Investor in the spotlight: Secocha Ventures' Sanket Parekh

By Nancy Dahlberg
By the numbers it looks pretty good: Miami-based Secocha Ventures, led by Managing Partner Sanket Parekh,  deployed $9.3 million in 19 deals in 2019, after deploying $8 million in 17 deals in 2018. In 2019, Secocha also kicked off a formal fund structure. “We did two deals in India last year and we also did a transaction in Israel in addition to the deals we did in the US,” Parekh said. “2020 is already shaping up well to follow in the same path.”
In South Florida, Secocha is an investor in CarePredict, a fast-growing healthcare technology company in senior care. Parekh, a third-generation entrepreneur who leads all Secocha’s investments, also serves on CarePredict’s board. Secocha also invested in Home61, the Miami-based real estate tech startup that recently closed down.
Parekh sat down with Refresh Miami to chat about all things venture. Here are excerpts of the conversation.
What makes Secocha different?
The fund was started in 2019, but we have been deploying capital on a deal by deal basis since 2014. Our LPs are not the traditional LPs who have had significant exposure to the asset class. These are LPs who are coming into the asset class for the first time. So there is a different process we have to follow to get them used to the asset class. We started off in 2014 getting them involved by in a deal by deal basis, similar to what Monica [Black] is working on now with Function. What we realized is once they build a certain amount of comfort, they stop wanting to look at it on a deal by deal basis, they want to do it as a fund. Since 2014, we have done 65 transactions, and in 2019 we kicked it off as a formal fund.
What do you look for in companies that you invest in?
We’ve been focused on b2c and post seed, pre series A is our sweet spot. But we have done deals at seed level where the founding team has really impressed us with what they have been ideating on. And at the same time we have done deals that are later stage. What we are really looking for is an opportunity to earn a good ROI for our LPs so we are a little more stage agnostic while still remaining value driven. We look at fintech, healthcare technologies and the consumer services and products. We very rarely will we do a b2b deal because that really isn’t our sweet spot.
How much do you typically invest?
Our average check size is $500,000.
Tell me about some recent investments.
We just did an investment in India, Zyla, a chronic care management platform. What attracted us was the massive target market in India and diabetes is a known issue in the country and there isn’t really anyone using technology on a chronic care treatment approach. India is not a simple market, it has complexities with languages and culture and communication is very different. What we found with this team is the ability to navigate those challenges and create a product that works very efficiently in that market.
Quite recently we have done an investment in a company in New York. It has not been announced yet so I can’t name it. The company is working on a micro-payments platform for content producers that allows people to monetize their work far more efficiently. We are seeing this already happening very well in China, where micropayments are already becoming huge. We also believe this will work for any kind of content [such as] news publications, with the challenges that they are facing shoring up revenues in an age when everyone expects it to be free and at the same time advertising is unable to pay for the costs you incur. Instead of having subscriptions to five different newspapers, where you read bits and pieces of each, if you could figure out a technology play that allows you to pay for just what you want to read and yet generate revenue for the content creator, that is really the holy grail.
What attracted you to CarePredict?
We have been steadfast investors since the early days — it was one of my early investment in 2014. They just announced the launch of their CarePredict At Home product at CES and it is already doing exceptionally well. The problem is massive with senior citizens not getting the adequate continuous care that is necessary. We believe with continuous monitoring, you get significant health benefits that can make quality of life far better not only for the senior citizens but also for their family members who can engage with seniors on more normal topics instead of constantly being focused on the health aspect when they meet. And not everyone can afford to have a human being there fulltime to look after and monitor them.
Why don’t you have more investments in South Florida?
It’s not for a lack of trying. We are great cheerleaders for the local ecosystem. I have seen a change quite dramatically since 2013, when I set up a base here in Miami. Seeing the recent conversation with Ameesh [Paleja] of OfferUP and him wanting to set up an entire team here and bring 50 jobs — that is the kind of catalysts we are looking for for the entire ecosystem. We have looked at companies that are local but when we put on our filters of the verticals we invest in, that narrows down the pool quite dramatically. We have be true to our thesis and honest to our LPs and make sure we are fiduciarily looking after their capital.
That being said, we are making an effort to help the local community as much as we can. Starting in 2020 we are going to be setting up open office hours for any entrepreneur in the local ecosystem to stop by and have a conversation with us in a no-pressure environment. We should be kicking it off by March of this year.
How would you characterize the deal flow you see in South Florida?
One of the things we would like to see change is that a lot of the entrepreneurs are heads down building their business, and when it comes time to raise money, they first look outside of Florida. It’s a two way street; we also have to make ourselves available to these entrepreneurs so they see the opportunity to raise locally. Hopefully we see more announcements of more people starting funds or opening offices here.
I have seen deal quality improve quite dramatically. Deal volume is going up but hopefully it will continue to go up, giving us more options to invest more locally.
What trends are you seeing in startups that you are particularly excited about?
With the WeWork/Softbank issues, entrepreneurs have started rethinking what capital raising should look like and how they should be thinking about their companies’ unit economics — keeping a better eye on profits and not being too focused on just exponential growth. I think that is a welcome trend that investors should be happy about and a welcome shift away from the Softbank mindset.
We have started seeing enough of this shift in the last 4 to 6 months — how do we get to break even and not just about growth. Obviously part of getting to break even is growth. It is not that they are not focused on growth, it is just that perspectives have tempered.
What keeps you up at night?
Setting the right example for my kids.
Your top tip for startups wanting to get in front of investors?
Don’t spray and pray. Be tactical and focused, research who you are speaking with and make sure what you are selling is what they are looking to buy.
Book recommendation?
Every team member of mine gets Start with Why. That’s a mandatory read for everyone at Secocha and it’s one I recommend for everyone.
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Nancy Dahlberg