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Angel Investing is an art and a science.
Looking at it from this perspective Jignesh Kenia of Times Network has invested in 50+ start-ups and was able to successfully exit in 5 of them.
Jignesh is a Chartered Accountant who has over the last three decades seen how the business landscape has been changing in India.
He shares his experiences as an angel investor with The Finance Story. Here are the excerpts from the interview with Jignesh:
Why did you decide to be a CA? How did you transition from a Big 4 to the broadcasting industry?
I was born in a middle-class family. My grandfather was one of the first tax consultants in our community -and he was a big inspiration for me.
Seeing the respect that he received from his clients and the community at large, it became clear that I wanted to follow in his footsteps. Therefore, CA was the natural choice for me.
I did my articles in a small-sized firm called Rajesh R. Shah & Company, where I got exposure across audit, tax, accounting, and advisory.
In 2001, I joined KPMG, Oman in their Tax practice and got great exposure.
Those days the Middle East was a stepping-stone to the West. However, I always wanted to return to India because India was opening up in a big way.
In late 2004, during one of the holidays, I began to apply for jobs in India. As luck would have it, I received a call from UTV (a film studio in India) and received the offer on the same day as the interview. That put me on the spot!
During my research, I discovered that UTV is one of India’s fastest-growing media companies and its founder, Ronnie Screwvala, was one of India’s most prominent entrepreneurs.
On this basis, I took the plunge and joined UTV, in early 2005, and never looked back.
Today I am the EVP and Head of Corporate Strategy and Digital Transformation at Times Network (the TV arm of the Times of India Group) looking after four functions – Corporate Strategy, Digital Transformation, Broadcast Technology, and Revenue Assurance.
While working in the media industry, you became an angel investor. What introduced you to the world of start-ups?
In 2015, I was working on the Digital strategy for Times Network, and we decided to strengthen our digital presence by launching our websites and Apps.
I led the launch of websites and Apps for the TV brands like Times Now, ET Now, and Zoom.
I also hired the first 50 members of the team across Technology, Engineering, Product, Content, Analytics, and Social Media. However I had limited practical experience in running Digital products and to gain the same, I ventured into the start-up ecosystem!
Over the years, my interactions with various tech-driven startups and founders have provided me with a deep understanding of digital and technology businesses.
The learning curve was so steep that I did not want to stop. I was in awe of how start-ups are shaping the world.
I too wanted to be a part of the changing dynamics and contribute to the same. That marked the beginning of my Angel Investing journey.
Which was your first angel investment?
My first investment was Vahananalytics, a company founded in 2016 as a platform that uses data and machine learning to make roads safer.
In 2019, Vahananalytics was aqui-hired by Bike Taxi firm Rapido.
With so many start-ups approaching you to angel invest, how do you decide which start-ups to invest in?
I have been sector-agnostic and in the past five years, I have invested across sectors – MediaTech, EduTech, FinTech, Sports & Fitness, SaaS, HRTech, E-Commerce, D2C, and Gaming.
I consider the following factors for assessing what startups to invest in:
1. The Founding Team – Investable companies are led by solid management teams with experience, knowledge, and complementary skills along with the ability to build a great culture as the Company grows.
2. Validation of the Product by Customers. We speak to the Customers or potential buyers to validate that they plan to buy it. Does it solve a major problem or pain point for them? And how does this product compare to the competition?
3. Is the problem big enough (scalability) and would the Customer pay for this solution?
4. Go-to-market strategy – What is the process to get to market? How long is the Sales cycle? How do the market and the product work together? Who are their Partners and Suppliers?
5. What would be the exit strategy? Who could be the Potential investors or Acquirers in the next rounds of investment?
6. Is the valuation reasonable?
7. Personal preferences. Choosing a startup for investment is a personal decision and over time Angels develop their own preferences. Many Angels start by investing in industries they are familiar with.
Not all start-ups are investment-worthy. What sets successful founders apart and deserving of your investment?
In the words of Jack Welch, “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion”
Successful Founders are visionary, possess strong leadership skills, are highly passionate and motivated, have an experimental mindset, and have robust execution skills.
Successful founders are good storytellers; being able to communicate their vision to investors and employees.
If there is more than one founder, I further look at how they complement each other.
Lastly, founders should have a risk appetite and be good decision-makers.
Considering that you do not have a background in technology, how do you assess tech in tech start-ups?
An indirect way to assess the Technology is by experiencing the product as a Consumer, talking to other consumers, and getting to know their experiences (ease of use, speed, etc.).
As a consumer, I can understand the experience – ease of the payment mechanism, effectiveness of the recommendation process as well as digital breadth. The start-up must create a comfortable experience for the customer.
We also evaluate the Technology Team behind the product, their experience, and their competence to build the product. In the case of deep tech startups, we do reach out to subject matter experts and take their views as well.
One must have a knack for technology and engage with the tech specialist for a deeper understanding of a startup’s business.
Investing in 50 start-ups, and holding a senior corporate role, how do you manage your time for each investment?
Working with startups, in addition to investing has become a passion and one always finds time for passion.
I must admit that Startup investments take a lot of time from evaluation to agreements to periodic reviews and one must be prepared for it. I spend most of the weekends on this.
I also invest through Angel Networks. The time involvement is comparatively lesser in these cases as the bulk of the above activities are carried out by the Network and one has to invest only a few hours.
In the early stages, the time requirement is high. However, the involvement gets lesser as the start-ups grow.
How has your involvement with Startups helped you to contribute to your workplace?
The startup ecosystem has helped me be in touch with the changing business model and how technology is disrupting all industries.
I came across several Tech and automation solutions that I could implement at my workplace making the existing processes more efficient.
Most importantly, it helped me lead the Digital Transformation at Times Network.
Lastly, do you recommend angel investing as a suitable investment option?
Angel investing is an upcoming asset class with high risks and high returns. It is an active investment where one can be involved and contribute to the operations of the start-up vis-à-vis other asset classes which are largely passive investments.
Evaluating and investing in start-ups also offers a great learning opportunity – on how tech is disrupting the businesses in which they operate.
In my view, investing in start-ups is a mini-MBA.
So yes, it is a good way to build wealth, but, like stocks, one has to take a portfolio approach ideally a bucket of 15 start-ups.
Start-ups are part of the country’s growth drivers and participating in this journey through investments provides wealth-creation opportunities.
Whilst one can expect a 15% return on equity, or upwards, start-up investments can yield 20%-plus returns.
