“We Do Not Mentor Startups; Instead We Mentor Individuals Capable Of Creating Startups”

Esha Tiwary, general manager, Entrepreneur First (EF), India, in an exclusive conversation with Electronics Bazaar’s Mukul Yudhveer Singh, sheds light on how the venture capital and private equity company functions. Unlike many mentorship cohort programmes, EF focuses on individuals who are capable of creating startups, and not on companies.

EB: What is the company vision with respect to innovation and helping startups in India?
Entrepreneur First has been around globally for around eight years. In India, we started last year in January 2019. Since then, we have had two startup cohorts. The third one is in progress right now.

The vision has always been about helping tech founders to form companies. We invest in talent, which means we take in individuals who are all aspiring founders but don’t have a company.

We take 50 such individuals in a cohort every six months. In the cohort, they work very closely with their co-founders and we mentor them. For the first three months, they work on company-building. After that, we decide which one of these companies to invest in. Ultimately, EF is a way for individuals to find co-founders and build companies.

EB: Can individuals who do not have a team approach you, irrespective of whether they have an idea or not?
We do not take on pre-formed companies as we are not an accelerator. We only enable individuals to come in and start companies.

EB: Can someone approach you without having an idea in mind?
Yes, in fact most people who join the cohort don’t have a specific idea in mind. while we evaluate people for their skills and focus on the talents required to build tech companies. The tech companies need technical and business acumen, and that’s what is expected out of an individual.

To start a company, you need a CEO and a CTO. We take a whole gamut of skill sets on the go. These include individuals:

• Holding a PhD degree with niche technical skills
• Hackers who can build any sort of product
• Domain experts who are business oriented with deep expertise in an industry

In addition to the above, we take some general business leaders as well. In our cohort, we have multiple frameworks that help them evaluate the best areas they can work on, the best co-founders for them, etc.

EB: Does this mean a startup that has already started working, or is in its pre-incubation stage, cannot approach you?
Generally, we do not accept companies. But in some exceptional cases, when the two people working together are outstanding, then we evaluate them on their merits.

We may take them on as individuals, and they can choose to work together within the cohort. But we do not accept or mentor startups.

EB: What kind of support can individuals expect from Entrepreneur First?
In the first three months, which is the company-building part, individuals get exposed to all the co-founders. We have ex-founders in the team who are mentors. We call them an entrepreneur investment team. They are very well-known founders from the ecosystem who work full time with EF, and they mentor all the founders on the programme.

We also pay a stipend of US$ 2000 per month to all 50 people. After three months, we decide to make an equity-related investment in a startup. We invest US$ 55,000 for 10 per cent of the equity. And after investment, those companies go through another three months of a launch programme, which is like an accelerator.

Here again, they will have an Entrepreneur In Residence (EIR) and interact with external advisors who are very well-known people from the industry. Then we guide them to get early traction, acquire early customers and really get ready.

Our final big boost comes when they are ready for seed investments.  EF exposes them to many investors in the ecosystem; we prepare them in terms of how to think about seed investing, provide them basic material on investing and pitches, and train them on how to think about a long-term strategy.

EB: What is the duration of every cohort programme?
Our programme is typically for about six months: the first three months for company-building and the next three for acceleration.

In India, we do provide support for longer periods; so we go on for at least another two to three months and then we have the Investor Day. After that, the funding, starting from the first conversation with a VC, takes its own time to close.

Funding cycles in India are typically longer than anywhere else. When the funding cycle starts, it is on a company-to-company basis. We have had companies close funding within a month, as well as companies that have been speaking to investors for over four to five months. But our programme is typically from six to eight months.

EB: What if VCs are interested in an idea but want to wait for another six months before investing?
When EF becomes an investor in the company, our interests are aligned in terms of getting the startup seed funded and moving forward, further. Formally, there is no programme support available after the end of six or eight months.

But like any investor, we stay in touch and we continue to introduce these individuals and companies to VCs, and give them feedback on their product or plan of action, which becomes like any investor relationship. We have an extraordinarily strong network of VCs.
When you have one investor, then we will continue to make sure that the company is on track going forward towards the next round. Though, to repeat, the formal programme ends within six to eight months.

EB: Any reason why Entrepreneur First is interested in deep tech startups and those that revolve around IoT?
We think that right now, this is an area that still has a lot of potential. For us, overall, deep tech, including IoT is a global focus area. The industry is still nascent and there is a lot of potential to build very promising startups in this area.

EB: What all does deep tech cover? What do cohorts work on?
AI and ML are broadly the kinds of tech we cover. More than half of our companies have some aspect of AI and ML applied to different industries. We have a vision in the robotics and nanotech fields.

We have seen aerospace tech startups as well. Some med-tech and biotech firms have also evolved. So, a lot of those kinds of deeply technical businesses are emerging out of EF.
We are a mission-driven organisation. Our mission is that the world’s most ambitious people should be starting companies at all our six locations across the globe. Most times, people don’t start a company because they don’t have a co-founder and they don’t know who to start a firm with. Or they don’t have that one earth-shattering idea, and they don’t know what areas they can apply their skills to.

I think those are the main reasons that prevent a lot of very smart, talented people from taking the leap. And that is why we exist —to cover that gap.

EB: How do you reach out to individuals with potential? 
We have different channels. About 25 per cent of our applications are organic. People have heard about us, and they apply to us on their own.

Then we also have a lot of referrals coming in from people who have been through the programme and recommend us to their friends. As we are global, there are a lot of references that come from people in Singapore, the UK, etc.

We do a lot of events as well, like those that are PhD focused. We work with IISc too. We do events for which we invite a lot of industry founders to come in and talk to people about entrepreneurship.

We also conduct events to generally raise awareness around entrepreneurship. We are always on the lookout for smart people and those who could do well as entrepreneurs. Then we directly reach out to them.

EB: You mentor 50 people during a cohort programme, 25 per cent of whom reach you organically. So how do you decide who are the right people?
We have an application, which has to be filled up on the website. This application asks a lot of insightful questions. If people pass the application review phase, then we have an interview.
It is a straightforward two-step process. Over the last few years, we have developed some methodology around identifying different talents and different skillsets. And a lot of times, people may or may not have found the qualities or the right motivation.

Ultimately, what’s important is that since it is a very exclusive programme where only 50 people are coming in from a pool of more than 1000, we want to make sure that each one of them has only exceptional co-founders to choose from.

EB: What if two teams are working on a similar idea? Is there a non-compete clause?
It does not matter. Across the world, many people are working on similar ideas. We always evaluate a team on its merit, how it’s thinking, what the business model is, does it understand how the market works, and does it have a deep understanding of the customer.
EF always encourages its teams to first sell and then build. It is very counterintuitive, but we tell them to first go find someone who wants to buy a product and only then to build it.
And so, the evaluation will always be on how strong these founders are, how much they understand their customer and their market, how quickly they can execute and move forward, and so on.

EB: Any successful startup stories you would like to share? 
There are many. QSense was accepted into the Reliance Jio Next programme and now the team is rolling out its solution with the Reliance Fresh chain. There is another company called Brainsight Technologies that got some good coverage last year. It received the BIRAC grant from the government and is building some interesting health science solutions to detect mental illness.