The Technology behind Good Capital (Part 4)
This is the final part of a multi-part series that we are sharing with our LPs through our newsletter, India Technology Review (ITR)
In our last issue, we unbundled our fundraising process, showing you the robust system that tracks our progress with our LPs and potential LPs.
Our investment strategy extends beyond our flagship fund; we've built a co-investment platform that allows us to capitalize on opportunities that may fall outside our core fund's mandate or exceed our typical check size. This approach not only enhances our deal-making flexibility but also offers our LPs additional avenues for direct exposure to promising startups.
Today, we'll dive into how we leverage technology to streamline our co-investment and SPV processes, ensuring we can act swiftly and decisively when opportunities arise.
When Co-Investments Come into Play
Our co-investment strategy is triggered in several scenarios:
When a deal exceeds our fund's typical check size/capacity
Follow-on rounds in our portfolio companies
To bring in strategic investors or domain experts
For opportunities that don't fit our core fund focus but show significant potential
To support our Bharat Founders Fund (BFF) initiative
Creating the “Hit List"
The beginning of our co-investment process is the creation of a targeted "hit list" of potential investors. We've developed a semi-automated system that allows us to quickly identify and shortlist the most relevant investors from our extensive network.
Our process leverages Airtable's automation features:
We start with a master investor list in Airtable, categorized by various attributes like sector focus, stage preference, and past engagement.
For each co-investment opportunity, we create a new Google Sheet that serves as our working hit list.
We've set up an Airtable automation that populates this Google Sheet based on our shortlisting criteria.
Our team then goes through various filtered views in Airtable (e.g., "BFF Partners", "LPs in Fund I", "All Co-investors") and checks off relevant investors.
As investors are checked off, their details are automatically pushed to the Google Sheet hit list
This process allows us to rapidly create a tailored list of potential co-investors, ensuring we're targeting the right audience for each opportunity.
How do we market these opportunities?
Once we have our hit list, we move to the marketing phase. We've developed a tiered approach to SPV Marketing, tailoring our efforts based on the deal size and complexity. They’re quite descriptively named:
Level 1: "Single Scoop"
For smaller (<$100k) or late-stage SPVs, we keep it simple:
1-pager by Good Capital
Deck from the founder
Optional group investor call or founder pitch
Level 2: "Double Scoop"
For medium-sized deals ($150k - $800k):
1-pager by Good Capital
Deck from the founder
10-15 minute Loom presentation by the founder
Optional internal investment memo for trusted investors
Group and individual calls as needed
Level 3: "Sundae"
For large deals (>$1mn):
Detailed investment analysis by Good Capital
Comprehensive founder deck and Loom presentation
Multiple group and individual discussions
This tiered approach allows us to scale our efforts appropriately, ensuring we're providing the right level of information and engagement for each opportunity.
Streamlined Communication
To efficiently reach out to our shortlisted investors, we've perfected a mail merge process that allows for personalized, bulk communication:
We draft the email content in a standardized template, using placeholders for personalization.
Our target hit list which resides on google sheets is set up with all necessary fields for personalization (e.g., first name, specific interests).
We use Yet Another Mail Merge (YAMM) to send personalized emails to our entire hit list with a single click.
We input these updates in our hit list as responses come in, allowing us to track interest and follow up effectively.
This process ensures that we can quickly reach out to a large number of potential co-investors while maintaining a personal touch.
Managing Investor Responses and SPV Formation
As responses come in, our system automatically updates the status and commitment amounts in the hit list. This real-time tracking allows us to gauge interest quickly and make decisions on SPV formation.
Once we have sufficient interest, we move to the SPV formation phase. Our operations team has a standardized Asana checklist that guides them through the process, ensuring all legal and compliance aspects are covered.
Ongoing Investor Relations: The Annual Update
Our commitment to our co-investors doesn't end with the SPV formation. We've set up an annual update process that keeps investors informed about their investments:
Our finance team prepares SPV operational updates, including valuation changes and financial metrics.
The capital relationship managers create business updates by interacting with portfolio companies.
We synthesize this information into a concise, insightful annual review.
Using our mail merge system, we send personalized updates to each investor, with magic links to their investor dashboard.
This systematic approach to investor relations ensures that our co-investors remain engaged and informed, strengthening our relationships and potentially leading to future co-investment opportunities.
At Good Capital, we believe that a robust co-investment strategy, powered by efficient processes and cutting-edge technology, is key to maximizing value for both our portfolio companies and our investor network. By continuously innovating in this space, we're not just facilitating investments – we're building a dynamic, engaged community of investors and entrepreneurs, all working together to shape the future of the Indian startup ecosystem.
