The Exchanges

Q And how has India been in terms for returns for you till now?

A India has been great in terms of returns, and that's, I think, one of the biggest testimonies of that is that the fund really wanted to expand here, hire another partner, you know, have a team on the ground, a bigger team on the ground. So India has been a good story. Obviously, there are taxation and all in India, which is not there elsewhere. But in spite of that, uh, you know, we have had, as I said, early days, some good outcomes. Free charge was one of the good outcomes. There were others. Some of them I cannot talk about, but Uh, you know, even on, if I, in the current portfolio from RTP two and all there is cred, MPL, RTP three, they are some very good outcomes for us in the country.

AI assessment note: “India has been great in terms of returns, and that's, I think, one of the biggest testimonies”

Q And do you think the speed of velocity of execution in India matches that of the other developed geographies like Silicon Valley, US Bay Area?

A It, it is still a bit slower, uh, from that because if you look at, uh, So there are two types of businesses. There are pure tech businesses. There are tech enabled operational businesses. Uh, if I talk about tech enabled operation businesses, operations in India is tough, right? There is, uh, generally there are, if you look at, uh, an e-commerce company, e-commerce company, uh, early days, just logistics was so, so tough. So it takes companies a while because they need to take care of a lot of, uh, you know, a lot of stuff in supply chain. In their tech, the, you, when you build insane example in a logistics company, when you build tech, you have to build tech for somebody who does not understand English very, very well, uh, and, you know, has not really interacted with maps, apps on smartphones and all. So that's how when, you know, early days of e-cart and chip cart delivery, express, all of the build logistics, it was a very, very, uh, tedious and difficult It's a journey for them. So in tech enabled operations business, India definitely takes time from that. And we as investors understand that, uh, when we invest in such businesses, we know it's not a five year business. It's a 10, 12, 15 year business as such, uh, from that point of view, when it comes to pure tech businesses, especially SaaS, AI today, I think, uh, getting to A workable product is way more easier where …

AI assessment note: “It, it is still a bit slower, uh, from that because”

Q And you only talked about the IPO markets. You didn't talk about the other form of exits, the MNAs or secondary. What about those?

A See MNAs and secondaries. So there are, uh, If you look at, there are two stages of a company when some of these MAs and securities happen. One is when you are a great outcome and somebody really big and strategic, uh, you know, sees that you have built something that you don't, uh, they can't build or they would take time to build and that's when they acquire you. There have been good outcomes in the country, but there are few. And today, uh, there, we don't, for Indian companies, they're, There aren't much, many options out there as well. Obviously, there are companies, ah, for tech companies, there are players in US, there are the biggies, the Googles, and Microsofts, and Oracle, you know, some of these guys, and they will always continue to play this game. So if you can build an outcome like that, but you know, that is again a power law outcome. What is the, the other way of other cases where M&A happens is a distress, uh, exit for founder. Nobody wants to back on that, but there is a big wide majority, uh, wide majority of startups who would probably not fall into that power law, but will be smallish, great businesses, IPOable businesses. And today, why do VCs not look at somebody building a really profitable, four hundred million dollar business?

AI assessment note: “See MNAs and secondaries. So there are... two stages of a company when some of these”

Q And, uh, for founders, right, uh, today, uh, differentiating between funds almost become impossible because these, these are not like, these are the best of professionals at best of the funds. Uh, uh, right. And talking to founders also doesn't give an edge. So, so ultimately you, if you have to, you know, uh, think about a fund's, uh, uh, moat, what would it would be?

A Okay. See some bit of it depends on your stage of the business, uh, and how do you see your business evolving? For example, if you are a early stage fund in SaaS, uh, sorry, early stage company in SaaS, and you already have a PM, if you would want a fund that can actually help you get customers, right? Uh, rightfully so. If you are somebody who's building a capital, uh, intensive business, you want your investors who have deep pockets, who can back you up for the longer term. So some of these things are very, very much dependent on the stage and nature, uh, of the business, uh, of the business. And then the third factor is whenever you are getting an investors, it's like getting, you know, again, it's dating and getting into marriage, right? So you need to really believe, uh, that will you be able to survive with this person for 1015, 20 years, you know, in marriage, there will always be disagreements. I think that is the beauty of it, right? Disagreements may, Ensure that everybody wants to ensure that the company becomes successful. I think that's the ultimate objective everybody has. Do you believe when you're getting an investor that that person will also operate like that for your company? Will they stand with you in things and things? I think that's the most important. No company has just a high ride. Companies will go through bad times and you need to really believe that…

AI assessment note: “depends on your stage of the business, uh, and how do you see your business evolving?”

Q And today, because now there are plenty of second time founders in India, everybody wants to go after second time founders, but let's say when Kunal started credit, right? He had huge success. So every VC wanted to be part of credit story, but where does, then it leaves the edge for first time founders who don't have a huge operator background also.

A Yeah. No, I think there is always, uh, they will always have an edge. See, there are, the great thing is a lot of these first time founder also have today a lot more refined worldview on the problem statement. If you, okay, if you haven't thought about it, it came out of a, you know, a friendly drinking conversation with your friends. It's very easy to spot on that the person has not thought about it, right? But a lot of your first time founders had thought about, have thought about their, uh, problem statements. We continue to invest in first time founders as well. Obviously, I think the difference where it comes in first time founders, if they build a good traction, you know, that is where we see somebody starts believing them a lot more. So the second time founders, you've already seen them do something so they can raise, as we've seen, second time founders raise huge seed rounds. First time founders, if they do well, raise better series A and B.

AI assessment note: “first time founder also have today a lot more refined worldview on the problem statement”

Q And according to you, right, uh, you are constantly taking many kind of risk while betting a company, right? Will there be a winner as you said, right, among the top three, four players in their category or not? What are the risks that you are not okay taking when you are betting?

A I think some of them are very, very obvious, uh, you know, if you, uh, you have a, like, you really need to, uh, if there are issues that come out in diligence with respect to, you know, financial, ethical, and those are, you know, you just stop the conversation there. Then there are other risks, uh, in terms of. I think at a different, at every stage you would want, there is a different combination of founder maturity and traction of the business that works. So you would not want to take, uh, you know, A risk where you feel the sector is very, very developed. There are immense, there is immense competition, and there is someone with, who comes up with a very, very naive view out there. So I think it's, it becomes, it's a very abstract question to say what risk you are not okay to take. I think At the end of the day, there is no checklist for a VC. When you invest, when you don't invest, it's a gut call. So yeah, if the gut says no, don't invest. And I think one big checklist, or I would say a question that whenever I invest, I talk to myself, will I be okay to, you know, invest a significant personal wealth into this company? If your answer is no, just don't invest. It's, it's basically something internally is telling you that you are not, you're not ready to underwrite something.

AI assessment note: “issues that come out in diligence with respect to, you know, financial, ethical”