Ep352: Shashank Randev – There Is No Surefire Formula to Venture Capital Investing

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Quick take

BIO: Shashank Randev has acquired a depth and breadth of experience from working in large companies, being the founding member for a SaaS startup (acquired by a Fortune 500 Company), to an early-stage fund investing in technology-enabled startups.

STORY: Shashank was the lead investor of his angel network and was advocating for a startup looking for funding. They had an impressive conversational artificial intelligence assistant for retailers. Their one problem, though; they didn’t have proof of concept. Shashank was unable to convince the founders to work on proof of concept, so he pulled his support. A year later, the startup was acquired by a huge company. Had Shashank not pulled out, he would have made 7x of his investment in the acquisition.

LEARNING: Identify your buyer even before you create your product. Have different perspectives when evaluating an early-stage startup.


“You cannot possibly have one set of perspectives when looking at an early stage company because anything can happen; acquisition can happen at any time.”

Shashank Randev


Guest profile

Shashank Randev brings entrepreneurial and investment understanding with 15+ years of cross-functional expertise. He has acquired a depth and breadth of experience from working in large companies, being the founding member for a SaaS startup (acquired by a Fortune 500 Company), to an early-stage fund investing in technology-enabled startups.

Shashank is Founder VC at 100X.VC (x)-India’s first venture fund to invest in early-stage startups using iSAFE Notes. Go to https://www.100x.vc/ and submit your pitch deck.

He is also an Angel Investor and Advisor with a keen interest in B2B emerging technology startups. Additionally, he is a Member at PIOCCI (People of Indian Origin Chamber of Commerce and Industry).

Previously, he was the Founding member and Vice President of VCCEdge, the SaaS data platform by VCCircle (acquired by News Corporation in 2015). He launched the SaaS platform, led revenue, product development, and growth initiatives for close to seven years at VCCEdge. He has also worked with NIIT Ltd. and Zensar Technologies Ltd.

Shashank holds an undergraduate degree in Bachelor of Engineering from Nagpur University and an MBA from International Management Institute (IMI), New Delhi.

Specialties: Scaling up Startups, Accelerators, Angel & Seed Investment, Venture Capital, Global Open Innovation, M&A, Cross-Border Transactions & Entrepreneurship.

Worst investment ever

Shashank was and still is very interested in conversation in commerce. In 2017, he met this company developing a conversational artificial intelligence (AI) assistant for retailers. The AI assistant could understand a customer’s needs through natural conversation, offer them relevant recommendations, and explain why that may be the best choice. This fascinating AI was a huge opportunity.

The founders of the company had previously built another successful startup that a famous Indian company acquired. So they were second-time founders, which was a colossal tickmark for Shashank.

Advocating for the founders to get funded

In August 2018, Shashank decided to lead the investment through an angel network. As the leader of this transaction, Shashank’s job was to convince all the other angel investors in that network that they should join him in investing in the two founders.

The missing proof of concept

The two founders had a good minimum viable product, but they had not tested it. Shashank kept asking the founders to try implementing the product in a few companies to test it.

But the founders wanted to focus on enhancing their algorithms instead of working on the proof of concept, which is what the network of angel investors wanted. At the end of 2018, after spending five months having multiple conversations, Shashank was not convinced that they would be able to sell their final product.

Giving up on the founders

Eventually, Shashank felt that he was wasting time trying to convince them to give him proof of concept. He also did not want to ruin the relationship he had with the angels in the network should the product fail. So he pulled the plug. Shashank decided not to lead the round, and eventually, that company did not get funded by the angel network.

If only he had been a little patient

Come September 2019, and a large Indian firm acquired the company. The company was so impressed by the hardcore tech product that they could not wait to acquire it.

When Shashank learned about the acquisition, he regretted dismissing the founders. Had he been a little patient to get to the acquisition cycle, he would have easily made a 7x return of whatever capital he would have invested.

Lessons learned

Keep an open mind when evaluating an early-stage company

You cannot have only one set of perspectives when looking at an early-stage company. Anything can happen. An acquisition can happen at any time.

Andrew’s takeaways

Identify your buyer even before you create your product

One of the best ways to start up a company is to determine who your buyer is going to be, then mold your core business around that.

Actionable advice

Make mistakes early on and move on. If you don’t, you are likely to make a costly mistake later on, which will cost you the venture capital fund. Also, be firm about your thought process when evaluating deals.

No. 1 goal for the next 12 months

Shashank’s number one goal for the next 12 months is to ensure that they reach a portfolio size of 100 startups at 100X.VC because once they have done that, the company will be genuinely solving the seed-stage capital problem and increasing successes.

Parting words


“If you are aspiring to become an angel investor or an entrepreneur, don’t think too much. Just go ahead and try it out.”

Shashank Randev


Read full transcript

Andrew Stotz 00:03
Hello fellow risk takers and welcome to my worst investment ever stories of loss to give you winning in our community, we know that the winning investing you must take risk but to win big, you've got to reduce it. And I bet you're exposed to investment risk right now. To reduce it, go to my worst investment ever.com and download the risk reduction checklist I made specifically for you my podcast listeners, based on the lessons I have learned from all of my guess. Fellow risk takers, this is your worst podcast host Andrew Stotz from a Stotz Academy, and I'm here with featured guests to shank ready, Randy Shashank. Are you ready to rock?


Andrew Stotz 00:54
All right. Well, let me tell the audience a little bit about you. So Shang brings entrepreneurial and investment understanding with 15 plus years of cross functional expertise. He has acquired depth and breadth of experience from working in large companies, being the founding member for a SAS startup, which was acquired by a fortune 500 company to an early stage fund investing in technology enabled startups to shine is founder VC at 100 x.vc. India's first venture fund to invest in early stage startups using eyesafe notes. Ladies and gentlemen, listen up, go to www dot 100 x.vc. And give it a chai, submit your high quality pitch deck there today, to shank taking money and affiliate further tidbits about your life.

Shashank Randev 01:56
Thanks, Andrew. It's an absolute pleasure being on the podcast, I'm so delighted to reconnect with you. And, you know, as asked by you didn't fill in the specifics, I like to kind of you know, you know, make an entry over here at this point in time for the audience that, you know, Andrew and myself got connected or very, very strange circumstance. We just started talking when we met for the first time and realize that he stays in a building where I used to stay during my school days in Bangkok, Thailand. And and that's how this whole conversation journey started off me being connected to Andrew and following his great, absolutely amazing work.

Andrew Stotz 02:38
I said I'd add to that. It was pretty funny because I was in Mumbai, I believe it was for an event. Yes. And and we started talking and he said, Yeah, I used to live in Bangkok. And I said, Well, where is it on sukhumvit road? And I said, Okay, what soy and soy 12 Okay, and were on site? Well, deep in the soy, you know, down the street, you know, you would know? I said, Well, what building is he said, Asia house. I said, that's where I live, what floor. So that's how I went. And that was pretty amazing when we both like looked each other like that is a small world. So that's the story.

Shashank Randev 03:19
Yeah. Now and you know, it's been a fantastic journey from from Thailand, I spent two years over there studying and in the International School of Bangkok, had some amazing experiences. And then, you know, then I moved back to India, did my engineering work with a few large corporates, did my MBA and ended up becoming the founding member for a startup called Vcc edge, which eventually got acquired by News Corp, the holding company in New York, which was a fantastic journey gave me gave me a deeper understanding of the evolving ecosystem in India, when it came to venture capital and private and private equity. And since the acquisition have been part of the ecosystem, making investments on the personal side, and and now have been, again, fortunate enough to join hands with my other partners at 100 x.vc. And fund early stage companies, our current portfolio sizes of 39 companies, and we hope to reach a portfolio size of 80 by end of this year, and we are super excited about the time, even post COVID I think it was a very humbling year for all of us. But I think it's it's one of the best times for startup entrepreneurs and investors to kind of really, really identify the next next unicorn so to speak. Because, you know, the mindset and the consumer behaviors is really changing now. It's just a great time to be investing in this asset class. So that's a little more on from my side. And

Andrew Stotz 04:54
yeah, you know, in preparing for this discussion, I went to the website of 100x dot v See, and I downloaded some of the documents that are available there. And I think you know, for anybody in India in particular who is interested in getting funding, you know, these documents are great. And I know that you guys are using the safe model, but you call it Isay for India, and it went through, you can look at some of the details here. But it's a, you know, a very interesting way, or let's say, maybe better way of funding for both parties. It also seems to be a way to standardize the funding process a bit, you know, and I went through some of the clauses that kind of stood out was, you know, the, the obligations of reporting financial results on a regular basis. Also, it's interesting that you have the CEO or designated person, sign a compliance to applicable laws, which is a very interesting thing. And it's actually a tool, I always say, for, for people who, who are sometimes, you know, challenged with opportunities, and people want them to break the law. And they, you can use this as a way of saying, My investors just won't let me do it, I've already signed that I won't do it. So that's powerful. And just going to all of the different, you know, events and stuff like that. It's very fascinating, but maybe it would be good. Before we get into the question of the day that you explain to people, what is the eyesafe sure, investment method compared to just a typical method?

Shashank Randev 06:28
Sure. So, Andrew, and for the audience, typically, from a venture capital industry perspective, what's been happening over the last 10 to 15 years and for the last 3035 years in Silicon Valley, is that, you know, this institutional class of investors invest into companies using a typical method called shareholders agreement, or a front allocation of equity or shares of your company. So if Andrew is the venture capitalists, and he wants to invest a shotgun, Dave, you know, typically, and it will take a percentage of my company upfront in lieu of the money, which has been offered. Now that is still applicable today. But for latest stage companies, now, since the advent of the whole startup drive in Southeast Asia, in India, there are entrepreneurs who have just built out the minimal viable product, or, or proof of concept, possibly tested it out with a few companies, and kind of broken their own bank balances to kind of build out their product, they don't have a high burn rate, and possibly require only a small, you know, set of capital. Now, these are companies which are likely not to be touched by growth stage venture capital funds, because they haven't reached that scale. Now, what has been happening in this ecosystem, that the failure rate of these companies despite having a good product, you know, they've not been able to reach that or amplify the growth because they weren't able to raise that seed capital. So the problem really lies, or was there in the ecosystem of seed capital access to seed capital in the quickest manner. Now, you could, you could give smaller checks, but if you go the shareholders route or taking upfront equity, it's still a 60 to 90 day process in terms of you know, getting the compliances in place, getting the, you know, getting the shareholders agreements in place, and it takes a lot of work. In lieu of this, an ICF instrument is, in essence in by Indian law, a compulsory preference share, which essentially means that you take my money right now, and our wire this money within 24 hours upon signing this agreement, subject to due diligence, technical due diligence, and financial due diligence, which we go through, which shouldn't technically take more time, at the stage we are investing in because these companies are young, right? They're likely not to be, you know, doing any Hanky Panky stuff. So, you know, due diligence should not take you more than 910 days. And so we why transfer the money very quickly. And the agreement is signed off quickly, and they do not have to go through the process of allocating equity upfront. So it helps them raise the small seed capital which ranges between as low as 35k as high as 160. k USD, and helps them accelerate their product development. They're the GTM and essentially, their ability to kind of survive over the next 12 months and possibly go ahead and raise a possibly a pre series A or series a round. This instrument is only applicable at this stage. It still doesn't hold at the growth stage venture capital stage because they there you still need to have a valuation. This instrument prolongs the valuation because there is no inherent valuation at an early stage you cannot possibly value a company which is a good deep tech company with zero customers, but you just can't say I'm valued at x x million because I have an IP doesn't work like that you shouldn't work like that. And we're trying to change that mindset of founders that don't worry about the valuation at an early stage, or when you're raising your first focus on building the product, making it relevant for the market, getting some retention, getting some stickiness. And as a function of that, when you cross the threshold of your first fundraise, you will then are in a position to command a valuation. So that's the concept, Andrew, where we're just trying to quicken faster in the process of fundraising at the first level, their first check, were you not necessarily need to value your company, and the capital required is small, and it shouldn't take you more than, you know, it shouldn't take 60 days or 90 days to close that transaction. So that's that's the, that was the mission. That was the the idea behind starting safe instrument. And and it's a it's a tool, which has been utilized in the valley for a very long time, by Y Combinator. And then so many words, we're trying to emulate the same model in lieu of the legal terms applicable in India. And the benefit also is that you have a pretty standard contract. So you've already done a lot of work through iterations that you've just got a standard contract, the two parties come together and couldn't really know. And it's, I think, the best best thing over here, it doesn't really make sense to take a board seat, right. So we do not take board seats, we don't have any rights, per se, in the company. So let's say tomorrow, if I give my seed capital to a company, and they do happen to kind of shut shop, they're not liable to pay me upfront, you know, they'll have certain liabilities on the company side. But if it shuts down, I lose my money. And that's okay. Because the model over here is to reduce the failure rate. So if I'm able to do 100 investments a year, I'm not worried about the ones which will fail, and they're expected to give me my money back. And I'm excited about the opportunity of building out the 10 to 15, large unicorn companies. And then obviously, the possibility of the remaining 3040 generating at least 20x return, right? That's, that's what we're going after, obviously, there'll be failures, but we don't want to penalize them. And hence, the contract, essentially, as opposed to a standard shareholders agreement, doesn't have a board seat, we don't have any rights. And it's it's more founder, friend,

Andrew Stotz 12:18
Got it. Got it. And it reminds me of something that I'm always challenged with as an evaluation guy. In my evaluation, master class, and in a lot of the valuation settings, people ask me, you know, can you value a company that doesn't even have revenue? And of course, the answer is, you know, truthfully, without revenue, it's all guessing. You know, anybody can make calculations, but without revenue, it's all guessing. So, I have a dar model, D AR, what I say is start first, with the dream. We could value a dream. Now, it's guessing, but all valuation addressing, it reminds me of, I was listening to a guy talking to Christopher Hitchens, a great speaker, who was dying of cancer. And he kind of apologetically said to him, how are you doing? He said, Well, I'm dying. And he said, but we all are. So everything's dream, in a sense. So first of all, I say, you know, if you get five people in a room, and you get a good idea, it's pretty exciting. You know, could you put value on it? Could you get people to put money into it? What if one of the members in that room's name was Elon Musk? Would that bring value to that? So first thing is the dream. And we could make up a value could be $10, it could be a million dollars. But then the next thing is the A and D AR. And that is activity? Could you value a company on activity? Well, look at the number of downloads, or look at the number of customer acquisitions, even if they're giving away the product for free. You could say my goodness, we've got some information here. So we could use to try to value and then the third item, which is are in the DIR model is just revenue. And if I was looking at, you know, if I gave advice about valuation to anybody about startup, which I don't need to give to you, but let's say to the audience, is that if you're investing in a company, or if you're a company yourself, is that, you know, set your revenue projections on a month to month basis for three months ahead, let's say and then every single month, review those revenue numbers. And that really is the key focus. And as you grow those revenue numbers over time, you can you can do evaluation off of revenue. Of course, people want to value off of cash flow and profit and all that stuff. But that's my the way I looked at it is the dream, the activity and the revenue, but what I see about This eyesafe note is that it postpones that process, you don't have to go through a makeup process of, Oh, this is worth x, y, z when really nobody knows. So you're postponing at one one question about it that I have to is that when an event happens in the future, how is the valuation determine? Or is it that you're a percentage holder in whatever valuation comes? Sure.

Shashank Randev 15:23
So it comes in with a valuation cap and a discount. And obviously subject to how the company has performed and based on that, how have they managed to successfully raise around, but most of our portfolio companies, they've gone ahead and raised a price round, which is the shareholders round where we've seen funds like Sequoia mas jurati ventures, which is a very prominent fund in India come in, and obviously, as I mentioned, came in at a certain valuation, and came in with a shareholders agreement, they will also companies, which still aren't mature enough for growth stage VC round. And they went on to raise another round through a bunch of angels through to Super Ah, nice or smaller family offices, through the sequel safemode, which, again, help them you know, not get a valuation offer, again, came in at a valuation cap and a discount, and help them raise let's say, 250 k to 350, k USD, which accelerated, let's say, their customer acquisition, or pushing, they're pushing out the GTM, to a larger set of clients, maybe international geography and thereby increasing their month on month growth, and becoming more relevant for a price trial. So so that that's how it's it pans out. In many cases, you know, we've seen the companies be affected by the COVID situation, but there's been a tremendous, tremendous surge in the way certain sectors have risen, like, for instance, SAS as a segment, right. And they've just, they've just grown month on month, and consume certain companies in the consumer packaged goods, obviously, we're, you know, suffered because of the, you know, the lack of distribution during COVID months, but they they came back through online ecommerce channels, and, and hence they were able to kind of raise money either through sequences or, or reach out to institutional investors. But that's, that's the beauty of this instrument. Again, I reiterate the point that in India, and also in, in this whole developing economy, countries, which we are part of Thailand, Philippines, Southeast Asia, India, Africa, Middle East, there we are, unlike the Silicon Valley, we are at least 25 years away from what's been happening in Silicon Valley, we cannot pick ourselves. To give you an example, Andrew, in what we call seed round in India is much different than a seed round. And us you know, seed round and use can be 1.5 mil. In India, that's that's like almost a series a right. So since a nomenclature doesn't matter, what matters is that the ecosystem is very, very fragile. And it's a function, your your Series B transactions, or your grocery venture capital industry will only pick up if there is a supply of sustainable deals. And and that ecosystem needs to be flourishing. And if you've got a massive failure rate, due to Bri operasi, of you know, evaluation process, which has been there, and it's still applicable, a growth state, but not necessarily at the early stage, then it kind of kills the momentum. And I think the old safe node concept in Silicon Valley, accelerated that process start today, Y Combinator is the place of Mecca for all VCs to come in scout for opportunities. So that's, that's, that's the whole it's just the place in the pyramid structure. We are where today for the first time, India has a bunch of startups. And some of them are likely to fail and failing because they're not able to raise this capital. So that's the background behind got it.

Andrew Stotz 19:05
Well, I appreciate that. There's a lot to learn. So that's pretty cool. So now it's time to share your worst investment ever. And since no one ever goes into their worst investment thinking and will be tell us a bit about the circumstances leading up to it, then tell us your story.

Shashank Randev 19:21
Sure, sure. So you know, I mean, I BB lost this fund, only a year and a half ago, we've done 39 investments, we yet to see an exit. So it's fairly early for us to say that which is a worst investment from a fun perspective. On my personal angel investment portfolio size side I've done for odd investments since March, since May 2018. And even there, it's quite early on to say which has been my you know, person lesson because I'm a fairly new investor, but I can be I have I have one investment which I regret because which was my which became my anti portfolio and And I missed out on that. And that's what I like to talk about. And, and more so because you know, it's a great ecosystem to be an aspiring angel investor. And this, this, this is this experience for those of us in the ecosystem who want to experiment with this asset class. And when I started out, you know, I had certain notions about evaluating a company. And in that process, I lost a big opportunity. So I like to touch upon that today. And in hindsight, you know, it was a massive learning for me, for me, which is really helping me now today at 100x, to kind of evaluate companies. So, Sandra, this this is a story from you know, you know, August 2018, not much time, you know, and, you know, I recently started evaluating companies from a personal investment perspective bank. And so, I mean, prior to becoming an investor, since I was the founding member for VC CH, where I monitored and analyzed early stage startups in India. So, that really helped me develop research skills for, you know, mapping comparable startups across sectors. So, while you know, there are multiple metrics of venture fund evaluates before deciding to invest, typically, angel investors, you know, will largely go by the passion of God, and even if they really liked the founder, and at an early stage, the angel investors judgment call is based on the founding team, their pedigree, and hope that the market size will continue to exist in the years to come. So for me, you know, conversation in commerce was and still continues to be a market to go after a particularly in India where vernacular is a huge opportunity. So there was this company, which I was evaluating, it's called boozer.ai, bu wzo.ai. We know, which was meeting this criteria of, you know, solving a problem in vernacular conversation, Ai, I first met these founders in 2017, and decided to lead the investment through an angel network in August of 2018. And the founders, you know, both excellent pedigree came from IIT Bombay, very, very repeted, you know, technical institute in India, where you know, that they were building this conversational, artificial intelligence assistant, for retailers, they had previously, you know, existed successful startups, so they were second time founders, which was a huge tick mark, for me, the company was acquired by a very large company called naukri.com, very prominent in India, in 2013. So they had all the right ingredients. And they will, they will building out this AI assistant that could understand a customer's need, through natural conversation, offering relevant recommendations and explaining why that may be the best choice, huge opportunity, extremely exciting, and I don't, you know, I drove into it, and how Angel networks work is, since I was part of it, I was leading this transaction, my job was to convince all the other Angel net investors in that network that I'm putting in, let's say, 10 baht, or 100, bought in this company, and, you know, why don't you guys come in and chip in 5050, let's raise a Roger round, and this company's gonna do well. So I was advocating for this transaction. Now, during this process, obviously, even as an angel that the transactions take time, once you've got a larger sum raise and you're leading a transaction, you put in your own money, by the end, the paperwork gets done, takes you roughly three, three and a half months. And during this process, you know, I kept telling them, you know, you guys have just rolled this out. And this is a proof of concept, or a minimal viable product, so to speak. Can you go out and try implementing this in certain companies, and I want to see something tangible. And they wanted to focus on enhancing their algorithms for specific categories. So I along with other angels wanted them to kind of work on the proof of concept somehow, at the end of 2018, when after spending five months or multiple conversations, I wasn't convinced that they would be able to sell what was coming, what was becoming prevalent during the conversations was that, you know, they are they spending too much time building out the product, and they're not going out selling either it's a challenge in terms of doing BD. Or maybe the product is not fully built out. I wasn't worried about the product not being fully built, because they had the technical know how they built a company earlier, which got acquired. And I was more concerned about the knowledge not being able to roll out a proof of concept with any company and literally by any I mean zero. So, so you know, and hence I was I imagined

Andrew Stotz 24:59
illustration, because yeah, looking at, they're smart, they just keep digging deeper into making the product better.

Shashank Randev 25:05
Good, good. So, so I was disappointed, I was really disappointed because I had known that for some time, and I was I was I was advocating for them in the angel network. And eventually, I decided that, you know, it doesn't make sense, I have other deals to look at, I have my, my, you know, my relationship with other angels in the network, I don't want to jeopardize that, you know, they know they won't trust me for whatever deal I advocate for. So it's not worth it. I'm pulling the plug, I don't want to lead this deal. And I decided not to lead the round. And eventually, that company did not get funded by the angel network. Come September 2019, literally a year after we're less than a year, maybe 10 months down the line. You know, they were acquired by a company called haptik, which is a reliance backed company realize the huge, huge company in India. And they got required for the technology to leverage its, you know, the word leverage its platform to power multilingual experiences for the next 500 million Indians, that will come online to shop with zero customers. And because they built a hardcore tech product, and when I saw that news come out, I think I lost that if I would have invested, I would have easily made within those 10 months due to that exit cycle or acquisition cycle, I would have easily made a 7x return. While I would have whatever capital I would have invested in. And I clearly missed that out. Because of I don't know, and I still don't know, when I looked back on the transaction, you know, I mean, there's just so many so many learning.

Andrew Stotz 26:45
But let's, let's go through, like, what, how would you summarize what you learned from it?

Shashank Randev 26:51
I'm still learning to be very candid, you know, I'm still learning as to how to interpret that one situation, there's no, there's no, I don't have a fixed answer. Whatever, the only answer I have is that I cannot possibly have one, one set of perspective and looking at it very early stage company. Because anything can happen, acquisition can happen at a Phenix valuation within 10 months. Or, you know, they might just get funded for which has happened in one of our portfolio companies right now, where we invested in a deep tech company with zero revenues, super product, within three months, they got funded at valuation, ever. This was a valuation round, which, which was obscene. And and then was the lesson for me, so what my learnings from this missed opportunity were multifold, you know, what to while it's important for, for a deep technology company to sell their solution or any company to sell this solution. The reason why Blizzard or AI got acquired was because they have managed to build a moat around their core product technology. And, and while if they would have continued, and I realized that they have no mindset that they want to sell this or you know, get the company or the product required. So it was a perfect roadmap. And I was of the mindset that they should stand alone and go out and roll out the product. And from that vantage point, obviously, they could have never scaled, because their mindset was to sell it to another large company, which, which is exactly what they did. And they built it out around that space, where in a large company came in, really felt that this product will fit into their larger scheme of events and strategy. And they went ahead and acquired it. So so what I realized is, you know, it's important to sell sure. But what is more important is if you can build around a moat, around the core product, with or without PLCs. And that's still debatable, like he will keep keep debating that. And it's it depends on each company to each company. This is not a standard learning for across companies across sectors. But for a deep technology company with or without pvcs. If you focus on the product, then that still remains critical to be to have a differentiated offering. And and that's my learning. But again, the learning continues. You know,

Andrew Stotz 29:11
that's what makes it so fun.

Shashank Randev 29:13
Yeah, yeah. Listen, that's been my journey in the company, which I missed out on totally.

Andrew Stotz 29:19
Okay, so let me summarize a few things that I took away from this. The first thing is I have a factory in Thailand, it's a coffee factory. And my best friend Dale runs that and he runs it very well. And we're equal shareholders in the company. And we had a coffee company from Europe calm, said that they wanted to see us and so the owner of that company came and did a tour of our factory. And we went out to dinner that night. And he looked at us and he said, You know, I don't normally do this, but you know, I'm I'm ready. I would buy I'm making an offer for your company right now at this table for you know Three times revenue, whatever that was. and it blew us away, you know, but what, what one of the things that we learned about that, and we decided not to take the offer, because we just saw so much growth that we could capture ourselves. But what I what you realize is that the reasons for acquiring often have nothing to do with the objectives of the existing owners. Yep, you know, he, he, he didn't care if we had profit or loss or what it didn't matter. He wanted a foothold, he wanted a distribution channel, you want to put his brands through it. And that's why sometimes people say, Well, we want to make a profit before we sell, not necessary. Many companies don't care at all about that. So that's a little story that I share that has some relationship with it. The other thing is that is that I would say, I oftentimes say that one of the best ways to start up a company is to determine who your buyer is going to be. And one of the best companies that I've been involved with the new was involved with selling this startup. And we sold the company to, they had been planning for 16 years, who was going to buy their company, they knew it every time they went on to a trade show that went directly to that company to show them how that what they're doing with their product. But of course, that company didn't know. But these guys knew. And I think it's a really big challenge. For everyone out there is trying to identify who's going to buy you. And that company was Microsoft, and I was the the guy that did the deal on the financial side. And it was, you know, fantastic. Because they had set their sights on it, they had set up so many things that made it, you know, so that they could do that. And so, you know, finally, I would say, I'm reminded of a quote, if there is such a thing as a quote from Buddha. And that is, there are many paths to enlightenment.

Try every path.

Andrew Stotz 32:06
And that's the same thing in startup. Whoo. You know, there are no rules. You know, if you go in and you say, you've got to get revenue right from the beginning. Yeah, that may work for some, but not for others. And another one is that you've got to focus on your technology, your mode, as you said, Yeah, I mean, work, but that just may be absolutely destructive. So that it's that mix of the founders, the technology, the industry, VC that all come together. Yeah, it's really unpredictable, ultimately, you know, is very, very hard to predict. And that, I believe, is what makes your type of business and investing. So exciting. Because you're trying to spot What is that thing, and the better you get, the more you realize that you really can't spot it is really hard to spot and anybody that thinks they can, you know, we'll find that they're wrong, you know, at least sometimes. So those are some of the things I take away anything you'd add to that.

Shashank Randev 33:02
No, I think I agree with you, Andrew. And it's a very, very difficult spot to be in. A lot of the bank VCs are asked, What do you think the next five years trends are? And you know, honestly, my answer to that is, you know, I need to speak with five founders, to give you a sense of what the trend is, because you know, those are the guys who are building the next market or the next next disruptive product, we guys are only investing in them and figuring out how we can expand the market. So so so it is it is a difficult space to be in. But on a personal note, I'm super, super excited about the way the whole opportunity is coming alive in 2021. For Southeast Asia and India, we've got data penetration for the first time at the highest. And we've got customers who are, you know, well aware of their mother tongue, as well as you know, the English language, right? You know, you've stayed in Tel Aviv. I've stayed in Thailand, it's just amazing to see the kind of the lack of linguistic challenges which we face or we faced, I think it's it's as comfortable as you possibly staying in, let's say us because, you know, it's, it's a lot more convenient folks being surrounded by you surrounded folks surrounding you who can speak English, right? So the vernacular play also is panning out where and you know, they are still in their ability to kind of pick up an e commerce portal which can help them order in their local Thai language, or let's say in India, in Hindi, despite the fact they are they well versed with English, but it still gives them the added so that market is picking up right, the whole the whole smaller. For smaller medium businesses, we're now becoming more automated, are coming on the digital landscape for the first time of getting visibility. All this is happening right now. And I just feel it's a great time not only startups, but you know, small medium enterprises, who've been doing legacy businesses for the last 20 years. Let's say just making plastics industry. manufacturing plant for the first time, they have the opportunity to go digital and push the business out and you know, various other cities and geographies. So it's just a fantastic time to be building. It's the next industrial revolution in our mind, across across geography, and really boils down to how much we can pull up those sleeves. And you know, and it kind of just stopped working. Okay, so

Andrew Stotz 35:21
my next question, before I ask it, I'm going to set it up by saying, imagine a young man or woman, and they have started to build a career in VC. They're in the beginning of their career, and you now have some experience that you can really give them some advice. So, and I'm going to challenge you, I'm going to ask you for one thing, based on what you learn from this story, and what you continue to learn what one action, one action, would you recommend our listeners take to avoid suffering the same thing?

Shashank Randev 35:55
Yeah, so it's a little counterintuitive, I would want them to make their mistakes. Because if they don't make the mistakes early on, they're likely to make a very expensive mistake later on, which will cost the venture capital fund so. So from that perspective, I think they will need to make their mistakes. What would be interesting is yes. And they should be firm about their thought process. So let's say they're evaluating a deal. And if they fundamentally believe, for whatever reason, let's say, you know, I used to go, but if if that unless used to go to, you know, let's say a state board school, in Thailand as an example, right, and they are evaluating an auto grading tool. And, and there is, this doesn't make sense, man, nobody's gonna use an auto grading tool and this type of school, this is my bias, but I want to stick with the bias, I would say, stick with your bias. Because when you believe in yourself, and you believe in that idea, no matter if you're wrong, make that mistake and move on. Because if you believe that, no, what is your fund manager going to think about your decision, your thought process, and they end up investing on your behalf, which might not be the right investment could be a good one too, but might not be, then you'll end up making a lot of costly mistakes, right? or other, you'll end up making one costly mistake down the line. So make those mistakes, I think those I mean, it's a business of making mistakes, you make 10 mistakes, and you make one win, and you will have the learning in that. So lot of failures needs to come my objective is that don't treat venture capital business as, as, as something which is easy, or, or something which is like, you need to spend time with the founders, you need to believe in the vision. And it's more important you and it's human psychology, right. So you cannot possibly determine how the founder will behave five years down the line, if let's say there's a personal emergency, of course, you know, episode and the, the founders life is you just don't know. So make then you get the founder. Yeah, get to know the founder, but then also focus on the business. So how do you think the business will grow the product will grow all of those things, but again, make those mistakes, stand by what you believe in, even if it's wrong, don't be Don't be shy about, you know, your personal opinion, when when expressing about a deal because those those personal nuances make a lot of difference.

Andrew Stotz 38:25
Right. You know, the other day, I was walking down the street in Bangkok, and you know, what, the sidewalks in Bangkok? Right? Yeah. And I found a while though, is, is definitely is definitely a lot better. But on this day, I fell. And I got tripped, you know, by stuff on the ground. And, and then, you know, at my age, as I get older, you know, and I look at taking care of my mom and you know, falls a very dangerous. Yeah. And I pulled out of it. And you know, with little minor this or that. And I thought to myself, I'm glad I know how to fall. Yeah, you know, and one of the things that we learn is that by falling many times as a kid where, you know, there's no supervision when I was, you know, there's nothing like what kids get these days, we just went out in the woods, and we fell out of trees, and we fell walking and running. But the point is, is that by doing that, we learn how to roll, we learn how to upset, not, you know, hurt ourselves in different ways. And the result of that is that we carry that knowledge into power, you know, into our age. And I've now come to believe really, that actually, one of the most important things to be successful in life is risk reduction. And a great way to think of that is maybe let's just think about basketball as an example. You know, there's, there's basketball teams in the US, you know, and there's top level professionals, but it's a small number 3000, whatever that number is, right. But truthfully, there's probably another 10 100,000 that could be on that court. Now, they may I've decided that it wasn't worth it for them. But there's ones that really wanted to be on that court. And the only difference is they got injured, hurt their knee, their, their elbow, their their shoulder, and they could not perform to the level that they wanted to perform. And so what I like to think about is, you know, experiencing risk, as you've advised, and growing from that, but also reducing. Alright, last question, what's your number one goal for the next 12 months?

Shashank Randev 40:32
So, Andrew, my number one goal is to ensure that we reach portfolio size of 100 at 100 x.vc. And that's that's the objective, we are at portfolio size of 39, and hopefully, by April and add a portfolio size of 50. And that gives us roughly seven odd months to kind of invest in 60 more companies. And that's very critical. And that's my ambition right now. Because once you've done that, that's when we'll be genuinely solving the problem of you know, the seed stage capital, more number of companies, less number of failures, successes. So so that's the ultimate goal for entire the next 12 months,

Andrew Stotz 41:13
I am sure you're going to get their wealth, listeners. Yep, there you have it. Another story of loss to keep you winning. By the way, my number one goal for the next 12 months, is to help you my listening to reduce risk in your life. So go to my worst investment ever.com right now, and download the risk reduction checklist and see how you measure up. As we conclude Shashank I want to thank you again for coming on the show. And on behalf of a Stotz Academy, I hereby award you alumni status, returning your worst investment ever into your best teaching moment. Do you have any parting words for the audience?

Shashank Randev 41:55
Thank you so much, Andrew, I really appreciate this. And I genuinely enjoyed being on the show. I'm looking forward to meeting you soon. And and you know, doing this again, and my parting words is you know, for the audience who are aspiring to become a angel investors and be entrepreneurs. Don't think too much. Just go ahead and try it out.

Andrew Stotz 42:18
Whatever you want to do. Beautiful and in Thai language, we say your kid ma Don't think too much. And that's a wrap on another great story to help us great grow, and most importantly, protect our well fellow risk takers. This is your worst podcast hose. Andrew Stotz saying. I'll see you on the upside.


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About the show & host, Andrew Stotz

Welcome to My Worst Investment Ever podcast hosted by Your Worst Podcast Host, Andrew Stotz, where you will hear stories of loss to keep you winning. In our community, we know that to win in investing you must take the risk, but to win big, you’ve got to reduce it.

Your Worst Podcast Host, Andrew Stotz, Ph.D., CFA, is also the CEO of A. Stotz Investment Research and A. Stotz Academy, which helps people create, grow, measure, and protect their wealth.

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