Faisal Aftab is the Co-Founder of Zayn Capital, a venture capital fund with a primary focus on seed-stage ventures in Pakistan. Faisal is also the Founder of BitRate Digital Assets, a Crypto Fund designed to give exposure to Institutional Investors & Family Offices. His notable investment calls in Pakistan include some of the top names in the regional startup ecosystem: GrocerApp, Bazaar-tech, Laam.pk, NayaPay, Tazah, KTrade, Truck It In, Savyour, Krave Mart, Bookme.pk, PostEX, Roomy.pk, Scribe Audio, Bagallery.com, Trellis Housing Finance, MandiExpress.pk and KnowledgePlatform.com. Previously, Faisal was a founding team member of Lakson Venture Capital (Lakson VC); he built the fund from the ground up and led the team as Managing Partner & Executive Director. As an early Bitcoin and Ethereum investor, Faisal has a deep understanding of global macros and blockchain’s implications on the digital economy. Faisal has an MBA from Oxford University, joint Bachelor’s and Master’s degrees from Michigan State University USA. He has also been an investor in Hedge Funds, Venture Capital Funds and an active Angel Investor for over 15 years. Faisal is a limited partner of the Silicon Valley-based Venture Capital Fund 500 Startups. Below are the edited excerpts from Manager Innovation’s recent conversation with him.
Yaruq Nadeem: How did you begin your journey as an investor? Was it something you always wanted to do?
Faisal Aftab: I initially started working with management consulting in the New York. My exposure to the world of finance navigated me to starting my own business. Once that I had jumped into the bandwagon, there indeed were a lot of options and obviously once that you get into tech, it is a whole new world. I learnt that the next disruption was going to be the change of value disruption, like in the form of Bitcoins. I started investing and realized that a merger of money and technology would be the future, so leveraging the both of them, I jumped into this field. I think anyone can be an investor, it just involves a heart and experience. It’s not rocket science.
Yaruq Nadeem: How should a startup make this decision of how long to bootstrap & when and how much funding they should raise? What is the criteria you suggest?
Faisal Aftab: I believe if the product requires a significant amount of funding from the very start, then you founders should take this into account from the very first day. Getting friends and family to support your project and raise a minuscule amount is fine is the way to go. Here is a small tip: you should raise enough funding that supports you well and cover your basic personal expenditure.
Personally, I have invested in companies that weren’t just about the idea and the team as a whole, but also about individuals who knew well how to carry themselves forward, demonstrating all of it as perfectly as possible. The execution that you think through defines your worth, giving the confidence to investors to invest into you. In order to make an impact, it’s not just about having a good idea but executing that idea vision with precision and dedication matters a lot.
Yaruq Nadeem: How do you define a perfect founding team? What sort of characteristics are you looking for?
Faisal Aftab: I think the best team is one the compliments and understands one another. In order for a startup to scale or establish, the team needs to have someone who understands how technology works and can troubleshoot any problem that arises with it – especially those pesky computer glitches!
However, it is imperative to have someone on the commercial side as well because sometimes the tech person has a limited understanding of vertical the startup is operating in. You also need someone with good business management skills, in short, amalgamation of 2-3 people would do. When choosing this combination, people from recognizable backgrounds make a far better option. But again, the combination also depends from idea to idea and business to business.
Yaruq Nadeem: Is there a pre-defined minimum growth rate for the startup to be succesful?
Faisal Aftab: In a country like Pakistan, it is very difficult to get funded if you have a growth rate in between 10 to 20 percent. It really comes down to your idea and to some extent the market in the home country of the startup. Once you begin getting funded, the growth rate of your startup obviously begins increasing. In my opinion, there is no such thing as a magic number really. In case you have a startup that has a low growth rate in Pakistan, your startup is likely to get funded if it has high growth potential.
Yaruq Nadeem: What sort of working, research, documents and preparation are you expecting from a startup when they approach you for investment?
Faisal Aftab: We tend to focus more on the team, especially when in the early stage. I actually don’t even look at the documentation before I get to personally meet the team. When approaching someone with an idea, make sure you have thoroughly thought it through, because you’re asking for money. Every time we ask repeated questions, we just are testing the founders as to how well they’ve come prepared for it.
When it comes to starting a business or startup, I always suggest founders to do their research and make sure that the industry in which they are interested in falls within appropriate limits before going into full swing with development because chances of failure are high due to unforeseen circumstances such as competition from the already established companies.
Yaruq Nadeem: How can startups, especially those which are not part of any support network, approach investors?
Faisal Aftab: It all is about your network, you approached me through one as well. A warm interaction always helps, through a mutual. It not is about being a junior or a senior, connections of any sort tend to work out. The best mechanism is finding someone who is connected to the investor and help support your introduction. While applying for a job, you are more likely to get selected for it through a connection than by applying through the site, which pretty much supports what I am trying to convey.
Yaruq Nadeem: How can aspiring entrepreneurs especially students learn more about fundraising best practices?
Faisal Aftab: Apart from Y Combinator, the aspiring entrepreneurs should Google it and search it out. You may find about 50 videos and all shall be explained well to you. Use the word ‘startups’, ‘early stage funding’ and educate yourself as that is the best capability one can have. The better you teach yourself, the more are you capable in solving your problems. When you intend to begin a startup, you need to change your internal wiring. Do not wait for people to answer you, instead go and help yourself find the answer.
Yaruq Nadeem: How many interactions does Zayn Capital have with the founders before making the investment?
Faisal Aftab: The general basis is that we have an initial screening for the startups. Many companies fear that their ideas might get leaked, but if you think at the fact that copying someone’s idea and presenting it is a lot more difficult. If you truly believe in your idea, there actually is nothing that can hinder your process of getting funded. Quite honestly, you do get an idea as to whether you are to invest or not in the first 20 minutes. It takes about 10 questions for us to figure out whether the company has a good enough grip on its idea or not. After that, the time is just used to validate the decision made. Once the first meeting has ended, we do have follow-up sessions as well, alongside doing our own research work as well.
Yaruq Nadeem: In many of the startup deals, we see investors and even Angel investors investing together. So what goes at the backend in terms of coordination and synergy between the investors when considering any deal?
Faisal Aftab: As mentioned earlier, it all is about the value disruption that brings about the exercising of money and hence seamless communication. Investors do invest where they see a matching thesis to theirs that eases the process to a large extent. Sometimes investors are students as well, like you have in your cohorts. It entirely is a funnel with investors connected to other investors and so on, with the funnel itself being quite narrow. It is all though your interaction with people that makes it a lot easier and a way you present yourself, so that investors are pretty comfortable relying onto you. It isn’t all science, but instead smart work.
Yaruq Nadeem: How do you manage your portfolio startups in terms of giving them time? How often do you interact with each startup?
Faisal Aftab: It just is like being friends with the founders. We stay in touch through Whatsapp and discussions are done easily any time. The focus really is like that on children. Each startup has its own problem, so working on it well and fairly is what the deal is. It all comes down to who needs our help and when. Informal meetings, texts, ongoing conversations keeps it going. You don’t need to spend an equal amount of time on all startups, but as to how and who needs you when and where. One individual at times is not easy to deal with, that is where the trickier part begins.
Yaruq Nadeem: What expectations do you have form startups in terms of updating you or involving you in the decision making process?
Faisal Aftab: I think if I am trusting someone with something, they will do the right thing, so instructing them to do so and so is not really my style of working. My system of operation basically is working with them as a friend, but if founders do not sit right with me since the very beginning, the element of trust does really go missing then. Integrity is what I look for foremost in the founder, before trusting him with an investment. Therefore, my standard of working is if someone really comes up to my requirements, I then give them an open hand with the capital.
Yaruq Nadeem: What 4 factors are you looking for in a startup founder?
- People Skills
Yaruq Nadeem: What is the future of startup ecosystem in Pakistan? Do you see any unicorns coming up soon?
Faisal Aftab: For the next 10 years, my point of view in regards to Pakistan is very optimistic. By 2030, the estimated revenue in the market through startups shall be around 50 billion dollars. Startups like Foodpanda and Daraz are already unicorns in Pakistan. Careem although not entirely Pakistani but co-founded by a Pakistani, is also another example of a unicorn. In my opinion, ecommerce startups like Bazaar are on track to become the next unicorns. Therefore, I’m extremely hopeful about the future, given how the market is steadily increasing with the passing day. Once things get going, there is a lot of scope actually.
Yaruq Nadeem: What would you say are the 2 most important takeaways for the audience from today’s discussion?
Faisal Aftab:The most important gift you’re given is free will, try thinking out of the box and be independent. You have the potential to do so why restrict the ability to so. Don’t ever let someone else hijack your thought process.
The second takeaway would be to strive to achieve all that you wish to and never let your limitations or background in life, get the most of you. Just think positive and know that you can do it and I think a lot of people in the tech space today, are proving so.
Everyone is waiting for people to solve their problem instead of themselves working on it. Keep your mind open and you’re good to go!