Product scalability should be considered before investing: Nilesh Jain, Metaform Ventures

Metaform-Ventures

As a serial entrepreneur, Nilesh Jain has wisely invested in startups ranging from Digital Healthcare, Home Automation, Logistics, Sports management, Early learning amongst others in India. His latest investment in an accessory branding company EFG, led by a young entrepreneur Tanisha Fagwani and Satyajit Roy, who has the Indian rights to all Harry Porter accessories, is yet another unconventional outing for this investor who represents Metaform Ventures LLP, USA.

Manish Joshi from NewsBarons connects with Nilesh Jain, who states ‘Investing in startups is riskier than gambling’ while discussing the Indian startup ecosystem and the important factors that investors consider while investing in startups.

NB: As an investor, what are key parameters for investing in startups?

Nilesh: The key factors that I look for, as an investor, while investing in a startup are founder/s domain knowledge and expertise, product validity and scalability and founder/s belief in his creation. I prefer to invest in startups that look beyond their existing offerings to continuously research and develop products that create industry benchmarks in-terms of technology, ease of use and, above all, costing. My emphasis has always been on startups that can cater high quality products at affordable costs to a large section of the society rather than creating niche products that are expensive and serve only a select segment. One of my startup in the home automation segment ‘Picostone’ has successfully created products that are durable, energy saving, multi-device usable, app driven and affordable, thereby, reaching a larger user base with quality offerings.

Nilesh Jain, Metaform Ventures
Nilesh Jain, Metaform Ventures

NB: You have invested in a range of varied startups from healthcare to logistics startups?

Nilesh: As per the old adage, I too prefer not to put all the eggs in one basket. I also, intentionally, avoid investing for emotional reasons; I had my share of emotional investments that backfired and most of these are now shut or are on the verge of closing.

Coming from a strong tech background, I believe that the role of technology had been limited in certain sectors e.g. Healthcare and Home automation. With the emergence of tech entrepreneurs and startup wave in the country, there is now a huge opportunity, across sectors, for technology to provide quality solutions and in many cases, instant gratification. Healthcare in India is plagued for multiple reasons like poor infrastructure, lack of medical professionals in the semi urban and rural locations and the cost of medical treatment. Technology can play a major role in providing real time quality healthcare solutions across locations to a majority of our population who do not have access to basic healthcare facilities. Our effort in the digital healthcare space with Clinivantage has already started to create visible difference with the Maharashtra government awarding us over 40 villages for the Village Social Transformation Programme (VSTF), with a goal to roll this across all 2000 villages under the VSTF. Clinivantage services are now present across 6 countries across the globe.

Like Clinivantage, we look at scalability opportunities across other sectors while investing in startups.

NB: What are the major challenges, as an investor, while investing in startups in India?

Nilesh: Though, there has been huge support for startups from the authorities, there are certain areas that still require some easing in the process to help boost the ecosystem. While investing and supporting startups, who are more focussed towards providing new age solutions through product development and product promotion, investors are sometimes disheartened by the huge list of requirements like innumerable registrations, certificates, finance, labor & environment-related compliances and various other bureaucratic regulations for a startup. Apart from the legality, investors also come across startups that are a part of incubators and accelerators, who themselves do not have the right skill set and experience to guide and support startups.

NB: How, in your experience, is the Indian startup ecosystem developing in comparison to that of US?

Nilesh: The Indian startup ecosystem is still in its nascent stage. India is opening up to the concept of startups and the acceptability of startup products is just gaining ground in India with change in the consumer preference perspective. In comparison to US, India has a lesser number of startups and investors but the pace at which the ecosystem is developing is encouraging. As discussed earlier, the system needs more support from the authorities in terms of regulations and taxation to aid ease of doing business, though we have improved tremendously in that scale. Also, access to capital at much lower but the situation is drastically improving.

NB: What are the top 3 sectors, that you believe, are high ROI areas in India?

Nilesh: Investing in startups is more risk taking than gambling. There are odds in gambling but with startups, apart from the risks of market acceptability, me-too products (similar service products) and technology disruption, there are other uncontrollable external factors that can swing the business in any direction.

Though there have been many great success startup stories like Ola, Uber, Zomato, Swiggy, PayTM to name a few, I personally believe that the next wave of growth with be across AI/ML – Data & analytics, Fintech, Healthcare and On-demand services (Aggregation). As a founder, I am heavily invested in Clinivantage, digital healthcare startup and are looking at various investible options across the mentioned segments.

NB: Numerous funded startups fail even with great support from investors? What are the top 3 reasons for this?

Nilesh: Startups fail for a variety of reasons, though funding would be one of the most important factor amongst others, many funded startups also had to shut shop as they did not focus on market need, did not investment regularly on product development, lacked initiative to introduce newer related categories and kept dependency on single product/service, depended upon wrong market advisors or mentors and lost passion in face of competition.

NB: What is your key message to startups?

Nilesh: As an investor who is actively looking at collaborating with quality startups, I can only part learnings from my experience in building, investing and managing startups across India and USA.

I always emphasise on the following:

  1. Passion, follow and live it
  2. Understand That Raising Financing Is Difficult – it’s more difficult and more time consuming than you imagine. It takes a great deal of effort to convince angel investors or venture capitalists to invest in your company
  3. Building a Great Product & Launch. – Don’t dawdle on getting your product out to the market, as early customer feedback is one of the best ways to help improve it.
  4. You are the ‘Strongest Salesperson’ – sell, sell & sell.
  5. Nail your executive summary and pitch deck: 3-4 page high-level summary, pitch deck of 15-20 page ppt.
  6. Know this very well: Financial Statements and Budgets.
  7. Communications: Communicate with investors, customers, employees and mentors with both good and bad news.
  8. Market your business with all your passion: You are your own brand ambassador and manager.