‘India Placed Much Better Than Others To Ride Out The Current Crisis’

Excerpts:

Being an early-stage VC firm, how do you identify an idea which changes an industry? What are the key parameters which you evaluate while shortlisting potential portfolio companies?

We are focused on investments in India comprising different sectors. All these different sectors are experiencing digitisation across businesses and consumers, which basically gives rise to opportunities for investing.

When we are evaluating companies, we look towards large spaces and sectors in the Indian economy. We look for large problem statements that exist which can lead to large businesses. We go out and speak to stakeholders and validate those statements. And we look for how technology can be at the heart of the solution. We are therefore also looking at what is the intellectual property or defensibility or moat, as investors call it that the founders have created. That should be rooted in tech. 

What is it that you try to find in the founding team before investing in a venture?

We look for high achievers. Large companies and ambitious goals are pursued by people who are intrinsically high achievers. There could be certain ways to see how they have been high achievers. It could mean leadership positions, academic qualifications or even achievements despite the absence of either of these. It could also mean setting up companies which may have failed and they have learned from it and not given up their dream of creating yet another company.

What are some of the emerging trends in the Indian D2C sector? How can a D2C brand differentiate itself in a crowded ecosystem like that of India?

It is very important that we figure out which are the most important gaps in the market, what is the size of the audience behind it, what is the frequency they would like to buy at, what’s the kind of estimate in market share. Then we put together a good product proposition against it and finally there is no substitute to testing with consumers.

The second thing is communication. It has to be spot on. The customer should feel that the brand understood them, they got the product they wanted, that the product was promising and was delivered at a good price. All of these lead to great value for money and that causes the customer to return repeatedly.

Do you think Indian D2C brands have the potential to go global?

The rules and principles that exist in India are no different overseas as well. It’s just that the economics change. In this case, the product proposition should be an international one — that is most critical. And then, of course, the change in communication. All communication needs to have an insight to make the benefit more relevant for consumers and that varies from one country or one culture to another.

Global markets are experiencing a surge in VC and PE investments following the pandemic. Could there be any lopsided effect of this? If so, how can this be corrected?

Economies have digitised all over the world far faster during the pandemic than they would otherwise have. The digital transformation journey of businesses has also accelerated. As a result of this investments have been pouring into our country as it is known for its tech prowess.

What might affect sentiments in the future is the current geopolitical crisis and inflation on the horizon. Investors invest across asset classes. So, when they experience bearishness in some asset classes, they might get a more conservative view and reduce investments in the VC asset class.

However, I see India, with its different strategies on the domestic and global markets, riding out the wave much better than its developed counterparts.