The Exchanges

Q If you can recall, You know, roughly. Which year did you cross? 50 miller and which year you crossed hundred miller?

A Yeah, yeah. So I believe we crossed fifty million. So I started with Cloudflare in early 14. I think we crossed fifty million in I think end of 16, 2016 in three years. And then in, then at that time we were more than doubling the business. So then we must have crossed the hundred like within the next nine months. Uh, so we went public in 2019 and at that time we were doing about three hundred million. So, so if you know, in our case, I think, uh, we went from like a couple of million to three hundred million in, in a, in a matter of, uh, five years. And, and then after, after going public, we, we actually accelerated over growth, because, you know, as a public company, we were, we, we were able to have bigger awareness, and then COVID happened, and then we went from three hundred million in 2019 to a billion in 2023, basically.

AI assessment note: “crossed fifty million in I think end of 16, 2016 in three years”

Q then the question there is, you know, all these companies, all the startups are built on top of these model companies, right? And these models are also learning what are the workflows that these startups are, are doing. And we have seen in the past, right? For example, with what happened with Windsurf, right? And there are more examples that these model companies are now launching their own vertical Absolutely.

A So look, that's, you know, it's a full circle to where we started off, 30 minutes ago, which is, Every startup in the AI application space, every, you know, service as software startup has to first and foremost internalize that their vendor is also their competitor. The model provider is both vendor and competitor. And that's a hard place to be. And they are, they are actually educating their vendor on how to compete with them. You know, that's, that's the inherent challenge. And so, if you recognize that challenge up front, then you have to start thinking about what is the data that you're not going to send to them, send to the model provider? What is the data for which you're going to use an open source model versus a closed source model? What is the role of reinforcement learning in sort of post training of a model for a customer specific situation? So, for example, I have a company called Player Zero, And while they do use GPT-V and other, ah, proprietary models, the core code base of the company for their customers, what they, what, what Player Zero does is it helps you debug problems in your code, and it actually simulates a pull request, so you can proactively identify likely problems. For both of those, uh, they're using reinforcement learning extensively, so they build a graph of your code. That graph of your code, they don't share, because no one wants their code to g…

AI assessment note: “Every startup in the AI application space... has to first and foremost internalize that their vendor is also their competitor.”

Q A couple of important points here. So do our regulators, you know, have built a playbook on their learnings from Aadhaar, UPI, that how does the regulator have to work?

A So in FinTech, the, the, the, if I take you back to, uh, Mr. Aguram Rajin's time, there was a regulatory approach that had, uh, been worked out, which was that we'll have a three lane system, right? Uh, there'll be digital public infrastructure, which is things like India stack was, uh, the name that we use then, uh, then there'll be regulated entities and there'll be unregulated entities and UPI, for example, you have had Um, Google Pay, Phone Pay and others in the unregulated lane. And then you have banks in the regulated lane. And then of course there is the protocol and the switch, which is part of DPI. Now that system was supposed to be applied to everything else. Uh, in fact, there's a beautiful, uh, BIS Bank of International Settlements paper, uh, which kind of captures this thinking very cohesively. But it has not been followed. And part of our pain in the, in the fintech system is that neither the fintechs nor the banks, unregulated, regulated, and the regulator have remained true to this three lane model while everybody says this is the right model. So either we should come out and say, this is not the right model. And we're going to have an alternative. Or, you know, we must follow it diligently. And we haven't done that. And we have not done that partly because as things change, on the regulatory side, the institutional memory is not kept up as much as it should. It…

AI assessment note: “there was a regulatory approach that had, uh, been worked out”

Q Yeah. I think what, what also happened is when India got its independence, uh, Pandit Nehru started looking up to Russia more than the West, right? And he modeled India as a socialist economy, modeled that on based on the Soviet Union. And when Soviet Union crashed, India's idol had crashed.

A Yes, that is true that, uh, we had the socialist pattern of society, but let's not also forget that, uh, Pandit Nehru first reached out to the West. He visited the USA in 1949, way before he visited the Soviet Union. But the United States wanted India as a partner, as an ally, like Pakistan became, and that India was not willing to, to do. And, uh, they did not want to help develop our industry and so forth, which the Soviet Union was doing. We got cheap credits and rupee payment from the Soviet Union. So, let's also not forget that the Americans did help us with their PL-IVAT program on giving food to us when we needed it. But the main reason why we drifted closer to the Soviet Union was that The United States was acting what we thought was against our interests on key issues of our territorial integrity and sovereignty, whether it was Kashmir, they were with the Pakistanis, which joined the Cento and Seattle. Uh, they, uh, were opposed to the integration of Goa, Sikkim, then Bangladesh, where they sent the seventh fleet there. So all this created a certain problem. Uh, in India-US relations. Now, uh, The Soviet Union was a very big anchor for us politically as well as economically. And when it broke up, we had to reorient our policies, foreign policy. And I must say that, uh, Prime Minister Narsimurao did that very skillfully. Our opening to USA developed, uh, it took some wh…

AI assessment note: “Yes, that is true that, uh, we had the socialist pattern of society”

Q What impact does this war has on India?

A Well, you know, the first impact was that we had our students. We had to get them out of Ukraine. Then it has had not only on India, a global impact for food and fertilizer. The fact that Russia is under sanctions means our trade with Russia is affected. Uh, you know, we, we cannot, uh, uh, send or receive money through SWIFT and other normal banking channels. But on the other hand, uh, we have managed to get a cheap oil from Russia, uh, because they couldn't sell it in the global market. So we have been buying the oil, refining it, and selling it to Europe at a profit. Uh, now the Russians have got a lot of money which is blocked in India, and we are trying to see how we can, um, Use that or they can use that money by investing it in some projects here. Our diamond trade is in trouble, our Surat diamond cutters, because the Europeans and the Americans have said that they will, the diamonds which are coming from roughs, which are coming from Russia cannot be processed and sold in the West. So Since that is a big market, so there's unemployment among our diamond cutters in Surat. Uh, then of course it has created a lot of diplomatic, uh, uh, problems for us because the Americans, uh, want us to be with them in condemning Russia and supporting Ukraine. And we have been quite careful not to do that in the way that the Americans want it. Uh, we have been following our own line. And…

AI assessment note: “Well, you know, the first impact was that we had our students.”

Q talk about quality of life, whenever we talk about, uh, elites returning to India, kind of topics we explore, Uh, in, in the comment section, we see people sharing that we just talk about the one percent of India. Uh, what's the other, uh, like rest of the people, what they are doing, like, uh, what policies are there for them? Uh, are we just talking about the one percent?

A No, I think, uh, I'll take an example. Uh, there are currently more than two million delivery boys in India across platforms like Swiggy, Zomato, Blinkit. Zepto. Big basket. 20 lakh delivery boys or girls. Now these each are able to earn an income of 20,000 to 30,000 rupees per month, working eight to 12 hours per day, and most of them have come from villages, tier three towns of India. Uh, 10 years ago, this opportunity was not there. Right. So you can imagine the quality of life of these people are changing. And now once these people come to cities, they are able to, uh, educate their kids and their next generation would have opportunity, which is better than what they have.

AI assessment note: “So you can imagine the quality of life of these people are changing.”

Q Okay, and how many people would have started in that batch?

A Yeah, so the funnel goes something like, you know, we, we might speak to a thousand people to get to the batch of 40 individuals, um, and then, you know, what we found historically is that, You know, if you go through that first, uh, three months of co-founder exploration, typically about 70 to 80% of people find a co-founder that they want to work with and, uh, you know, want to commit to. So, you know, like of those 40 people, you know, we might end up with 12 to 16 teams form of, of, um, of two people each. And then we go through a process of deciding which of those teams, you know, we think, uh, have the potential to be venture scale. Um, companies, and so we invest in those. So we might make 10 investments out of those.

AI assessment note: “we might speak to a thousand people to get to the batch of 40 individuals”

Q And you were managing the trading desk for Asia?

A Not trading desk. I was the junior most trader to start off. And when I joined in 98, I was lucky to, you know, After three months of rotating around various rice trading, coal trading, green coffee trading, uh, I found my boss, Jens Nelson, his name, he was trading in, uh, in coffee and he was ex, uh, head of Goldman in Asia. So with him, I actually built entire desk from fifty million to billion dollar book in about two years time. So that's where I got a lot of exposure. I used to go to travel, 29 days a month. I used to start making calls at seven AM till two P two AM in the morning. All across the globe selling coffee from Vietnam. So I actually spent a lot of time in popularizing Vietnam origin coffee.

AI assessment note: “Not trading desk. I was the junior most trader to start off.”

Q What's the history and what has been, like, what happened really in governance failure?

A So what happens is whenever society faces a problem, it has to create institutions which can then sort the problem, right? So when Bangalore faced water scarcity in the 19 sixties, it created the Bangalore water supply and sewerage port, a utility which had the capability To pump water from a far away source and bring it to the city, and then also be able to set up sewage networks and sewage treatment plants. Now, because the utility was created, it was then followed by the Delhi Jal Board, the Chennai Metro Water and Sewerage Board, and so on, so forth. Other cities built institutions which knew how to design for water and to design for sewage networks. So these were all 20th century institutions. In the 21st century, which is what we occupy, water is no longer one of supply side. There's, in the 20th century, there was water everywhere. You built a dam, you used pumps, and you brought it to the city. So that, that's the skill you needed. Now, demand management, ecological restoration, social justice. These are the angles that which we need to have our institutions with. Just to give you an example, the Bangalore Water Supply and Storage Board does not have a single hydrogeologist. The city has 500,000 bore wells at least. It pumps out six hundred million liters per day. But the institution does not have a single hydrogeologist who's able to understand groundwater. So groundwa…

AI assessment note: “does not have a single hydrogeologist who's able to understand groundwater.”

Q Why does it happen? Like, is it not planned? The infrastructure is not planned?

A Two things are happening in the city. One, because of climate change and urban heat island, the intensity of rainfall is increasing. We were previously designing for a 60 millimeter per hour intensity rainfall. Now, rainfall intensities for short bursts of time are recorded at 2:40 millimeters an hour. One 80 millimeter per hour is the norm. So you're getting a large volume of water in a very short duration, which are stormwater drains or rainwater pipes are not prepared for. One. Two. Previously, when it used to rain, there used to be enough absorption capacity in the city where water would percolate into the soil, into the ground. Now we are paved so much. So the runoff has increased from what used to be 15% to 95%. You have a four-fold increase in intensity of rainfall, a six-fold increase in the runoff. The combination of both means that it overwhelms our capacity to drain the city. So therefore floods will be the norm as things go along, unless every house, every residence becomes responsible for what we have now designed as a policy for Bangalore for 60 millimeters of rainfall, saying that for every square meter of roof area, 60 millimeter of rain, you either hold on in your rainwater tanks or you recharge through a recharge well. Then you have both climate change and flooding mitigation, but also the groundwater table coming up. This has to be sold to every citizen in Ba…

AI assessment note: “The combination of both means that it overwhelms our capacity to drain the city.”

Q And what is the reason of migration to Bangalore?

A Primary reason was the salubrious climate, which then brought the educational institutions. Tata set up the Indian Institute of Science in the eight and nineties, and so therefore there came a crowd of people who were now talented and educated, so therefore the industries came to tap into this talent. The public sector units like BEL, BHEL, ITI were set up here in the sixties. They worked on a pool of educational support, which was coming from the students. That public sector brought with it Uh, diversity from all across India who realized that this was a great place. It was a pensioner's paradise, a retired person's dream. And so it kept attracting, and then the software industry took off here, and then, you know, the rest is

AI assessment note: “Primary reason was the salubrious climate, which then brought the educational institutions.”

Q Okay. And what do you mean by it? Let's take some analogies.

A So for example, if you look at the latest number that came out just now for the second quarter, which is the July to September quarter, Um, of the financial year, it, you can see that we grew at 7.6% year and year. That's a massive real growth. Um, in nominal terms, it's even higher. And then you also had, um, you know, the industrial sector in particular, the construction sector is growing. So these are solid numbers coming through and it is happening without any help from exports because exports are actually mostly flat. Uh, they had grown in the previous year, particularly services, but now they are flat. So without the benefit of a global environment that is expanding, we are managing to hit, for the full year, we'll probably hit something like seven percent. That's a really solid growth rate. Easily makes us, us the fastest growing economy in the world. And very importantly, we are doing this without stressing the macros of this economy. So there is no spike in overall inflation. Yeah, tomato prices may go up and come down, but there is no sustained inflation. Similarly, our external account, our current account, our trade balance, et cetera, they're not blowing up in any which way. Uh, we have six hundred billion dollars in foreign exchange reserves. So we, you know, the, the external sector is not under stress. Our banks, as we have discussed before, they are in decent s…

AI assessment note: “It's, it's like we are jogging and doing the seven percent.”

Q And do you think the liquidity for Indian startups be both an SME, like in India till now, in the last seven, eight months, 72 companies have listed on SME exchange, which is the highest India has ever seen. Right. And so startups are going towards more SME exchange. And would you yourself as part of your PMS dip into the SME exchange?

A No, because SME doesn't have liquidity. It doesn't make sense for a company like ours, where we offer liquidity to our customers. I can't offer them and then have companies which I can't sell in a day. But I think it makes sense for a lot of closed-ended funds, a lot of, in fact, VC funds themselves, you could actually finance companies on an SME exchange. You could, the minimum per share is one lakh rupees, I think. That means you can buy in multiples of one lakh rupees. So, which is easily possible for VC funds. You could actually finance companies on an SME exchange until they become big enough. Uh, may not work out for us particularly, but I know PMSs, there are some PMSs who have restrictive conditions, who say, you can't get money for four years and there's an exit load of X percent. So, they use that to buy these SME stocks.

AI assessment note: “No, because SME doesn't have liquidity. It doesn't make sense for a company like ours”

Q So, so where does your capital come from?

A So our capital comes from three sources, you know, of course, equity, which is the capital that we have raised. And like I said, internal accruals, we don't pay dividends. You know, we are confident that the company is definitely using that growth capital moving further. The entire, we are a, you know, very good cashflow accruing company. So the entire profits gets reinvested into the business. And third, of course, is the debt capital, which comes from banks. We have more than 50 lenders at this point of time. A combination of private sector banks, public sector banks, larger NBFCs, different types of instruments. It could be securitization, NCDs, some ECBs that we have taken, some impact funds which have invested in us. So it's a combination of all that which sort of works.

AI assessment note: “So our capital comes from three sources, you know, of course, equity”

Q So Mithun, let's step back, and can you describe us the jewelry market of India in its all glory?

A Let's divide the jewelry market into certain sections. The largest piece of the jewelry market is the plain gold jewelry business. That's an area which is the largest piece, and we frankly don't even exist in it yet. This is where people for years have invested in gold. They haven't looked at this adornment alone. You can say 70% of the thought process is investment, and 30% of their thought process is adornment in that. You think about, um, the next phase, which is, um, you know, the traditional arts of India, which is in Jaipur, you have Jadao, in South, you have temple jewelry, and so and so forth, and all other parts of India. That possibly is another 25% of the market. And that 25% of the market is very ethnic. Indians love to wear from different parts of the world, and that's why that market keeps growing, and we all enjoy that. The third part of this business is the diamond jewelry market. Now, that market is just about 50 years old. And possibly the fastest growing piece in this. It also has great value addition for everybody. And if you think that society is modernizing, you would see a lot more people wanting to wear diamond jewelry as well, because our clothing is so westernized now as compared to where we used to be before. And we are, at the end of the day, jewelry is an accessory that complements what you wear. In the diamond jewelry piece, you can say now you've …

AI assessment note: “Let's divide the jewelry market into certain sections.”

Q Dheeraj, now I want to go back, like, 20 years back, right, or maybe more, 25 years back, and talk about your whole journey. Can you tell us more about your family, your roots, which city you came from?

A Yeah, and for that, you have to go back almost 40 years, you know, because, um, I'm 46 right now, and I grew up in Patna, and when I was 16, almost 17, I came to come for my undergrad at IIT Kanpur. I pursued my undergrad in computer science at IIT Kanpur, and when I was 21, I mean, almost 22, I came to the U.S., And basically, at an age of 21, I had a fork in the road. I could have joined Unilever here in India. I could have gone and done IT consulting with Deloitte because in 97, this was the first year they had come directly to come and hire out of campuses in India. Or I could have gone and pursued PhD at either UT Austin, Urbana-Champaign, Columbia, you know, Southern California, USC, and so on. And I talked to one of my seniors, it was two years my senior, his name is Gokul Rajaram. And, uh, he's another really accomplished person in the Bay Area. You know, he was very early at Google, was a product manager for AdSense for like seven, eight years and went to Facebook and built their entire business and then was at Square for the longest time and so on. So I spoke to him and he's like, you know what? You need optionality. Don't commit to anything but a PhD. And so I ended up at Austin because I had a fellowship, so I didn't have to go work. UT had It basically said, look, we'll pay for everything, just come and be a PhD student, which is exactly the same opportunity that G…

AI assessment note: “I grew up in Patna, and when I was 16, almost 17”

Q Open is a new bank for small and medium businesses, helping them with all their banking needs. Today, they have an enterprise suit also for the banks. I'll let Anish talk more about Open, but first let's deep dive into his own journey. Anish, can you share, you know, your trust with entrepreneurship? How did you get started in entrepreneurship, your family background, and about your parents?

A So Siddhartha, sir, I was born in Kerala in the small town called Perindulmana, which is near to Calicut. And I, my parents were into the government service. My dad was an engineer and my mom used to Work as a school teacher. And I always aspired to become a journal, a journalist throughout my, uh, throughout my school. And because of that, I used to always like, you know, uh, have this, uh, ability to connect with news or keep exploring more things, the curiosity to learn things. And, uh, that's when the, when the internet started by the, while I was in seventh standard, I got my first email address and by ninth, I got started building websites. And, uh, I also happened to read the story of, uh, Sabir Bhatia and the Dotcom, and I was really inspired by what the potential that internet can bring, and especially dotcom, because it was actually connected to the, my dream of like doing something on the media space. And, uh, 2001, I ran away from my home to a place called Truandrum, which is the capital city of Kerala, which is 300 kilometers away from my, uh, place where I grew up to do my first dotcom startup called India first dotnet. And in the initial three, four years, I used to Stay in a tumble and a railway station. And I have like three more, three of my friends who was co-founders at the point of time, they were going to college, which was also supporting me. So I ran thi…

AI assessment note: “my parents were into the government service... to do my first dotcom startup”

Q Gautam, uh, before we dive deep into your lessons on compounding, I want to explore your journey, right? How you started in investing, uh, and what are the sources that you learn, uh, the real power of compounding yourself?

A Sure. So I come from a family of four and I was born and brought up in Kolkata, India. And as we, as you very well know that the Marwadi community in India is known for having business in its genes. So ever since my teenage years, I was very fascinated by the, by the concept of entrepreneurship, especially by the fact that once a solid foundation is established for a business, the owners do not work for money, rather money works for them. I did my graduation, uh, Uh, with a specialization in accountancy, so pursuing higher studies in the field of finance seemed like a natural extension. I did my MS in finance from IFA University, Hyderabad, India, and I also did my MBA in finance from Nirmala University, Ahmedabad, India, and later on, I went on to obtain my charter from the CFA Institute, USA. After completing my MBA program, I got placed as an analyst in the investment banking team of Citigroup, and I worked at their Mumbai office for three years, and after that, I Moved to Deutsche Bank, where I worked as a senior analyst in their investment banking team for almost four years. As regards, how did I get my start in the Indian stock market? As is typically the case of most investors, I was simply pulled into the stock market out of sheer greed during the final euphoric phases of a bull market. In my case, it was the 2003 to 2007 bull market in India. I still remember I'd purch…

AI assessment note: “As regards, how did I get my start in the Indian stock market?”

Q And how do you incorporate checklists in your investing process? And how do they help you make higher quality decisions in investing? Because you are saying throughout these cycles, which you mentioned,

A So a prudent, a prudent investor never purchases ownership in a business without conducting the necessary due diligence. You should study about the company and its competitors, both listed and unlisted from company website, company filings, information on the internet, and you should read the last 10 years annual reports, proxies, notes and schedules to the financial statements, and the management discussion and analysis section, or what we call MDA. Within the MDA, check for changes in management tone and industry outlook, and also observe the recent trends in insider shareholding. After you've concluded the initial groundwork, proceed to study the following parameters in checklist fashion. Income statement analysis, cash flow analysis, balance sheet analysis, returns ratios analysis, operating efficiency analysis, management quality analysis, and a psychological checklist of the standard causes of human misjudgment. All these seven categories are detailed in my book chapter on checklists. At the same time, it's very important to understand and realize that the ideal checklist is subjective and it varies from individual to individual. For instance, the primary checklist items you look at when evaluating deep value cyclicals or commodities is very different from the primary checklist items you look at when you're evaluating high quality secular growth stocks, where the quality …

AI assessment note: “proceed to study the following parameters in checklist fashion. Income statement analysis, cash flow analysis”

Q And there are certain final nuances to individual position sizing, which is initial allocation plus subsequent pyramiding, which one gets to learn over time with experience in investing. How was your experience Been with this and how have you evolved your approach on this?

A So I size individual allocations in my portfolio according to my evaluation of potential risk with the largest allocations having the lowest likelihood of permanent loss of capital coupled with above average return potential. I initiate new positions with a minimum weighting of three to five percent and subsequently average upwards if the management executes above my expectations. It's very important to realize that Individual position sizing is important, not only for its impact on overall portfolio performance, but also for one's mental peace of mind. I sell down to my sleeping point. If any single position becomes a discomfortingly large percentage of my portfolio value. And one should have higher allocations in businesses with disciplined capital allocators, solid growth prospects and longevity of growth. As Mae West very aptly put it too much of a good thing can be wonderful.

AI assessment note: “I initiate new positions with a minimum weighting of three to five percent and subsequently average upwards”

Q And in the time frame when you pivoted, did the revenues hit zero or near to zero because of that?

A Yeah, we almost got to zero. Uh, so I, you know, I, I told you, right, at peak we were about two, two and a half million dollars. Um, and then when we pivoted, we lost one of our biggest customers, uh, because they didn't like us pivoting and, you know, shelving the previous products. It's just, um, churned and that triggered a series of churn. Uh, initially we were a little reluctant because we were, you know, we wanted money to survive. But, uh, once we had some traction on the current product, we forcefully churned all the previous, uh, customers on the previous stack. So that got to zero in about a year and a half period from the time we pivoted. Um, and today it's all, all the, you know, the new stack that we sell.

AI assessment note: “Yeah, we almost got to zero.”

Q Anjali, uh, now I would like to go back in time and would want to know how your journey started, right? You worked as an engineer in ISRO to being a consultant at McKinsey, then being chairman of a, of a very large bank and now a VC.

A It's been an interesting journey full of lots of learning, lots of new experiences. Um, I did my project internship at ISRO. I grew up in the generation that was fascinated by Isaac Asimov and Carl Sagan and space and Star Trek. Uh, so I thought I would actually go work at ISRO and potentially at some point go work at NASA and so on. But I think having spending a year in a lab helped me realize, and I think this is very important for entrepreneurs as well. It helped me realize what I like doing, but what my strengths are. And, um, that led me to then pursue a degree in international policy and business, uh, from Columbia, and then joined McKinsey in New York as a strategy consultant focusing on financial services. So from there, I actually got involved with the banking innovation, particularly as it relates to microfinance. I moved back to India in 2000, continued to work with McKinsey. Um, ended up sort of chairing the board of Women's World Banking, advising Seva Bank, getting very involved with microfinance, not just as a development tool, but also as a mainstreaming activity for an entirely new borrower segment. And, uh, some of the earliest, uh, companies at that time that we, uh, sort of supported through lending, whether it is a Bandhan Bank or an Ujji one today, are very successful large-scale enterprises. So from there onwards to my first entrepreneurial opportunity, s…

AI assessment note: “I did my project internship at ISRO. I grew up in the generation”

Q And Anitish, you also raised from Rakesh Junjunwala, sir. Uh, right. How, how did that happen? Right. I'm very interested to know that story.

A No, sure. I think we had some common connections and, um, I kind of, uh, you know, reached out to him and his team connected with me. And, uh, he really, we just had one meeting before he decided to invest in the company. And I think what he liked was two, three things. One was obviously gaming as a macro trend, uh, which is going to become very large in the years to come is something he really believed in. Uh, the second was Nazara had persevered over a very long time, right? When he met us in 2017, uh, we had already existed for 17 years. So he felt that we had the capability to persevere for a long time and the energy to persevere for a long time. So even for the next decade, We could actually persevere as the market grows. And third, being a value investor, he appreciated our use of capital, limited use of capital, uh, and other high levels of profitability and cash flows that we generated. Unlike a lot of the other businesses, he was seeing in the tech space, burning a lot of money. I think these were the three things that he really liked and which is why he invested in the company, uh, in late,

AI assessment note: “we had some common connections and, um, I kind of, uh, you know, reached out”

Q And can you share your journey, like key milestones from 2003, what you built, what are the revenue sources that keep the company floating? How did you repay back the debt?

A Yeah, I think, uh, uh, So the debt was repaid by 2004, uh, you know, through revenue models that I kind of been able to generate profits and been able to generate. From 2004, we kind of jumped back into gaming in a proper way. We focused on mobile phone gaming instead of, you know, the online gaming that we were doing. Started working with many telcos in India, expanded that business globally over the years. So by 2000, I would say seven, eight, we were running a fairly profitable, tight, lean and mean shop in that sense. Westbridge Capital had invested in 2005 and 2007 small amounts of money, 1.5 million dollars each. It raised a total of three million dollars, and by then the company had become profitable. So then we focused very much because of the early struggle that we had, our focus was a lot on cash flows, not chasing vanity metrics, focus on tangible business. So from 2007 to about 2015, we raised, I mean, not raised, we kind of accumulated profits of about 202 150 crores. Uh, and hadn't raised any more capital. Uh, from 2015 onwards, we kind of started again expanding into different verticals of gaming, and we approached, uh, I would say, uh, acquisition driven strategy, uh, which we also like to call friends of Nazara, uh, you know, uh, ecosystem. And that also worked out very well for us and was an enabler in terms of the IPO that happened as we were able to, you kno…

AI assessment note: “So the debt was repaid by 2004, uh, you know, through revenue models”

Q And can you tell the various milestones in the journey? Like, you know, if you can share what was the revenue back in And what's the revenue today?

A It's, it's, yeah, I don't even think it's admissible, but, um, so when we started, we were in events business. Sponsorship was the only way for us to generate any form of cash. So I think the first year we did maybe 40,000 in revenue. The second year we moved to six lakhs. The third year was 40 lakhs. The year after that was one and a half, then five and a half, and then we ended the last year at about 10 and a half. So, um, it's been interesting because, you know, like our model has changed from being an organization that relied only on ticket sales as revenue to then becoming something that was supported through branded content and ads to now actually moving away from that model and relying completely on B to C revenue, uh, which is the user directly paying for the courses on the app. So it's been sort of like a transition after every couple of years.

AI assessment note: “first year we did maybe 40,000 in revenue... ended the last year at about 10”

Q Can you tell us about the latest fund of Unicorn? How much it is raised? What's the size? How much it has been closed? And what's the plan?

A Yeah, so our first fund, uh, as you know, which we started in 2016 is a hundred crore fund. We've deployed the entire amount. This is a slightly larger fund. It's 400 crores, uh, of which we've done the, we've announced the first close, I think it was March last year before COVID really took shape in, uh, at 90 crores. Subsequent to that, we've not announced any closure, but we've raised about another, uh, 150 or close. So we are close to about 250 crores. We are looking to, uh, raise the remaining one 50 crores by September, October. Uh, so it will be a 400 crore fund from the second fund, uh, as you picked up some of the names like Finin and Probus, Sasken, these are all investments from the second fund. We've already invested in six companies. Uh, and I guess two of the companies will, uh, will go into our problems before we close our fund itself. Uh, and, uh, this fund, uh, unlike the first fund where the entire money, uh, where the entire LB money came from, uh, local Indian investors in this fund, we have a, a feature structure through which we raised already a substantial amount of money from overseas.

AI assessment note: “It's 400 crores, uh, of which we've done the, we've announced the first close”

Q So, so how has the fund grown over a period of time? You mentioned the first fund was 125 crores. How, how big is the current fund? And how many companies do you fund from, from every fund?

A So first fund was 125, uh, crores. We funded nine companies out of it. And, uh, we wrote down two of them. Uh, we have, uh, we launched a second fund, which, uh, in, in 2016, this was a 300 crore fund. Where we funded, uh, about 19 companies. And now we are on a third fund where, uh, which we are raising, uh, you know, amounting to 500 crores. We've done a first close already, and we are looking at a second close by end of December. So our, our thesis has remained steadfast. We'll continue to focus on enterprise tech. And in the third fund, we anticipate, uh, creating a portfolio of about 20 to 22 companies. Uh, in the previous funds, you know, because of the fund size and all, we actually also did seed seed plus investments. In the third fund, given that the corpus is a little larger, we would do more of pre-series A and series A, while, you know, we will take very few selective bets on seed seed plus companies. Very few. That's how our portfolio construct is going to be.

AI assessment note: “second fund... this was a 300 crore fund... third fund... amounting to 500 crores.”

Q Ankur, also would like to know from you that, ah, what's the interest rates that you come in, ah, for, for a startup? What are the repayment cycles like? And for how long, let's say, if you deploy 40 crores for you, ah, at what point in time do you fully, you know, receive your principal and interest back?

A So, for us, ah, the, we have been a bit flexible on that part of it. So, our interest rates range between, ah, 14 to 18%. Ah, then that is one. Second is our loan tenor can range and we have done transactions as short as four months also, ah, at one off and we have done transaction as one off as five years also. But if you look at average tenor it will be between like 24 to 36 months. Ah, in terms of the when the money starts coming back is the interest servicing starts from day one, right? So, the moment the money goes, ah, the next day itself we start getting our interest accrual. And when you look at the principle part of it, generally it can range from a average duration of principle moratorium that we give is three to six months and post that on an EMI basis on a monthly basis we start getting a principle back.

AI assessment note: “our interest rates range between, ah, 14 to 18%.”

Q And how is Indonesia a market as compared to India in terms of SaaS adoption and willingness to pay for SaaS?

A So I think, um, that's a great question, Sadam, and you know, something that we've asked ourselves a lot of times as well. Um, I would say the, the adoption is actually a bit similar to India, like it's just starting to happen. Um, I think just like India had its own geo movement, like, um, Indonesia has had not a telco-led movement, but more, uh, uh, tech unicorn-led movement. With the likes of Gojek and Grab and Toppedia and Bukalapak sort of opening up the market and educating the market towards tech, right? Like, um, all of these platforms have, um, hundred million plus sort of users, and, um, the total population of Indonesia is around two sixty million, and the addressable population from, from, you know, a tech VC perspective is maybe around one 50 max one eighty million. Right? So significant amount of adoption has already happened on the consumer side, which is sort of seeping into the SME side, and now is sort of the best time to build these kind of SME, um, digitization platforms, right? So from an adoption perspective, very similar to where India sits today, but from a willingness to pay perspective, it's very interesting. I think the willingness to pay is a bit higher than in India, um, thanks to sort of the higher GDP per capita. Um, that Indonesia sits at. Um, but again, that there's a slight nuance, you know, Indonesia is mostly led by micro, um, businesses and …

AI assessment note: “adoption is actually a bit similar to India... willingness to pay is a bit higher”

Q Can you tell us more about Sistema? I believe it's a Russian conglomerate which built a fund in India and would love to know about Sistema's journey.

A So, yeah, so Sistema is a large Russian conglomerate. We like to call them as the Tatars of Russia. They have operations in about 18 sectors. And these vary from, uh, telecom to financial services to retail, healthcare, paper and pulp, et cetera, et cetera. In India, Systema had a joint venture with Sham Group, and they were running the MTS telecom operations for about 10 years, and, you know, we know how the telecom story ended for a lot of the players, so they also, uh, wrapped up their business somewhere in 2016, and, uh, and decided to exit the telecom business, but while they were here, they built a lot of equity and network with the startup community, a lot of Early stage companies would reach out to them to tap into the balance sheet, uh, and to, uh, you know, uh, form business partnerships. And so, uh, Systema at the parent level decided that we need to have a play in India, and we need to learn from the Indian ecosystem. So, uh, in India and Russia and Germany, they launched a string of, uh, venture funds, venture funds and private equity funds. So we were beneficiaries of one of that, uh, theme. We started this fund in 2016 with a focus on mid-stage investments. We looked at the landscape fairly deeply and realized that while early stage has a lot of established brands, Uh, and late stage has a lot of capital in terms of Softbank and DSTs and all those guys. The real …

AI assessment note: “Sistema is a large Russian conglomerate. We like to call them as the Tatars of Russia.”