Naganand Doraswamy

Naganand Doraswamy

VP, SPAN Systems

About Me

I have been working in or with start-ups for over 15 years now. I started off as a technologist with a Master’s in Computer Science and started to gravitate towards entrepreneurship after about 7 years in the industry. I like working in or working with start-ups as it is fast paced and exciting.

Investment Strategy

The key factors I look for is the team, their passion to be successful and of course the problem they are trying to address. I would like to feel confident that the problem is for real and does have a potential to make a difference in the market.

Portfolio Companies

I tend look at companies that are either developing a product in the technology space or trying to provide a service in any industry but with some technology play at the back-end. I have invested in companies in varied industry- Financial (Niyojit- which is now defunct), Advertising (Basil), Mobile (TouchFone), e-commerce (UnBxd), Travel (Polama), Mentoring (Mentor Square), and Retail/Consumer (ScienceAdda).
ScienceAdda is my most recent investment and we are trying to do something really different by providing experiential mobile learning experience in Science. I am actively involved in this company.
All my investment has been in companies when I have known the entrepreneur except for UnBxd which I invested as part of IAN. These investments are because of the fact that I have known the entrepreneur and liked their passion and also think the idea has the potential to have an impact in the market.

My Criteria for Investing in Startups

It is difficult to say what you are primarily looking for as it is always a combination of various factors. Sometimes you end up investing because you like the entrepreneur and trust them to be doing the right thing and sometimes it is because of the fact that you really like the idea. One needs to look at every deal on its own merit as the criteria for making a decision is different for each deal. However, to invest in any company you need to ensure that you like the idea and like the people behind the company at the minimum.

Attributes I Look for in an Entrepreneur

Self-belief and perseverance are two key attributes I look for in founders. There is a thin line between self-belief and arrogance and one has to ensure that they don’t cross the line. If you become arrogant, then you stop paying attention to what the market is telling you which leads to failure. They key is to believe what you are doing but be open to ideas from others and more importantly look at what the market is telling you.
Perseverance is also important as many a times you will be in a situation where you feel everything is going wrong and you need to keep your cool and chug along. This is very common in start-ups as you are trying to bring something new to the market and that is never easy.

Message for Entrepreneurs

I believe entrepreneurial journey is lot of fun but filled with landmines. Not everybody is cut out for this journey and one needs to assess themselves before embarking on this journey to ensure they are ready for the ups and downs associated with this. I would also advise entrepreneurs to seek out for good mentors whom they can bounce off ideas. It is very important to seek the right mentor who give ideas and direct them in the right direction. I believe a mentor should not be over bearing and thrust their ideas into entrepreneurs.

Common Mistakes Startups Make
I believe mistakes do happen and one should not be afraid of it. Entrepreneurs will make mistakes but what is important for me is their ability to identify it quickly and change the course. This is why I don’t want to ever work with an arrogant entrepreneur as they will be oblivious to this! Start-ups need to try out and experiment with various options to determine what works and what does not.
One of the biggest reasons why start-ups fail is because of the ego clashes between founders. This to me is the most common reason for the failure of the start-up. My company- SPAN Systems- was founded by 5 people. Although we all grew up together, I feel we were successful because we never let our ego come into play. We did have lot of animated discussions but at the end of the day, we all agreed to implement what was decided right for the company.
How to Avoid Making Such Mistakes
The founders need to understand the strengths and weakness of each other utilize the strengths to the benefit of the company. It is very important to put the company ahead of everything else including personal ego (which is never easy)!
Most Popular Types of Businesses in India at the Moment
Based on the deals I am presently looking at, Healthcare, E-Commerce, and Education seem to be most popular.I believe building pure play technology products in India is very difficult as the market in India is not mature for this. You will be required to sell the product in other countries which cannot happen out of India.
Fields in which Indian Entrepreneurs Should Be Building Startups
It will be very presumptuous of me to specify the fields where an entrepreneur should focus as it defeats the spirit of entrepreneurship. However, I believe, Entrepreneurs in India should focus more on consumer service oriented products. What I mean by this is providing services but with a strong back-end for the service to provide the best user experience. Another area where there is lot or traction is building products as Software as a Service aka Cloud. This has definitely opened up new opportunities for companies to go global with operations in India. I would caution companies wanting to get into E-Commerce as the barrier for entry are very low and unless there is a real differentiator it is not scalable.
Thoughts on Being a First Angel
I am not really hung up on whether I am the first angel. My goal in investing in a company is to ensure the company is successful and do what is right for the company. However, I would like to be active in the companies I invest in and do my part in ensuring their success. This will ensure that I also get a good return on my investment.
Thoughts on Follow-on Investments
As an angel, I typically don’t reserve money for follow-on. There is a well-defined eco-system to raise the next round if the company is doing well and there is no point in you as an angel reaching deeper into your pockets as that will limit the number of companies you can invest in.
How Much to Offer an Angel Investor
I firmly believe that entrepreneurs in addition to raising cash should also look at who can add value to their company. Building a company is easier said than done and you need all the help you can get. If you get lousy investors who interfere in your daily operations, there is no fun in running the company. So in terms of board seat, I believe the entrepreneurs should look for investors who can add value outside of financing.
Entrepreneurs need to realize that the investors are taking a big risk in putting their money and should be ready to part with their company. Unfortunately, this comes only with maturity. Most entrepreneurs think they are being cheated as they feel they are taking all the risk. Only when they come to the other side of the table, they will realize that the person writing the check is also taking as much risk as the entrepreneurs. It is just that it is different kind of risk! It is important to make the entrepreneurs understand this so that they feel comfortable in parting with their company.