Choosing right VCs for our startup - it's much more than just capital

Choosing a VC to invest in your company is like entering a professional "marriage". The relationship is built on trust, communication, and shared goals. At times, founders believe that investors only provide capital, but it's also essential to consider the quality of capital being raised.

Some of the dimensions to consider when raising funds are:

1. Stage of fundraising: Most investors specialize at certain stages of a company’s journey (pre-seed, seed, Series A/B/C, etc.) and time their investments accordingly. Few funds also invest across all these stages indicating their ability to participate or lead in future rounds.
2. Sector focus: Some VC firms have a strong sector focus and can offer unique insights by virtue of having worked with similar companies in the sector. On the other hand, sector-agnostic VCs can facilitate the exchange of ideas, best practices, and strategies across industries.
3. Operational support: Some investors can provide operational capabilities, industry connections, or access to resources that can help the company grow in addition to traditional capital. These investors bring a private equity mindset to early-stage ventures.
4. Dilution: Every fund has a different playbook around preference for multiple investments with minority control vs few investments but with concentrated holdings. This impacts how much of their limited time VCs can allocate to the company.
5. Fund size: The fund size can change the trajectory of speed to scale for startups. Larger funds are not always focus on individual companies given large portfolio.
6. Team Experience: It is imperative to understand the Fund’s team background and expertise to evaluate the extent of value addition the Fund can provide, along with the capital infusion. A good team can consist of a diverse mix of seasoned professionals in the investment space, bright talent from reputed consulting firms or even ex-founders themselves. Such a team can provide operational mentorship, a strong network, and sound exit opportunities.
7. Domestic capital vs. foreign capital: The source of capital, whether domestic or foreign, can have implications for compliance and taxation.
8. Investment philosophy: VCs can have different investment philosophies, and it’s helpful to understand which one suits the startup better. Some VCs underwrite innovation, while others are more confident with execution risks. Some VCs take a spray-and-pray approach, while others have a focused investment philosophy.

What to expect when you partner with us

1. Stage of fundraising: We invests in a post-revenue stage, typically seed to series A, once the business has achieved PMF and is now looking to raise growth capital.
2. Sector-focused: We focus on consumer brands and consumer enablers based on our successful track record in building D2C consumer brands as well as logistics tech, fintech, and B2B SaaS as consumer enablers.
3. Operational support - We are proud of the value we can add to businesses such as hiring, design, UI/UX, data analytics, performance marketing, data warehousing and customer support services etc. We spend time with the founders regularly to help problem-solve and make data-backed decisions.
4. Dilution: Given the operational support provided, we put higher skin in the and collaborate with founders in strategic thinking.
5. Fund size: We seek to collaborate actively with founders and thus like to back a few founders but go all in. This unlocks our ability to fund large rounds and also lead follow-on rounds for our portfolio companies.
6. Team Experience: Since we invest primarily at an early stage for startups, we are a mix of general operators with sound investment, consulting and operational background in startups.

Please let us know your thoughts in the comments.