(MANAGING DIRECTOR of DEV VC, he’s an Expert in VC Investments and Startups with focus on Technology and Entertainment)
How a VC Company Raises Capital for its Investments? What is the Usual Structure and Positions of a VC Company? MANAGING DIRECTOR vs. VENTURE PARTNER in a VC company?
How new Startups can Pitch Dev. to Raise Capital? How to Value Your Startup? What are the challenges to expand the VC and startup culture in the Middle East?
With English and Arabic Subtitle
Swatick Majumdar is a MANAGING DIRECTOR of DEV. Previously he was with Chatsworth Securities, a Greenwich, CT based boutique investment bank. At Chatsworth Mr. Majumdar focused his investment banking activities on the US-India corridor where he helped execute numerous successful financings in various sectors including Technology, Media and Telecommunications, Renewable Energy, Biotechnology and Medical Devices.
Mr. Majumdar has also held key positions at Janney Montgomery Scott, LLC and Josephthal & Co. He was also an entrepreneur and founder of Riverhead Sports Management, a hospitality and entertainment company. Swatick has been sought out as a speaker, a panelist and a moderator at industry events in the US, India and the United Arab Emirates.
Mr. Majumdar received his Masters Degree in Applied Economics from University of Lucknow, India and a Masters Degree in Computer and MANAGEMENT INFORMATION SYSTEMS from University of Central Texas (A&M Central Campus). He has been active as an advisor in the start-up evolution of companies and brings a wealth of global relationships, expertise and operating history to the team at DEV.
Swatick is a trained volunteer at the American Red Cross and represents the Disaster Action Team (DAT) of Long Island. He also volunteers his time in India for causes related to children. Swatick is active in local politics and supports issues related to economy and education. He is an avid sportsman and was a Marshall at the Barclay’s PGA Golf tournament.
DEV fuels the companies that transform media and entertainment. Our portfolio of investments and advisory clients span music, TV/film, games, publishing and social media.
We INVEST seed stage capital in startups and early stage capital in companies that are on a roll. Here are some of the things we look for:
Your business should represent a transformative trend in media and entertainment, and the product you are selling should fill a genuine gap or need in the marketplace.
You should be able to validate your business concept and identify several natural exit opportunities.
Key developmental milestones should be achievable at low cost and your product should have the potential to reach significant scale.
Your management team should have prior operating experience and include thought leaders in their field.
You should have a strong presence in New York City and our team should be able to add value.
We offer consulting and advisory services by a team with extensive experience in building companies and monetizing digital media. Our expertise includes:
Strategic business development.
Content licensing and rights negotiation.
Introductions to key executives in media and entertainment.
Business plan and INVESTMENT presentation development.
INVESTMENT and fundraising strategy.
DEV has established a global profile with offices in New York and Seoul. DEV Korea, located in the heart of Seoul’s vibrant Gangnam district, brings the knowledge and experience to build a new venture ecosystem. Korea is on the cusp of an explosion in tech and new media startups and DEV Korea is uniquely positioned to provide the right blend of investment and guidance. DEV provides a platform for Korean ventures seeking US distribution and US startups that are ideal candidates to enter the Korean market. We are committed to helping local brands become strong global brands.
The DEV Korea Discovery Fund is building an extensive portfolio of the most promising early stage Korean companies. Groups of ten companies are periodically selected to participate in an intensive acceleration program that is split between Seoul and New York City.
The DEV Accelerator Fund is INVESTING in hundreds of early stage companies by working through established U.S. and global accelerator programs.
Websites & Social Media Links
- How did you start in the investment world and what’s your background?
- How a VC company raises capital for its investments?
- What is the usual structure and positions of a VC company?
- What’s the investment sentiment in the US today?
- MANAGING DIRECTOR vs. VENTURE PARTNER in a VC company?
- How the management fee for operating the fund and the carried interest on investments for a VC company works, in other words how a VC company MAKES MONEY?
- How DEV accelerator works and what makes it different from other accelerators?
- How much is the range of your investment per startup?
- Which kind of startups you are looking for?
- How new startups can pitch you?
- Do you still need full projections studies or you accept sometimes some realistic studies based on one page excel sheet file?
- How do you help the startups that you invest in or advice to exit?
- Based on what you value a new startup with no sales?
- How much would you value a company with $100000 sales per year and 20% profit? And with a 10% growth per year, in operations for 3 years?
- Form your experience; your successes were mainly related to the great idea of the startup or the entrepreneur?
- What are your most successful startups that you invested in and why you think they are very successful?
- Why you decided to open a branch in Korea specifically?
- Why currently you are thinking of expanding your presence to the Middle East?
- What are the challenges to expand the VC and startup culture in the Middle East?
- Do you think that the tech startup world is a bubble?
- What’s your advice for new entrepreneurs to be able to raise capital successfully?
- Tell us more about your other projects that you are currently working on or planning for the future?
- What’s your daily life and work routine looks like?
- What are your other hobbies?
- Who are your top 3 mentors?
- What’s the biggest failure moment in your life and what did you learn from it?
- What are the Top 3 apps that you use on your smart phone?
- What’s the best advice that you ever RECEIVED?
- If you have the chance, what would you say to advice your younger self?
- What are your top 3 favorite BOOKS?
- What makes you really happy?
- How people can contact you?
Ahmed Al Kiremli: Hi everyone this is Ahmed Al Kiremli and welcome to Be Efficient Tv. The mission of this web TV show is to boost the efficiency of your business and life through tips and tricks from leading experts and today I have with me Swatick Majumdar, he is the managing director of Dev VC, he is an expert in investments and startups with focus on entertainment and technology, welcome to the show Swatick.
Swatick Majundar: Thank you, thank you very much Ahmed, great to be here.
Ahmed Al Kiremli: A pleasure. So Dev is what?
Swatick Majundar: It stands for digital entertainment ventures, it's a US-based early-stage seed stage investment fund that invests primarily in the digital media space.
Ahmed Al Kiremli: How did you start in the investment world and what is your background before?
Swatick Majundar: Let's start with the background first and see how that evolves, I'm originally from India where I did my Masters in applied economics and started working and operating logistics freight company which I manage successfully for quite a few years and then came to the US to pursue my Masters in science, in computer science, systems and business strategy and thereafter just landed on Wall Street in sales and trading and one thing led to the other, I started investing in startup companies in the biotech industry first and then later in tech companies and then underwrote many of them, exited via IPOs, public offerings, went and worked on the advisory side for mainly cross-border transactions between India and the US and then finally decided to set up my own fund to invest in startups, because New York and started showing compelling reasons why start up funds were needed and at that time I met one of my current partners who asked me to join the fund and I jumped at the opportunity.
Ahmed Al Kiremli: Which is the same one?
Swatick Majundar: That is correct, Dev.
Ahmed Al Kiremli: And do you still invest in the stock market or do you like investing in startups more because it's both two totally different worlds?
Swatick Majundar: Yes well I invest personally in the stock market but Dev, that's not the mandate for Dev, it is purely a fund to invest in startups but most of my investments personal investments now are in startups as well.
Ahmed Al Kiremli: When you invest in the stock market are you a speculator or do you invest for long-term and how you compare it with business investments because with business you have more control, you can call the CEO of the company and make some decisions while in the stock market regardless how much you know about it still you are not in full control.
Swatick Majundar: It depends which stage of life you are in, the state of life I am in I don't really speculate too much, earlier on when I was younger speculation was the name of the game, now you are right startup is something that I focus on as an individual as well as fund because of the creative process as well as the control factor that you spoke about.
Ahmed Al Kiremli: How does a VC company raise capital for investments? How does it work? How do you raise capital is a VC company?
Swatick Majundar: They usually seek out people in their circle of friends first, expand their Rolodex thereafter to other networks and it just grows from there, fund raising is an exercise which I call of three Ps, process, patience and persistence. You have to be tenacious, you have to be a person or you have to be a group but stands by the principal, by the course of the action as determined you know and that is the most difficult part of the VC exercise is to fund raise but once you prove yourself and the subsequent fund and the fundraising process becomes much easier.
Ahmed Al Kiremli: Usually the VC partners they invest project by project or do you first race a certain amount of capital from each one of the partners and then you start investing in different startups how usually does it work or does it work both ways?
Swatick Majundar: You can work at both ways but primarily a VC would raise a pool of money and invest based on certain principles, based on certain strategies, based on certain mandates, you just don't raise capital and invest all over the place, just the very fact that you are a venture capitalist which means you are taking the maximum out of risk because of taking the maximum amount of risk you need to mitigate some of that risk in the way you do that is follow a very strict mandate, follow a very strict strategy as well as principle.
Ahmed Al Kiremli: The strategy means focusing on let's say certain types of companies or let's say…
Swatick Majundar: It means a whole lot of things, broadly speaking it could mean industry segment, geographical segment, size, stage of investments, certain entrepreneurs that you fund, certain ones you don't fund, those are some of the strategies to look at plus you also look at strategy from the industry point of view as to is that company or is the entrepreneur trying to disrupt a certain industry, does that industry need disruption, those are the kind of strategies we look at.
Ahmed Al Kiremli: What is your focus now as Dev?
Swatick Majundar: Actually earlier on you mentioned that you introduced me as a managing partner and I just wanted to update that, I just transitioned last week from managing director of digital entertainment ventures to a venture partner, what that really means is it's essentially the role you play within the firm as a full-time partner or managing director you undertake daily operation duties involving administrative etc. and you spend 100% of your working hour on projects related to the firm whereas as a venture partner it allows you the luxury to work outside the scope of the fund and therefore we decided on transition based on the path that Dev…
Ahmed Al Kiremli: So the managing director means the one who is selecting the investments and works on them and the venture capital, the venture partner is the strategic person in selecting these things?
Swatick Majundar: Not necessarily, both would be strategic book could be making decisions and investments, investment is not made by one person, investment, the whole, the way the process works is a company comes to you, it could be anyone of the partners or within our group of the Board of Directors for investment advisors depending on who they are we put them in a bucket, yes, no, maybe and then bring it up to the next level where the partners look at this, do some diligence on it to see if there is a fit, if it fits within the mandate, if there is a need in their sense for that kind of a company and then moves it beyond that and if there is, if it's still yes it moves to the investment committee, they look at it and say yes it looks like a good idea but the investment committee and the board of advisors also our relationship maker so they might know somebody that would look at this company and say oh this is great, but this company built to a certain level it could be a great exit for a company or a great acquisition for another company, those are the different steps and I'm simplifying it but those, there's a lot of other steps that go in between but these are the simple layers that going to make the decision and then is the managing director and the full-time partners, they are the main, they are the managers of the fund and they are the ones that make the final decision.
Ahmed Al Kiremli: But from the title managing director looks like he is a guy who is not investing, like the partners like a venture partner looks like a guy who has invested in the pool of the VC from how I understand it. Can you clarify that?
Swatick Majundar: A managing director could be investing his own money, alongside or a managing director does have his own money in the fund as the early seed for the fund or might not it just depends, every fund is different but the venture partner plays a very similar role to the managing director, just simply doesn't actively participate in the daily workload. And he can work outside the scope of the fund.
Ahmed Al Kiremli: So he could be kind of a sleeping investor something like that?
Swatick Majundar: Absolutely.
Ahmed Al Kiremli: So he is a higher level than the managing director he is more as an investor then the manager?
Swatick Majundar: There are no hierarchies here to be very honest we don't see any hierarchical differences it's more the role you play.
Ahmed Al Kiremli: And both don't receive salaries and how to the other roles work like in the VC who receives a salary and who does not, if they don't receive a salary…
Swatick Majundar: You could receive a percentage of the company's income it just depends how the structure is made every fund is different they do it differently.
Ahmed Al Kiremli: There is no standard for that?
Swatick Majundar: There really is no standard.
Ahmed Al Kiremli: What other positions in the VC, like the main or standard positions that you find in most of the VCs?
Swatick Majundar: Standard positions you mean roles people play? Well the Board of Directors, the board of advisors really mentors, those are certain roles.
Ahmed Al Kiremli: And is there a marketing guy who goes and let's say finds companies or startups, how do you find your startups or just start up supply and you just filter the applications?
Swatick Majundar: Right, the way we do is we have a platform where the startups go and apply, it has certain metrics, certain questions they have to fulfill, they have to fill those and then that comes to us depending on how we feel about it we give it a yes or no, if it's a yes than one of the partners or somebody within the fund will make a call to the entrepreneur and then make, initiate a conversation to take it further. If it's a no, obviously nothing else happens however in the VC world most of the deal flows come through referrals so we get eight or 10 deals per day and there is no way we could look at all of those deals that one given day, some of those deals come with a whole business plan you know so we use a platform to kind of filter out those things so when we see things that come through referrals the referrals know what we are looking for, what would make us put a checkmark on the box so we kind of respond to that more efficiently than not so most of our deals to come through referrals and it continues doing that, don't forget as VCs we talk with all the other VCs as well, we talked with a lot of private equity people we talk with a lot of entrepreneurs we talked with a lot of, I said private equity we talked with a lot of attorneys the top with a lot of CPAs, accountants so they all know what we are looking for and a lot of those that just funnels into us.
Ahmed Al Kiremli: What is the difference between private equity and the VC?
Swatick Majundar: A VC by its very nature is high risk, a private equity doesn't need to be high risk, private equity could be money for restructuring or money for rollup or money for acquisition, and it would not invest in startups, they would not invest in early-stage companies whereas our DNA is to invest in early-stage companies or venture companies.
Ahmed Al Kiremli: How does the accelerator work and how much are you investing in the startups, how much do you take equity in exchange for the investments in the accelerator?
Swatick Majundar: Well the accelerator, the way the accelerator works is, it is a company or group of companies we, they apply to us, we look at… Most of the accelerator's work the same way the only difference, the technical or the percentages in the amount of work the partners put in for the mentors put in our different otherwise more or less they all follow the same formula which is the companies apply to them based on what they feel and it is not necessarily any segment it is sort of an industry that follows a broad industry, I doesn't have to be very good, they invite those companies which are at a concept stage really and the idea is to take that company from a concept stage with 2 or three founders or management people to a VP level which is a minimum viable product level very quickly within three months and the idea is to take it to that level to basically…
Ahmed Al Kiremli: Like mentor them and make them prepared, more prepared…
Swatick Majundar: Get them to the level where they are ready for key investments or ready for big investments.
Ahmed Al Kiremli: How many new startups can pitch you, does it still work like if they submit a simple Excel sheet or does it have to be a full business plan and a feasibility plan?
Swatick Majundar: None of that is needed, it's very simple, you have to submit one-page maximum two if you really have to but one-page executive summary which talks about your industry, talks about what are you disrupting, it talks about how you are disrupting it, it talks about how you were going to make money and it talks about who is on your team that's it.
Ahmed Al Kiremli: Is that both for VCs and the accelerator or you talking only about the accelerator?
Swatick Majundar: I'm talking about VCs, accelerators is even, accelerators is also more or less the same. That gives us a very clear understanding as to who you are, what industry you're going after, whether that industry is ready for disruption and if so, what kind of market it is going to address, we call it the total addressable market.
Ahmed Al Kiremli: But it has to be disruption thing or maybe someone has a business for a couple of years making some numbers and wants to submit to you like a projection for that and he is not disrupting anything he is just making money on a certain level and he wants you as a VC?
Swatick Majundar: That is not a VC investment that is more private equity investment.
Ahmed Al Kiremli: You don't accept such investments?
Swatick Majundar: No, we would not. Again, certain companies, there are different stages of investments in the VC world, you have early-stage, expansion stage, series ABC stage, D stage, you have the later stages, maybe a later stage what do it and build them up into a public offering in that sense however of VC by its very nature word only take where they are investment and their mandate supports it and the company that is making money and making a whole lot of money has never taken money and never taken investments would be more suitable for a private equity.
Ahmed Al Kiremli: What is the usual structure of a VC company?
Swatick Majundar: In general most of the VC companies in the developed world is GPL P structure which means a general partner and a limited partner structure, it could also be holding company as well I know in the UAE the user holding company structure but here we use a GPL P structure which means 80% of the profits go to the limited partners, 20% come to the general partners, general partners are the managers of the funds to make all the investment decisions and the limited partners by the very definition are limited in as investment partners of the fund.
Ahmed Al Kiremli: So the pool of the money gets 80% and the managerial team gets 20% of all the investments that you make?
Swatick Majundar: All the profits.
Ahmed Al Kiremli: All the profits, and the managing team will not share the loss? In case they are just only managers? They just take 20% of the profit?
Swatick Majundar: They take 20% of the profit, all the losses are borne by the limited partners they are the financial ventures, financial partners into the venture.
Ahmed Al Kiremli: What is the investment sentiment in the US today?
Swatick Majundar: Today, let's see 2014 was a fantastic year it was a banner year for venture capitalists I think we close 2014 with about $48 billion in investment capital, that was invested in about almost I would say 4400 companies all different stages, most of them were in the expansion stage and then came the early-stage and then the later stage and then most money was taken away from seed stage which I mean the least amount of money flowed into seed stage funding however first time funds or not first-time funds but first time funding by companies were the most received from the VCs and most of these were in the softer side, Internet specific side and you know a lot went into the media entertainment side. As a matter of fact media entertainment was almost 6,000,000,000 that went in.
Ahmed Al Kiremli: You work in your company as well as consult and advise to startups, how do you advise the startups to exit like you guys them to certain companies to buy them out whether it's the companies that you invest in or the people who come to you for advice, how do you advise them will teach them to make a plan to exit?
Swatick Majundar: We just don't advise and exit in that sense we invest and then we want to make sure that the investment is worth something there is a return to the investment and the return to investment could be a variety of ways, being a public offering, being acquired by somebody else or it could also be, I could also mean that it gets taken over not taken over but invested at a higher level from the level you invested in so you could exit at that level so as far as, those are the ways that we plan those exits as far as the companies are concerned we want to make sure that there is a natural fit for some sort of an exit, every fund that invests in a company is looking for eternal value so if I see a company at $10 and I say well this company, the next three years could be $100 we will value it at a certain point and billed the company from in terms of strategy in terms of product validation in terms of building relationships and take it, create a roadmap if you will to take it up that road.
Ahmed Al Kiremli: How do you value a company with no sales, how do you put the valuation for it in general?
Swatick Majundar: That is a venture capitalists forte so to speak unfortunately having said that I say that in tongue-in-cheek but it is not an exact science it is more art than science, if we look back to Internet 1.0 there were a lot of companies that were funded for millions of dollars based on a certain concept, I think Internet 2.0 has learned the hard lessons and today we do not want a concept or idea, ideas, the dozen we want to make sure that the management team has done it before or has, we really that the whole process we check the background we see their experience and everything else their educational background, what have they done before who have they worked with before, how many times they failed by the way a lot of entrepreneurs that come to us do fail or have failed in the past and we see that as a badge of honor, it's never a bad thing to fail, if you have failed and have not learned from the failure that is a bad thing, we always think an entrepreneur is tenacious, is very resilient, and they learn from their failures so we like supporting some of those entrepreneurs and we ask those very tough questions. So we base our investments on who the entrepreneur is, what market idea it is, how are they going to build that business and what market of the going to serve, those are some basic questions that lead us to a certain value number.
Ahmed Al Kiremli: Another valuation question how do you value a company with 100,000 annual sales and was 20% profit being there for three years with like 10% growth per year how do you value that?
Swatick Majundar: Right so let me answer that a little differently, value a company with $100,000 in sales is nothing, it's very small however that we take the sales number out but if the company is growing 20% profit and 10% growth the profit looks good but the growth does look very good for a new company we need more growth so every industry is different, depending on what industry you are talking about if you're talking about a software industry with that kind of growth you might get a 3X of your profit number whatever that is, if it's a manufacturing company you might get a little bit less because there are a lot of costs involved, today what happened with technology though is very little money can take you to a level where you know if the company is able to make money are not or can sell a product or not so without giving you sales numbers all I could say is the value depends on the industry, the value depends on what future growth they can have and what future numbers they can make, the growth factor is very important for a new company you should be growing at least 50% year-over-year, if not more.
Ahmed Al Kiremli: What is your success rate like every 10 companies that you invest in? How many succeed?
Swatick Majundar: The general rule of thumb is out of every 10 companies and this is a general rule of thumb for VCs, some do better in some do worse, the bigger one so far have been doing worse unfortunately and there are reasons for that however 20%, 2 companies out of 10 do well, they do really really well, that makes up for all the other a companies however out of the other eight, 4 fail, so we have four left out of the four, 2 do okay, they just kind of return your money and then 2 do above par, nothing significant above par so that's usually the kind of mix and again that changes it's not a hard and fast rule but that's usually how it over a period of time if you look at history, historical numbers do that.
Ahmed Al Kiremli: What are the most successful startups that you've invested in?
Swatick Majundar: The most successful startups, we're an early-stage fund so I don't think I'm qualified to say they are very successful, we've been around for two years, if you ask me this question in the next three years maybe I will have a better answer for you. Let me say this though, some of the companies that we've invested in have had another series of investments that has come in at a much higher valuation from where we invested so on paper we look very good but paper being paper, is not really the number we should go by, when you really exit is the number we should look at and out of the a companies that we invested in 2 years we had 2 exit so far, one has been significantly good which is 2 1/2 times and about 14 months, the other one didn't fare well but that's a general rule, trend anyway.
Ahmed Al Kiremli: From the US and then you expended to Korea you opened a bridge there why is that?
Swatick Majundar: It's not that we opened a branch there, it just so happened that we had a partnership, we had a relationship and Korea, one of my partners had a relationship and Korea and they were very close to the market sentiment, very close to what the government was looking to do in Korea and what the government was looking to do was looking to allocate a huge amount of money for startups so we took that opportunity and formed a joint venture with this partner and started looking at some of those opportunities, those opportunities basically opportunities that were supposed to fund Korean companies, innovative Korean companies to kind of build the next generation of companies, and Korea we know there are some very branded names such as Samsung and LG and Hyundai but there are tons and tons, Korea is very tech savvy, they have tons of companies out there, very smart people and has 90% broadband penetration, it just made sense for us to look at that market and I'm happy to report and the last one year we've invested almost 10 companies so this came about really the Korean thing really came about because of two things, one is people on the ground our partners on the ground there and the government pushed towards the startup ecosystem.
Ahmed Al Kiremli: Why you thinking to expand your presence to the Middle East?
Swatick Majundar: Now you come to the crux of the question yes I am very interested, I've been traveling to the Middle East since 96 really, however you know during the downturn I saw there was a lot of inner turmoil that went around, just not that area but a whole part of the world, the Middle East obviously get affected as well and once the market started coming back, once the sentiment start coming back I knew there was a market to be felt, there is an ecosystem there that needs further nurturing, there are entrepreneurs there with great ideas and very little audience to share it with, but I know the process already started their there are some locals, some family offices but much more is needed, especially from regions such as the West where we have good experience and we have market intelligence to mitigate some of startup risks so right now and having several conversations who are very curious with what we're bringing onto the table with our concepts and I'm having conversations with high net worth individuals as well because you know I really see there is a need from, there are accelerators in the Middle East, but a little different from how I would run one, they call them incubators, they are trying to incubate companies and that takes much longer than accelerators, we like accelerators better because within three months we know of the company is going to work or not, we invest a little bit more money get a good percent of the company so the company succeeds and we make very good returns and if they don't we have not lost too much money, the mantra of fail fast, fail cheap applies here.
Ahmed Al Kiremli: What do you think that VC companies coming to the region mainly for the ecosystem or because there is huge money here and high net worth people that they want to add them to the pool of their money or by the way they invest also in the Middle East?
Swatick Majundar: Actually both honestly, obviously there is an appetite in the Middle East, I'm not going to speak for why other people come there, I spent all of last year in the Middle East, I've traveled a maybe four or five times I've lost count now and I spent months talking with people, looking at what the realities are looking at what is needed and talking to entrepreneurs, they are the people who we are looking to fund, whether they have ideas whether they feel there is a platform that is needed and that is something that was really needed so I spent a whole year discovering the process in the Middle East.
Ahmed Al Kiremli: In Dubai or other cities, and what are the challenges that you have seen for the VC and entrepreneurships?
Swatick Majundar: I'll get to that let me just finish this thought really quick, like what I said there are processes that have started already, there isn't really any big VC their per se from a developed nation that is looking in the Middle East because there is no platform, there are no serious companies they can invest in, VCs with not just go to a place just for the sake of going to someplace because there is money, money doesn't make companies only, it's entrepreneurs who understand what the market needs, understand but the market needs to fill is what makes it so what I am, like I said I am not looking for what other people are looking to do there, my goal really is my goal is to set up a flag there with a one or 2 serious anchor investors that believe in a vision that understand how this is going to play out and I totally believe that once we get the ball rolling there and become visible and start branding ourselves we will not only attract other investors from the region but I strongly also believe that corporate VCs from the US will buy into the platform because right now there isn't anything so that's why I keep talking about building the ecosystem because until you build the ecosystem, entrepreneurs will not know what to do, they will not know where to go, we have accelerators there that are more incubators but they are more really a real estate play because the way the legal system is built there you have to have a license to do business in the only way you can have licenses if you are housed in one of these units but these units, in five for example they are in a process of learning and again supported by the government, just not providing real estate to the entrepreneurs but also providing certain knowledge-based classes to these entrepreneurs that is what the entrepreneurs need, how do I do this once I have reached a certain, I'm an engineer once I reach certain process in the engineering field how do I take this to be tested how do I take it to the market that is stuff that needs to be taught and delivered and as a venture capitalist we've done this day in and day out and I'm planning to build that platform there and bring it there. I'm sorry you asked about the other question I kind of redirected you.
Ahmed Al Kiremli: Yeah I wanted to ask if you had visited other parts of the Middle East or only Dubai and what are the challenges that you have seen for the ecosystem for the VCs for the entrepreneurs?
Swatick Majundar: Right, so I have traveled to Abu Dhabi, I have traveled to Sharjah, and Dubai right now, I'm coming next month I plan to go to Oman and hopefully to look at other regions as well maybe travel to Saudi as well, that all depends I would like to first create a hub rather than and by the way I had relationships in all of these different places and I would like to create a hub first in one place which is popular by or popularized by all these different regions, everybody from that region does come to Dubai so I would really create a hub their first and then expand elsewhere and I wanted that hub and spoke kind of model, one of the challenges I mean the VC asset classes just not understood in the Middle East the reason the money is still not well diversified, people are still investing in oil and gas and real estate, they understand that it's a touch and feel, it's a cultural thing and they understand that more than anybody else I'm from an Indian background, if you don't see something and can touch it then they don't think it's worth anything look at Facebook I mean can you touch and feel Facebook? It's worth $200 billion. So technology investment has happened but the underlying theories are still a mystery, hence those bridges need to be felt and I see it changing very quickly, the mindset has to change, the question of yes I will invest with someone other than my family member, those mindsets have to change, professional investments have to be more the underlying theme rather than just family investments.
Ahmed Al Kiremli: Don't you think like the Internet world is very overrated because it is very competitive like the failure rate in the Internet world is much much higher than investing in real estate and other stuff because even if you choose a niche you are still competing with the entire world instead of competing with a location or a mall or a neighbor so do you think that especially the tech startup world is going, is it a bubble basically?
Swatick Majundar: Don't we hear that everyday? It's difficult to say if it's in a bubble and then not being evasive I really mean it, the bubble really came once we had the Internet bubble 1.0 and as I've explained earlier 1.0 really happened because everything was concept, people really didn't understand what they were investing in, they were just investing because it sounded right, a lot of things have changed since then, now we understand more I would say we understand fully but we understand more than what we saw 10 or 15 years ago, the bigger difference however is these companies are making money, they are revenue-generating companies, look at Google, look at Facebook, look at twitter, you can argue that haywire the value so high, it's a demand and supply question rather than a bubble question but the difference is these companies are making money so they might be, I won't call it a bubble it might be a downturn but that is very healthy, anytime he gets overheated it cools down so without getting to bubble discussion which I think is maybe a 2 hour-long discussion I would say it's not really a bubble per se but I would probably concur with the sentiment that it's probably a little overheated at this point.
Ahmed Al Kiremli: In the new ecosystem, investing ecosystem of the Middle East what is your advice for the entrepreneurs in the Middle East to raise capital?
Swatick Majundar: To raise capital? You now build a product, build a product that is required that you feel there is a need for and when I say disruptive I don't want to use the term loosely because really you have to build a product that is required in the market don't build something that we don't need, look at some of the disruption that happened, get an idea from it, we've all heard of air BNB, we've all heard of Uber, we've heard of Facebook and WhatsApp, these are certain disruptions that have happened, so what I would advise is introspect into what you are building, make sure that it is a product or a service that is needed, once you feel that you sell that purpose then run with it, do not listen to anyone at that point, run with it because your passion is very difficult for an entrepreneurs passion to be replicated by an investor or anybody else for that matter so if you in your heart of hearts believe that it's going to be successful and you are filling those gaps go with it.
Ahmed Al Kiremli: So how is your daily life and work routine look like with your hobbies as well?
Swatick Majundar: Okay, no day looks the same, it's looking at what is happened while you are off-line or on radio silence while you are sleeping, there always seems to be breaking news in the tech world of the financial world than there are beings with portfolio companies, potential companies, a whole lot of diligence on macro and micro analysis on companies interacting with current and future investors, attending trade related events to network and learn more and more about new trends, offer opinions excuse me have discussions so it's a very people related work routine.
Ahmed Al Kiremli: Who are your top three mentors?
Swatick Majundar: Well, top three mentors I would say definitely it would be Warren Buffett and again, no order but Warren Buffett obviously for sustaining his investment thesis for so long, by taking a very simplistic approach to investment, not complicating it at all I would also consider Steve Jobs for being creative, a creative mind and that is what I was going to say, he provided to people what they really needed not what he thought they needed but what they really needed and without compromising quality so I would consider him a mentor as well and Elon Musk's visionary tenacity, he is doing Tesla, space station, solar city and now hyper we bought the same time, I can manage one company, he is managing four or five of these huge enterprises so absolutely mentors for me.
Ahmed Al Kiremli: What is the biggest failure moment in your life and what did you learn from it?
Swatick Majundar: There have been many failures but since we're on the topic of investments let me say, let me give it an investment related answer, the biggest obviously was making investments based on other people's beliefs and analysis and not spending enough time to kick the tires yourself, doing a lot of diligence, depending on other people's analysis to make investment decisions, that led to a lot of failures, now what I learned from it is I personally look at certain analyses, I kicked the tires if I have to on investments and then I depend upon a very strong support system that adheres to the same principles and values that I believe in.
Ahmed Al Kiremli: What are the top three apps that use the new smartphone?
Swatick Majundar: Top three?
Ahmed Al Kiremli: Apps.
Swatick Majundar: There are a lot, there are billion apps out there nowadays and if you asked me this question maybe three years from now I might have a different answer.
Ahmed Al Kiremli: Top three apps that you use on your smartphone?
Swatick Majundar: I would say LinkedIn for work-related, especially to connect with people, Skype for platforms such as what I'm doing now and then WhatsApp for my social interaction with folks I am socially connected to, LinkedIn Skype and WhatsApp.
Ahmed Al Kiremli: What is the best advice that you have ever received and another similar question but would you advise your younger self if you have a chance?
Swatick Majundar: But when I advise my younger self I would advise my younger self to focus more on a single plan and build that really well and save a lot of money, I think my mother and my late father would be happy by me saying that but that is really the truth I would focus more on certain way I have looked at opportunities.
Ahmed Al Kiremli: Top three favorite books?
Swatick Majundar: Top three favorite books, I love reading so I really feel anytime you're reading is time well spent so if you will allow me I would like to separate the top three reading into 2 categories, leisure reading and technical, knowledge-based reading. Actually I would bring that even further, so I'll just give you some very quick names, Catch-22 by Joseph Heller was a fabulous book, Godfather by Mario Puzo was a wonderful book, and love story what a combination was wonderful but that was such a fantastic moving book, the biography side, any personality really Warren Buffett I mentioned, Steve Jobs, Eric Clapton, great reading books and on knowledge, anything to do with investments, intelligent investment by Benjamin Graham or John Templeton, great reading stuff so I have a huge list it would be unfair fight is broken down to three.
Ahmed Al Kiremli: What are the habits that you are trying to develop to stay efficient?
Swatick Majundar: Well, time management as you know I came to your meeting a little late, I have a very difficult time saying no to people when they ask for meetings, very difficult time in counting them off when I know I am going over time and wasting time on conversations which really means nothing so I'm trying to focus more on time management and follow a certain agenda and know when I am wasting time when I should be using time to my advantage and benefit.
Ahmed Al Kiremli: So you struggle to say no to people?
Swatick Majundar: As human beings we all do, right? We feel hey they have come to us for advice or that come to us for certain questions, why turn them back but at times you have to kind of you know did your heels in the sand and say let me get to it later.
Ahmed Al Kiremli: What makes you really happy?
Swatick Majundar: What makes me happy, what makes me happy is I guess seeing my children at the end of the day, I have 2 young kids actually one is not that young, 17 and 13 that really makes me happy, we have a wonderful relationship and a really wonderful family, my wife and my 2 kids, spending a lot of time with them and the family person that really gives me, it really relaxes me so to speak, what else makes me happy, I'm in our stores person, I love playing golf, I love meeting people, having intelligent conversation with intelligent people those are things that recharges micelles.
Ahmed Al Kiremli: Last question how can people contact you and when are you opening an office in Dubai or can they just a plan your website?
Swatick Majundar: They can for now send me emails to my work ID which is email@example.com and that's digitalentertainmentventuresny.vc so they can send emails but I am planning to be there next month if you would like to coordinate and takes names down if they call you I would love to meet with them, all I'm trying to do is build up a pipeline, build up relationships with entrepreneurs, build up relationships with potential investors and build up the ecosystem because I really feel there is this niche that we could fill, we would love to be pioneers and settlers there we would like to do something for the region and there are a lot of groups, families, individuals hear from that part of the world that would love to do something but they don't know what to do, they are at times overstretched on the real estate, overstretched on the oil and gas projects they would love to do something else, they would love especially their second-generation their kids understand technology like nobody else they would love to partake in some of the ventures that are happening so I'm very excited to spend the next 2 years building this project and I'm looking to partner and help and get assisted by folks who are local on the ground there.
Ahmed Al Kiremli: Thank you so much Swatick, for this interview I really appreciate your time.
Swatick Majundar: Thank you, thank you very much Ahmed I hope I did answer most of your questions and you have a wonderful night I know it's a very late night for you right now.
Ahmed Al Kiremli: No worries, thank you so much, thanks everyone, be efficient and stay efficient and see you soon with another leading expert.Word Count: 7438