The Exchanges

Q in their models in some businesses, and some businesses are getting, you know, completely a hundred percent, one 80 degree pivot. Some of business are trying to, you know, lay, uh, do layoffs and just survive through cutting costs. Startup founders are making super tough calls. I think, uh, in this decade for the first time, what are your portfolio companies doing specifically to cope up with the COVID times?

A So I think, um, um, our companies are doing pretty much what, um, I think all other companies are also doing. The first and foremost objective of any company during COVID is to simply survive this entire period. I would bucket our companies into two sort of buckets. One is a bunch of companies which have been positively impacted by COVID. Uh, and there, um, I think, uh, there is no worry over there, except the fact that if they were going to do some fundraising, then that has got delayed. So they need to ensure that they have enough runway, uh, to be able to run their companies until, uh, the funding happens, uh, while keeping, uh, up with the pace of operations and the demand, uh, surge. So I gave one, one such example Which is a gully network, which obviously saw an increase in consumer demand in their retail stores, which they were managing. Uh, there is another bucket of companies which have been negatively impacted, uh, during this time. Uh, so one of the companies that I gave an example earlier on in the podcast was Money and Click. And, uh, this is a lending company. Now, imagining that, uh, COVID despite being a health and a humanitarian crisis has deeply impacted the economy. And this naturally will bring economic hardship irrespective of, you know, sectors. Um, for people, especially employees whom they lend to. So, um, what they especially started to do was stop the …

AI assessment note: “I would bucket our companies into two sort of buckets.”

Q What are the some investments you have led since joining Orias in 2018?

A So my first investment, uh, was, uh, in, uh, Beto, which is, uh, full stack diverse management, uh, company. This was, um, already invested by some angels, very leading angels and two funds. It was a pre-A round. Uh, the team consisting of Gautam and Yash is, um, an excellent team. Uh, one of the leaders in that space completely. We saw a large space and, uh, a great team, uh, with some early execution, uh, that was, uh, extremely, uh, you know, uh, outstanding in their own, uh, in their own way. And a lot of runway, uh, for growing further from there. So we basically invested, uh, on that basis. Um, the, um, another investment that I led was in a completely different space, which was fintech. So money on click, uh, this is a team which is ex-lending cart, Vishal and Imanchu, uh, based out of Bangalore, um, uh, digital source sourcing and digital underwriting for salaried but underserved group of customers. And, uh, you know, probably the best team in the business. Again, uh, co-invested by, um, other funds, uh, no angels this time, but a large space, therefore, great team with, with, like I was saying, prior, uh, examples of excellent execution, uh, courtesy of their lending card experience. So, uh, we, in fact, invested even before they had any product or started, or started their business. So it was completely at a pre-seed stage. Another such example is in the, is in anothe…

AI assessment note: “So my first investment, uh, was, uh, in, uh, Beto”

Q You have been very active with Misfits. You have, I believe, three batches of Misfits, uh, before COVID. So is the fourth batch happening in coming time, or are you focused right now on building the existing portfolio and reinvesting in them?

A So our, um, uh, third batch is, uh, running, and, um, we keep, uh, selecting companies to Uh, take into the next batch. The third batch is full, but we are still investing from our, uh, current fund and therefore looking at, uh, admitting New, um, you know, so investees into the next, uh, cohort, which is cohort four. So, uh, we keep meeting up with startups and, and startup founders to, um, sense any opportunity over there, uh, for, for us to partner with them. And we'll certainly keep the, you know, keep looking out for them to join our cohort four. Uh, but in terms of time allocation at this point of time, yes, we are working with our folio companies, uh, across the already established cohorts, uh, uh, very closely. So, uh, almost, uh, you know, 60% of my time, uh, is going, uh, into the current portfolio companies, uh, to help them, uh, through this crisis as also to help them with, uh, anything else that they might need.

AI assessment note: “almost, uh, you know, 60% of my time, uh, is going, uh, into the current portfolio”

Q Orias portfolio, uh, looks very diverse from Miss Malini to Country Delight, Roastal, Farm Easy, Pretty Secrets. Can you share philosophy behind investing in some of these companies?

A So indeed at Orias, uh, we are a diversified, uh, Tech-based fund. We use a couple of principles for investing. One is these should be extremely large spaces where fragmentation, asymmetry, scope for therefore organization from an unorganized environment consisting of multiple players and lack of, you know, information, pricing, discovery, etc. There could be multiple pain points, ah, and these could result in large businesses, ah, doing that on the basis of tech or using technology as one of the key pillars. Uh, we look for, of course, the, uh, best founders in that sector. So that goes without saying, and that's the number one, uh, criteria for us to choose a team over another team and, uh, make our investment. Uh, otherwise we simply wait in that particularly identified sector, uh, for the right team to come about. And, uh, third, I think, um, it's the, it's the quality of execution, uh, that we have either seen The team do in their past lives. They may be startup founders before. They may have succeeded. They may have failed. It doesn't matter. Uh, or Uh, if they've already started working on their idea when they've come and met us, then, uh, what sort of execution have they had? And the quality of it is obviously far more important than the quantity of it, uh, being early. So with their small scale, small teams, small funds, uh, what have they managed to achieve? How well …

AI assessment note: “We use a couple of principles for investing. One is these should be extremely large”

Q So, uh, let's talk about FarmEasy. FarmEasy has been the crown jewel of Orios portfolio companies. Can you share more details on, you know, uh, when you came in, uh, into the FarmEasy, uh, what was a special thing that you saw about the business model or about the founders?

A So, um, uh, look, Rehan is the lead on this, but, uh, suffice it to say that, um, uh, FarmEasy, um, is, is, is bang on thesis as far as, uh, you know, some of the principles that I highlighted basis, which, uh, Orias makes investments, uh, which is, it was a large unorganized market. Um, you know, each of the players, um, not holding more than one percent, lots of, uh, you know, value loss in the entire chain because of information asymmetry. Um, you know, consumers on one side, businesses like small hospitals, large hospitals on the other side, on the B to B side, all of the chain right from pharma company down to the consumer was completely, uh, kind of broken and fragmented. So if, um, a platform came up, which provided the marketplace for consumers to discover the products and, um, you know, be able to get it delivered at their houses by uploading a prescription or getting to talk to a doctor and make a prescription and then order it. Uh, I think that created a significant value by, um, Uh, organizing this entire, uh, supply chain and passing on the largest share of it to the, to the consumer, because the actual cost or the margins of the product, which is a medicine was extremely high upwards of, you know, 75, 65, 75%. And a large part of that value was being cornered by the unorganized players of stock is distributors and various middlemen. And, uh, this needed to be orga…

AI assessment note: “FarmEasy, um, is, is, is bang on thesis as far as”

Q And, uh, you are some of the people who have come outside from the venture world. Most of the VCs and the VC partners, especially like we see, you know, Rayhan, they have a decade of experience in venture investing. So, so do you consider yourself an outsider to the VC world or how do you deal with it?

A So Siddharth, I think a good question. I think it is only fair to say that, look, I am not a, um, I'm not from the traditional investment, uh, space, so to speak. Uh, and therefore I don't have 10 years of, let's say investing experience, um, you know, behind me, but I do have, uh, um, a good, um, sort of now four years of investing, um, experience behind me, uh, with, you know, out of that, Almost three of them, uh, you know, being here in Urias as well. Um, so yes, I think one could treat that as, uh, you know, I, I am a definite newcomer, uh, formally speaking into the investment space. Uh, Urias, um, uh, has, uh, Rehaan, myself, and then Rajiv was the third partner. He joined us last year. Uh, he also comes from an operating background and that's the common thread that runs amongst all partners that arise. We feel that, uh, this is the special sauce for us as different from other VC funds. We come with operating experience and therefore Our mentoring is rooted in our own actual experiences. We have not risen from looking at Excel sheets, uh, only to make investments and to be able to mentor founders. We are able to lean back on the mistakes and experiences that we have had while working in large spaces and large companies for large corporations. And provide the depth of that experience, uh, to founders for solving their problems. So our suggestions look more realistic. Our …

AI assessment note: “I am a definite newcomer, uh, formally speaking into the investment space.”

Q And what about, uh, uh, companies in co-working space? You have a portfolio companies also, which is in, uh, hostel space, or I would say co-living for a short period of time space. How are they impacted from this time? And do you think they'll be able to recover?

A So, um, Zostel, uh, is a satellite model of, uh, uh, hostels, which are basically meant for the youth. It is no secret that, uh, there is no travel, tourism, leisure happening at this time. They come under the umbrella of, uh, uh, hospitality overall, and that sector has been, uh, the most adversely impacted, probably next to aviation. Uh, I would, I would imagine, or, uh, yeah, or any such related businesses. So, um, I think, uh, uh, will consumers, uh, travel again, uh, in groups? Will the youth want to take holidays and explore new places? I don't think human beings are going to change. Uh, so that I think is going to remain. Now, um, what happens, um, you know, uh, Um, um, and how long does it take for us to come back on track for the entire sector to start? That is, I think, anybody's guess. Uh, as we know right now, it is, uh, completely up to the government to, uh, start opening up various, uh, you know, areas of activity. Uh, I did see a newspaper or, uh, or a clipping in one of the online news channels that, uh, the government is thinking of allowing states to operate domestic flights if they so agree with each other. And therefore domestic aviation could start. Uh, so therefore travel for business, travel for, you know, other occasions, uh, could actually start. And once that starts to happen, I think, uh, you know, you will see some, um, sort of come back, uh, to nor…

AI assessment note: “that sector has been, uh, the most adversely impacted, probably next to aviation.”

Q And you believe, has the pace of investment slowed down or is still going on pre-COVID?

A So pace of investments has definitely slowed down. It has slowed down overall. And it has slowed down definitely at the early stage. We have also seen that the, uh, pace of investments, uh, not just that, but pace of, uh, supply of, uh, let's say entrepreneurs has also slowed down. So, uh, the number of companies or startups which were getting formed, the number of teams which were coming together to form, uh, new ventures and launch their products or services in the market, that has also gone down. And therefore we're meeting, uh, fewer startups at this moment. Um, so overall, yes, uh, the investing, uh, uh, community is seeing, uh, slow down, uh, directly as an impact of COVID, uh, and it's across stages.

AI assessment note: “pace of investments has definitely slowed down. It has slowed down overall.”

Q If you can share one or two areas where your portfolio companies are seeking your most help in current times, what would be those areas?

A So, um, I think it'll be fair to say that, uh, look, most of the startup founders, they, uh, their chief, uh, cause for worry is always, uh, runway, and therefore cash. And, uh, that's one of the biggest, uh, needs that they have. So, um, that is, that remains, uh, one of the, uh, biggest, uh, sources of concern that they will seek our help on. Uh, the second one would be to, um, also exchange some thoughts and ideas in terms of how they should, uh, vary their operational plans in order to stay relevant to consumers, as also to, uh, sometimes brainstorm as to the measures that they could take, which we might be knowing about on how to go about, uh, you know, preserving cash and cutting down on some costs and some strategies for doing that. So I think one is the, uh, one is funds, and the second one is on the operational side.

AI assessment note: “one is funds, and the second one is on the operational side.”

Q If you can share, uh, before joining Orioles, what were your personal angel investments like, and how are they doing now?

A So, um, uh, my journey was, uh, look, I did invest in, um, agri tech. I was a very small investor. This was into B to B hydroponic farming. So this is, uh, the farm is coming up. Uh, there is, I invested as an angel investor in, uh, which, uh, is doing well. Uh, they faced some challenges, but then after that they've come back and, uh, through the COVID, uh, era, Uh, they've really gone from strength to strength. Uh, in fact, they've launched a dialect-based entertainment platform which connects consumers to amateur artists, uh, which is called Stage. So if you download the Stage app, you will see today how, uh, amateur artists, uh, are displaying their talent in the Haryanvi dialect. Um, for, for consumers from Haryana or consumers whose, um, you know, dialect is, is, is Haryanbi. And they were opening up a new form of encainment. So that is really growing very well. Uh, one of the investments that I did in B to B networking, which is called let's gain. So that unfortunately is, uh, has not done well. And that is, uh, uh, you know, I think there, the tech product didn't really take off. And that's been a learning, uh, for me as part of my angel portfolio. Uh, so I think these are the sort of spaces that I, uh, I did some personal investments. Now, of course, I do all my investments through the fund.

AI assessment note: “one of the investments that I did in B to B networking, which is called let's gain”

Q You have, uh, uh, not invested in ed tech. Or SaaS businesses. Is there a reason behind that or is just that you didn't came across some of the best founders building in those categories?

A So I think the age of, uh, look SaaS business is, uh, built in India around, uh, The entire dollar rupee arbitrage between clients based here and clients based there. So the best way to, uh, um, basically run or spot a SaaS business for investment is if the clients are based overseas and the cost or the tech team, which is supplying the service is based over here. Uh, we, um, have tended to sort of stay away, uh, from SaaS businesses in the past, uh, because we couldn't, um, you know, uh, do due diligence on customers overseas. And therefore, uh, we kind of stayed away from that. We felt that it was too early in that space. But today, as we speak, I think the enterprises of all shapes and kinds have now woken up. They are ready to pay for technology for productivity. Uh, I think COVID has taught everyone that a client server environment does not work. You need to be working off a cloud based environment. So therefore you need to purchase cloud based products and SAS products, which help you to do accounting or marketing or, or do anything, you know, which, so that your team stays productive. Uh, you cannot be working in a desktop kind of an environment, uh, which is fixed to a certain office location. So, um, I think in the coming years, uh, businesses of all types, uh, will be very amenable in India to paying, uh, a SAS company, uh, um, subscription fee for using their product…

AI assessment note: “stay away, uh, from SaaS businesses in the past, uh, because we couldn't”