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In an interview with TechGraph, Devansh Lakhani – Director of Lakhani Financial Services said, “What I can tell you from working with multiple startups is that how cricketers are there in every gali of India, a startup is born in every gali in India daily.”
Here’s an excerpt:
TechGraph: Before, we start the interview. Could you let our audience know more about Lakhani Financial Services?
Devansh Lakhani: First of all thanks for inviting me for this interview. I am grateful to you and your team to get me to do this. So, Lakhani Financial Services (LFS) is a boutique Investment banking and an investment advisory firm based in Mumbai.
We specialize in assisting startups to raise funds from our network of investors which majorly comprise of Angel, HNI, and VC investors. We help startups from scratch to end and advise them on their whole fundraising journey. In fact, we just raised funds for 2 of our startups during Covid-19.
TechGraph: What makes Lakhani Financial Services, different from other platforms, who are already working in this sector?
Devansh Lakhani: That’s an interesting question purely for the fact that there are very few players in this market. Our strength lies in the fact that we understand our startups inside out before we pitch to any investors.
We don’t just take any pitch to any investor before we believe in it. And for us to believe in the startup we help startups to prepare a business plan which trusts me no other firm makes or will be able to make.
This Business plan is very important before we approach any investors because it gives us conviction as to what is the founder’s vision for the next 5 years.
We ask the founder thousands of questions regarding his vision which could have been stuck in his sub-conscious head but no one would have ideally sat him down and grilled him the way we do. We remove all information which is a must before one goes to investors.
We understand investors ask and need and we just do that with our founders. So, in a nutshell, our most important differentiating factor is the way in which we understand startups like no one does which has made it possible for us to raise funds for 2 of our startups even during these difficult Covid times.
TechGraph: What was the story behind the launch of Lakhani Financial Services and How it all got started?
Devansh Lakhani: So after I completed my CA in May 2015, I worked as an equity research analyst at a stockbroking outfit because my passion was to in stock markets and learn how to research companies and do investments.
Later, in 2 years I realized, I could do something on my own, a typical entrepreneur keeda you can say. So started LFS by offering wealth management solutions to clients which we still continue wherein we advise our clients on their financial goals and investments.
Later we also got into Investment banking wherein we worked on 1 SME IPO and 1 Right issue of an SME listed company and conducted deals on a stock exchange to the tune of over Rs. 30 Crores.
Slowly that market was getting overheated and a lot of froth was gathered there so we drifted and pivoted to Startups advisory and funds raising in January this year and have already raised funds for 3 of our startups (included 2 during covid). And here we are.
TechGraph: While researching on Lakhani Financial Services, our editorial team stumbled upon that there are different services available on the platform. Can you explain more about them to our readers?
Devansh Lakhani: Yes. So we can broadly say we have two divisions under our firm namely:
1) Investment advisory.
2) Investment banking.
So Investment advisory part covers all wealth management solutions like Mutual funds, stocks, bonds, Unlisted shares investment advisory. And Investment banking includes raising funds for startups and advising them as their strategic business advisors where-in we connect startups with investors and close deals.
TechGraph: We saw that Lakhani Financial Services mostly engages with startups. Can you tell our readers how Lakhani Financial Services helps the startups?
Devansh Lakhani: Our main job is to help startups raise funds and do to raise funds we help them with everything possible.
TechGraph: What you look for in startups and the founders?
Devansh Lakhani: So We mostly look for 6 factors in a startup:
1) Sustainability – The business should be a Long term sustainable business model. If it is not when we initially see it, we will work towards it to first make it that by re-working with the founder on the business plan if he wants to raise funds from our firm.
2) Strong Unit economics – If you are going to make a loss or burn cash for every customer you acquire or your break-even point is very far or high then the model will have to of course undergo a change.
3) Road to Profitability – There has to be a clear road to profitability in the business.
4) Scalability – We don’t believe in growing at unreasonable rates and still be in losses and burn cash. This really will hurt the company in the long run.
5) Strong management – Even first time entrepreneurs are fine till the time they have the necessary intent, conviction, discipline, execution capability, and patience to grow the business.
6) Proof of concept – Most importantly there should be a good proof of concept and traction in place for the startup.
TechGraph: What are the factors startups founder needs to keep in mind while pitching to you?
Devansh Lakhani: Probably the same as above. But also one thing I always request upon from the founders is that they should be flexible enough to understand what investors want and probably we are that medium through which that message is being conveyed. So when one is fixated upon his thing only then it’s very difficult to deal with such people.
TechGraph: What are the big trends and changes have you seen over the years.
Devansh Lakhani: Not over the years but what I am seeing now a major change in the startup ecosystem more specifically is that more and more VCs have now moved from funding cash-burning startups to cash flow positive startup with strong unit economics and a road to profitability.
One needs to understand that if a startup will not become profitable its IPO will not come. So now hopefully VCs are understanding this fact and changing accordingly.
TechGraph: What has been the biggest startup success story for you?
Devansh Lakhani: I think I would not like to use the word successful here. What I can tell you from working with multiple startups is that how cricketers are there in every gali of India, a startup is born in every gali in India daily and that’s what excites me the most and I think that’s the biggest success for us as a country to see blooming entrepreneurs in every Gali of our country.
TechGraph: Since coronavirus hit, many VC deals have been closed down or fallen. Have you noticed any rise or fall on your platform as a result?
Devansh Lakhani: Yes we have seen a stupendous rise on our platform for our services during COVID-19. This has been a blessing in disguise for many of our startups and for us too and we hope will keep able to help our startups grow and raise funds.
TechGraph: What medium-term changes do you foresee the pandemic having on the way funds are raised in India?
Devansh Lakhani: I believe, at the outset, funds had dried up at the initial few months of the pandemic. But now with things opening up, I see the movement of cash also in startups increasing and deals happening. You would have also seen the IPOs that had come recently they were a major success.
However, on deals, no I believe, they are happening at lower valuations and cheque sizes have dropped. That’s one major difference from Pre-Covid to Post-Covid.