Nov 1, 2021 · 43m · neon-show
@firstcheque7252 CEO on Early Stage Investing and investments from founders ft. Kushal Bhagia
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Kushal Bhagia, CEO of First Cheque, discusses the mechanics, thesis, and portfolio success of their operator-led pre-seed fund, detailing how founder angels, rapid capital deployment, and active ecosystem support empower the next generation of Indian tech startups.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
Siddhartha as informed peer 3.9 Guest teaching 3.1 Guest disagreement 0.8 Siddhartha pushing back 1.3
speaking balance: gold is Siddhartha, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 17:49 Rejecting the moat premise in venture capital
Kushal dismisses the host's inquiry into a VC firm's moat by stating that power-law investing means VC is fundamentally not a winner-take-all game.
Hardest push from Siddhartha ▶ 24:15 Challenging fund strategy and check size scalingSiddharth presses Kushal on whether increasing check sizes from 10 lakh to 75 lakh rupees will force stricter underwriting standards.
Biggest teaching moment ▶ 31:19 Educating on pre-seed non-competes and pivotsKushal explains why pre-seed accelerators and funds cannot observe non-compete clauses, detailing how early pivots render strict sector exclusivity unworkable.
Siddhartha holds their own ▶ 37:23 Probing market cycle peaks across emerging pre-seed fundsSiddharth demonstrates sector knowledge by naming competing micro-VC funds and questioning whether current market enthusiasm is approaching a peak.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Siddhartha as informed peer | Guest teaching | Guest disagreement | Siddhartha pushing back | Why |
|---|---|---|---|---|---|---|
| Fund 1 Milestones and Transition to Standalone Fund 2 | 4 | 3 | 1 | 1 | Siddharth asks about the origin, AngelList partnership, and the upcoming hundred-crore Fund 2. Kushal provides a breakdown of First Cheque's transition to an independent SEBI-approved entity, setting an informative baseline. | |
| Fund 1 Portfolio Performance and Follow-On Funding Traction | 5 | 4 | 1 | 2 | Siddharth prompts Kushal on internal metrics and valuation changes between cohorts. Kushal provides detailed cohort data on follow-on rates and explains why top-tier repeat founders command premium valuations early. | |
| Venture Partner Sourcing Mechanics and Network Dynamics | 4 | 3 | 0 | 1 | Siddharth asks about sourcing attribution and venture partner retention. Kushal explains their 70-30 split in sourcing and the natural attrition among founder angels. | |
| Spotlight on High-Performing Portfolio Companies | 3 | 2 | 1 | 1 | Siddharth invites Kushal to list top portfolio performers. Kushal hesitates to rank strictly by valuation due to unannounced rounds, instead detailing ten standout companies across sectors. | |
| Pre-Seed Evaluation Framework: Market Size and Team Quality | 4 | 6 | 3 | 2 | When Siddharth asks about First Cheque's moat, Kushal reframes the premise by arguing that VC is not a winner-take-all asset class due to power-law dynamics, though funds can maintain an operational edge. | |
| Time Allocation, Response Times, and Cap Table Allocations | 4 | 2 | 1 | 2 | Siddharth asks whether allocation crunches cause them to lose out on competitive deals. Kushal clarifies that early-stage syndication dynamics usually keep rounds open, though Fund 2 ownership targets might test this. | |
| Fund 2 Strategy, Deployment Targets, and Check Sizes | 5 | 3 | 1 | 2 | Siddharth questions whether check size increases will alter underwriting rigor. Kushal explains why keeping check sizes at $100k enables co-investment agility without forcing them to lead every pre-seed round. | |
| Core Pillars of Pre-Seed Support: Speed, PMF, and Fundraising | 4 | 4 | 0 | 1 | Siddharth asks how post-investment value add is executed. Kushal outlines their three core pillars: fast capital deployment, hands-on PMF guidance via founder angels, and deck/narrative coaching for Series A. | |
| The Structural Advantages of the Founder-Angel Model | 4 | 3 | 0 | 1 | Siddharth asks what makes the founder-angel network fundamentally effective. Kushal explains the triple advantage of founder angels: organic deal flow, predictive operational insight, and near-zero cap table rejection. | |
| Portfolio Conflict Management, Startup Mortality, and Returns | 4 | 4 | 1 | 1 | Siddharth asks about conflict management across competing portfolio companies and early mortality rates. Kushal explains why pre-seed funds cannot enforce non-competes due to frequent pivots. | |
| High-Velocity Angel Investing vs. Traditional VC Roles | 4 | 3 | 0 | 1 | Siddharth explores Kushal's personal fit for high-velocity investing over traditional multi-stage VC. Kushal contrasts high-volume learning against slow-paced, board-heavy multi-stage investing. | |
| Macro Tailwinds and Growth Outlook for Indian Startups | 5 | 4 | 2 | 2 | Siddharth asks if market exuberance is nearing a cyclical peak. Kushal rejects a slowdown narrative, pointing to structural digitization, UPI, and rising founder ambition across India. | |
| Personal Mission and Ecosystem Initiatives at First Cheque | 4 | 3 | 0 | 1 | Siddharth asks about broader ecosystem initiatives. Kushal outlines bi-annual demo days, founder education series on term sheets, and YouTube video features for nascent early-stage teams. | |
| Podcast Conclusion and Final Remarks | 1 | 0 | 0 | 0 | Siddharth and Kushal conclude the podcast with standard warm closing remarks. |
Statements from this episode (22)
Powai Lake Ventures backed Ola, Housing.com, Toppr, and Fynd
“Gagan there used to run Pawai Lake Ventures, which was like this, you know, network of founder angels from IIT Bombay who were reinvesting in founders that graduated from IIT Bombay. And that really worked. They ended up backing, you know, Ola, Housing, Topper…”
First Cheque launched in 2019 to co-invest alongside founder angels
“We decided, okay, let's, let's, you know, try and set up a fund which basically backs founder angels and then let those founder angels pick companies for the fund, and the fund will basically just invest with them wherever they do. So that is how India, that i…”
First Cheque backed almost 100 companies through its first fund
“We've backed almost a hundred companies now through the first fund.”
Almost half of First Cheque's first 100 investments raised follow-on funding
“If you look at the first score, the first 32 deals we did out of those 20 21 have raised follow on rounds now. If you look at our second cohort, which is the next sort of 3035 deals we did out of those 12 13 I've raised follow on rounds and out of the last coh…”
Over half of First Cheque deals are pre-product and pre-revenue
“Like at least half of them are pre-product. And almost all are pre-revenue.”
Pre-seed startups typically take 6 to 18 months to raise follow-on rounds
“So once we fund the company, they then ship product, they show some traction, you know, build out build out what they set out to do, and that is when a VC round really happens. So that takes about, you know, you could say anywhere from six to 12 months to 18 m…”
Pedigreed Indian founders raised 2021 seed rounds at $10M to $20M valuations
“Ah, but even then, what we see is that, like, a VC round, VC seed round is typically happening at, say, A one and a half to three million dollar raise was happening at a 10 to fifteen million, sometimes twenty million valuation. But people who only have this p…”
First Cheque caps pre-product, first-time founder valuations at $2M to $3M
“Category A is first time founders. Younger folks, you know, free product deals where the risk is significantly higher. Those deals we don't do beyond two, three million evaluation. Three is also a bit on the higher side. Usually it's around two million.”
First Cheque sources 70% of its deals through venture partners
“Effectively all hundred deals have been done with a VP, but I would say about 70% were sourced by them. 30% would have come from our network.”
First Cheque executes 30 to 40 startup investments per year
“First check as a fund will still do 30, 40 deals a year.”
First Cheque's breakout portfolio startups include GIVA, Fashinza, and Fleetx
“So I would say Jeeva. Jeeva is doing really, really well. It's a DTC silver jewelry brand. Fashions are doing really, really well. It's a BtoB marketplace for the fashion supply chain. Then FleetX is doing really well. It's a SaaS company which enables fleet o…”
Most pre-seed startup teams pivot away from their initial product idea
“Because most pre-seed investments, the team pivots after a while, they'll, you know, find adjacent ideas. They'll, they'll, they won't even be doing what you thought they'll be doing when you invest.”
First Cheque invests almost blindly if a venture partner vouches for founders
“If the deal has come through a venture partner, and if the venture partner knows the founder, right, and is watching for the founder, then we will almost blindly invest. Then it doesn't even, like, as long as it's a VC fundable space, we'll go ahead and invest…”
First Cheque evaluates 300 to 500 startup investment deals per month
“Yes, I think, I would say we see three to five, 500 deals a month, roughly. 300 to 500 deals a month is what we see, so it's in the same ballpark as what you said.”
Venture capital is not a winner-take-all business due to power laws
“See, it's hard, ironically, VC itself is not a winner-take-all business, right, like, You will see funds at every stage and every sector succeed. Because finally the power law game means that, you know, even if one of your companies really, really works, you w…”
First Cheque deploys an average check size of $100,000 per startup
“The average size right now we are doing is about a 100,000 dollars. So about for 75 lakhs is what we are deploying per company.”
First Cheque's Fund 1 check sizes averaged 50 lakh rupees with syndicates
“First fund itself was putting 10 lakh rupees in every company, but because of the angel list syndicate, we were doing anywhere from 25 lakh to 50 lakh. 50 lakh was the average check size in the first fund.”
Almost all unicorns in India, China, and the US had founder angels
“And if you look at unicorns in India, in China, in US, right, almost all of them you will see have raised their first round or raised some money from founder angels in their early round.”
First Cheque will invest in competing startups if venture partners vouch
“If a venture partner knows the founder, then we'll still do the deal, even if it's a competing company, because as I said, we are investing at pre-seed, right? So the market and team is what is important to us, not the current product.”
Only five of First Cheque's initial 100 portfolio companies have shut down
“About five companies are shut down already, and it's possible that I mean, we fully expect a lot more will, because at pre-seed, we are taking the highest class of risk.”
Traditional VC partners do at most three to five deals per year
“Most partners at Atta Sequoia, IQ, Accel, etc. Will do, right? Because they build deep conviction, they spend a lot of time with their companies, and after investing also, they'll take a board seat they'll talk to their companies once in two weeks at least, an…”