Inside Titan Capital’s “Gardening” Approach to Investing in Early-Stage Startups
Indian startups are marching towards the coveted unicorn club at an unprecedented pace, with Hyderabad-based SaaS startupbeing the last entrant. Beneath the ever-growing list of unicorns, the valuation of early-stage startups has also increased over the past two years, noted Bipin Shah, partner at Titan Capital.
Since its creation in 2015, Titan Capital has identified and invested in more than 200 startups including six unicorns, and
In a conversation with Siddhartha Ahluwalia, Founder and Host of 100x Entrepreneur Podcast, Bipin said, “Through 2019, a great startup idea with a great team would be worth around $2-3 million, which has now reached more than 10 million dollars. .”
Early-stage gardening startups
Titan Capital deals were traditionally classified as Titan Seed Deals (TSD) where the valuation is below Rs 20 crore and High Valuations Deals (HVD) for valuations between Rs 20 crore and Rs 100 crore.
“In mid-2021, our TSDs were zero that year and that was all HVDs every month. So we had to remove that demarcation because you barely get companies with a valuation of Rs 13-14 crore. Recently, when I was studying all the performance of our portfolio, the average valuation of startups invested in the last four or five months was around Rs 40-41 crore,” Bipin explained.
Through LinkedIn and email, as well as ongoing internal reviews, Titan Capital reviewed over 3,500 startups last year. From this, Bipin went through a funnel of 500 startups and Titan Capital made over 90 investments with an average check size of Rs 75-80 lakh.
While these may not be huge checks, Bipin said entrepreneurs seek support from Titan Capital for their network and guidance, most shared founders found in their polls.
“We are very clear as a common consensus that our team should be available to our portfolio companies wherever they need them and we are not someone who forces founders to do board meetings or to impose our thesis. In fact, Titan’s thesis is not to join a board as a director and we usually join as observers and remain very quiet,” he added.
He said Titan Capital’s approach to seed investing is purely like gardening: it takes time, stress and focus to help portfolio companies that are not doing well.
Lessons on Investing in Startups
While most of his peers were happy to land financial analyst and consulting roles at global brands, Bipin pursued his interest in startups and worked with Susanto Mitra in angel investing after getting graduated from IIT Bombay in 2013, where he worked in the entrepreneurship cell for two years in college.
From there, he began his digitization journey through startups and there was no turning back. Bipin said his learning was all about jumping in at the right time and working with founders who are truly passionate about their companies.
He added that this decade really belongs to Indian entrepreneurs and startups in all sectors are going global.
For more, listen to the podcast here:
01:18 – Join Titan Capital
06:10 – Find unicorns and unicorns soon
08:27 – How did Titan Capital manage to make more than 90 investments in one year?
12:02 – What support does Titan Capital offer to portfolio companies?
15:58 – Thesis: Focus on the bottom 50% of performing companies
28:10 – Valuation change at seed stage
31:20 – Learnings over the past six years as an investor