-Shahan Sud, Investment Manager, JAFCO Asia
Team 100X interviewed some of the top investors across the globe about their venture investing journeys, startups, and India. Here, Shahan Sud, Investment Manager, JAFCO Asia shares his responses.
Q1. What is your motivation to be in venture investing business?
With my grounding in Economics, I had conceptual clarity (due to my internships and college level entrepreneurial experience) by the end of my college days that my interests’ were leaning towards finance. I started my career in finance in Bombay with Anand Rathi Advisors. In addition to working with founders on the Sell Side, I actively tracked trends and shared my insights through various business dailies from an early age. Over time I realized that early-stage investing is expected to pick-up pace in India and that is when I joined Indian Angel Network (IAN). Being part of the Investments team at IAN, I built and led the Consumer vertical at IAN. By now I knew that working with entrepreneurs and helping them to “Build for India” is something that I was passionate about. Hence, when I got the opportunity to co-build JAFCO Asia in India it was a good fit. As I transitioned to the Buy Side and as I co-build JAFCO Asia in India along with the global team, my motivation to remain in venture investing remains the same: “to support and to help in building India’s growth story”. I feel Indians need to work towards building the Indian dream in order for India achieve its GDP targets.
Q2. Help describe your investment thesis and ideas you would like to back.
From a JAFCO Asia in India perspective, we look at four broad pillars that are a sufficient condition for us to evaluate a venture. These are:
1.) We are looking at ventures that are either “Building In India, For the World” or “Building for India or Bharat”;
2.) We look at ventures that are either Tech-driven or Tech-enabled;
3.) Ventures that have high levels of Corporate Governance; and
4.) Ventures that built by founders that are resilient and have integrity in their DNA.
Regardless of market cycles, our thesis would remain the same as we feel a strong foundation is a sufficient condition to build a sustainable business, especially in a competitive market like India.
From an India market standpoint, a few key sectors that we are bullish on over next few quarters are SaaS (B2B or vertical plays), Marketplaces, FinTech 2.0, Consumer Enablers, Agri-Tech, Climate-Tech, Clean-Tech, Health-Tech, Cyber Security and Deep-Tech. In addition to this, being sector and stage agnostic, we are open to innovative ventures that we are evaluating on a case-to-case basis.
Q3. What are your 5 key learnings from your experience as a venture investor?
For me, transitioning from the Sell side to the Buy side was timely; it helped me to broaden my horizons; made me far more empathetic to founders and taught me the resilience needed to build and contribute to large teams. In addition to these three learnings, my role at JAFCO Asia has taught be how to work alongside global teams and how one must keep a founder’s mindset while building a brand in a market like India.
In addition to these five learning, I must emphasize that the ability to be humble and to have clarity of thought and action are critical for an investor to operate from their highest potential. Without having these two traits, the first five learnings will not be sufficient for a venture capitalist to invest in a competitive market like India.
Q4. Top 5 advice you would give to
As a global investor operating in the early stage investing space in India we, at JAFCO Asia, feel founders should focus on the following 5 keys pointers as they go-ahead and build:
- Be aware of your surroundings and strive for Conscious Capital:
Founders must realize that the cost of capital has gone up and innovative business models need to rationalize for monetization over gross transaction volume. Trickle down to the bottom line or a pathway to the same is the key to a sustainable business model in these challenging times. Founders must strive to raise capital only when they need to - Not just to increase valuation or your existing investors want you to. This “Conscious Capital” will help you to derive the much needed balance.
- A team is critical to building moonshots:
Founders need to invest in a team that helps them reach their goals of building their moonshots. The founders must be personally invested in hiring their first 5 team members as not only do their visions need to be aligned but also the teams must be capable of building synergies on what each one of them brings to the table.
- Smart Capital & develop the ability to tap into an investor’s moat:
While the top 5% founders will continue to attract capital at favorable valuations even in this market (as there is no dearth of capital), as a founder you must raise capital from the investor that is the best fit for your venture. There must be synergies there. Furthermore, you must be able to ask the investor “What is your moat?.” If the investor can’t answer this question you may want to reconsider partnering with them. We at, JAFCO Asia in India, have 5 moats and we are happy to discuss these when you reach out to us. The ability get “Smart Capital” is crucial for founders to succeed in today’s time.
- Build for customers, not investors:
You can only optimize for CAC to an extent. Beyond that the venture must be able to bring in repeat purchases. And this is where the strength of your product or SaaS solution comes into play. Repeat users are a function of a stellar product and seamless customer experience. Furthermore, in the initial stages of building your product you must keep your ear to the ground and value the feedback that your first few customers give you. Iterating the product or solution based on such feedback allows you, as a founder, to continuously find multiple PMF’s early-on so that you can scale your venture’s solution in a sustainable manner. While this might seem expensive for the startup in the initial stages, it pays healthy dividends later on.
- Be balanced:
As a founder, you must learn to analyze how macroeconomic forces impact your business and you must know when it is the right time to pivot – either from PMF perspective or from a going concern perspective. In addition to this clarity, founders must learn to actively report and be compliant, while ensuring they have their feet on the accelerator.
Q5. How do you support your portfolio companies?
We help the companies we invest in by leveraging our existing portfolio across India, Southeast Asia, Japan and Taiwan in order to drive synergies and in guiding them to make strategic routes to other markets. In addition to working with them on a month-on-month basis, we also actively help them in raising capital for their follow-on rounds. We do all of this with a co-founder mindset.
Having a 50 year’s history, JAFCO Group is one of the earliest and largest VC in Japan, invested in more than 4,000 companies and taken more than 1,000 companies to IPO. Due to our strong network and connection in Japan, we have created many opportunities from Japan - from GTM perspective or from a fundraising perspective. In fact, this is one of our key differentiating factors.
About Shahan Sud:
Shahan Sud is an investment banker-turned-VC. Currently, he is co-building JAFCO Asia in India. He is the youngest member of JAFCO Asia's global investment team and their first investment manager in India.
He is an economist by education and a columnist by passion. As a passionate trend analyst, he actively authors thought pieces on consumer trends, Indian economy and the startup ecosystem. He believes that the convergence of finance, technology and public policy can help in navigating how India will innovate and evolve in the next few years.
