Manish Singhal, Founding Partner, pi Ventures, shares insights on the parameters required for startups to attract investors
Tell us a little about yourself and how you got involved in working with startups and early stage entrepreneurs?
After doing my engineering from IIT Kanpur in 1992, I began building several products across startups and established organisations like Sling Media, Ittiam Systems and Motorola. Subsequently, we spent a few years mentoring and investing in several startups from technology and strategy perspective. In the process, also co-founded LetsVenture.com, a platform for investors and startups to discover each other. In short, I have been deeply engaged in the ecosystem for the last few years.
What attracted you to invest in healthcare companies?
India as a market is deeply underserved as far as healthcare is concerned. We have an abysmal patient to doctor ratio and if you talk about access to quality healthcare, the ratio further takes a beating. We simply cannot train enough doctors to bridge this gap. However, AI- backed technology can create a middle layer between the doctors and patient to make the system more effective. Hence, I am quite excited about how technology can make a difference to the entire healthcare space.
What are the parameters you set for startups who approach you for fund raising?
Beyond the usual parameters like team, product and market size, etc., we gauge how good the IP is, what are their real differentiators in IP, what is the real AI algorithm that they have built. We also look at the data strategy they have put together; how do they plan to acquire data, who will the data belong to, how will it grow, what is its cost, etc. Third pre-requisite is the specific business case of the start-up as we look to fund companies in the applied AI space. All the companies we have funded so far have a business case, which states the problem that they are solving, using AI to their advantage.
In your experience, when is the best time for an early stage healthcare startup to raise capital that has been bootstrapping its operations?
A key milestone in any startups’ journey is product market fit. That stage tells you that the market is somewhat receptive to the disruption the startup is causing. That is critical for a startup to further build on it and scale. I think reaching this stage is a very good stage for a fund raise. If, however, the startup needs capital to get product market fit stage, that can also be achieved if the innovation is unique and solves a real problem. Some validation on those fronts would be helpful.
In the West, there are intermediaries who guide companies in their fund raising activities. How many of these firms exist in India and how much are they relevant to healthcare companies? What do these intermediaries really do?
Intermediaries (also called Investment Bankers) are a part of the Indian eco-system as well. Our bias generally has been that at early stage, the founders need to have enough skills and hustle to work their own fund raise out. Investment bankers can play a critical role in the advanced stages of funding.
A lot of startups focus on valuation in order to attract investors and of course grow their business. Is this the right approach? What is your opinion on the same?
Valuation is a result of a demand and supply problem. Over focussing on this can lead one on the wrong path. Focussing on building a solid business case is a better area to focus. Funding, valuation etc., will all fall in place if the core construct is in place.
Which are the companies that you have invested in so far and how are they performing?
We have invested in three health-tech companies; Sigtuple – a startup revolutionising digital pathology through data-driven intelligence, NIRAMAI Health Analytix – a startup that is building a revolutionary non-invasive, non-touch, non-radiation approach to detect breast cancer and ten3T – a medical grade wearable device for continuous monitoring of patients.
What is your expectation from each of these companies and what is your vision for them?
I expect each of these to become global players in the days to come. They should become the number one player in their respective fields.