Malhar Mehta, has worked in the banking industry for more than a decade in various organizations and has donned various hats which includes a relationship manager, location head and regional head across various verticals like Small and Medium Enterprise, Corporate Banking and Corporate Real Estate. As part of his role he has had exposure to various industries like Infrastructure, real estate, textile, oil and gas, Engineering, Jewellery, Chemicals, etc. As part of his interest and investment activity he is an angel investor and is also part of Ahmedabad Angel Network (AAN) and has invested in several start-ups in the fields of retail, education and accounting. He also acts as mentor in these start-ups. In a candid interview by Akshit Gupta, Co-Founder of FundTonic, Malhar Mehta discusses his investment philosophy and highlights the important points that he takes in consideration while evaluating a start-up :
Akshit: When you are evaluating startups for investment, what is the first thing that comes to your mind that enables you to make a décision ?
Malhar : The first thing that comes to mind is whether we are solving any problem or not. I always tell the start-ups that your first goal should be to understand what you want to solve with deep research and understanding.
Akshit: There was a time when aggregation as a model was new to India and over a period of time it seems to have became a commodity. From your point of view as an Investor, do you continue to look at promisting aggregator models ?
Malhar: The question that I ask myself is, if the model is easily replaceable and if there are no entry barriers it becomes just a matter of time for any business to become a commodity. Unless the team has exceptional execution capability, aggregator models with low entry barriers is a difficult investment proposition.
Akshit : Are you in your investment thesis looking at categorizing business models towards any particular kind of business eg. product v/s service etc., sustainable v/s scalable ?
Malhar: For now there is no such specific focus. However, I will be keen on evaluating businesses which have higher proability of achieveing sooner breakeven.
Akshit : One challenge that we have seen in the past especially in high cash flow generating businessess is that the entrepreneurs loose their hunger to scale and hence lesser need to raising next round of funding. How do you forsee exits in this situation ?
Malhar : You need to look at the mindset of the investor also, if the investor is continuously pushing the team for raising next round of funds, then the team will loose focus on doing business, however, if the investors find that the business is generating revenue, and they don’t need to go for raising the next rounds that's fine with me.
Akshit : What are your suggestions to some of the new angel investors, looking at investing in startups for the first time ?
Malhar : My first recommendation is that they should not go by spread sheet, not a presentation, first they need to meet the team, after going through their pitch, and then ask them relevant questions which will give a fair idea, otherwise, without meeting it makes no sense in investing, Without meeting you wont get an idea about how good the entrepreneur is, how good are his presentation skills, and how confident he is about his own idea.
Akshit: What are the key qualities you like to have in the founding team ?
Malhar :How confident is the team about their idea or business, coordination among leadership team, out of the box thinking, ability to tackle challenging situations.
Akshit : What is you tolerance level to startup failures while investing ?
Malhar: Everyone fails, but when you are dealing with someone else's money the level of failure has to be minimal, and if you fail then you need to have the ability to rise back and make it good.
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