Mahesh Murthy is a founding partner of Seedfund, a fund that focuses on early stage startups. He is also the founder of digital ad firm Pinstorm (Mumbai, Singapore to Zurich and Santa Clara).
1. How many years has Mahesh Murthy been an active investor?
17 years. Since 1999.
2. Areas/sectors of interest to invest in?
I’m sector agnostic. Actually I believe if there’s an established sector one should avoid it and instead create a new one. That apart, I have a slight bias for things that have the potential to become great consumer brands.
3. Size of fund?
Currently managing investments (personal and Seedfund) of more than Rs. 400 crores.
4. Notable startups invested in and/or mentored?
There have been more than 50. Here are 10 of the somewhat more notable ones:
Pinstorm, Doolally, RedBus, CarWale, MyDentist, WebDunia, Chumbak, Heckyl, Voonik, Edusports.
5. What are 3 startups you have been pleasantly surprised by?
RedBus – with how Phani and team grew it with constant optimisation.
Doolally – with how Suketu and team have created a near-cult experience.
Chumbak – with how Vivek and team have created perhaps the first modern Indian design-centric brand.
6. What are 3 startups not so pleasantly surprised by?
Innoz – by the then rampant corruption in the telco VAS sector.
Done By None – by the disappointment of creating a cult brand and not having the tenacity to hold on, survive and follow through.
Fetise – by promoters’ short-term mentality and greed across the board in the e-com business.
7. What’s the next big trend you think will hit the Indian startup ecosystem?
Originality in startup plans and in VC funding. For too long have we tried and failed at copy-paste.
8. What one big thing must Indian startups do to become sustainable?
Aim to earn money.
From customers, not VCs.
9. The best way to exit a startup is:
a. Through acquisition
b. Via IPO
c. Prefer to maintain shares in startup if it becomes successful enough to reach IPO status
If you run a great company why exit? We have celebrated short-term hump-and-dump serial entrepreneurs way too much. The real impact comes from lifelong entrepreneurs, like Bill Gates or Branson or Premji or Narayanamurthy, who each spent 20 or more years building great businesses, without the word “exit” coming to mind.
I don’t think you should ever exit a great company if you can help it.
10. Seedfund prefers a single founder or a cofounder team?
Most funds seem to parrot some American verbiage about “team”. We haven’t found any statistical evidence to indicate that one needs a great founding team to succeed. Most Indian successes so far have been driven by one person, whether it is Phani of RedBus or Mohit of CarWale or Premji of Wipro or Dhirubhai of Reliance.
11. How many startups would you typically like to have in the Seedfund portfolio?
We currently have made investments in 32 startups across 2 funds.
Having 12 to 24 startups in a fund seems to be the right range.
12. Looking for more startups to invest in at the moment or absolutely no more room for more startups?
As of now, no room at Seedfund – we’re full up there! But I’m investing personally
13. What’s the one big thing an entrepreneur can do to convince you to invest in their startup?
Convince me that your startup can be a dominant leader in a niche without spending much money. And yes, convince me that you’re not a mercenary – that you’re not here to hump and dump, but you’re here for the long term.
14. Best way to contact Seedfund:
b. Head to the office directly
c. Thru a referral
d. Phone call
Ideally an email to [email protected] from a referral.
15. Is it a waste of time and money for novice entrepreneurs to pay to attend networking events and startup conferences?
What do you want from it? Funding? Unlikely to get it. Gossip and buzz? Sure you will.
Decide what you need now.
Too many clueless speakers speaking the same Silicon Valley lingo, usually in the same American accent.
Not much of value to be gleaned from there that is of relevance to us in India.
17. Seedfund prefers to invest in sustainable business models selling a product with proven demand (like clothes and food for instance) or innovative, slightly wild ideas with a bit more unproven risk?
If there already is an estimate of a market size in the sector and a few proven models there then we are not likely to touch it with a barge pole.
We have always sought businesses that start sectors, not follow them, and that can be a dominant leader, not a copycat follower.
18. How do you deal with write-offs and losing money?
Sad. Learn your lesson. Move on. Try to avoid the blunders that caused the earlier loss.
19. One piece of advice to novice investors
Remember it’s a long portfolio game: you have to have diversification and you have to have patience.
If you have the appetite to invest in at least 20 diverse companies and wait for at least 10 years after investing then you have a chance of coming out ahead. If you don’t, then put money in an SIP of a Mutual Fund.
20. Which role do you prefer? Being a seed investor or heading a digital ad firm?
Seed investor? Digital marketer? Corporate speaker? Happy dad? Itinerant traveller? All of the above.
Each one helps me be better at the other four.