A Conversation with SixThirty Managing Partner Atul Kamra
Last Friday I had the pleasure of sitting down with SixThirty Global FinTech Fund's Managing Partner Atul Kamra. The conversation was great and covered a variety of topics, but two main points stood out to me that I thought were worth sharing.
1. The best form of capital for a startup is customer revenue. This one is a no-brainer but I think it is extremely important to reiterate. Founders can so easily get too caught up in the media headlines of a big raise or "needing" capital to get to the next level when in reality, outside of tech, very few businesses are able to secure such large investments with so little revenue.
Atul's advice here is also important as I cannot emphasize enough that you are building a business first and a product second. The product is the conduit or tool by which you carry out the business in the most effective manner possible. Customer revenue is also the gift that keeps on giving. It is easier acquire more customers once you already ave customers, and the feedback from your current customers is vital in determining the next steps for your business.
2. The cost of delivery for Asian and African based startups is much lower than it is for American based companies. Right now Asian and African startups often copy the ideas of American tech companies and distribute within their own markets, but in our conversation Atul predicted that American startups will begin to copy the lower cost of delivery model that allows global startups to scale with considerably less capital. This allows startups from these regions to scale and become profitable businesses despite less easy access to capital from investors, businesses, and consumers.
U.S. based startups could learn much from this on a number of levels. In the states, entrepreneurs and companies are leaving the Bay Area for lower cost cities as talent is not confined to a particular locale and in today's world you can sell to customers from anywhere.
Again - at the end of the day early-stage tech companies "startups" are still businesses and margins are still king. I'm not suggesting that founders substitute quality for price but I definitely see many founders making the mistake of spending too much too early. Maybe rather than building that MVP you should get a few LOI's in place that you can take back to your network and use as a leverage point for capital. Maybe it isn't imperative that you fly to that conference or pitch event because your company is still pre-revenue. You'll still be able to catch the eye of the right investor when your company is ready.