The Exchanges

Q Shripati, the global macro outlook about India, what are the things that global investors, you know, still are unsure about? I still don't understand about India.

A Yeah. I mean, we all understand the excitement about, about India, the China plus one being, uh, you know, one major one, of course, the tailwinds, which we are getting for all the infrastructure investments, which the country has made back in starting in 2010, 14 onwards. Right. The things which I would say as a private market venture investor, which people are still, uh, have question marks on, is around liquidity and exits. So, of course, part, ah, limited partners who are investing money in India want to have a view of when they are going to get returns. In what time frame are they going to get it? And I feel that that questions are being answered slowly, ah, but still the predictable, repeatable nature of that remains to be proven in India.

AI assessment note: “people are still, uh, have question marks on, is around liquidity and exits.”

Q And how much time it took you to raise the 45 mill fund?

A Those funds, I think it took, ah, I would say by the time we had, ah, commitments fully would have taken four to six months. But the thing is that the way you do funds is that you don't need to close the full fund in order to start deploying. So again, you are able to actually do a substantial close about 70, 80% of the fund within the first three, four months. Uh, and then actually have conversations with, uh, with some other folks and keep it open for a little bit longer to actually close it. Uh, so it was reasonably fast, and it is important because you don't want to be out market. I mean, you know this as a fund manager, right? Which is that if you're investing and then you suddenly stop investing, you might actually get an opportunity just at that time. So you sort of have to start the, kick off the process of fundraise a little bit before the last investment has been made from the, from the fund so that you can actually just continue from one fund to the, because entrepreneurs don't care which fund you're investing in, right? They just say that, okay.

AI assessment note: “fully would have taken four to six months.”

Q Sripati, since Prime has a concentrated portfolio, right, so while you are reflecting on your wins, what make that win happen, you're also reflecting on your losses, like, why didn't this particular company, what, not order, without taking names, like, what are the lessons that you have learned across those set of companies, some stories, right, why some of those companies, beside timing, that didn't work out? Yeah.

A Some of them are, uh, we come in early stage and we are actually making, we're imagining the future and we're imagining the future. There are a lot of unknowns. And what happens typically is that the overwhelming reason why a particular company does, you know, doesn't end up doing well is that some of your assumptions around the size of the market do not work out. I would say that just happens to be the overwhelming, uh, I would say majority. And what happens is that the reason the size of the market might not work out is a number of reasons. If it is a consumer company, it might be that the consumer acquisition just never came down. The cost of consumer acquisition. Now the assumptions at the time would have been that, Hey, look, once I reach a certain scale, there'll be a certain brand and then the organic kicks in, et cetera, et cetera. What you find is that, well, you built a certain brand, but the retention wasn't good enough. And as a result, you had high churn and you just couldn't actually do it. That's one, one way in which the, uh, um, the economics don't work out. Another way it might be that the competitive dynamics change. And then the competitive dynamics change, your ability to charge gets very much compromised, and that actually changes. This is all related to the business environment. One of the reasons why companies fail is their inability to raise funds, and …

AI assessment note: “overwhelming reason why a particular company does, you know, doesn't end up doing well”

Q And why is that? Because it's very counterintuitive. Because, you know, the more that you rotate capital, the more it has tendency, like capital makes more capital.

A That's correct. If you're actually investing in short term investments, but the way I look at venture investments, Is that, um, you're getting to it for the long haul, right? So you're making a seven to 10 year bet on the company. So it just doesn't make sense to hurry into it. That doesn't mean you actually take two months to decide. You decide quickly, right? You can take three, four weeks and you make a decision. But the bar has to be such that it makes sense for you. It should not be like, hey, I have money and I want to deploy. It should be like, I have a certain thesis. And I need to find companies which have that thesis. And we should also remember that back in 2012, the startup formation wasn't as As heavy and hot as it is today. Uh, right.

AI assessment note: “venture investments, Is that, um, you're getting to it for the long haul”

Q Prime is the first institutional investor in category-creating tech startups like Dozie, PlanetSpark, Neo, MyGate. Prime is now investing out of its fourth fund, which is more than a hundred million dollars. Today, I have with me Sripati Acharya, managing partner, Prime Venture Partners. Sripati, we would like to know from you, how does Prime work with the founders and what is so different about Prime from other VC firms?

A So Prime is a high conviction, high support VC. And so our process is different, both during the evaluation and after the investment is made. During the evaluation, it's less of a typical Q and A, but more of a joint brainstorm where we are jointly looking and brainstorming On what the product could be and what the ultimate vision of the company could be in terms of its impact. And in the process, entrepreneurs engage with all the prime partners. And this is very important because after the investment is made, the entrepreneurs can engage with individual partners directly who can assist in different areas. For example, we had a company which was looking for a U S go to market. And there we helped the company directly connect with prominent Valley angels. And get an investment from prominent VCs there, so that they could not only get an investor base, but also develop an ecosystem partnership in the US, which was very helpful to the company. So in that fashion, the engagement is both deeper and more intimate with the, with the founders once we have, once we have entered the company.

AI assessment note: “our process is different, both during the evaluation and after the investment is made.”

Q Before we, you know, discuss more serious stuff, I wanted to chat about your health, right? You look so fit. And I see founders getting unfit day by day. Is there a secret to VC?

A I wouldn't, I wouldn't say that. I think it was, I just had, ah, you know, personally, a lot of struggles with acidity and so forth, and so I needed to regulate a lot of my, a lot of my diet, as we were discussing earlier, that it is, there's really no magic bullet to these kind of things. You just have to figure out which foods are good and which foods aren't, and it turns out that many of the so-called sinful foods are something which is not agreeable with me. So I had to monitor that, but otherwise I am, uh, somewhat conscious in terms of just being excited. I just like doing yoga, uh, not actually beefing up or anything like that, just being flexible and, you know, you know, taking a luggage and putting it on top of the aircraft compartment the next day, you know, you shouldn't be feeling a pain in the back, right? I have very modest goals.

AI assessment note: “there's really no magic bullet to these kind of things. You just have to figure”