2016 has been a story about funding – from corporate funding, to markdowns and government-backed money coming into the picture. Another interesting facet of funding that one got to see this year was the coming together of multiple investors for a single round.
Though this phenomenon isn’t for the ecosystem, it’s definitely a breather at a time wherein we’ve seen the wrath of a list of big league start-ups getting marked down by big-league funds.
A COCKTAIL OF IDEAS, KNOWLEDGE AND ENTREPRENEURS!
Investors believe that the coming together of different power houses helps in collaboration of a wide range of knowledge under one roof. “The main reason is to diversify the portfolio by collaborating with others. Fund A may have more in-depth experience and understanding of a particular sector, while Fund B may be trying to spread the
risk across many companies and bringing more capital to this sector, that in turn will improve the success and valuations,”said Jaspal Sarai, Co-founder of Jaarvis Group. For a cocktail like this to work, it’s very important for like-minded investors to come together and there should be a lot of transparency between the investors and the start-up.
“Collaborating with a fund is similar to collaborating with an entrepreneur. In order to build a business in a constructive manner it is important that everyone around the table be aligned on the vision and objectives of the company. Investors spend time with both entrepreneurs and co-investors to understand motivations, values and timelines before collaborating….