Vishal Gondal, Founder and CEO of Indiagames Ltd, is becoming a saviour for startups. Gondal, who sold a large chunk of his holdings in the online gaming company Indiagames first to Chinese gaming giant Tom Online and later to UTV Software Communications, has launched a new venture called Sweat And Blood Venture Group. This entity will invest in startups at seed level, mentor them, and help them scale.
Gondal has already made his first (undisclosed) investment in Instablogs, a social news website headquartered out of an unusual place – Shimla in Himachal Pradesh (see another here for more details). Instablogs has a worldwide network of citizen journalists writing about news developments and is modelled on the basis of Canadian social news website NowPublic.com.
Gondal says there are promising startups outside large cities like Mumbai and Bangalore, and his idea is to spot them, invest in them and mentor them.
Currently, Gondal is investing his personal money. He refused to say how much has been kept aside, however, VCCircle’s independent estimate is that he could have made about $4-5 million from his partial exit from Indiagames. Don’t expect Gondal to invest all of them in startups. He says there are more successful entrepreneurs joining hands with him to help early stage companies. Gondal says they can invest in a startup anywhere from $100,000 to $500,000 (Rs 40 lakh to Rs 2 crore)
Gondal thinks there is a huge gap in startup investing because there are very few successful entrepreneurs setting out to help startups (except for an odd one like former Mphasis founder Jerry Rao who has put in money in a legal outsourcing outfit and a wine company).
Professional fund managers like Erasmic Venture Fund and Seedfund are growing bigger in size and that may drive them away rather than taking them closer to early stage entrepreneurs. (For record, Erasmic has merged with Silicon Valley fund Accel Partners and is launching a $60 million fund, while Seedfund is reportedly raising a second fund of $30 million).
Gondal’s venture is to fill this gap in the startup ecosystem where the companies need not just money but a lot of handholding too. This can be done well by a successful entrepreneur and not a professional VC who is mostly a banker-turned-investor.
“Normally early stage companies do not need money as much as a lot of handholding. You have to spend time with them to take them to the next level. We provide them sweat and blood,” Gondal says.
Gondal has already made a few trips to Shimla, where Instablogs is located, while he is also constantly interacting with the team on phone and the Internet. “It’s unlikely a VC will even look at a statrup outside a large city,” Gondal quips.
He also refused to be categorised as an angel investor. Gondal says angel investing is very “casual”, (as in, the investor’s involvement is not as much as it should be) while, if the investor is an entrepreneur, he can add more value.
Where will they invest?
Gondal said there is no sector or space they are particularly biased. “India is a large market and there are a lot of things that we can do. It does not have to be just internet and tech. Even a business model around vada pav can be bigger,” says Gondal. “The basic criterion is we should like the guys. It’s pretty much about working closely with promoters.” However, the industry space should be something which the investors are also passionate about. So Gondal may not be interested in funding a telecom infrastructure startup laying telecom towers, for instance.
The difference is Gondal is looking for startups from every space and location who needs not just funding but a lot of handholding too. But he will not invest indiscriminately (it’s not third party money, by the way) and is also not under compulsion to deploy capital. “We will only work with companies where we can add value,” Gondal says, adding: “If we have five companies, all five have to make it big.”
No Fancy Business Plans
Even though Gondal may face competition from angel investing groups like Indian Angel Network, who claims to have more than 60 members and Mumbai Angels, who have some 15-odd members, in dealflow, it’s likely a lot of young entrepreneurs may identify with him than the formal and bureaucratic structure of the angel forums.
Gondal says he prefers entrepreneurs those who are not armed with fancy presentations (but those who know what they do and passionately) and also those who do not frequent business plan competitions and startup showcases. “Good entrepreneurs do not need to attend startup beauty parades,” says Gondal.