SAIF Partners, Accel and Sequoia, have built in-house teams of marketing, product management, design, technology, and human resource experts who are as dedicated to helping growthstage companies as their seedlevel counterparts.
Mayank Kumar, cofounder and CEO of months-old logistics startup Opinio, benefitted from this. “Accel helped us tremendously in talent acquisition. They gave us a few personally vetted profiles within a 24-hour turnaround. They would also connect you to any CEO in the country immediately,“ said Kumar, whose company was backed by Accel twice in two months.
With quickly expanding teams, legroom is also nice to have. Startup deals platform LetsVenture has taken space provided by its seed-stage in vestor Accel as it ran out of office seating. “They have helped us with legal and HR aspects of the business, too,“ said LetsVenture founder and CEO Shanti Mohan.