Mumbai: Mumbai-based Seed Advisors Pvt. Ltd, which raised a $15 million (Rs59 crore today) fund called Seedfund early this year, is one of India’s handful of venture investors that focus exclusively on providing seed capital to start-ups. It invests Rs1-5 crore per company and has invested in firms such as Printo Document Services Pvt. Ltd, Banyan Netfaqs Pvt. Ltd and Carwale.com.
Given the firm’s focus on young entrepreneurs, Seedfund’s management team often has to take on a mentoring role prior to assuming an investing role. Chief financial officer Anand Lunia spent last Sunday at a funding workshop on-campus at the Indian Institute of Technology (IIT) Bombay.
Luniya, a former entrepreneur who co-founded and profitably exited Brainvisa, an e-learning firm, in 2005, spoke to Mint about connecting with start-ups and Seedfund’s run so far. Edited excerpts:
What value does Seedfund derive from such (IIT Bombay workshop) forums?
The objective of these workshops is to de-mystify venture capital. My aim is to
throw light on how venture capitalists make money and what are the various ways to raise money from venture capitalists. Venture money is ultimately public money, it is raised from public capital pools such as pension and education trusts. So, it is important that the public understands where this money goes and what it does.
Unique factor:Anand Lunia, chief financial officer of Seed Advisers.
What differentiates you from other early-stage funds?
Seedfund is a unique fund in India. There is virtually no source of capital available for young entrepreneurs who have no family backing. Such entrepreneurs need Rs1-2 crore to start up. But more than money, they need advice and mentoring support.
A lot of entrepreneurs who come to us don’t have access to experts. Therefore, alongwith funding, we have also decided to get into the education of entrepreneurs. Part of that is achieved through such workshops.
How many business plans do you turn away on an average?
A lot of the business plans that come to us are very raw. They need a lot of work before they get to the stage when they can pitch for funding.
Sometimes it takes a month or more to fine-tune a business plan. If we like an idea, but it needs work, we prefer to spend that time on the plan and then consider it for funding. We don’t turn away a plan just because it is not complete.
What about the quality of entrepreneurs at this stage of funding?
See, most of the business plans we get are not prepared by investment bankers and the entrepreneurs don’t have an Ivy League education. So, 80% of the plans we get are not good.
However, the remaining 20% are extremely creative. The quality of ideas we get is very high.