INSIDER: August 20th, 2021

August 20, 2021 · 5 min read

Dear Reader, do you know - on an average, Indian startups raised $100.2 Mn per day in 2021 😱  A total of $16.9 Bn has been raised across 828 VC deals this year so far. Top it with 25 unicorns already in this year and Nasscom's estimate of 25 more by year end. Phew.

The first crop of Indian startups (the ones that were mostly founded around 2008-2011) is graduating to IPOs - giving massive exits to its institutional investors and producing a whole lot of new millenial millionaires. Thus, powered by the retail investors participating via the stock markets, the capital is flowing back to the ecosystem. Certain geopolitical factors including China's crackdown on its tech giants is further motivating larger investors to divert their investments towards India.

In our Short Take section this week, we look at the reasons behind the heavy capital flow into the Indian startups ecosystem.

In our Favcy Review section this week, Pranav Chaturvedi, Founding Partner, FavcyVB gives you an insider view into the 4P's of product development and audit - Positioning, Practice, Proposition and Perk . Do give it a read if you are constantly evaluating early stage startup deals. This framework will help you accelerate your product assessments as an angel investor.

Angel Bytes brings to you this week a comparison between investment returns from public and private markets.

And now the exclusive invite  for all our newsletter readers this week. We invite you to the Opening Day on 21st August, Saturday, 5PM for our exclusive OpenbookVC fund - the most transparent approach to venture capital. In the session, Pinaki Aich (General Partner, OBVC) will share the fund thesis and his vision story for Openbook VC and the impact he seeks to create.

Register Now

Do share your feedback on this effort. You can mail us at insider@1stcheque.com

Cheers 🍻
Yamika

News broke out recently about start-up investments in first half of 2021 eclipsing those of 2020.

Tiger Global has funded almost 10 start-ups a week in Q2 of 2021.

PE funds have poured more money into start-ups in 2021 then they did in the last two years combined.

An indian start-up listing on the bourses was fully subscribed by retailers within an hour of it's IPO launch.

Why is so much money flowing into start-ups? Why now? Scroll dow for answers!

Favcy Venture Builder's Product Validation Framework - 4P's of Product Development and Audit

by Pranav Chaturvedi, Founding Partner, Favcy Venture Builders

As a Venture Builder, we have to consistently co-build great companies and co-create great products. I am opening up to you some of Favcy’s internal info. Why am I providing internal information that could be proprietary to a company? The simple answer is, I am just trying to save our work load. We have a product audit system, through the lens of which, we see these companies. That product audit system is fast being adopted by other capital ecosystem members, not because its built on some AI/ML models but because its SIMPLE and its damn EFFECTIVE. Capital ecosystem comprises of simple folks, well at-least majority of us are. We spend hours together listening to pitches and in plucking out information from the pitches that make sense to us. Trust me, if you are not able to explain what you do in simple terms, more often than not, you are struggling with what you have built. Simplicity and Clarity of thought are an absolute must from a founder. So while we as a Venture Builder listen to all kinds of difficult pitches, we pick up information and start putting it in a framework of the 4Ps of PDA (Product Development and Audit) This week, we uncover how we go about building start-ups and the framework we follow at Favcy.

Acquire Expertise in Angel Investment and read our well-researched and in-depth topics about startups and investing

Income doesn't make you rich. Investing does. Where to invest though?

This week we give you a comparitive look between investing in the public markets and the priavte markets. Where does the real money lie? Read on to find out.

Angel investing has been touted as the best way to maximise your wealth. Well, how true is it? Read on to find out as we break it down for you in a comparison between investing in stocks and start-ups.

Let's say you have Rs.2 lakhs in 2011. You decide to put Rs.1 lakh in stocks and make an angel investment of the remaining Rs.1 lakh. After much research and deliberation, you pick a stock and a start-up which you like. Since you're bullish on the automobile sector, the stock you pick is Motherson Sumi, a company involved in the supply of auto components and the start-up you pick is Ola, a fledgling new start-up which is trying to make cab booking available through a phone app.

Your Rs.1 lakh investment in Ola gets you 0.03 percent stake and your Rs.1 lakh investment in Motherson Sumi gets you around 50,000 shares (at price of Rs.20).

Fast forward to 2021.

Both of your investments have turned out to be multi-baggers. But, there is a stark difference in the growth. By how much? More than 50 times! Your investment in Motherson Sumi is now worth about Rs.12 lakhs and has yielded you more than a 10x return. On the other hand your investment in Ola is now worth about Rs.6.5 crores and has yielded you more than 500X return!

But before we get too ahead, you have to understand that investments in start-ups are much riskier than those in the stock market. Investing in index funds gives you an assured rate of returns of at least 10 percent (from average past performance of previous years). However with a start-up there isn’t any assurance. The company you invest in could be the next Facebook or on the other hand could end up shutting shop. In short, you get equally rewarded for the risks you take.But did you think investments in start-ups were only for high networth individuals? Well, that is the problem we at 1stCheque by Favcy are trying to solve. Talk to us if you are looking to explore startups as an asset class, irrespective of your ticket size propensity.

Happy Investing!

Here are the events of this week:

- Postman becomes the most valued Indian SAAS startups after $225M funding

- Zomato invests $100M in Grofer's Indian entities

- Zupee raises $30M at over $500M valuation

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