Sanjay Nath

MD, Blume Ventures

Mumbai

About Me

I am a Co Founder & Managing Director of Blume Ventures, one of India's leading early stage venture funds. I have 15 years of entrepreneurial, business development, management consulting and operations experience. I have been a member of the Mumbai Angels, one of India's leading angel groups, since its inception in 2006. Earlier, I spent 7 years between PwC Consulting and IBM Global Services' Silicon Valley offices, advising and working closely with leading high tech clients like HP/ Compaq, Sun Microsystems, Intel and AT&T. Before my return to India in 2010, I co-founded and ran a Legal Process Outsourcing (LPO) company.

Investment Strategy

Ideas that aim to dramatically improve the way a certain product or service is delivered OR ideas that are path-breaking and can redefine how we live, work or play
Any idea / business model that can scale rapidly in terms of revenues / consumer adoption, which means using technology as an enabler 8 out 10 times
Highly capital-efficient business models
Committed and passionate entrepreneurs, who are flexible and can adapt to changing market dynamics

Sectors: mainly technology-enabled companies/sectors e.g. internet / mobile / new media, that can scale very capital-efficiently

Portfolio Companies

I have made 8 investments across mobile, online travel, software, healthcare. I was an early investor in InMobi (formerly mKhoj), one of India's best known angel-funded success stories.

My Criteria for Investing in Startups

The team is very important - primarily because business models can and in fact do change, but is the team that holds the business together. Its important to have team members that can challenge and push each other to get to a level that neither can get to alone. So, the team is certainly the most important.

A large market size is also important - "its better to have a smaller slice of a fast growing, big pie" than to be the big fish in a small pond, other things being equal.

Most importantly, today, "path to profitability" is also important - its ok to have a cool product/amazing technology, and an inkling of revenues but sooner than later, the best businesses are the ones that become self sustaining and need cash only for growth and not for working capital / sustenance.

Attributes I Look for in an Entrepreneur

Entrepreneurs will meet their goals regardless of the resources they have. They will "create/adapt to" resources and work around obstacles to meet their goals.

Entrepreneurs have to be agile, flexible, adaptable, and great team players, but also leaders. And be very very hard working and able to stay the course. Good listening is very important. Clarity of thought, re business model, growth, an understanding of the competitive landscape (and therefore, differentiators) is also important.

Common Mistakes Startups Make and How to Avoid Them

Sometimes entrepreneurs, as they say in the US, "start drinking too much of their own 'kool-aid'". That is, they don't listen to their customers, the market, experts, or even their colleagues. Lack of or unwillingness to listen is a big mistake.

Another common mistake is to think from a product-centric and not a customer centric view. Technology only works when it solves a customer pain point. So everything - the solution, tapping into the ecosystem, building the team should be designed around the user.

Most Popular Types of Businesses in India at the Moment

Good businesses are - good businesses. Unlike fashion where styles and the latest "in" things change seasonally, good businesses are perennial. That said, given increasing broadband connectivity, access to all things mobile, and the Indian consumer's willingness and openness to spend online, some of the sectors below are finding a lot of interest :

Niche / targeted e-commerce - with a focus on certain verticals
SaaS - Software as a Service / On the Cloud
Big Data & Analytics (though this is still much more prevalent in the US - gradually getting India interest)

Thoughts on Being a First Angel and Follow-on Investments

My fellow founder and I used to be "first angels" in our previous avatars - before starting Blume. Yes, its exciting to be the first angel - while it carries the highest risk profile, it also has the highest return potential; plus, there is the ability to influence the CEO / founding team and advise of matters of strategy, direction, product development, customer segmentation and so on.

At Blume, we do reserve money for follow on investments.

How Much to Offer an Angel Investor

There is "no formula" for offering equity to angels / VCs. Entrepreneurs should try and find "smart money" wherever possible - i.e. partner with angels / VCs who bring in MORE than just money - access to their networks/ecosystem, advice / mentoring, help in hiring and finding the best senior and other resources, sharing best practices from their portfolio, and so on. Sometimes a board seat is necessary, other times an observer seat's also ok. Again there is no formula.

I'd also say the angel - entrepreneur relationship is a "partnership" - not just a financing transaction.