Ankit is Cofounder and CEO of A2D Ventures, whose mission is to build Southeast Asia's largest angel investing platform where visionary investors get access to co-invest and back tomorrow's game-changing startup founders.
Ankit has also held a leadership role in Shopee and is ex-McKinsey.
Guest Author: Ankit Upadhyay
Just recently Garry Tan, CEO of Y-Combinator made this post that completely reflects one of the important reasons why we at A2D Ventures are focused on early stage investing.
It is a math game.
In the earliest stages of a startup it is a very fragmented and therefore democratic game. We have about the same opportunity of investing in a future potential unicorn as almost any early stage investor out there.
But as the business model is further validated and the valuation rises… the startup naturally gets pickier about who they allow to put money in. And therefore a smaller and smaller group of elite VC’s get into those rounds, putting the odds in their favor.
So if we were a VC that did say Series A, B, or C… we would have a hit rate on unicorns that is far lower than big names like a16z and Sequoia.
Y-Combinator(YC) is a strong reflection of this fact
YC has invested in early stage startups since their founding in 2005. They invest at the earliest stages.
Some startups even get in at the idea stage. They literally have nothing. No traction. Just a group of founders and an idea.
So the risk at this stage is naturally huge.
But if you know what you’re looking for than you can successfully invest even at this stage the way YC does. And as Garry Tan points out in his post… they have been involved in roughly 10% of all unicorns.
And this is enabled by two main factors:
1st: The checks are small at these early stages
And therefore you can spread your money around quite a bit. If you have an appetite for investing a total of $200k you can spread this investment around into say 10-20 early stage investments as opposed to a single Series A stage investment.
2nd: It’ s a lot easier to get in
At this stage the founders are rarely that picky about who they let in as investors. And often they’ll collect a number of small checks, some of them from folks that they barely exchanged more than an email or a single call with.
A2D Ventures makes spreading your bets at this early stage easy
If you were to go around and try to invest directly in lots of early-stage startups you would probably find it quite challenging. In that it is a serious time commitment plus it is not always easy to get the introductions you need to get in the door with the good ones.
You’d have to take it quite seriously to do it well. And some folks do. But they also almost treat it like a full-time job.
If you don’t have this time or desire to make it a full-time job than it makes a lot of sense to work with someone like us. We make it the full-time job of an entire team to go and scour the startup landscape for what we think are the best ones.
And then we make it easy for our investors to put money in… knowing that we have already vetted out what we perceive as the better ones.
Also note that the process of ‘vetting’ is a skill that generally gets stronger the more startups you’ve talked to. Because over time you see who makes it and who doesn’t.
And you start to see patterns. These patterns then evolve into what many investors call ‘instincts’.
And many of the most prolific early stage investors like Peter Thiel talk about how they rely heavily on these instincts that they’ve acquired when determining who to invest in.
Want to learn more about A2D Ventures?
Have a look at our site: https://www.a2dventures.com/
And let’s find a time to chat!
