14: Parth Garg & John Finkelman | Vance
Co-Founders at Vance | Building an Operating Platform for SMEs in India.
Ingredients for Success:
Get your foot in the door. It’s easy to assume that the best way for a founder to highlight their ambition is by launching their company with a big bang. Going after that large market on Day 1 and acquiring users at breakneck speed. But another - and less spoken of - way of doing things is to start with a ‘wedge’ and then drive deeper value through additional features. For Vance, their wedge is to launch a revenue-based financing business for SaaS companies, and then eventually, become the operating system for all excluded small-to-medium businesses (SMEs) in India. Once the customer has your trust, they are more than willing to support your scaling efforts.
Authenticity beats competition. Although growing up on different ends of the world, there’s one thing that binds Parth and John together: their willingness to take tough, contrarian, and unconventional decisions. We’d like to impact change, but the founders of Vance walk the talk: they’ve started large NGOs, run and been elected for government, and through Vance, want to demystify and democratise access to capital for excluded SMEs. This non-linearity lends itself well to making creative, unique decisions as a founder. Lean into it.
Play smart with the cards you’re dealt with. Although outsiders to the startup ecosystem, Parth and John have used their fresh perspectives to build a lending-first business using first principles. They have leveraged their background to an advantage; not simply replicating the ‘Pipe for India’ approach but questioning every assumption to build a uniquely Indian product. And it’s working - they’ve financed 18 companies and deployed over $3.1M in less than 100 days from launch.
Dinner table conversations matter. Especially the ones that take place during childhood; it’s as if the dialogue remains etched in the subconscious, eventually playing out in how we make our decisions. For Parth, these conversations formed the basis for his entrepreneurial itch. “Growing up in India, I was always learning as my dad spoke about his journey as a founder. The ups and downs, the thrill of owning something. I always knew that it was the path I’d want to take eventually.” This desire to build manifested in several ways for Parth – most pertinently, in launching and scaling UAE’s largest student-led NGO at the time, at the young age of 16.
Thousands of miles away, along the coasts of California, John had a similar trajectory. A son of Soviet Union refugees, he was cut from a similar cloth to Parth – one with an incessant need to do more. “Growing up in California, I’ve been fortunate to have exposure and access, and I wanted to share that with others as well. I found that the best way was to launch a charity that could help refugees start anew; this entire experience was enriching and allowed me to learn in so many ways outside of the classroom.” But it didn’t stop there for John. Eventually, he decided to go one step further and run for office, all before his 20th birthday. He won, and today is California’s youngest local government representative.
Fate is reflected in life in unique ways. It could exhibit itself in the way you encounter your significant other, or perhaps in which career path you end up choosing. But for John and Parth, it was Stanford’s roommate matching process that led to their meeting. Two uniquely driven individuals, having spent their lives in different corners of the world, but both with an incurable and deep entrepreneurial itch. And that’s where the story of Vance begins.
Smartcuts
On campus, once Parth and John finished up with the formalities and small talk, they quickly realised that the bulk of their time together was spent ideating. “It was infectious. We would constantly bounce ideas off one another. I had gone to Stanford to study Physics, but within weeks – upon realising that the academic papers I was reading had an audience of seven people – I knew I wanted to get back to building a company!”, exclaimed Parth. As the impact of COVID swept across the Stanford campus, another thing became clear to Parth and John: the opportunity cost of being a student was too high. “We both felt that we didn’t want to learn at the pace that Stanford was teaching us. We wanted to accelerate our learning and apply our knowledge immediately”, said John. Both being on the same page, they decided to go all-in and dropped out of Stanford to pursue their entrepreneurial journey together.
As cinematic as this sounds, it wasn’t all sunshine and rainbows. It took a few pivots - including a short stint with a VC firm for Parth, that quickly ended with an aversion to the hours of presentation-building. Before Vance came into being, the first company that was conceived by the duo goes by the name of ‘Nesse’ – a pay-now buy-later (yes, you read that correctly) solution for the US. It was contrarian and appealing enough for the founders to get into YCombinator. But something didn’t sit right with the founders – they wanted to build a product for a larger market, seeking an untapped opportunity. After a stint of introspection and reflection on sage advice from mentors, both founders looked to India for their next big entrepreneurial venture.
“When we learnt about the stories of Capchase and Pipe – it really resonated with us. Upon evaluating the Indian market, we saw that most revenue-based financing (RBF) companies were targeting direct-to-consumer brands. We realised that there was an untapped opportunity – the SaaS industry is not only growing in India, but it’s also highly networked, leading to more referrals for products.”
By picking SaaS as an initial niche to focus on, John and Parth built conviction that Vance was something worth pursuing. So much so, that a few days later, they packed their bags and got on a plane from Palo Alto to move to Mumbai.
Fresh Eyes
Nothing like accelerating your learning curve by moving to a new country to launch a business. This rings especially true for John. “It wasn’t that crazy for me. The way I think about it: India offers the greatest opportunity for entrepreneurs. Sure, the last few decades have belonged to the likes of the US and parts of Europe. But as Bill Gates noted in 2016 – India will leapfrog the world; it’s something I truly believe and think the next decade belongs to the country.”
The thought of two wide-eyed college dropouts arriving afresh in India can bring about easy skepticism from bystanders. But what’s interesting is that this very scenario has given Parth the reason to believe why Vance will win.
“Our differentiator is that John and I are outsiders. Many founders operating in this space want to build the ‘Pipe for India’. But to be honest, there are so many nuances for the Indian market that we are willing to learn and apply. We have no underlying assumptions and are building Vance using first principles.”
As Parth and John described their passion for the opportunity in India, it provided me with perspective, too. Sometimes we spend so much time inside a bubble – in this case for me, the local startup ecosystem – that we forget how special our circumstances really are. John rattled off the various exemplary innovations coming out of India. UPI, Account Aggregators, and the Open Credit Enablement Network, to name a few. And as he did so, I felt overwhelmed with a sense of gratitude. One thing was clear to me as they described their journey: their immense commitment to building a big business for India. The premonition took over me; as the adage goes, ‘when you know, you know’.
Foot in the Door
Some of the greatest companies in the world lure their customers in with a ‘wedge’, a feature set that enables the business to showcase value to their users, with a goal to eventually upsell other products. Apple is the most notable of these companies; nobody has just an iPhone. This approach is central to Vance’s broader ambition.
“In India today, 43% of MSMEs are digitized, with that number only going up every year. As this number rises, our target market for revenue-based financing increases as well. In general, we will first focus on businesses that have recurring revenue – that is, SaaS businesses. Then, we plan to eventually move to re-occurring revenue businesses. A good example of a re-occurring revenue business is Zepto, where the customer order isn’t contracted, but it gets done; for example, people buy milk weekly and that behaviour can be predicted into the future”.
But the ambitious duo didn’t stop there with their vision. As I dug deeper, I could see that what separated the founders from the rest was their innate need to provide deep, long-lasting value to their customers. Vance isn’t built to acquire as many users at a shallow level; they have the zeal of using lending to introduce themselves to users, with a goal to offer a wider set of features to their audience of excluded SMEs. Think expense management, hiring software, credit/debit cards… you get the idea, the opportunity set is endless.
The First Lieutenants
Parth and John are forces to be reckoned with. Even through the tiny rectangular Zoom window on my screen, I could feel their sense of urgency, focus, and desire to win. But as with any company, the founders can’t cross the finish line alone. It’s the team they build around them; it’s the support, world-class operators that they hire (and fire) along the ride. “One of the filters we use during our first meetings with a potential hire is very basic. We want to understand if the person across from us simply understands what a startup is. What the role entails, the kinds of expectations we would like from them, and the ups and downs that go along with the position. I know you’re looking for a magic-voodoo-esque response from me, but this is the truth. You’ll be surprised by the number of people that get this basic notion wrong.”
I’ve had several moments during my interactions with Parth and John where I’ve felt the famous moniker of ‘less is more’ ringing true. Even though their sample set of hires is small relative to the broader ecosystem, I believe what they’re getting across is accurate. Joining an early-stage company is sexy from the outside, but the role itself is unstructured and requires more zest and creativity than most larger businesses would need. When one makes the decision to follow this path, it’s a commitment to building from ‘zero-to-one’ as opposed to settling for incrementalism. Beyond the notion of understanding what you’re getting into, Parth and John have a clear focus on specific sets of values. “We care less about pedigree and traditional barometers for success. What we are really looking for are people that are passionate about learning and problem-solving. It’s the raw intelligence that counts. In some cases, we’ve spent over 7 sessions with an initial hire. Our goal is that each of the first 15 hires at Vance will go on to build a unicorn in their careers.”
I’m an ardent believer that a founder’s hiring criteria forms a key variable in determining the success of a company. But equally so, their approach to firing is critical too. “I think culture is not inductive; it’s something we continue to see, learn from, and adapt to. There’s the Google route where once they bring someone on board, they have conviction that the person is right and will rarely end up firing them. And then you have Netflix on the other end of the spectrum, where a slight deviation from expectations can lead to layoffs. What we’ve seen so far at Vance is that because we test for raw, innate intelligence, we’ve found that the person will eventually find their place in the company. It can be a different role completely, but they do find their home here.”
Do Your Thing
As you can probably tell at this point, I’m expressing a sense of extreme excitement and belief in the founders of Vance. So much so that we’ve been fortunate at Hummingbird to back their pre-YC demo day financing. Albeit subjective, I was curious to ask Parth and John on what has driven their traction with fundraising. “The truth is we’ve never really focused on raising capital. We’re builders and strong believers that if we are focusing on creating the foundations of a good business, and adding value to our customers, then investors will see the traction and come in. At the end of the day, we want investors that believe in us and our abilities.”
Parth’s response rings true. Simon Sinek’s ‘Finding Your Why’ TED talk has inspired many to reflect on their purpose. But I think using a similar framework – spotting an investor’s ‘why’ – is relevant, too. Are they borrowing conviction from other investors, or are they buying only into a specific vision? These are things to look out for, as a pivot or any near-death experience can lead to abandonment from a backer that isn’t committed for the right reasons.
Instead of a simple goodbye at the end of our chat, we recall the next step on a follow-up call to rehearse their demo day pitch. Of course, this doesn’t feel like a chore or burden, but brings to the fore a sentiment of gratitude knowing that I am lucky to be in the passenger’s seat on their journey together.
Disclaimer: Hummingbird Ventures is an investor in Vance.