Know Your Investor: Why 100X.VC Bets on Founders, Not Startup Ideas?

Forget everything you think you know about startups needing piles of cash. In India, a new breed of entrepreneur is emerging, bootstrapping their way to success and catching the eye of venture capitalists. Venture Capitalists are redefining what it means to invest in innovation, placing their bets on the minds of the founders rather than the glitz of the product.Is this a gamble or a glimpse into the future of venture capital?

In an engaging conversation, Mr. Vatsal Kanakiya, CEO of 100X.VC, sheds light on the firm's investment strategies, the evolving Indian startup ecosystem, and his outlook on the future of venture capital in India.

100X.VC’s Investment Portfolio

Mr. Vatsal Kanakiya  provided an insightful overview of 100X.VC's investment portfolio, highlighting their focus on tech investments in early-stage startups across India.

"We are primarily tech investors in pre-seed and seed-stage bootstrapped startups domiciled in India," he explained.

The firm’s two core criteria are that the startup should be bootstrapped, defined as not diluted more than 5%, and must be based in India. The portfolio is diverse, spanning from consumer brands to deep tech sectors like 3D printing, robotics, and AI. With over 150 companies invested in, 100X.VC has seen significant success, including notable names like Beyond Snack's Kerala Banana Chips and Phylo in agri-IoT. Collectively, these startups have raised over $80 million from prominent investors such as Sequoia, Lightspeed, and Nexus Venture Partners.

How 100X.VC Select Startups for Funding?

When asked about the criteria for selecting startups, Mr. Kanakiya emphasized the importance of market potential and the capabilities of the founding team.

"We invest very early, often at the idea stage. Our focus is on two things: a large, fast-growing market and founders who understand the market and have a key insight to tackle it," he said.

He likened their investment philosophy to betting on the jockey rather than the horse, underscoring the significance of the founders' vision and execution capabilities.

Evolution of the Indian Startup Ecosystem

Further, talking about how Indian startup ecosystem has grown over the years and where it will lead ahead, Kanakiya expressed optimism. Despite the challenges posed by macroeconomic cycles, 100X.VC maintains a bullish stance on India's long-term growth prospects.

"We're investing for a seven to ten-year horizon. The India story is very real, and we're committed to betting on Indian companies," he asserted.

Promising Sectors and Investment Trends

While 100X.VC does not confine itself to specific sectors, preferring to let founders lead with their unique insights, Kanakiya acknowledged the expanding opportunities across various industries in India. He believes that new funding methods, such as debt funding, are crucial for providing capital in different formats, suitable for different types of businesses.

"Venture capital is not the right fit for every business. The more diverse the funding options, the better it is for building real businesses," he noted.

Addressing the notion of 'funding winters,' he pointed out that while late-stage capital has seen a slowdown, early-stage investments remain robust. "There is no funding winter at the earliest stages. There's enough capital for the best deals. It's more of a 'fungibility winter' where the bar for funding has risen, and fewer companies meet the criteria," he explained.

Advice for Aspiring Entrepreneurs

To wrap up the conversation, Mr. Kanakiya offered candid advice for aspiring entrepreneurs. He emphasized the importance of self-motivation and resilience. "Entrepreneurship is a lonely journey. If you're seeking external validation or motivation, it might not be the right career path for you. You have to keep pushing yourself," he advised.

Mr. Kanakiya's insights underscore the dynamic nature of the Indian startup ecosystem and 100X.VC's strategic approach to fostering innovation and growth. Their commitment to early-stage investments and belief in India's potential is a testament to the vibrant entrepreneurial landscape in the country.