The Exchanges

Q Which are the, some of the notable companies today from that capital 18 era?

A So I think the notable companies, uh, we invested in about 11 companies over that period. And you know, the big successes have been for us have been Book My Show, which is now a very large company, um, I guess, uh, has raised significant amount of capital, has become a very large player. And again, like I said before, the satisfaction is not just that, you know, the company has become big or the valuation has increased. But the fact that the physical parameters have changed so much in terms of movie tickets, going beyond movie tickets to sports, to plays, to outside India, and you know, now even into events. So I think Book My Show was one big success. Yatra was another very big success. Again, you know, you could argue that from a valuation perspective, it didn't do as well as we would have hoped. Although since we invested very early, it has done well for us. But I think the, you know, the bigger thing that, you know, today over Almost two billion dollars of tickets are bought and sold on the platform. Uh, the company, you know, uh, impacts a lot of people. And I, and I believe that Dhruv is, you know, one of the great entrepreneurs in India. And I think he's done an excellent job of building a very difficult business in a very difficult, uh, and competitive space.

AI assessment note: “the big successes have been for us have been Book My Show”

Q So what are the top five, six companies which have done very well or have raised subsequent A, B or C rounds?

A Sure. So for us, actually we have a fairly high success rate. So what I mean by that is that of the 16 companies, 10 companies have been around for more than a year, as in we've been investors in for more than a year. And in those 10, eight of those 10 have raised follow on funding. So Almost 80% you can say is the success rate in the first set of 10 companies. Among those, I would say the ones which are notable and have raised or have done well, one is of course Unacademy which was our first check, which we exited that position. Uh, with a very handsome return. It was five times our initial money or over a 150% IRR. Uh, that was, you know, again, a unique situation where both, uh, the founders were just amazing and they built a really large business and they were able to, you know, show traction and raise a lot of capital. And, you know, we felt that it was the right time for us to, uh, move away because we were really not, we have a small portion in their company and we continue to believe that they'll do very well. Uh, but for us, it was the right decision. Um, I think apart from an academy, I'd like to mention magic pin, which is doing well, which we invested with light speed. Uh, now they've raised another round as well. Businesses tracking also extremely, uh, positively in terms of growth, uh, revenue, et cetera. Uh, third company I would mention is Chalo, uh, which is in…

AI assessment note: “one is of course Unacademy which was our first check”

Q At which stage water bridge comes in? Like, what are your prerequisites for revenue, business model, team, traction, when you put in a check?

A So we have, we do three kinds of deals. Uh, one is a seed deal where, you know, we put roughly, let's say two, 300,000 dollars kind of, uh, check from our side. Uh, there, obviously I would say the bigger thing that we are backing is the, uh, founder. So that the two things that we look for over there, one is strong founder. And secondly, it could also be that we believe that the, you know, the market may take a little bit longer than we think to materialize, but we want to be part of it and we'll, you know, we can sort of slowly, uh, grow with it. So we do seed deals. We do pre A kind of deals where we put, let's say, around a million dollars. There, you know, we are looking for a little bit more. Uh, we are looking for, um, uh, not just a founder, but a little bit of a team. Uh, we are looking for some signs of early traction. Um, and you know, sometimes there is revenue, sometimes there is no revenue. So that's not a prerequisite for, for us. Uh, and then of course a series A, which would be, let's say three to five million. They're, you know, much more conventional where you're looking for some kind of product market You're looking for, you know, ah, some focus on economics. You're looking for essentially at that stage, what you're really looking for is that have they figured out what is the, you know, ah, business model, what is the fuel that they need so that if they get …

AI assessment note: “we do three kinds of deals. Uh, one is a seed deal”

Q So recently you have been investing across, across boundaries, like beyond India. What, what has been the reason for it?

A I think we, we have a thesis, uh, Siddharth, that we believe that there will be many companies, uh, that will be found, founded in India or formed in India with Indian talent, which will serve global markets. So we've already seen that in the SaaS space where we have an investment in DataV, which, you know, uh, whose technology team is based in India, but, you know, they're Focused on the U S market. So, so clearly, uh, that is one sort of big, another sort of one theme that we focus on. And I think the investment that you're referring to is our investment in pocket pills, where the front end is in Canada, where they're addressing the pharmacy market in Canada, but the tech team and Abhinav who's the CTO, whom both Manish and I have known well, uh, for the last was the CTO of rocket fuel, which was listed on NASDAQ. So he's a, obviously a great guy. His co-founders are very competent as well. And, you know, we just felt that this was again a very good opportunity where the product was being built in India, but obviously it's going to have a fine expression in, in foreign market.

AI assessment note: “we believe that there will be many companies... with Indian talent, which will serve global markets”

Q Sir, so are you a market first investor? You look at market, build your thesis, and then find founders for it, or reverse, you go bottom up?

A I think we tend to go bottom up. Uh, but of course, you know, every, all the three things are important, right? The market, the business model, and the founders. So it's difficult to say that, you know, that you don't consider the other two, but we are a founders first fund. We're very clear on that. We, we spend, I would say, 60, 70% of our time in understanding the founders, their motivations, their ability to, you know, execute their, their suitability for the, for the business that they are doing. So different sets of people are good for different things. So we want to make sure that the founders are, uh, you know, Have the competence required to succeed in the business that they are doing. And then of course we like to see large markets. I mean, everybody does, uh, but we also understand that good founders can, can make their way around markets and they can solve the problems, which may not be obvious. So in the early stage, you cannot expect everything to be there. You know, if, uh, there are always some things which are going to be proven out. So you try to take a bet on one particular factor, which you believe is extremely strong. And for us that tends to be the team.

AI assessment note: “I think we tend to go bottom up. [...] we are a founders first fund.”

Q So you have been invested in an academy and traditionally, as you said, people in India were not willing to spend for subscription based services. What has changed in the recent years that people have started paying to an academy paid services?

A So I think there are, uh, two things that I would say have changed. See, one is the whole digital versus traditional media, right? Earlier we had television, we had print, we had radio. These have been, you know, there for a while in India and of course movies. But now in the last, especially in the last three years, if you see what has changed is that for a lot of people there, their time is being spent solely on the smartphone, right? So everything starts with their phone. Uh, they are reading, watching, listening, everything on their phone. So for these people, you know, the idea that, you know, just as they would earlier go to a coaching class and pay for it. Now the same way they think that they can pay for a subscription to Anacademy, which, you know, offers them the same value. So I, I personally believe that The issue is value, not the fact that people will or will not subscribe. The problem is that many times we are not able to give consumer value, and then we sort of blame the consumer. So I think what has changed is that the habit of a person has changed totally. Person who is not spending any time digitally is now spending significant portion of their time, and because they are doing that, they are willing to pay for it. Now, you know, of course, there are sort of, it's still an evolving journey, so It will take time and everything to grow, but, but I think that's t…

AI assessment note: “what has changed is that the habit of a person has changed totally.”

Q So you mentioned a lot of times about You investing in founder first. What are the traits in a founder which you are looking for? If you can describe them both generally as well as specifically.

A So I think there are two or three traits. One, I believe that every founder has to be a good salesperson because, and I mean it in a, in a very positive sense that every founder's main job is to sell. They have to first convince their co-founders, their team members, their investors, their own families, you know, to decide to sacrifice so much for this, for this ride. So, so I look for, this is a very critical element is salesmanship. Whether or not this person is able to convey, then you can look at very clear trends in that, right? It's not just about how they come across in talking to us. I think that's not the critical thing. The most important thing is what is the evidence on the ground? Who are the people they've been able to attract in their team? Have they got somebody who has given up something in their life to join them? Uh, you know, what do their vendors think about them? What do their, you know, sort of other people that they worked with think about them? So I think you can make it fairly quantifiable rather than just looking at it as a business of how do they pitch. I think too often founders believe that pitching is the whole, whole issue. I think pitching is not the issue. It's really the, the real actions that you've done. I think the second thing I would say after sales is domain knowledge. Too often, too many founders come to us without having understood the …

AI assessment note: “So I think there are two or three traits. One, I believe that every founder has to be a good salesperson”

Q While investing, you mentioned about the founder and the team and their view of the market, but, but there must be some elements, you know, which you already are, your team is working on that, you know, let's say education market or healthcare mapping, you're mapping out, you have also expanded internationally. So, so what's your, uh, science behind it?

A Yeah. So I think what we call this, uh, you know, prepared mind approach where we, We have spent the time or have made the effort to understand some of these sectors, whether it's financial services, healthcare, education, or whatever, where we have spent some time to understand what are the basic drivers over there. And we have some view on what works and what doesn't work. Uh, and you know, so based on that, we are able to identify with the founder and say, okay, this is the vector that you are focused on. We, we believe that this is a good idea, or in some cases it can be a negative thing where we believe that Something will just not work, and we don't want to be part of that journey. See, you have to also understand that investors and founders, finally there's a match. You have to be in a position where people want to be with you on that journey, and it may be different people for different journeys. And you know, now you can see that in the market, there are funds which do different things. So I think the, the crux for us is that it's not just that we are not waiting for somebody to show up and educate us. We are also spending the time to talk to, you know, people in industry, people, you know, in other startups. Uh, you know, people in, you know, who know more about these markets and we are creating a thesis for ourselves that, okay, this is what I want to do and this is …

AI assessment note: “what we call this, uh, you know, prepared mind approach”

Q So now coming to a more personal side of yours, what's your daily routine like?

A Yeah, if I'm in town, I get up around five o'clock, I do yoga in the morning, um, what three, three, four days a week. Um, yeah, I actually spend a lot of time doing nothing in the morning, whether I'm reading or maybe, you know, exploring something. Um, yeah, then I come to office. Uh, I, you know, I spend a fair amount of time in the office. I take a lot of meetings. So I'm one of those people who, Uh, try to meet a lot of people of different types and, uh, different backgrounds. Uh, and, uh, yeah, and then on weekends I play squash. That's my, really my passion. And, um, I have three daughters, so obviously spending time with them, with my wife, you know, takes up most of the week that I have.

AI assessment note: “if I'm in town, I get up around five o'clock, I do yoga”

Q It would be interesting to know the story behind WaterBitch. How did you and Manish meet together? What was the early team you set up?

A Yeah, I think, ah, so there are two points to that. One is Manish and I have known each other over the years. So I think it is very important that when you Decide to partner with someone and I'm sure whether as a founder or co-founder or anything else, you need to have some degree of history with the person because it's a difficult relationship. I mean, any partnership is not easy. Uh, so I think Vanish and I are both, uh, are from IIT Delhi. He was my junior. Uh, although, you know, we didn't know each other that well, but you know, you have the same sort of circle and you know, some people who know each other. And then when he was at Providence, we interacted a lot because they were investing in media and, you know, I was with a large media group in India. So we got to know each other over the years, kept in touch socially. And the way it worked out in Waterbridge was that he started Waterbridge first in 2016. And once he started, and then in 2017, we met and we, you know, looked at a few things together. And that's when we realized that, you know, there is a lot of similarity in our thinking and And also complementarity. I think partners also have to complement each other. You can't both be doing the same thing. And, uh, that's why we felt that we could, you know, make, um, and both of us were united by the same sort of ambition also, which is to really create a domestic, uh…

AI assessment note: “Manish and I are both, uh, are from IIT Delhi. He was my junior.”

Q So what's your average time spent between interacting with the founders for the first time or introduction and cutting the check?

A I think the average would be, I would say anywhere between, um, probably six to eight weeks, uh, would be the average. It has been faster than that also. In some cases it has been slower than that also. And here I would go out on a limb and say that many times people blame investors, but a lot of times I feel founders don't take the process very seriously. Uh, whether, uh, you know, and I don't know exactly why, because I assume they want to get the capital in fast, but you know, you have to understand that there is a process that a fund is going to follow, and I think you have to make sure that, you know, you, you get your documentation and everything in order. Uh, so many times when the delay happens, it's not, uh, you know, it's both sides of course, but I think many times the delay is because founders just take, uh, too long to, you know, Focus on the process. And it's a surprising thing for me personally, because I've never understood what is the incentive for a founder to delay, you know, matters, but for some reason it does happen.

AI assessment note: “anywhere between, um, probably six to eight weeks, uh, would be the average.”

Q You mentioned about, in your case, the relationship is more of a partner rather than an investor or a founder relationship. What strengths you and Manish and the Waterbridge team bring to the company you invest in as partners?

A So I think we, uh, I mean, apart from, of course, experience, you know, both of us have been, uh, investors, our entire team, in fact, if you see, have been, uh, you know, Uh, over 20 years of average experience in, in each of the four partners. Uh, I think the other thing that we definitely bring is that both of, uh, all of us have been both operators and investors. So we do understand, you know, what is the effort required to build organization? You know, what does culture mean? Not just in sort of theory, but in reality, uh, we understand what are the problems that a founder faces. I think, you know, it's important that investors are realistic about what founders can do or cannot do. We know that hiring is difficult, for instance, for an early stage company, and we, rather than, you know, sort of blaming each other, we try to help them with that process. Um, so I think what we really bring is, I would, of course, this is a question better answered by our founders, but I feel that we bring an empathy to the process of business, creating a business and entrepreneurship, and we try to support the entrepreneurs in that journey and different entrepreneurs have different, you know, challenges. Some are very good at X and not so good at Y. And we try to provide that why which they are not good at, rather than, you know, sort of saying that, you know, again, pointing fingers. So tha…

AI assessment note: “all of us have been both operators and investors. So we do understand”

Q You have seen very early journeys, as you mentioned, Book My Show, Yatra. How have you seen those founders evolve and see the tough time of India, 2001, 2008?

A Yeah, I think, uh, in each, in both the cases, Ashish Rajesh and Rick at Book My Show, and then Dhruv Manish at Yatra. I think, you know, um, Obviously, you know, all of them really, uh, went through those tough times, uh, with lot of courage and strength. Uh, I think they, they really believed in the business and they, they knew that they would be able to kind of emerge on the other side. They, they were different people. So I think different people work out these situations in different ways. Uh, and again, one thing that I've seen is that, uh, you know, uh, the good founders, you know, they find a way. It's not always obvious and, you know, some of the ways are very non-conventional and non-traditional. See, because it's also not right to believe that the only sources of capital are, is venture capital and equity, right? There are many other sources of capital in this world. Uh, you know, there's debt, there is your vendors, there are your, you know, your customers. So there are many ways to raise resources, especially when you need them. And I would say that, uh, not just these guys, but many others that I've worked with, they have found a way to, you know, solve very difficult problems, and sort of emerge successful, and the options have been very varied and very different, actually.

AI assessment note: “some of the ways are very non-conventional... there's debt, there is your vendors”

Q So what have you read recently? In terms of books or articles, which have impacted your thinking, change your perspectives?

A Yeah, I think as I was telling you before we started that I don't read as much as I would like to. So I bought, I buy a lot of books and you know, they pile up and now I started buying them on Kindle rather than physical books. Um, I'm trying to think what has really, um, I mean, I actually like to read not just business related books, but you know, books related to Whether it's fiction or it's history and, you know, stuff. So I've been reading about the history of Delhi recently. Uh, that was quite interesting for me to see, you know, what we think are very, uh, big monuments and structures, you know, how new they are in the arc of history and how things can change pretty quickly and what we take for granted. So that has been interesting. I, I've, I'm very fascinated by the growth of China and I've, you know, I've spent some time there and I've also been reading a lot about it. About how they are governed, about how they make decisions, you know, how, what they've achieved. So I think those are the kind of areas that has been really interesting for me. I think, uh, closer to home, I would say that, uh, I enjoy reading about new technologies. So I've spent some time in trying to understand Bitcoin. What are the, you know, basics behind it? What could be the potential uses? Things like that. Uh, so I think those are the kind of things which, uh, I find very interesting and, um, …

AI assessment note: “I've been reading about the history of Delhi recently.”

Q If one or two things you could have done differently from 2007 to 2019, what would they have been?

A Yeah, I mean, differently, I, I, I wouldn't, I mean, I would, I wouldn't want to change too many things. I think it was a, I mean, it was a good decision or good, Opportunity for me to have come into venture capital. Um, it's a great, it's a great business. It's very, very interesting. It keeps you on your toes every day, and it, I think it keeps you very honest. Uh, so I think that part has, uh, worked out well. I think, uh, in hindsight, maybe the only thing I would say is that maybe in the 2000, 1314 period, 12 to 14, when things were a little light, then one could have been a bit more aggressive, uh, than, than we were, but there were a bunch of factors, frankly, which didn't allow us to do that. Uh, but other than that, I would say it's been a pretty positive journey and reasonably happy with it.

AI assessment note: “in hindsight, maybe the only thing... one could have been a bit more aggressive”

Q So talking about the product market, what is product market fit according to your definition and what kind of startups, you know, have you seen achieving it and then take a boom rocket ship?

A So I think product market fit essentially means that you have figured out. So one of the key things that I feel, uh, is especially in consumer startups or even enterprise startups is that have you figured out who your customer is, right? Who is your customer? And sometimes the answer is also who is not your customer. And this is not, of course, it's not as straightforward as it sounds, but I think the question is that have you decided, okay, these are the people who are my customers and they value this and this in my product because no product is complete on day one, right? So it's not like that this product is fully formed. We know that there are some improvements and things that need to be changed, but is there in general, is there 80% acceptance that, okay, this kind of customer likes these features in my product and that's why they use them. That's what I think we, we look for on what we call product market fit. Uh, and sometimes the answer is in the negative that you're able to answer that why, you know, somebody else is not a good customer for my product. Now you may have a roadmap which will address those customers later and things like that, but initially there's, there has to be clarity around who the customer is. And then of course you look at very, you know, more conventional metrics, right? Around what is your customer acquisition cost? What sort of looks like the l…

AI assessment note: “product market fit essentially means that you have figured out... who your customer is”