Andy Pandharikar, founder of Tall Idea Labs, a startup studio with emphasis on startups with global potential, previously headed a San Francisco-based startup, FITIQUETTE, which was sold to India's Myntra/Flipkart and is now valued at $16 billion. Andy is now activly part of WizRocket and DreamFunded.
I sat down with Andy to discuss his background, what he looks for in an investment, and what type of advice he can give entrepreneurs who are trying to transform their ideas into a viable business while attracting funding.
How would you describe yourself as an investor and what have you invested in?
I would describe myself as a hands-on entrepreneur investor. I have invested in my own ideas and those of my co-founders, first and foremost. Besides FITIQUETTE, I have also been involved with Style Land and ValetAnywhere, both of which were big ideas that addressed a need in the market and were molded into viable businesses.
What types of investment are you looking for?
Tall Idea Labs gets involved in two models; very early ideas with strong potential and seed stage startups with ambitious teams.
In the first case, we actively participate in building the startup from the ground up. We take on ideas that have strong potential for developing into independent startups. Basing ourselves in ideas that align with our current focus, conversational commerce and on-demand commerce, we get involved in the initial branding, MVP, team creation and early growth just like a regular startup.
In the second case, we join with other angels/VCs to invest in the seed round. Our basic criterion for this case is the ability and access to provide hands-on help to the founding team. These days, many startups are getting funded as a party round. Therefore, very few angels can get involved in the post-funding phase of startups.
We take pride in helping entrepreneurs with day-to-day issues, utilizing our own experiences as entrepreneurs. We often get invited by the VCs to join the seed round based on our background. Currently, our investments include more than nine companies based in the United States and India. These companies are primarily in the consumer space, ranging from on-demand services to mobile analytics.
In both types of investments, we prefer to pick those ideas that have the potential for international expansion. This allows us to put our global experience to work, providing new pathways to build revenue for the startup founder while increasing the investment potential for a greater return.
How do you find the right investments?
Most of the investments are through referrals. When we join as seed investors, it is usually because we received an invitation from the lead VC. There are few that we invested in based on demo day pitches at accelerators, such as YCombinator and AngelPad.
Why do you choose the investments you do, and what are the key things that make them standout?
When we decide to invest, there are several patterns that stand out. First, they are difficult to get in. If we get invited last-minute when the round is about to close, then I take a very serious look at it. If the founder doesn’t respond to my email, then it is usually a good sign. Second, they have made significant progress with very few resources. Third, they can raise the next round of funding. Either they have raised series-A/B/C for a startup before or they have had some other fundraising experience at a previous company. Fourth, founders who have witnessed near-death experiences and survived with flying colors make them a real standout.
What advice would you give entrepreneurs looking for investment?
My advice would be to keep connections whether they are warm or cold and always network. Warm intros are overrated. If you don’t have a connection to a certain investor, then just cold call them. The smart ones are always listening. Also, get a technical key co-founder and find an idea not too far from your prior background. Lastly, join an incubator as soon as possible. The more you progress, the harder it is to go back and undo. Fail fast and pivot wisely whether it’s a market pivot, technology pivot, channel pivot or all of the above.
In terms of what not to do, it's easy to get dragged down by the fundraising process, which then affects the real building that needs to go into a business so prepare it accordingly. Do not try to fundraise with an incomplete team. At least the core team should be ready and working on a full-time basis. Lastly, don’t waste time pitching to investors who already have a competing investment, have no experience in your domain, and/or are not actively investing.
Coming from someone who has seen startups on the business as well as the investment side, these are insights to take to heart. There will always be do’s and don’ts in building a startup, the key is to ensure you get your startup and fundraising efforts on the right track straight out of the gate.
