The Exchanges

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, uh, you have some diverse investments, which are neo-diagnostic startups, SASCAN, Which is MedTech, blockchain-based chipmunk platform, chipmunks, and Probus, digitizing power sector. So these are not very popular sectors. How did you, were able to identify, uh, these rising sectors at the time of investment, and what are the theses on backing these companies?

A That's a great question, uh, Siddharth. And one of the things, uh, you know, our fundamental thesis is we stay away from consumer, you know, consumer internet, classical B to C businesses. If you see my background, all the businesses where I have sort of either ran or, you know, exited myself. Have been in businesses which are, if you will, on the boring side of the supply chain, where it was all about digitizing of existing business processes. And I fundamentally believe that given where India is, the size scale, the broken supply chains, the fact that there is still lack of transparency, a whole lot of sectors, this whole area of digitization of business processes is going to be massive. And that is a theme which basically runs across both our first fund and second fund, uh, except for a few we might have taken conscious calls to do otherwise. And with that team is where we have invested in these three businesses. If you see, you know, if you see, uh, let me take one at a time. If you see the power sector in India, that's one of the, uh, areas which is ripe for complete rehaul and digitization. Even today there is, especially on the distribution side, even today on the distribution side, there is spill footage, there is leakage. And obviously technology will play a big role in this, whether it is the rollout of smart meters, whether it is the rollout of Uh, you know, uh, tech…

AI assessment note: “our fundamental thesis is we stay away from consumer... digitizing of existing business processes”

Q And you all have been early bettors in neobanking, for example, Open and Finan. How did you spot the early trend in neobanking, and how do you identify these companies to back?

A Uh, let me step back to about 20 15. We invested in, uh, in open bank, I guess it was in 2017, but as you very well know, Siddharth, uh, London, UK and especially London, uh, remains the new banking capital of the world, so to say. Uh, the whole, uh, open bank architecture has been spearheaded out of London. Uh, FCA was the first ones to legislate open banking architecture. And being in London, I had a strong sense The banking industry was going. You know, if I give you my uh,, ah, broad thesis, if you see where telecoms have gone and utilities have gone, especially in the West, is today the old utility companies or the old telecom companies are mere service, sorry, are more mere infrastructure providers. It is on top of that you have various equivalent of MVNOs, the old MVNOs in the telecom industry, who came and started providing consumer facing propositions, you know, different, uh, price ranges, different propositions, and the whole telecom industry has been decimated because of that. I saw a similar trend happening over here in the banking, where the traditional banks, be it in UK, in NatWest, Barclays, all they would do was become the infrastructure provider, which in case of banking meant compliance providers, be the depository, the treasurer, all of that, and multitude of front-end applications started to be built around that. So in UK, you had Revolut, you had Sterling…

AI assessment note: “I saw a similar trend happening over here in the banking”

Q Can you share, how can you identify your co-founder Anil Joshi for unicorn India and how did you both team up together?

A You know, it's a great question. And, uh, recently, uh, I had mentioned, uh, somewhere, uh, that, uh, at the end of the day, uh, fund is nothing. Starting a fund is exactly the same as starting your own startup venture. And one of the biggest, uh, challenges in that is to find your co-founder and most of us, even whether it is in funds or even in startups, make the traditional mistake of, you know, Taking someone as a co-founder who's exactly complementary to you, you know, or someone with whom you can, uh, sit down and always like to have a drink or a beer. Not that with Anil, I don't like to have that, but you know, we are very different individuals and both in terms of complementarity of skill sets, We compliment each other as well as when it comes to, you know, the whole mindsets. So whenever one of us is at a high, he sort of, the other guy sort of brings him down to ground or vice versa. So, you know, complementarity of co-founders is a sense. For me, although I spend substantial time in India and I'm well clued onto the Indian ecosystem, but given the fact that I do spend a lot of time in UK as well, I needed a co-founder who obviously was based in India and who was really from the heart of the ecosystem. And as my background, you've seen, I've been more an entrepreneur scaling up businesses and exiting. So I needed someone who was more an investor in the system. And the…

AI assessment note: “we would have ideated together and because our investment philosophies matched. So we started”

Q And, and you also mentioned early in the podcast that you avoided consumer, uh, as a fund thesis. Why did you make an exception in this case?

A It's a great, it's a good one. And we've been asked this by our, our LPs as well. Uh, you know, Honestly, it is the size of the market and the, uh, the kickstart, I think that, uh, Finin had over some of the others, which made us, um, you know, deviate from a standard non-consumer type of play, even in the first, all, uh, Finin is from the second fund. Even in our first, first fund, we do have a consumer lending company, SmartCoin, which has done phenomenally well. So it's not that we are apathetic to pure consumers. We have to see a transactional mode rather than, you know, constantly the companies depending merely on, uh, you know, equity funding to scale up. So that's not in our DNA. So I'm sure Finin will be one of the successful reasons the consumer will have.

AI assessment note: “Honestly, it is the size of the market and the, uh, the kickstart”

Q You also offer a union, United Kingdom, India cross border fund called unicorn extension fund, which helps startups in UK enter Indian market. Any examples from that fund which, which, which are success stories or case studies?

A There is, uh, so let me tell you, uh, the rationale of that fund. Uh, the rationale of that fund was, you know, while in India, businesses scale up extremely fast, given the size of the country, given the size of the funding associated with the demographics of the country, the UK startup environment is very, very different. In a way, it is an environment where, The founders tend to be older founders. They tend to be founders who worked in a particular industry for a long time and then come up with propositions within that industry. And therefore what happens is these tend to be very deep tech and very, uh, uh, resolute type of industries. Let me give you a couple of examples. You know, there are, and UK is known for its med tech. UK is known for, uh, you know, all these things in the e-governance area. So I saw potential where some of these companies, they couldn't scale up because of the size of the market, but some of the technologies they had would do very well in India. So because of that logic and rational, we created a fund. It is a joint venture fund along with another local Uh, fund over here called Accention Ventures, through which we invest, we have invested till now in about eight odd companies, uh, all of whom have a potential to go to India. One company which is really scaled up in India is a company within the eye care sector. You know, they have, uh, and they typ…

AI assessment note: “One company which is really scaled up in India is a company within the eye care sector.”