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BVG – Change of Guard!

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Yeps that right folks – its time for change of guard at BVG – starting tomorrow Monday, May 15th 2017, Dr. Deepak Kotak (dk@contrariandoc) is taking over as MD of BVG & all the Investment decisions for our new fund.

Ok – I didn’t get fired (real news not fake newsJ) As we are closing the launch of our new fund with a different mandate so the timing is appropriate.

This has been in the works for sometime and the BVG Advisory board finally accepted my recommendation last week that we bring Dee on and help shape the direction & future of BVG.

BVG was started a few years with the goal of helping entrepreneurs get access to angel/seed capital & mentorship & guidance. Most of the folks are not aware that we are self funded and have refused OPM a few times as we continue to evolve, learn, expand and help the entrepreneurs bringing ideas to life. Happy to report that we have had our fair share of success, losses & the pipeline we have is robust & we might have a big one in the smallish portfolio we have. More importantly, we believe that we have contributed, helped, influenced the folks we have met in many ways other than just our angel investments and $$.

Why now?

I want to spend more time at home and less traveling as we got blessed with a little angel earlier this year. I plan to go back & do another corporate gig for a few more years.

We started with a tech/fintech mandate fund in 2012. We feel that getting into advanced bio-tech agri-tech, ai, SMDD tech is the direction; we want to open the second fund mandate for. I believe Dee is so much better equipped to lead this turn as he has the right background and passion to get us where we want to be. Here is a brief intro to Dee & his expertise.

I will be incredibly privileged to support Dee in whatever manner I can and with the guidance of BVG Advisory Board (John, @DeepakShenoy) – I am sure Dee will take BVG to new heights.

Lastly a Big Thank You! To Everyone. Bricks & Bouquets welcomed :)

Love!

Raghu https://twitter.com/BlackstoneVG

 

 

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First Time Entrepreneurs/Founders raising funds, Please do Read !

guide to first time entrepreneur founders

Entrepreneurs, Founders – This is a repost of the Linked In Article I did a couple of months ago!

A quick post for all the first time #founders/#entrepreneurs especially in #ASIA, #MENA, #LATAM markets and who are on LI seeking #angels #investing #seed #preseed and have approached me and/or other investors.

Disclaimer: This my personal view and I have been wrong many times before, so take this with a grain of salt & yes I did not edit it for proper grammar + I was told that hashtags were important in first lines ….

1) Traction/Growth stats are too small a sample size in the beginning – a 3 month dataset is not enough to conclude anything meaningful – unless you are Rocketship.

2) Extend the POC/(what I call Pre-Beta/Beta stage) time – ie runway to see what you can do bootstrapping yourself & are your growth metrics at 6-8 months as what you had expected in month 3-4? Rocketships ignore…data will force your hand.

3) Try raising friends & family (F&F) round first – at this point, you have folks closest to you believing in your app idea/biz model/product (hence investing with you) + your first customers willing to give you no-holds feedback.

4) Or if you are a Rocketship – go for named investors and institutional ones. Start local, national but don’t constrain yourself in your approach going Global. (Avoid Brokers/Advisors/Freeloading Mentors) looking to make introductions with funds & getting you funded – in return for monetary compensation or even worse a stake post money – this applies to non-rocketships)

4) Sustain this #round as long as you can but start planning 3-5 months in advance of your planned Seed Round (btw let the F&F know that you will look to raise soon if you get traction – they can exit or participate or dilute). Rocketships ignore.

5) Keep your#team size small till you get Seed Round locked try to keep it optimal after that.This is critical but most overlooked aspect by entrepreneurs.

Unrelated Side note: For all those using #AWS – 4gigs of RAM minimum and 8 cores will keep you humming in your initial stages.

6) Break up your Ask in stages – (friends & family) – (Seed) -(A) -(B) – no one goes from Seed to IPO in a straight line irrespective of what the MSM (look up MSM on social media especially #twitter for what MSM stands for) wants you to believe in overnight success stories. Side note – References to Unicorns, Decacorns in your deck don’t help.

7) Tie your revenue milestones to expenses – break #Capex (will be surprised if you have that big, #Opex yes understood) so it becomes easy to see what the plan vs commit vs forecast vs actual numbers are ( h/t to the person who actually shared this on the net first, apologise that I don’t have the reference here – if someone could point that out, will update the post) – in short how are you trending in the financial/growth metrics – yes the sparklines graph in that #GSheet cell looks ugly but it is ok.

8) Know your metrics(growth/rev/cac/expenses/*cap table) by heart but try to know everything about your target customer/markets – (everything – maximum data points on your target customer). *this becomes more important for Rocketships.

For ex: TAM shouldn’t be entire population of India & cell phone penetration percentage metric. You are building an app. Smartphone market is much smaller + paying customers (TAM gets smaller) and yes Android rocks in that part of the world so no need for an iOS app developer at this stage in time. (ref to point #5)

9) Keep your term sheet simple. Be transparent and ask the investors to showcase the same transparency. And yes those #convertible notes signed on early do matter.

10) Competition will spring up before you know it – have a plan to face that scenario – (am serious) this where all PPT decks doing SWOT analysis pre-raise fail because no one plans or is thinks that the competition will hit you fast. This is true for Rocketships..

In conclusion:

You will get multiple rejections before you get an investor on board, don’t lose confidence, work harder and keep sending progress/or lack of progress updates to the investors (don’t spam them but only update with their permission). Build relationships that are part of your entrepreneurial journey that will help you, guide you & influence you in your successes and stand with you when you face failure.

No shame in failing, success takes time, for a few it takes months to years, for some of us a few years & still counting :) Keep the consulting gig, freelance assignment, day job if you have to but most importantly keep the hustle going!

Hope this helps folks, if it does please share/comment, if not hit me up with comments, happy to engage/enrich the experience for everyone’s benefit & please do share.

Thanks,

raghu-signoff

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Update on Dubai (MENA) region startups and funding

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Hello Folks, it’s been a while, since I took to blogging my thoughts. Dubai is one of the places I love to frequent, both as a traveler and as an investor. While experiencing Dubai is a mesmerizing trip in itself, getting a hang of its flourishing start-up environment is an altogether unique and refreshing experience for me as an investor.

The last time I was here, I gathered all the info I could and posted it in this article.

However, I couldn’t help but notice some major updates this time. I have been moving around, talking to local startups and investors and getting to know the startup scene in UAE especially up close. I am really impressed with a few local startups I have been following closely from last year.

The first one is https://twitter.com/wa9faat co-founded by a friend and an amazing technoprenuer Ahmed AbuSaad https://twitter.com/aabusaad1 – who is getting ready to launch his first startup in the MENA region – I won’t steal his thunder but for the folks in Dubai/MENA reading this please sign up and support Ahmed, you will be surprised J

The second one is http://www.vvip.co/ co-founded by another good friend & the guy who rubs shoulders with Royalty, VVIPs, and mere mortals like me and just gets things done – Saber Ghaith (https://twitter.com/VVIPTM) here is a (pic) at the Dubai Marina. Anyone looking to race a Bugatti Veyron on the streets of Dubai here is your guy https://twitter.com/VVIPTM?ref_src=twsrc%5Etfw J

The UAE govt. has been very supportive with providing infrastructure, flexi offices, micro loans and kudos goes to His Highness Sheikh Mohammed bin Rashid Al Maktoum https://twitter.com/HHShkMohd vision in moving the region to a post oil economy and encouraging innovation and entrepreneurship.

The Startup scene in the MENA region, especially Dubai continues to be bullish across major sectors like e-commerce, healthcare, transportation and real estate.

Let’s look at the Major updates in the Dubai Startup Scene in the last 6 months

 

  • Based on a research conducted by Wealth Monitor, there is a consistent 15% growth in the total value of early-stage equity investments. It amounted to USD 30 Million in Dubai alone.
  • UAE stands at the top when it comes to investor attention. Other regions like Qatar and Oman have yet to see their fare share but most investors from US and Europe are instantly attracted to Dubai.

 

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The Basic Stats:

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Source: http://bit.ly/1tI5FMV

 

 

With Online retail being the most successful sector based on numerous forms of research and projections which clearly peg the revenues above USD 15 Billion in 2016. Most of the startups are active and operational under this sector.

Surprisingly, there is a sharp rise in startups offering core enterprise software both desktop and based on cloud solutions. E-commerce investments have also seen an upswing with some new entrants. We will look at them below.

The market for such kind of business frameworks is bound to rise as more Internet-based startups find the need for robust enterprise platforms to make their operations more effective and traceable.

 

Sector-wise break-up

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Source: http://bit.ly/1tI5FMV

 

The following charts cover the major changes in the investment scene for MENA Startups in the last 6 months

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Source: http://bit.ly/1tI5FMV


 

Let’s look at some startups that have risen in valuation in the past six months based on funding and operational revenues

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Source: http://bit.ly/1tI5FMV

 

E-commerce has seen some major spikes with a new entrant Jugaad raising a significant amount and The Luxury Closet entering further rounds with higher and profitable valuations.

 

1.       Jugaad

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  • Investment Raised: USD 100,000
  • Date: December 29, 2015
  • Investors: Unknown

Jugaad is an app aggregator where you can avail all kinds of core services on the same platform. Think of any thing you want and Jugaad has it. From food and grocery delivery to on call drivers and household help, it provides a one-stop platform to access all such services.

 

2.       The Luxury Closet

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  • Investment Raised: USD 2.2 Million
  • Date: January 8, 2016
  • Investors: Wamda Capital

Designer fashion has Dubai on the roll as the demand for designer products on the online front keeps soaring. The Luxury Closet caters to the elitist market and has thus driven its sales so far by dealing in exclusive brand wear and accessories.

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Wamda Capital that funded the company with USD 2.2 Million earlier this year noticed the rising tide and made sure it had a stake in it.

There has also been some movement on the B2B Front. Brndstr has risen in the enterprise software segment and roped in new investments.

 

 

3.       Brndstr

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  • Investment Raised: USD 400,000
  • Date: November 1, 2015
  • Investors: Funsho Investments
  • Current Valuation: USD 9 Million

 

Talk about real-time marketing and the name Brndstr is already making waves across nations. This Dubai based startup founded by former Trump Towers executive Simon Hudson who has a keen interest in the Dubai startup scene and has been heavily active.

The company helps brands create campaigns that are based on in-the-moment real time events and timeframes. It allows brands to engage with their audience and fans using innovative solutions with genuine API technology. As an enterprise software solution company, Brndstr is using software powered by the cloud to amplify its reached and had consistently been backed by Funsho Investments.

 

“Just as China has its own local giants like Alibaba, MENA will start to breed its own equivalents of Western successes in earnest over the next few years. The appropriately named Souq.com is just one company that has that potential. Like Asian markets, the Middle East largely skipped the first generation of e-commerce and has jumped straight to mobile. Saudi Arabia is home to some of the world’s most voracious consumers of YouTube content.”

-Mic Wright, The Next Web

4.       Artscoops

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  • Investment Raised: USD 130,000
  • Mode of Investment: Crowd investing through Eureeca

 

A niche fine-art based e-commerce platform, Artscoops has raised investment to cater to the business of fine arts creating an online auction feature, a mobile application, a design platform. Considering the uniqueness of the business model and the target customer base, bullish figures can be expected from this enterprise in the time to come.

You can read more about it here.

 

I will have to say that the E-commerce sector has to be taken very seriously as an impending opportunity in the MENA region. Valuations have risen sharply in the past year. Seasoned platforms like Souq.com have raised funding in excess of USD 200 Million and new entrants like Wadi.com have raised spectacular seed stage funding.

 

5.       Souq.com

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Known as amazon of the Middle East, Souq.com is a seasoned player, which has entered into the big league with its recent round of funding

 

  • Investment raised: USD 275 Million
  • Investors: Tiger Global, Naspers, Standard Chartered Private Equity, IFC
  • Sector: E-commerce
  • Specifics: Online retail

 

6.       Wadi.com

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  • Investment raised: USD 67 Million
  • Investors: Al Tayyar Travel Group Holdings, Middle East Internet Group
  • Sector: E-commerce
  • Specifics: Online Retail

 

Read more about these investments here.

The BVG Team & Rahul Rakesh

 

 

 

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The BVG Team & Rahul Rakesh

 

However, performing sectors are consistently inviting new players as incubators, accelerators and investors who are taking a keen interest in the entire MENA startup landscape

 

One cannot deny that the startup landscape in the entire MENA region continues to rise. With established startups entering higher stages of growth and investment and a number of potential seed stage businesses on the rise, the projections do look promising.  However, I would like to see more Fintech in the region and also some innovation across the dormant sectors.

 

“Dubai is an entry point to the fast-developing markets of Asia, the Middle East and Africa. These are markets growing at double the rates of the developed world, and the hub for accessing these markets is Dubai”

 

– Mustafa Abdel-Wadood,

Chairman of the Management executive committee, Abraaj Group

 

To conclude, I will point towards an observation of mine. After interacting with numerous startups & investors in Dubai, Ras-Al-Khaima, Abu Dhabi one can clearly notice a variable, which is driving such growth. This ecosystem although still maturing is currently driven by growth and profitability rather than valuations and scalability, which is more than what I can say for other ecosystems. I guess, that is the underlying USP all startup ecosystems should aim at. What do you think? Please let me know @blackstonevg

 

 

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