The Exchanges

Q And, and then even you were mentioning during the raise of second fund COVID happened. What, what are the stories from that fundraise?

A So, uh, we are always, uh, we have the gift of perfect timing, Siddharth. Our first fund we tried to raise when nobody was investing in India. Our second fund we planned to launch in April of 2020. March, we were all sitting at home. We had finished building the portfolio, and I remember having the call with one of our largest LPs. That was a call in which I was supposed to ask them, hey, we are starting our new fundraise. Are you guys in? I have the call and the LP on the other side started talking about how they want to delay even the drawdowns of the current fund. I didn't even have the courage to ask him the question about the next fund because they wanted to slow down and look at what, uh, you know, where else their capital needed to go. Um, so we had to delay the fundraise, uh, by a few months. Um, at that point, it was not clear how long we would have to delay it for. We also were not sure how much capital our existing portfolio would require, how much support the portfolio will need to tide over this COVID period, because there were companies, particularly in the consumer space where demand had gone from doing really well to absolute zero. And so they needed capital to tide over that period. So we took a decision at that point to do small secondaries in two of our companies so that we have the capital to help our portfolio if needed. Uh, now it turned out that by the fa…

AI assessment note: “Our second fund we planned to launch in April of 2020. March, we were all sitting at home.”

Q And, and what has been, you know, in your opinion, uh, Stellar's strategy Which, which attracted the best of global LPs in 24?

A I think there are certain, uh, there are three or four key pillars to our strategy, uh, Siddharth. I think the first one is focus. Uh, we have seen probably because the India opportunity in the past was not large enough, uh, funds often defocus from their core strategy. So India only funds will start investing in other parts of the world. Um, uh, early stage funds will start doing mid stage and late stage, uh, tech only funds will start doing retail and, uh, hospitality and, Uh, manufacturing. Uh, we took that call relatively early on that we will, uh, we will be tech only, India only, and early stage only. And for the past eight plus years, we have followed that strategy. Um, and, uh, there have been temptations. There have been fantastic opportunities. Back in 2018, we were offered a CDC opportunity that looked Phenomenal. And, but our thinking was that either we do it as a new strategy, uh, either we build a portfolio of such late stage companies. We can't have a one-off late stage investment in our portfolio because it increases the risk. Um, it makes fundraising harder. Uh, and of course that is not our area of expertise either. So we have said no to those kinds of opportunities. Uh, I think focus counts for a lot. Um, the other aspect for us is, uh, uh, discipline of portfolio construction. Um, uh, as I mentioned, we do proactive portfolio construction at a portfolio leve…

AI assessment note: “there are three or four key pillars to our strategy, uh, Siddharth. I think the first one is focus.”

Q But, but there are a lot of nuance to, to making an investment. Are you getting, uh, at right stage, the right entrepreneur, the right market opportunity and right ownership? A lot of factors combined together.

A No, absolutely. But in the end, if you look at the essence of venture capital, I think it is being able to invest in the best entrepreneurs. And, uh, unlike, uh, unlike many other, uh, uh, uh, asset areas, the one important thing in venture is that not everyone has equal access. Uh, I might be smart enough to recognize the next Zomato, But if the founder of the next Zomato is not coming to pitch to me, I'll make exactly zero dollars from that trade. So the, it all starts from getting the best entrepreneurs to come to you to raise money and all of the other analysis, what is the right level of ownership? What is the right amount? What is the right stage? All of it is downstream of that first decision. Uh, and that decision is not ours. That decision is the entrepreneurs, uh, which is why Our effort is in attracting the best entrepreneurs to us and then trying to make a good decision on, uh, on, uh, the investment.

AI assessment note: “All of it is downstream of that first decision.”

Q What has been the experience across consumer AI?

A I think, uh, on the consumer side, we are, the deal flow is not as much as on the enterprise side. Um, we have, uh, we have backed Dashstone that I spoke about. Uh, we have seen a number of, uh, applications in, uh, FinTech that I, uh, look at, uh, particularly I'm quite curious about, uh, the application of, uh, uh, AI on wealth management. Uh, can AI do a better job than your human advisor can? Uh, can AI, uh, help you avoid The emotional traps that come with investing. Uh, those are some very interesting, uh, areas. Um, I think as, uh, as Indian entrepreneurs realize that they can sell globally and that AI reduces the cost to that extent that it becomes viable to sell globally, we should see a lot more consumer AI startups come out of India.

AI assessment note: “on the consumer side, we are, the deal flow is not as much”

Q uh, Ritesh, uh, you know, uh, why I consider Stellaris one of the best VC funds in India, not even just from the perspective of having the best portfolio, uh, but even it's very rare to find fund globally. Who in the seventh year on a scale of one X DPI has, have provided one X DPI to their LPs on a scale of. How does it make you feel?

A Well, to be honest, DPI is an output variable Siddharth. Uh, we don't really measure ourselves on the, uh, on the output that's for our LPs to do. That's for the market to do. We measure ourselves on our ability to attract the best entrepreneurs to ourselves. So, and we try to measure that through a metrics like deal coverage, how many deals, uh, that are getting done in the market that we got to see. On measures like our bin ratio of all the investments that we want to make, how many are we able to make? So those are the ones that I think, uh, are input metrics that will lead to long-term success. DPI will happen if we make good investments.

AI assessment note: “to be honest, DPI is an output variable Siddharth. We don't really measure ourselves”

Q What has worked for the Solaris in the last eight years? Andy, do you think the same thing will work for Solaris for the next eight years as well?

A I think you asked a question about what keeps us up at night. I can certainly say that this question keeps me up at night. Uh, and if I were to, uh, if I were to identify one thing that we would like to achieve over the next few years, it is to be able to institutionalize the fund, uh, which means thinking through How the team will evolve over the next decade. We've made a good start with a new partner. Uh, I'm hopeful that over the next decade, we are able to bring in several newer partners, uh, uh, and create several new, new partners in the firm. Uh, we have to constantly evolve and rethink our strategy. What worked in the last eight years might not work in the next few years. Do we need to think beyond the boxes that we have created for ourselves? That would be another, uh, I would say key challenge of the, uh, of the next decade. A third challenge I would even say is Are our patterns, and I'm specifically speaking of Rahul, Alok and myself, not even the younger folks in our team, are our patterns going to hold over the next decade? We have created certain patterns in our heads on what works, what doesn't work in certain situations. How should a startup react to a certain situation when it happens, a certain challenge when it happens, and we rely on those patterns to guide our startups. Will those patterns still be valid 10 years from now? Basically what I'm saying is, are …

AI assessment note: “What worked in the last eight years might not work in the next few years.”