The Exchanges

Q Deepak in WH you have some of very interesting companies. We are doing great. We've also raised the follow on series B rounds like Prathilipi small case. Uh, what has been your thesis behind these companies?

A Okay. So I think the thesis has been obviously different in each. So I'll have to talk about each of them. As far as Prathilipi is concerned, uh, Prathina P is a company that I encountered a long time ago in early 15 before I launched WH Ventures. Uh, they were essentially at that time and still doing the same thing, which is have a user generated content platform for literary content. Uh, a model which was a crying need in India due to the lack of distribution opportunities for Indian content. And something that had actually worked out well in other countries like China or Canada, combined with a very impressive founder who was very driven and charismatic. So when I encountered this company, it made me think about the overall content landscape. And I concluded at that point in time that a few years from then, India would have a fairly bustling local content, vernacular content market, and this company Pratilipi could easily be one of the major companies in that content landscape. So I actually engaged with the company, shook hands with them, and worked with them to help them raise their first major round, which was a million dollar seat round. In which I also did a small personal participation. So by the time I launched my fund, WH Ventures, the company had flowered and grown quite well, and due to, I guess, my association with the company, they were kind enough to allow us to…

AI assessment note: “I concluded at that point in time that a few years from then, India would have”

Q And, and what about the other half of those companies? If you can share some of, some of the learnings on how.

A So I think the other half, uh, I think, uh, if you look at our portfolio, we have broadly, uh, Four categories of companies. One is in the content space. We have the likes of, uh, Trell, Pratilipi, Gypski. Then we have a couple in FinTech, small case, and, uh, early stage company called Infineo. Then we have a couple in consumer brands, which is Henry and Smith and Noto. And then we have Clinique, which we've talked about, which is, More of a healthcare slash fintech play. So out of these, I think the brand companies have a bigger challenge right now simply because of the lockdown. They are not in the grocery space, so they're not able to ship product. It's not that there is no demand. It's just that they can't. So they have to, ah, you know, just tighten up and wait for this to open out. So they are probably in the short term more affected. Uh, as far as the content companies, uh, as far as even clinic, I think, uh, it is generally positive because they don't have to ship anything physically. Similarly with small case, there is appetite for people to invest and with volatility trade more, uh, So that's, that's what it is essentially. So I would say the brand companies obviously have to adjust more. They've taken some action on reducing the costs, et cetera. Uh, now how quickly will it open out? We don't know that, right? It seems very hard to predict the path of recovery and w…

AI assessment note: “out of these, I think the brand companies have a bigger challenge right now”

Q You spent a long time working with Intel and in the venture capital arm of Intel. How did that experience help you, you know, in your WH Ventures journey?

A No, I think, uh, Intel has been a great learning ground. They gave a lot of autonomy. Uh, one had to do the entire life cycle from sourcing to pitching internally to board and exit. And, uh, You know, it has taught me about the basic principles of venture capital. These principles sort of get, uh, broken, you know, in bubbles, uh, but fundamentally, you know, how to evaluate companies, how capital is raised, how capital is deployed and allocated. Uh, I've been through a couple of downturns. Uh, one is I was, uh, I was a potential controller for Intel's Asia business when the 2008 downturn struck for a very large business it was. And I've seen how even for big companies it becomes very difficult to predict the precipice and the valley below when things turn south. So there are a lot of learnings I would say in terms of seeing downturns in terms of basic Principles of venture capital, uh, and having seen so many founders at different stages of evolution in different markets, which perhaps help, especially when the chips are down, I guess.

AI assessment note: “it has taught me about the basic principles of venture capital”

Q So overall, uh, what's your fund investment philosophy and approach?

A So we are a modestly sized fund and Like I mentioned before, we want the companies to raise seed capital to reach a certain milestone. We also do not think that just doing large numbers of deals is the answer to get to good companies. The companies have to be of a certain quality. So our approach I would say is to do not a very large number, a modest number of companies Uh, to make sure they're well capitalized. So we will invest and typically coinvest with other smaller or larger investors to make sure there's enough runway. Uh, we typically would like to say yes to them regardless of who else is investing. So we typically will not ask the question who else is there. We just want to know what capital amount is around the round or how will we get there. And then engage with them to, you know, move them forward. So it's essentially, uh, don't do spray and pray. Make sure the companies are well capitalized, collaborate with other investors. And, uh, you know, move them forward.

AI assessment note: “So it's essentially, uh, don't do spray and pray. Make sure the companies are well capitalized”

Q you are a very experienced investor, you have seen many cycles. So how are you advising your portfolio companies or the entrepreneurs who are even not in your portfolio, but you are a mentor to them to prepare for a crisis because there might be some commonality though all crises are very different. There cannot be one generic answer for each one fits all, but What's, what's your key advice?

A See, there are, there are two kinds of companies in this crisis. Uh, those who are sort of in the right sectors, which have some tailwind from the crisis. Those are the sectors which may have a negative headwind. And within that also, those who have capital, uh, which is very significant and those that don't. So if you are in the tailwind sector, many of our companies are, especially those who have content, or even small case, uh, and you have the capital, then you should be, what I call, semi-aggressive. Because if you see the general advice, it is survive. I think survive is good, but if you're actually getting tailwind, you should do better than that. So you should be semi-aggressive, which means not blow up all your capital, but slightly be aggressive, maybe even look for acquisitions, et cetera, if you have some skill. If you're in a sector which is more badly affected, then you need to just patent down and, you know, reduce your cost so you can really extend your runway. Because there are some companies where there's almost zero business in this lockdown. And then as the lockdown opens up, you'll have to see what is the recovery spike and then adjust your business. At that point, it's very hard to predict, uh, sort of how quickly that recovery will happen, uh, or not. So you just have to batten down a lot to preserve your runway. So that's what I would say to them. Of cou…

AI assessment note: “reduce your cost so you can really extend your runway.”

Q Almost every five years, there's a huge change in macro environment when it especially hits, you know, the entrepreneurs, when no one is prepared, no one was prepared for demonetization back in 16. If you can highlight, you know, if you have observed the qualities of the entrepreneurs who thrive in these changing environment the most, what, what are those?

A Yeah, I mean, see, there are, I would say, it's, you know, most of the entrepreneurs that have been funded in the last five years are relatively young, right? On average, sub-thirty. So I would say, ab initio, it's hard to gauge if they will necessarily thrive in crisis. I don't think it's a very easy question to judge. But you can obviously observe them when the crisis hits. So I think when the crisis hits, uh, one of the things is to be, uh, pragmatic and non-emotional, right? Which is actually a, uh, contradictory quality to when we appraise entrepreneurs upfront where we want them to be passionate and all that. But they have to be sort of passionate and pragmatic. That's what we're asking them to do. The second is, ah, I mean, that's an even higher ask is some of them are actually able to slightly see around the corner before things get really bad, and then take action, right, before the headlines are full of shit. If they are able to act, not many of them can. I think that's a very valuable trait Uh, I would say the third is sort of personal leadership, you know, where they are willing to take the pain and, uh, the fourth is I would say transparency, right? Transparency and clarity with the investors, stakeholders, and employees so that they're able to carry them along very quickly and come to some common ground and actually proactively do that. Like I said, if you see the…

AI assessment note: “one of the things is to be, uh, pragmatic and non-emotional”