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Growing up in India, Afore Capital Founding Partner Gaurav Jain was focused on becoming an engineer, and it was only when he moved to Canada for high school and eventually landed in the University of Waterloo was he first exposed to the idea of startups.
It would be at the University of Waterloo where Gaurav would start his first company before deciding to leave to join Google as the first product manager in the Android team. After seeing Android grow from 1 million users to 1 million users joining everyday, Gaurav would go on to Harvard Business School before joining the world of VC through Founder Collective. Today, Gaurav focuses on investing pre-seed founders through Afore Capital, a firm he started with Anamitra Banerji, who was previously a partner at Foundation Capital.
Afore Capital Co-Founders Gaurav Jain and Anamitra Banerji
Starting A Company While In University
Through Waterloo’s co-op program, Gaurav got the chance to intern at Blackberry as a software engineer. This early exposure to smartphones would be the catalyst for Guarav and his friends to start their first company: Polar, which had the goal of making rich media content look a lot better and have a better user experience on smart phones. The team ended up raising a 600k pre-seed round and this was Gaurav’s first exposure to the world of venture.
He shared, “We made a lot of mistakes and learned a lot and our VCs were very helpful in being a guidepost and iterating the product and that to me was really solidified what VCs could do for first time founders and that really helped me understand the role of the VC and the fact that they took a chance on us early on.”
While Polar would go on to hire over 50 employees, Gaurav decided to leave after the company raised their Series A to become the first product manager for the Android team. He shared, “I saw the company grow from a million people to 1 million downloads a day and 80% of market share.”
Value of Business School In Moving Into VC
After Android, Gaurav decided to go to Harvard Business School (HBS) to take time to think about what he wanted to do next. This would give Gaurav the opportunity to test the waters and experiment whether or not he enjoyed working in VC. He shared, “I ran an experiment working in Founder Collective (FC) part time and I was intrigued by venture and had this hypothesis testing phase. I really enjoyed it and felt like that was my calling and went from there.”
He added, “I think the value I got out of business school was very different from what I expected. For me, the biggest value, I had seen the movie a little bit: I started a company and worked at Android but it was a great inflection point to think about what is next for me. Frankly if I didn’t go to business school, I might have just stayed in Google. Business school was a great platform to meet new people; folks I work with in Founder Collective I met in HBS. I learned a lot from them. I also invested in two of my classmates where we led the seed round and Sequoia led their series A. Frankly, just shifting gears and having time to think and reflect outside of the day to day was very powerful for me.”
Going From Founders Collective to Afore Capital
Gaurav met his co-founder for Afore Capital and partner Anamitra in early 2012 during a dinner hosted by one of the General Partners of Foundation Capital where Anamitra was an EIR at that time after being the first product manager at Twitter.
Gaurav shared, “I was helping Foundation scout for interesting startups, and Anamitra and I hit it off right away because we were the only two product guys and non VCs in the sea of VCs in that dinner. We stayed in touch, and we ended up collaborating in a bunch of deals. One thing led to the other and in late 2015, we saw the opportunity to start a pre-seed fund since seed rounds had changed meaningfully in their composition.”
Specifically, Gaurav and Anamitra saw that the typical seed rounds had ballooned to $2M-$2.5M and very often seed investors would tell founders to do an angel and family friends round first. This was the catalyst for Gaurav and Anamitra to get together and start Afore Capital. He added, “We went to our partners, got their blessing and went off to start Afore Capital fulltime in the summer of 2016. For us it was the opportunity to build a brand and focus on the category while still getting involved in company creation.”
Evaluating Pre-Seed Companies
In terms of what Gaurav and his partner looks for in evaluating pre-seed companies, there isn’t really a lot of data to use since there’s not much traction or revenue, so the two things they try to understand and focus on are: the product and the distribution strategy.
Gaurav expounded, “The product doesn’t mean the actual product but is it a non obvious product and can the founders get to product market fit in 9-12 months. We’re very much trying to understand the short term. We find the best companies end up doing something fairly different from what they set up to do. For AirBnb, their first incarnation was a bed and breakfast marketplace but now they have large aspirations to own travel. What we really want to understand is what is the non obvious insight and does the market care about this.”
Then in terms of distribution, Gaurav looks back at what went wrong when he was at Nexus 1 and why he believes distribution is extremely important for early stage founders. He shared, “I learned this the hard way from Nexus 1. While Nexus 1 was a pretty good phone, the distribution did not work. We tried to push the product in google.com/phone and it was not sold in retail stores. Thankfully, the Android product was good and Samsung went all in. Nexus would have been a failed startup if it weren’t for Android. As a startup investor now, distribution is so important so we try to understand what their insights are when it comes to distribution.”
Thoughts On The Canadian Ecosystem
For a successful startup ecosystem, Gaurav believes you need 3 things: talent, early stage risk capital and experienced mentors.
Canada has always had the talent. Gaurav shared, “When I was in waterloo, there were tons of great engineers, but most go to Facebook and Google. The talent was there but the other two things were missing. But in the last 10 years, I’ve seen a surge of risk capital either local to Canada or from the US. We’re comfortable investing very early stage in Canada now. However, the third piece is still missing, there are few pockets and few folks who are starting to give back whether the founders of Wattpad and Kik.”
While the ecosystem is still nascent, Gaurav believes that in the next 5 years, the startup ecosystem in Canada will scale exponentially. He added, “I’m very bullish about Canada. Canada has the same time zone, same language, very easy to go back and forth, the government is a lot more welcoming in integrating immigrant founders.”
Advice To Aspiring Founders
Gaurav is a big believer in the importance of focusing on the short term when starting out. He shared, “You really have to focus on the short term when you’re starting something. I think it’s easy to get caught up in the romantic notion that this could be the long term. But its important to go 0 to 1. What can I demonstrate in the short term to show that there’s traction here?”
He also cautions that now that we’re in a bull market, people shouldn’t be over raising and doing a startup just for the financial reasons. He adds, “we like this self selection of founders that want to raise a small round to get it off the ground. They have this innate passion and desire to solve a problem and build a product and a company. The financial benefit should be the side effect and not the main reason because tis risk adjusted in a very poor way. You’re better off going to Google.”
Finally, for aspiring founders, Gaurav’s advice to them is simple and straightforward, “Don’t overthink. I really genuinely believe that you connect the dots looking forward and if you’re in the moment excited about it, just do it and if it doesn’t work out, the beauty in America is it gives you second and third chances and failure is a badge of honor. If it doesn’t work out, you can try again. For most people, it goes in a bunch of zigzags and its important in the short term that you’re working on something you’re really passionate about and that’s sort of the high level advice I would give.”
Learn more about Afore Capital here.
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About the Author: David is a senior at Penn studying Cognitive Science and Computer Science, originally from the Philippines. At Penn, he’s heavily involved in the startup scene as an investment partner at Dorm Room Fund. Currently, he’s working on SkillStackers, the easiest way to scale work using a virtual workforce. Previously, he started a nonprofit organization called YouthHack which has gone on to scale to do programs in over 8 countries in the last 3 years. David enjoys meeting new people and sharing the stories of exceptional entrepreneurs!