The Exchanges

Q And you invest in only two to three companies a year. What's the reason for that?

A So what we do do, we have a very concentrated portfolio. That's right. But the, it's not investing in two or three companies a year. It's more like investing, uh, in a very few number of companies per fund. So our last fund was a hundred and fifty four million and we invested in eight companies. Our current fund is, um, Um, over two hundred million, and we will be investing in, um, up to nine businesses. So now, whether we invest in those businesses in one year, two years, three years, um, that is really up to our ability to be able to find deals we want to work with, but, um, it's very, very concentrated, and I think the biggest, the first reason for that was our, our need to want to help Founders. Founding teams. Management teams. And the only way we thought we could really do that is by having a, um, a, a first a very few number of companies to be able to help. Because you can only have, ah, that much, ah, time to devote. And if you don't devote the time to understand businesses well enough, then you will definitely not have The ability to be able to help anyone in that business. If you don't have the time to be able to build a relationship with a founder, uh, which is more than asking them how business is going, then their ability to want to talk to you, put faith in you, or, um, relay things they wouldn't normally relay to you, um, diminishes. Uh, so we decided that a conc…

AI assessment note: “concentrated portfolio allowed us as investors to invest much more time”

Q And talking about your portfolio companies, what are the top three or four companies from your fund one in terms of exits, if you can share?

A So our fund one was actually a secondary, uh, purchase. So which was being, which was, uh, originally Kleiner Perkins and Sherpaulo. Uh, but our first fund from a blind pool perspective was what we call fund two. Um, we've had one exit, um, Imbibe, which is an EdTech play, uh, which we sold to Reliance. Um, outside of that, we have not exited anything. It's a 2014 vintage fund, meaning we, we launched it and raised the capital in 2014. So, it's not been that many years either, and, you know, and our belief is that we, we wouldn't necessarily Want to sell businesses so early in their lifespan. If we could have held on to imbibe, uh, we would have. Um, it would, it wouldn't have been, uh, our, uh, desire to sell, um, a business of that nature being led by a founder of that nature. Uh, but it was in the best interest of the business. It was in the best interest of, um, the future of, uh, what we believed would be education in our country, led by that business, and so, um, it was, uh, on us to do the right thing by the business, which is why we sold it.

AI assessment note: “we've had one exit, um, Imbibe... outside of that, we have not exited anything.”

Q And how did you, uh, come about education and mbibe that matters? How did that happen?

A So, Imbibe was a very interesting, uh, uh, company. It actually, my partner, uh, uh, Sandeep had met with the founder first, actually. And, um, then the two of us met with her, um, Aditi, uh, after that. And I think we were just blown away by both her, the, uh, The vision that she had for the education space in India, but more than that, just her own energy. And I think, ah, it's, when you're, when you're making investments very early, the one thing that I think is the most important, and people argue one way or another on this, but, the, any business plan is more of a guideline. You're not really gonna, oh, why didn't you hit this number? Why didn't you hit that number? And you're, the, the chances that one will have to pivot, figure something out, is very, very high. And so, if you're gonna invest behind a plan, or invest behind a market, um, because you're not sure if the plan's gonna work or not, uh, you're taking, you're taking undue risk, or at least risk with multiple X factors involved.

AI assessment note: “my partner, uh, uh, Sandeep had met with the founder first, actually.”

Q You as equal partners to the founders with more strategic advice and experience, as you said, you bring on the table. Isn't it scary when you are, let's say, building a subscription market in India when it's never been proved before?

A Absolutely. I think it's very, um, It's very scary. Uh, most people won't believe you, and I think Ajith will be the first to tell you, we went, we've gone, you know, to talk to so many different investors in the early years, and every, everyone was massively skeptical of any business being created like this. Well, who's gonna take this rent? Uh, who's gonna subscribe to this furniture? Uh, well, I don't know. I wouldn't do it, so why would anyone else do it? This is a, in general mentality, and I think, uh, I think this is where I hope and what we wanted to be able to achieve as a fund as well. Of course, Ajit would be the right person to ask or any other founder in our portfolio. But, you know, suddenly it starts becoming very lonely. You're like, oh my God, maybe I'm not going down the right path. And as an investor, sometimes you feel that, and as a founder, sometimes you feel that. And it was really the relationship that we had with Ajit, where whenever he was down, We would be like, listen, no, no, no. We're here, man. Don't worry. It's gonna happen. And sometimes we were like, oh my God, what's going on? And he'd be like, I've got this. Don't worry. And we were together. And it's interesting, a lot of the Aditi or, or, or Ajit, they're single founders. And so, their ability to be able to lean on anyone else is much more difficult because they're more working for them. An…

AI assessment note: “Absolutely. I think it's very, um, It's very scary. Uh, most people won't believe you”

Q And in terms of, you mentioned about a lot of values. So first off, what kind of businesses are you looking to build? You mentioned about the Bharat, right? Serving Bharat. But are there specific domains which come from, uh, top down, where you are analyzing each and every sector, the gas in the market, and then finding the right companies for it?

A Sure. I think, um, so first of all, we invest in technology companies, which is a very broad word. There are all kinds of companies that are technology companies, but if we, we break it down, I think we're investing in companies that are using technology in some way to, um, build their business, and hopefully the technology that they use gives them an advantage, um, either economically or, uh, through some sort of, uh, brand, um, benefit that Allows them to compete against others. So technology is very big. We like to invest in businesses that are, uh, targeting India. Uh, because we're here. We don't live in Singapore and Dubai and London and Hong Kong, uh, and come into India and fly out. We live here. Our kids live here. Our families are here. They go to school here. We shop here. Uh, we go out here. We order food here in, uh, we travel to work every day here and travel back. We're trying to invest in businesses that are trying to make India a better place. Now we're not altruistic in, in that we want to make money also, but there are so many things that companies can solve for to make India a better place, and we can define better later, but India a better place while making money out of it as well. And I think, um, that's a very big part of how we think about a business. Uh, what's the value outside of just the valuation of the business growing, um, over a 10 year period? …

AI assessment note: “we invest in technology companies, which is a very broad word.”

Q And in terms of the companies who are in valuation, the top three, who would they be?

A We don't really look at our businesses like that. First of all, Uh, when you have a hundred portfolio companies, you can say, well, some companies are doing well, some companies are not doing well. We've reinvested in these businesses, and so obviously we look at those. For us, we are a small family. And we believe that unless everyone in that family does well, the family will fall apart. We are joined at the hip of every one of our entrepreneurs. And we continue to support them because we know what they have the ability to be able to do because we spend so much time with them. And so we will continue to invest and reinvest in them. And continue to reinvest in them, ah, because we know where that money is going to go. Ah, and so, there is no top three, ah, companies in our portfolio. There are top eight companies in our portfolio, and each of them Are given an equal amount of attention by one or the other partner, ah, that is responsible and then cumulatively by the entire organization, ah, behind them. So, um, we don't look like that. We don't look at failure. Ah, it's not that we, companies might not fail or will fail, ah, but we don't think of it in that respect. And also at any given point in time, any one company Might be in a very different circumstance than another. Uh, but that doesn't mean that the other company won't reach similar heights over a period of time. So we …

AI assessment note: “there is no top three, ah, companies in our portfolio.”