A product offering under the roof of Better Inc., ReadyContacts gives out actionable data for B2B sales, marketing, and demand generation, and is used by Fortune 100 companies like IBM, Equifax, and Salesforce, fast-growing venture-backed startups, private equity leads, and equity research analysts.
While the rest of the team at Better Inc. runs the show by building several consumer products like ReadyContacts, Vaibhav opened a VC fund, Better Capital, in 2018. Better Capital is a micro-venture firm that builds and invests in category-defining businesses at the earliest stages such as pre-seed, seed, and pre-Series A. It has a particular focus and thesis on Indian markets.
Better Capital invests between Rs 50 lakh and Rs 2 crore for its first cheque, depending on the size of the round and stage of the company. Vaibhav’s portfolio companies include Khatabook, OPEN Bank, Gramophone, Rupeek, TestBook, Yulu, and ShopKirana.
Vaibhav recently spoke to Siddhartha Ahluwalia, on an episode of 100X Entrepreneur podcast by Prime Venture Partners, a series featuring founders, venture capitalists, and angel investors.
The evaluation criteria
As an investor who was also a founder, Vaibhav has been through the founder’s journey himself and has seen “the ups and downs of it”. He says while he knows how hard it is to be an entrepreneur, what he really looks for while investing is an “understanding of the market”.
“I am an engineer who became a product person, who then became a salesperson. Considering the way I have learned in my entrepreneurial career, I think sales matters the most. This means checking if there is a market where I can make sales for this product happen. So, we are a very market-first investor,” he says.
He says this does not mean that Better Capital is “not a team-first investment fund”. All teams need to clear a certain bar before they qualify as something that interests the fund.
So far, the fintech industry in India has largely emerged from only the digital transformation of the financial industry, which started off with things like digital lending and payments among others.
Vaibhav believes the next generation of fintech startups will create a new line of original products that will separate fintech distribution and brands.
How can a founder reach out to Vaibhav and the team at Better Capital? The best way is to reach out to a founder the fund has invested in.
“We are flooded with founders reaching out across channels. It’s hard to keep on top of everything. So I think the best way is to get our portfolio founders to make introductions; it’s the quickest way to get attention,” Vaibhav says.
Distribution challenges for early-stage startups
Vaibhav says there isn’t one right answer to the distribution challenges question for early-stage startups.
“What needs to be understood is that what worked yesterday will not work tomorrow. That’s number one. User acquisition that is purely paid is a recipe for limited success. So, we take a slightly different approach,” he says.
He speaks about KhataBook, saying it’s a product that’s working. “So, you can market it and scale it better. But without the product working, you can’t really force fate and the market even if I give you $20 million to burn.”
This is why the Better Capital team is actively asking portfolio companies to try marketing organically, without using Facebook or Google for outreach, and going with product-first tactics.
What happens when startups do this is that the truest output of what works and what doesn’t clearly shows up. Vaibhav says this is probably his only strategy with early-stage product investments.
“You really have to focus on what users your product is for and go deep into that product-market fit, before you jump into marketing it. The best distribution strategy is no distribution strategy, which is asking your users to tell you what they love, and then building a product for that love,” Vaibhav says.
How has the coronavirus outbreak disrupted your life? and how are you dealing with it? Write to us or send us a video with subject line ‘Coronavirus Disruption’ to email@example.com