The Exchanges

Q What are your views on SaaS? We have one billion dollar startup right now, fresh disc, and tens of more waiting to be the next unicorn.

A Yeah, no, so I've been a, I've been a big believer in SaaS for a long time. In fact, if you look at my angel portfolio, more than half, half my investments are actually in SaaS companies, right? Uh, I, I think, look, uh, we're still, I think, a few years away from, uh, you know, having sort of hyper value creation or hyper growth in Indian startups. Uh, in fact, this year we'll see, I think, our second, actually we today have two, right? So Zoho's been a unicorn for a long time. We don't talk about Zoho, but probably we'll end up being the best ROI anybody could have ever had because, uh, Sridhar's never raised any money externally, right? Freshworks, as you said, was the second. This year we'll certainly see a third, uh, actually very soon you'll hear about a third Uh, SaaS unicorn. Uh, and then I think we are, so we are at about one a year now. Last year was Freshworks. Uh, we are probably, you know, we'll probably be at one a year for a few years, but then, you know, somewhere around, 20, 22, 23, we'll start seeing, you know, several SaaS unicorns, uh, every year, right? So if I look at my, uh, portfolio, you know, uh, companies like Druva, Capillary, uh, Inovace, Unifor, uh, I mean, these are all super, super interesting companies, right? So there's been one model that, There are two models, actually. The India to US model. Freshworks was, sort of, more of a digital distrib…

AI assessment note: “I've been a big believer in SaaS for a long time.”

Q How has monetizing getting better in the last two, three years of the startup ecosystem?

A Yeah, I think monetization has, uh, has been very difficult, right? I think For quite some time, uh, India is really about a user growth story on the B to C side. Uh, now we're specifically talking about, uh, tech startups and, uh, you know, within tech startups, uh, B to C, B to C startups. I think that is changing, right? Uh, it's changing because of a couple of reasons. One, uh, if you look at existing markets today, uh, you know, they're, uh, not huge, but they're quite sizable. You know, you've got a thirty billion dollar e-commerce market. Uh, you've got a ride hailing market that's quite large and so on and so forth. Uh, but really one of the reasons it's actually changed is payments, uh, right? UPI has been the biggest boon that's happened to the Indian startup ecosystem because now you have, you know, uh, over a hundred million Indians that actually transact online. And the fact that you can actually pay not just a thousand or 1500 rupees, but you can very simply pay, uh, you know, 10 or 20 or 30 or a hundred rupees. So I think monetization, uh, is improving. It's still very early days, but the fact that, you know, Baiju's has 1.5 million Uh, paying users, right? And these are really, it's really a subscription business if you think about it. Uh, there are quite a number of companies that now have, you know, 10, 15, 2000 thousand subscribing users. So whether it's comm…

AI assessment note: “really one of the reasons it's actually changed is payments, uh, right? UPI”

Q Big spaces like e-com and mobility. Seeing a lot of renewed interest, recent investment of Facebook in Misha, what's your thoughts about that? You know, how are the e-com to or e-com three point going to look like?

A Yeah, I mean, look, I think it's a, it's a great point because if you, if you had asked everybody two years ago, they would have said e-commerce is over, right? We have Amazon and Flipkart and, you know, they've both spent billions of dollars each. Uh, you know, how on earth would any other startups really come up? But the reality is, look, in a country where, you know, we have four hundred million plus, over four hundred million daily actives, only about seventy million Indians actually, ah, today transact now with e-commerce sites, right? So, ah, you know, it's still less than 20% of the active user base is sort of transacting, so there's a huge amount of headroom that's left. You know, if you call it the first fifty million Indians have now become very, very comfortable transacting, right? So they're gonna buy lots of different things, so, so, The first big opportunity I think we're going to see, ah, we are beginning to see some companies now, is companies that are going to capitalize on the first fifty million and make them buy things, ah, that maybe are, are, are different, right? So a company, one of my portfolio companies, Fresh to Home, ah, which actually sells fresh seafood, meats, and so on and so forth, is just on fire, right? It's on fire because these first fifty million users, now that they're comfortable buying phones and fashion and accessories, are buying groce…

AI assessment note: “you're seeing this new class of companies, what, what you call sort of e-commerce tool”

Q You have been investing for the last 30 years, and in hundreds of founders. What has been different about the companies which have been mega-head?

A Yeah, so I think, ah, well, firstly, I've been investing for a lot longer than that, ah, you know, since the early nineties, I'm actually, ah, much older than you are, so, ah, in the U.S. anyway, ah, but yes, in India, I have been, ah, investing since I moved, ah, since 2006 or so. Um, look, I, I think it's difficult to pinpoint. There is no one model for, for success, right? Uh, but I think a lot of it really boils down to the founding team, the founder or the, or the founding team, right? Uh, I think, uh, the teams that have been very successful, they have incredibly deep insight about the problem that they're trying to solve, like uncanny, you know, insight about the problem that they're trying to solve. Uh, they tend to be very, very resilient because, you know, before you get to a unicorn, you're going to have Four or five near death moments. So you cannot give up in those times. Uh, they tend to be very agile, so, uh, they'll pivot the business. Sometimes they'll radically change, uh, the business. The business that they have now, you can't even recognize, uh, you know, the business that, that, that I funded when I was an angel, and I'm totally okay with that. Uh, so, uh, for instance, you know, uh, Dunzo, where I was the first investor, uh, you know, when I funded them, they were basically a WhatsApp. They were using WhatsApp to help people in Bangalore kind of get thing…

AI assessment note: “a lot of it really boils down to the founding team”

Q What are the three of your recent investments which you are very excited about, and why?

A So I think it's important to keep in mind that I am excited about every company that I invest in. Right? That I've invested in. Uh, I invest in them because I'm very excited about them. Um, uh, that being said, I think, look, uh, you know, I'm maybe not, maybe less about, most excited about, but maybe I'll tell you about some companies that are very different, that are doing very interesting things, right? Uh, so, uh, I invested, uh, last year actually in a company called Gen Robotics. Uh, this is a startup from Kerala. They're actually building robots, uh, that clean manholes, right? So India has about four million scavengers, Ah, and they have to actually go into these manholes and clean them, and because of that they, you know, most of them really, unfortunately, don't live beyond the age of 32, 33. Ah, so what, what these set of very young founders from Kerala have done is they've built a robot that they call Bandicoot, ah, which is an assisted robot where they can train now the, well, the person who used to be the scavenger to be a robot operator, and this robot then, ah, you know, it basically kind of goes into the, ah, goes into the manhole and starts cleaning all the switch.

AI assessment note: “I invested, uh, last year actually in a company called Gen Robotics.”

Q You, angel investor, come very early in spaces, for example, Uh, when Rapido was raising the angel around, nobody believed in the concept of shared two wheelers. And similarly, I think the earliest angel investor in SaaS. What are the segments you are now focused on as an angel investor?

A Yeah, so look, um, you know, I've been investing in SaaS for a very long time, right? So, um, uh, you know, I moved to India in 2000, from the US, uh, in 2005, 2006, I joined the Indian Angel Network. I did one investment that year. That was actually a consumer internet company at that point, which actually eventually became a SaaS company. So about half my portfolio is SaaS, and I would say that is a constant theme, right? Because my view is, uh, India is going to create thousands of SaaS companies. Obviously, Uh, you know, quite a number of them will become very, very large, but we can build, you know, hundreds of companies that are worth a hundred million dollars each in the SaaS space. So, so that has been a constant theme, but I'm always, you know, my, the themes that I look for within SaaS change. Uh, vertical SaaS I've been investing in for a very long time with its capillary, innovative companies like that. So that's been a big theme. And then on the consumer side, I would say, you know, my themes have changed, right? I try to get into a space very early. Uh, I make a whole bunch of bets and then I move on. So, Ah, for instance, I was investing in digital content about four or five years ago, right? So PopX or Miss Malini, Little Black Book, all bunch of other companies. Ah, but then I stopped, ah, right? Ah, I made, I invested in MyApshar, which is probably one of the …

AI assessment note: “about half my portfolio is SaaS, and I would say that is a constant theme”