The Exchanges

Q So how many pitches? Or how many companies to pitch to you in a span of a month or a year?

A So to give you a data point, we have met about, uh, or we have received 1500 plus, uh, plans over the last two years. So that would roughly translate to 60, 70, uh, per month. That number is gradually going up. In fact, you know, there are months we have seen 8100 companies come in. Uh, physically I would imagine we would probably engage with, uh, maybe about a third of them. So let's say 30, 40 companies every month we would spend some time in having conversations with. And then as you deep dive and you start evaluating, eventually I think our hit rate would be more like one in 71 in 80 kind of, uh, investment. So we have done 18. We have seen 1500. So that's a good way of defining it.

AI assessment note: “we have received 1500 plus, uh, plans over the last two years.”

Q What's your highest aspiration for your portfolio companies to go IPO or to be a profitable private business? What is that?

A I think the first aspiration is neither of the two is really, can you build long lasting brands? Ultimately, all of us, both from us and the entrepreneurs point of view are passionate about building brands. And we believe that if you can build a brand that can, uh, sustain itself for several decades, uh, even more than a few years, then that is really a dream achieved for all of us. Now, if that objective is met, then the journey of, uh, an investor who's along the ride with the company could be through an exit by a strategic or through an exit by a private equity buying you out, or even some cases through an IPO. But The bigger vision is that how can, you know, at Fireside, we be part of, say, the next 25 iconic brands that get built out of India.

AI assessment note: “I think the first aspiration is neither of the two is really, can you build”

Q And so what's your, uh, typical roadmap for these founders? At what stage they should be hands on with every, uh, department in the company and what state they should delegate and start focusing maybe on, you know, investor relationships or be the face of the company and outsource or delegate most of the functions.

A So see, like I said, we come in very early. So our point of entry is actually, uh, typically five crore of revenue pre series a round of investing. So certainly, you know, we see the entrepreneurs being very hands on and very involved in every aspect of business, all the way through series A, even up to series B. So our journey with them, uh, is really, you know, getting the founders to be more and more, uh, capable and more and more, three 60 in how they understand every aspect of business. But like I said earlier, one of the things that we are very conscious about is you start bringing in senior leadership into the organization. So that by the time you are at a 50 crore run rate, you have enough strength of people in your team who can do the day-to-day business, uh, on an ongoing basis. And the founders, I think they probably need to start then thinking about the vision of what next, what are the new areas of growth, what are the new ways of building the business further, rather than just running the day-to-day business.

AI assessment note: “hands on... all the way through series A... by the time you are at a 50 crore run rate”

Q And what's your ticket size in Fireside, and what stage you enter in these companies?

A So our ticket size typically can vary from three, four crores up to seven to eight crores as our first check. And we believe that that's a point where a company typically, again, we would look at some companies who would be in the revenue range of maybe 40, 50 lakhs a month. So let's say five crores a year. And that's the time when we really want to help the company establish what you would call a product market fit. So our money comes in, you know, our expertise, our knowledge of the ecosystem and how to build the brand It comes in to really help the company to achieve that most important understanding of what is really driving their success. You know, what are the key metrics? Who are the consumers? Why are they buying? Those kind of questions are answered. Once we get comfort around that, then we write a much larger check, uh, typically which could go from 15 to even 20 crores of rupees. So, in a company that is showing all the right elements of success and the basic DNA that we believe can build a large business, Typically, we would write up to 25 crores of capital from our side.

AI assessment note: “ticket size typically can vary from three, four crores up to seven to eight crores”

Q Sir, do your LPs have the same kind of exit expectations from these businesses, like internet businesses?

A So, interestingly, uh, our LPs are either large consumer family offices or even, in many cases, the, uh, consumer companies themselves. And we have publicly announced that, you know, the Premji Invest and the Marivala family and Unilever and ITC, these are some of our investors. So I think they are all expecting, uh, Obviously good financial returns, and that's what we are committed to deliver. But there's one big difference between say a typical tech VC portfolio and our portfolio. We believe that we will see anywhere from 60 to 70% of our companies with successful outcomes. So our dependence on one single success or two single success companies, which will do significantly high returns at the cost of some of the others not being able to do well, It's very different in our case because we believe that once you have crossed a certain size and scale, most businesses will deliver positive outcomes. So I think overall expectation of return and IRRs and performance, uh, is very much similar to any other, uh, VC. The expectation is that we will have a lot more successful companies, uh, out of our portfolio, and we may still have some, uh, significant successes, uh, which is the typical, the top 20%. But we will also have another 50, 60% of companies which will all be successful.

AI assessment note: “overall expectation of return and IRRs and performance, uh, is very much similar”

Q So what's your KPI or key performance index for measuring your portfolio companies when you say either they're succeeding or not succeeding as per your expectations?

A So it's not very rocket science. Uh, obviously the revenue growth is important, but what we do take a lot of focus on, and we are very, uh, you know, specifically targeting is that we are not looking at revenue growth at the cost of everything else. So we look at certainly the unit economics. Uh, that's a very important measure for us. Unit economics. I mean, the gross margin that the individual product is able to deliver. So even if you're spending on marketing, even if you're building teams, even if you're working capital is still relatively high, the inherent proposition should be profitable and should be able to make money for the company as you scale. So unit economics, the, uh, growth in top line. Third is the whole consumer side of it. You know, what is the acceptance by consumers? What is the repeat metrics? What is the cohort? What is the cost of acquisition?

AI assessment note: “unit economics, the, uh, growth in top line. Third is the whole consumer side”

Q Any of the startups which you have invested in has not grown Or has folded up?

A So not folded up in the sense that they have shut down, uh, maybe one or two of them, uh, but several of them which have not done well, uh, are still around. They're still trying to, you know, figure out their business models. So what happens is that in most of these businesses, because like I said earlier, the unit economics is quite favorable. The companies can continue to, you know, almost manage their, uh, expenses and manage their burn. Without having to shut down for a fairly long period of time. So they may not be companies, uh, which would give a great return as an investor, but not too many of them would actually end up completely shutting down. So that would, that would be the slight, you know, I would say a nuanced answer to that.

AI assessment note: “So not folded up in the sense that they have shut down, uh, maybe one or two”

Q For the listeners who are building their consumer brands right now, what's the ideal way to reach out to you?

A So I think the simplest way is through our website. I mean, that's been the most common way that we have received incoming interest. And we have a process internally where somebody, you know, scans it and responds to it. So I think we are reasonably efficient in our response. I do get a lot of things on LinkedIn, uh, where, uh, companies are reaching out to me personally or my partners Vinay, Dipanjan, and Kanan. But I would say that coming through the company's official portal just makes the process a little easier because, uh, you know, I can always be accused of not being very prompt on my LinkedIn responses, but certainly as a company, we would be far more A process driven.

AI assessment note: “the simplest way is through our website”

Q So in your own personal journey, how have you kept your ego and arrogance at bay?

A I think I generally have not been a high ego and a high arrogance guy. So it wasn't as if, you know, I was correcting something, which was a mistake, but you know, the humility comes from two sources. One is obviously just meeting so many interesting entrepreneurs and, you know, to see their passion and to see their, you know, love for what they're doing. It just makes me feel blessed that I am, you know, part of such an ecosystem and I, I have a role to play in, uh, shaping some of these, uh, outcomes. So that to me, you know, the, the thrill of that is what keeps me, you know, excited. And, uh, as I said, you know, uh, at some point it, uh, also brings out the humility in any one person. I think the second aspect that I said earlier is the fact that you are Always a mentor, or that somebody called it, you are a kingmaker, but never the king. I think automatically, uh, does make you less egoistic, because you know that, uh, eventually, you know, you are helping an entrepreneur succeed. Uh, almost the first ownership of that success is always the entrepreneurs.

AI assessment note: “the humility comes from two sources. One is obviously just meeting so many interesting entrepreneurs”

Q So, what kind of founder DNA are you looking at when you are investing in these companies?

A That's an interesting question because, uh, you know, obviously these are businesses which are, uh, in a sense, fairly execution heavy, but on the other hand, they're also trying to disrupt the traditional way brands have got built, the traditional markets that are out there. So we are looking for an interesting combination of somebody who has both the vision to build a large business, who's willing to experiment, who's bringing in a lot of passion for what they believe in. And that belief system is what we look for. And if you see most of our companies, the founders will almost reflect the philosophy of the brand that they are building. And then of course we look for execution capability because this one is a brick by brick business to be built. So if you can get confidence that the founding team, which typically we find is two, maximum three people, uh, if they can bring this interesting combination of a longterm vision, the ability to see the big picture, to disrupt the markets, and also strong execution capability, Then that becomes a very good DNA for us to back.

AI assessment note: “combination of a longterm vision... and also strong execution capability”

Q Coming on to disruption, what do you think are the key elements required to disrupt a market?

A I think disruption can happen in multiple different ways. Obviously, one of the big disruptors is in the product itself. You know, can you create a product which is, uh, in a way disruptive in the market? Now, today there is more and more focus on natural, organic, you know, less chemical, less preservatives. So, uh, can you create a product story which is disruptive is obviously the high ground for any brand to achieve. But we believe that over and above that you can disrupt on business models. And there are examples of companies like I mentioned, Licious, who have also changed the way people consume the category and not just the product itself. The product itself is, is quite innovative. You know, then the business model linked channel strategy, you know. For example, we have a company called Boat, which has now built a very large Mobile accessory business, uh, primarily audio headsets and earphones and wireless speakers, which has disrupted the whole approach of how this business can be built, working with partners like Amazon, Flipkart, etc. So there is a channel disruption that has been created by a very interesting, uh, business approach that they are taking. So I think disruption can happen in many different ways, as long as you are able to, Almost, you know, change the way a consumer looks at you either as a product or a brand story or as a, you know, the business model…

AI assessment note: “one of the big disruptors is in the product itself... you can disrupt on business models”

Q So what are your learnings from those companies which have grown 50 to a hundred x since your investment and which have not been able to grow?

A I think clearly, like I said, if you have a great founding team and if you have a disruptive idea, In our space, market is always, you know, large enough for us to build exciting businesses. But the combination of, uh, the right team and the right, uh, idea is one very logical, you know, common sense place that these companies have grown. The third aspect is always being execution. Because, like I said earlier, the execution is one of the key factors that will drive success because these are very, you know, Step by step and brick by brick kind of, uh, businesses. For companies that have not grown so well, very often, uh, the product market fit becomes a challenge. And we also realize that, you know, in literally a year, year and a half's timeframe, you can get a good sense on how the market is reacting to your product. If the product itself is not good enough, if the price points are not relevant, or if there is too much competition and you're not able to create your differentiation. Those are very much the factors that will create the, you know, either slow growth or, uh, impact the overall performance.

AI assessment note: “For companies that have not grown so well, very often, uh, the product market fit”

Q So what common mistakes have you seen your portfolio founders made, which you, you know, have learned from and now advice to the new founders?

A I think the biggest mistake is clearly trying to chase growth at any cost. We have found a lot of companies which have tried to force the pace of growth without getting their foundations right are the ones who have very often suffered either in terms of very high cash burns or needing too much of capital to achieve a certain size of success. Or even, you know, disrupting their own business ideas because they were not able to establish the base of the business very effectively. So that would be the most common. Second one, which we also find happens in a few cases is not building the right team and not investing in people at the right time. Typically, you know, some of the founders may believe that they can continue to run it as a one or two man show for a long period of time and hire very junior people just to, you know, be the hands and legs. And that doesn't work because as you start growing, you need a lot of, you know, execution, uh, capability in the organization. So those are the two, I would say, common areas that, uh, we find, uh, as issues with the company. Then that's how we also advise our companies that get your basic foundations right. Do not spend too much money until you understand what are the drivers of growth. And then of course, hire for, uh, faster, uh, uh, growth of the business by getting the right people.

AI assessment note: “I think the biggest mistake is clearly trying to chase growth at any cost.”

Q You have been an investor in previous innings at Helion. How has your operations rolled on a day to day basis or your investment approach changed from that innings to current innings?

A So I think two things. One is, is more hands on. Uh, I chose to leave Helion and set up my own, uh, family office. So it was a one man show for two years. I was doing everything all by myself. So it taught me, you know, almost took me back 20 years when I started my career and I had to literally learn everything on a Personal basis. So that way I would say that was a great stepping stone for me before starting the Fireside Fund. Second is that, uh, it's also an area that I personally feel very passionate about. It's something which is so emerging that every day is a new learning experience. So I think I would say the big change from the Helion to this current role is really about far more, like, Involved in the business of our companies and the kind of deals that we are seeing. When you are in a large fund and, you know, at a senior level inside a very large fund, you tend to become little more, you know, dependent on all the next level, uh, resources and the other members in the team to do the heavy lifting. I think what I've enjoyed most is going back into the so-called trenches and doing things all over again.

AI assessment note: “the big change from the Helion to this current role is really about far more”