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Post startup exit, it’s not uncommon that an operator will buy into an LP to further invest in the next generation. They might even try angel investing themselves. What makes Mohan Markandaier’s story unique is that he failed at angel investing the first time he tried it, started and sold another company, then founded an entire VC firm based on the lessons he learned. Speaking with SAAS NORTH, Mohan explained the long and winding road he faced transitioning from a SaaS operator into a venture capitalist.
- Being a startup founder and evaluating other founders are two different skill sets.
- Knowing how to assess vision and founder resilience is critical to making the transition from operator to investor.
- Operators-turned-investors should focus on the stages they personally have the most experience with and passion for.
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After Mohan Markandaier built and sold his first company, he moved into angel investing. It didn’t go well, so he went back into the land of startup operators, starting and selling a second company. When he returned to investing a second time, he took a much more seasoned approach. Speaking with SAAS NORTH, Mohan shared his journey into, out of, then back into the world of investing in startups.
A DOT COM BOOTSTRAP SUCCESS STORY
From 1996 to 2009, Mohan was a co-founder of Pulse Voice Inc, a telecom services provider. He and his co-founders bootstrapped their way to millions in revenue and nearly 100 employees, even navigating the dot-com boom and bust without going under.
The company was doing well – selling telecom software globally from Canada – and the co-founders were looking optimistically to the future.
“We grew almost entirely organically and bootstrapped,” said Mohan. “Then we got to a stage where we wanted to take the company to the next level, which would require raising capital.”
While the team began the difficult process of fundraising in Canada during the post dot-com era and into the Great Recession, something serendipitous happened: a Pulse Voice board member happened to meet someone at an airport while travelling.
The two struck up a conversation and it turned out the other person was involved with Enghouse. That initial conversation led to Enghouse buying Pulse Voice in 2009.
“It all happened so fast, but it made financial sense,” said Mohan. “The year we exited was our best year to date, so selling gave everyone the opportunity to have the freedom to do whatever they wanted after that.”
IF AT FIRST YOU DON’T SUCCEED, TRY AGAIN
Throughout his Pulse Voice journey, Mohan experienced firsthand how little support and investment was available to upstart entrepreneurs in Canada. He wanted to change that and get involved at the earliest possible stages, so he moved into angel investing, but unfortunately it didn’t work out for him the first time around.
“I had a passion for helping founders, but I lacked investment experience,” said Mohan. “I was trying to write one big cheque into one investment and I didn’t understand how to evaluate great founders.”
“In particular, I didn’t understand that a great founder doesn’t necessarily mean the nicest person,” Mohan continued. “Morals and ethics are critical, but the person also needs to have passion, perseverance, vision, a hustle mindset, and has to be a risk taker. That’s what is required to sustain a business for a long period of time.”
Fresh from his setback in the angel investing world, Mohan regrouped with his Pulse Voice co-founders to start – and sell – another company. Throughout the journey, it hit him that he genuinely enjoyed mentoring and supporting other entrepreneurs, so he wanted to get back into the investing world once more.
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“I realized I enjoy mentoring and working with young entrepreneurs who have a big, bold vision,” said Mohan. “So after my second exit, I wanted to get back into angel investing and write multiple small cheques to bring value based on my experience as an operator.”
Getting back into investing, he joined York Angels, a southern Ontario angel investing group. While there, he connected with two other investors. The three of them began to talk about making investing full-time versus only angel investing on the side.
In the end, the trio decided to formalize their goal in 2017 and found Good News Ventures.
“Instead of just us writing small cheques, we wanted to put more capital together to write bigger cheques and participate in follow-on rounds,” said Mohan.
NEVER FORGETTING WHERE YOU CAME FROM
Reflecting on the business, Mohan said they chose the name Good News Ventures because they wanted to “give a positive connotation to something very difficult.” Beyond that friendly first blush, the team is focused on finding market-leading ideas who have founders with a large vision.
Now a full-time VC investor, Mohan has the opportunity to invest in founders he believes have the idea, passion, and hustle to succeed. Within Good News Ventures, Mohan focuses on pre-seed and seed stage startups. He and his partners currently have about 40 companies in their portfolio and invest in around 10 startups per year based on a simple thesis: “Why you? Why now? And why this?”
Despite having access to companies at all stages, Mohan always comes back to supporting founders at the earliest stages possible. For him, it’s about his personal experience. Even though the funding landscape has changed dramatically and early-stage founders can get significantly more support than was available to him in the 1990s and early 2000s, he is passionate about supporting people through the early days of building a company.
“Going from zero to one is the most difficult thing,” said Mohan. “That’s the barrier we know best.”