Investing Across Borders

Decoding Due Diligence, Investor Insights & Startup Comparisons (India vs. US)

โšก๏ธ An Essential Refresher

An angel investor typically offers startup businesses initial seed funding in exchange for a share of ownership in the company. They can be professionals who invest in multiple projects or individuals connected to the entrepreneur, such as friends and family. Their investment can also range from a one-time investment to ongoing financial support to bring a product to the market.

The journey of angel investing is not just about financial commitment; it requires something more than that - a meticulous approach that demands the rigorous practice of due diligence - the process angel investors use to evaluate potential investments.

๐Ÿงฉ Decoding Due Diligence

Find your Sherlock Holmes hat because due diligence is like detective work for investors.

๐Ÿช™ Types of Due Diligence

  • Financial - examines financial statements, cash flow, revenue projects, and key performance indicators.

  • Legal - assesses legal structure, contracts, intellectual property rights, and potential legal liabilities.

  • Market - analyzing the target market, competition, and growth potential.

  • Operational - reviews operational processes, scalability, and potential risks.

๐Ÿ—๏ธ Key components

Let's delve into the minds of two experienced investors to seek valuable insights on angel investing, navigating the startup landscape, and potentially launching your venture.

1. Gokul Rajaram

Gokul Rajaram is a product and business facilitator at DoorDash and holds board positions at Coinbase and Pinterest. He is also involved as an investor and advisor in several other ventures.

๐Ÿคย Friction is a friend, not a foe!: Challenges for founders and investors can help identify weaknesses, increase learning and innovation, and build a stronger team.

๐Ÿ™… Overconfidence can be a red flag: When things seem too easy, founders and investors might miss potential problems. This can create blind spots, lead to underestimating their competition and poor risk management, and cause them to ignore market trends.

๐Ÿ’ชย Friction builds resilience: Facing difficulties early on forces founders to be resourceful and adaptable. Limited resources and difficulties act as a pressure cooker, forcing them to develop critical skills: resourcefulness and adaptability.

โ

The most important quality for an investor is temperament, not intellect. You need a temperament that neither derives great pleasure from being with the crowd or against the crowd.

Warren Buffett

2. Paul Graham

Paul Graham, a venture capitalist and angel investor based in Mountain View, California, co-founded Y Combinator, where he now serves as a Partner. Before his involvement with Y Combinator.

๐Ÿ‘”ย Domain Expertise Matters: Successful investing hinges on understanding the underlying factors influencing an investment's value. This means thoroughly researching the industry, technology, or asset class you're considering.

๐Ÿ“ˆย Competitive Advantage: Paul suggests that an edge in knowledge can be a powerful tool for investors. By understanding something most others don't, you can potentially identify undervalued opportunities or make better-informed decisions.

๐Ÿ’กThinking Beyond the Obvious: Don't just follow the crowd. Explore new, emerging areas or delve deeper into under-researched sectors. This unconventional approach could lead to uncovering hidden gems.

Indian based Startups:

  1. Sarvam AI (2023):

    • Sarvam AI is a rapidly growing Indian startup focused on Generative AI solutions.

    • Their technology helps Indian companies create, deploy, and distribute Generative AI applications.

    • Benefits of using Sarvam AI include:

      • More robust applications

      • Cheaper creation costs

      • Improved overall performance

    • They recently raised $41 million in funding to expand their team and accelerate research.

  2. Vidyut (2021):

    • Vidyut offers affordable financing for EVs, reducing costs by up to 40%.

    • Customers can drive away with a new EV on the same day of purchase.

    • Flexible rental options allow payment only when the car is driven, including low-cost battery rental.

    • Vidyut closed a successful $10 million Series A funding round in February 2024 to introduce new services, including vehicle resale, insurance provision, and EV maintenance.

  3. Scrut Automation(2021):

    • Scrut Automation simplifies security and compliance in India.

    • Their user-friendly SaaS solution, built from spreadsheets, allows teams to monitor, log, and track risks easily.

    • Automation eliminates repetitive tasks, reducing human error and saving time.

    • Scrut Automation secured $9 million in Series A funding (February 2024) to focus on product development, international expansion, and a 30-40x user base increase by 2023 end.๏ปฟ

USA-based Startups:

  1. Pearl(2020):

    • Pearl Health prioritizes patient care in primary care settings.

    • The software helps healthcare providers identify patients needing immediate attention, leading to improved outcomes.

    • Offers tools for financial and efficiency improvements within healthcare organizations.

    • Secured $95.5 million in funding from four investors, with potential for future fundraising.

  2. Entitle(2021):

    • Entitle automates cloud security access controls.

    • Improves efficiency and security by automating cloud access granting and reducing vulnerabilities.

    • Offers solutions for various needs, like revoking vendor access and granting quick engineer access.

    • Secured $15 million in funding (February 2023) to enhance services and expand.

  3. Regal(2020):

    • Regal built a conversational marketing platform for businesses.

    • Assists with outbound phone calls and SMS messages to reach customers.

    • Offers tools to maximize conversion rates and recover lost sales.

    • Secured $42.1 million in funding across multiple rounds from six investors.

Thanks for reading so far! See you later! Until then, stay motivated! stay strong! cheers!

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