Startup investors, used to taking four flights a week for years, have sat at home for the past 18 months as the pandemic unfolded, watching their portfolio companies collapse and then bounce back with unexpected vigour, aided by an epic funding boom.
Now, as Covid-19 abates in India, many of them are back to traveling with full fervour, meeting the founders of the companies they’ve invested in for the first time and finding out the joys and pains of an older world, even as the fear of a possible third wave lingers.
Investors have committed billions of dollars sitting in their homes – startup funding crossed $20 billion in 2021. Yet, in a sector that’s driven by personal relationships, gut feel and instinct (or luck), physical meetings are still largely irreplaceable, except for introductions or cursory meetings.
Bengaluru-based Ritesh Banglani, the managing partner at Stellaris Venture Partners, an early-stage investor, travelled to New Delhi last month and only when he met a portfolio company founder could he understand the extent of the startup’s growth, despite having been in touch throughout.
“From the time we invested, they have gone from 5 to 75 people. That number is apparent only when you actually see them in office and it really strikes you how much the company has grown. It is hard to get the sense of scale only by looking at a graph on a Zoom call,” said Banglani.
A Mumbai-based investor said that when he went to Bengaluru recently for the first time in almost two years, every single meeting of his, planned for one hour, stretched to about two hours. He did not mind the collateral damage of moving a few meetings at the last minute simply for the relief of a detailed and more informal conversation.
“I am tired of Zoom calls for the most part,” Banglani said. “There is a collective relief at being able to do in-person meetings again. Zoom meetings end up being too transactional. In-person meetings are more wide-ranging. We can discuss each other’s portfolios, investment theses and interest areas.”
Founders and investors saw their relationship tested in the early days of the pandemic, one that they now seek to strengthen by meeting again. Investors are combating Zoom fatigue by making it clearer than ever how they prefer to communicate.
Sequoia India partner GV Ravishankar’s WhatsApp status reads: “WhatsApp chat>Call>Zoom.”
Such a clear public preference would have been unheard of, even considered rude, before the pandemic.
VC firms have also started having internal meetings in-person, with teams traveling for off-sites and annual get-togethers, according to three people at top firms. These events serve as places to catch up with each other, plan internal strategy, judge younger investors and their performance, and have deeper discussions about future investments, some of which are more conducive to in-person meetings.
At some of these internal meetings, firms discuss investments they missed, new sectors to look out for, and propositions that worked or did not work or, in some cases, are too early to tell.
“Physical meetings are very important for team bonding. The nature of work of a VC is that you have deep and hard discussions because you are pushing each other's thinking,” said Anand Datta, vice president at Nexus Venture Partners, an early stage investor in Bengaluru.
For many investors, traveling marks a return to normalcy – for good and bad. Investors say they have missed even the mundane and often troubling bits of business travel – delayed flights, traffic on the roads, booking a cab and travel fatigue.
“It is hard to quantify what more you get from a physical meeting, but you talk more, you go deeper, and there is some unstructured learning,” Datta says.
Madhu Yalamarthi, vice president at GGV Capital, agrees. After 18 months in San Francisco, he travelled to Brazil and Mexico in the past week, meeting entrepreneurs and getting perspectives that he had missed all these months – making his trip sound almost spiritual. He enjoyed the routines, hopping between cities, checking flights on the fly and scheduling meetings with buffer time, accounting for peak hour city traffic.
“This (venture investing) is a business of trust. Unscheduled, informal, and in-person interactions are great at helping foster them. Intrinsically, that’s how we are wired. So, for example, when we share a car ride for 1.5 hours each way for a field visit with a founder, it gives you insights and trust-building moments you otherwise wouldn’t get as seamlessly through Zoom calls,” he said.
Investors anticipate a hybrid model to be the future, where a first meeting or introduction is virtual, followed by physical meetings.
“Video calls are great for levelling the geographical playing field. We recently did diligence on a company based in a small town in Gujarat. If it were not for Zoom, we would have found it hard to have an initial interaction with the company,” Banglani said.
Before the second wave hit India around April this year, a few investors had started traveling again, but that came to a screeching halt, more so as investors and their close ones were infected by the virus and many lost near and dear ones.
Sitting at home, in between doing the dishes, entertaining the children and taking care of parents, the investors made new investments, helped companies through their harshest times, and even raised funds worth billions virtually – something previously unheard of. But the way they did this was hardly sustainable.
“When the lockdown started, I was less worried about accessing deals and more about whether I am doing my best in terms of due diligence. On top of that, we had limited time. So you work longer hours, talk to more people via Zoom, and get more work done in less time to get to a similar outcome,” Yalamarthi said.
With more than 20 percent of Indians fully vaccinated, investors are traveling more now because no matter how much they try, it is impossible to create a physical environment on video calls, or to have the same closeness, or observe non-verbal cues, which help them judge a person and build a relationship.
Yalamarthi developed his own routine during the pandemic: before he finalised an investment, he had a virtual coffee or dinner with the entrepreneur and a 60-90-minute informal session to “chat and exchange thoughts about life, motivations, and other things beyond the business to get to know them better and them me.”
But even these meetings had to be scheduled, a calendar invite sent, and finally, it was two people on a laptop screen. It was a decent substitute, but not a replacement for an in-person catchup and the resulting camaraderie.
Before the pandemic struck, it was traditional for some VC firms to take a founder out for dinner and drinks before closing an investment in an attempt to bond and know them better. Now, these customs are back.
Even so, investors are acutely aware of the possibility of a third wave in India and don’t want to be blindsided again. Many of them have seen relatives in other countries infected by the most recent wave there, and are still staying vigilant, having suffered previously.
Datta of Nexus still meets people in person only if he deems it essential and ensures they sit in an open area, not in an enclosed or air-conditioned room, where a virus can potentially spread faster.
“I still think everyone should worry about a third wave. We’ve seen evidence of it in the US and the UK. There’s a very good chance of it, so you have to maintain all precautions,” he said.
GGV’s Yalamarthi, too, is relatively cautious.
“As I’m moving between countries, I’m taking an RT-PCR test and wearing a mask even if the broader public isn’t locally. It is more of an intrinsic thing than a rational thing, given the high vaccination rates and low infection rates. I just want to be doubly sure,” he said.
If there is a third wave, investors will jump back to Zoom, whether they like it or not.
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