VCCircle Startup Walkabout Pit Stop I: Sequoia explains what investors look for

News Corp VCCircle Startup Summit 2017 started on Wednesday with a Walkabout, an initiative under which entrepreneurs get to visit offices of marquee investment firms and listen to top investors as they talk about their strategy and what matters to them before they write a cheque.

Sequoia Capital’s office at Peninsula Corporate Park in Lower Parel, Mumbai was the first pit stop for the Walkabout. The large boardroom was brimming with a chatty bunch of over 20 entrepreneurs, including two women, who were discussing their business ideas that ranged from online procurement assistance to ed-tech to investment advisory. 

Sharp at 10 am, Abheek Anand, principal at Sequoia Capital, walked in and greeted the participants. Anand dived right into the one-hour session after giving a five-minute brief on Sequoia, which started investing in the country in 2006.

As soon as the session started, participants began shooting questions at Anand. One entrepreneur asked if it matters to Sequoia that a company is based in a non metros area. “It does not matter where a company is located. We evaluate a firm on the basis of its business, not on the network of its founders. We would go to Nasik or Ahmedabad, if need be. For us, what matters is the ability of the team and its vision,” said Anand.

During the free-flowing conversation, Anand had to answers a litany of queries. How do investors value startups at an early stage, asked an entrepreneur. “I have not done discounted cash flow based valuation. That’s not how venture investing works. It’s a function of the market and people go up and down (on valuation) depending on how far the company is (in terms of growth, scale and peers),” said Anand.

What matters most to Sequoia Capital while evaluating investment opportunities? “It is different in each situation. The addressable market size is important. We want to know how much of the market can be captured by the market leader,” said Anand.  

A few others wanted to know how entrepreneurs can connect with investors. “Keep writing to investors. Send them two-five lines on your business that catch their eye. For instance, tell them your revenues have grown multi-fold in four-five months after inception. Share your numbers and tell them where you will be in 12 months and follow up,” he said.

Anand sat in rapt attention as entrepreneurs explained their business models and also offered to talk to them offline.

Like this report? Sign up for our daily newsletter to get our top reports.

Leave Your Comment(s)