<div>Ventureast is perhaps the oldest fund house in India. It has been around since the mid-nineties, and is in its fourth stage of funding Indian entrepreneurs. They have made a Rs 550-crore bet on Life Sciences and is in the process of pumping in another Rs 600 crore in the sector. The remaining Rs 1600 crore of the fund’s corpus has gone into investments in technology, distribution, agriculture and infrastructure companies. The fund is also betting on clean environment. It has invested in interesting ideas such as Central Parking Services (CPS), a tech enabled parking management company, 24LetterMantra, an organic food company, and Bharat Light and Power, a solar infrastructure management company. </div><div> </div><div><strong>Sarath Naru</strong>, the Managing Partner of <strong>Ventureast,</strong> says in an interview with<strong> BW|Businessworld</strong>'s <strong>Vishal Krishna</strong> the risk taking abilities of Indian entrepreneurs have gone up significantly because of the availability of seed capital. However, Sarath believes that Indian entrepreneurs need to build technology businesses that could solve problems related to consumption; such as connecting hyper local retailers to the supply chain and to the factories with a consumer play. Amidst the investment buzz in India, Sarath believes, the general rule of investing in ideas remains, which he means that only a third of the portfolio companies would become extremely successful companies. Ventureast has until now invested in over 80 companies.<br><br><em>Here are the excerpts of the interview.</em></div><div> </div><div><strong>What is the current idea behind investing?</strong></div><div>Seeing the current state of affairs in the e-tail sector, let me quote from Guy Kawaski. It goes back to the previous internet bubble in 2001. His comment was that "I am praying every day for the next bubble to come because I know now what I am going to do". We have seen bubbles and the entrepreneur in us wants to cut it fine because we do not want to miss out on the opportunity. It’s a repeat of the previous peak and we can be talk about winners and losers. In the end of the day the question remains have people created value? That is the way we look at it. By and large we are always moving forward with value creation. There will be transfer of wealth. From a strategy perspective, how do we look at it? We constantly track companies and we are trying to find the best companies before the foreign funds back a startup. There are businesses which will be generic businesses and market places. Market places will be very difficult to build because of the generic nature of the business. The one with the muscle will win. Its winner takes all market. Market share is not the only variable to success. There are good lessons and bad lessons. Many entrepreneurs can raise Series A and get stuck after that. These guys have to restart their lives. It is the nature of the game that they have got in to. </div><div> </div><div><strong>What is the new internet business?</strong></div><div>Businesses that need capital are generic and on a horizontal platform. It is like land grab. Here the entrepreneur is taking a huge risk. The early investors need to take that risk and have to ask themselves if they have the ability to convince large funds to take a bet on their company. We take small bets. Our thesis is that we need to look at companies that have a lifetime for profitability. The next set of businesses is integrated to the real world, where we see they have competitive advantage in product delivery. A combination of real world and the internet is all we are seeing. You need something more than capital in these business cases. Ventureast is looking at B2B, B2B2C. Full stack businesses that look at real world integration. India is a cash economy and companies need to solve this problem of accepting payments in cash. We must use the internet to scale, but the delivery is a real world problem that companies must solve this. One needs to control the experience. The furniture etailers is something that needs a full stack. If someone can solve the experience then it makes great sense to invest in these customers. Can they customise furniture? This is the real world problem that can be solved. It can be solved by working with designers and manufacturers. Now is the time for such businesses.</div><div> </div><div><strong>What kind of businesses that use technology can add value in India?</strong></div><div>The handyman market is there. About eight years ago we worked with ProHandyman, the entrepreneur had a brilliant customer acquisition model, he had a door to door model of selling where he would tie in with Croma and gets a contract to service consumers. The entrepreneur’s problem was with execution of getting the plumber or a carpenter to the home on time. It was a hub and spoke model in Bangalore and Chennai. At least now the acquisition problem is solved and we need to crack the service part. Handyman service is very protocol driven and technology should track every activity and process. There are consumer services which technology can solve. Take for example Portea, about a third of the consumers need nursing and physiotherapy. The delivery has been done with smartphones. Solving the technology part is easier; it is the cultural part that is difficult. Can these individuals who are professional nurses make it on time to the destination of the consumers and follow processes. Again we come back to the real world delivery problems. We are looking at a company that allows patients to connect with doctors for surgeries. Hospitals have changed their mode of operations, they are providing infrastructure only. The doctors have to pull patients today. If technology can play a role here then it is a good business to look at. We would like to seed such a company, about $1.5 million is going in. Hospitals have built too much capacity and they need to utilise it. These internet companies can help these hospitals get more patients for surgeries. A patient’s family spends more on the first two days of the surgery and the hospitals want to bring the average length of stay down to increase revenues. Portea has signed up with Manipal to continue monitoring the patient after surgeries. The company makes sure that the person goes home at the right time. The insurance companies are happy because it is data and are happy that people are cared at home rather than a hospital. We had several telemedicine companies in the past and not many came through. The hand-held phone has changed the way you can do diagnostics. The device play is meant for specificity and accuracy of data being collected. Scanning pictures and sending it from remote areas. There is a point of care solution for the company that we have invested in. It is an exciting company. </div><div> </div><div><strong>What about skill development as a business?</strong></div><div>The biggest challenge is no one gives value for certificates. Imagine you getting paid the same salary even after having a qualification, although you have better skills. This is difficult to solve because the companies that employ such individuals need to set a clear path for these individuals. The first wave of course was BPOs and call centres. We skilled so many people and there was too much supply. I think education is a space we still have not found a company that makes a different. But there is a lot of interest from entrepreneurs who want to give back to society in terms of skill development. India will continue to have opportunities for disintermediation, can we make people self employed by using technology and finance. There is also a case for startups that are getting in to financing of small businesses in rural regions. This is a service that can use information and services.</div><div> </div><div><strong>What about manufacturing, design and retail services?</strong></div><div>Make in India has two or three elements to it. India cannot compete with China in scale, investors cannot get into companies that are playing the price game and we need to find companies that can be unique in intellectual property. Clearly we have missed the bus in manufacturing. However, Ventureast is betting on design services and have a portfolio company. In retail there is a play for entrepreneurs in build cloud based services to connect FMCG and Kiranas or small stores. We have already met such a company. The ideas that are coming to the table today are certainly better. Life Sciences is an industry that we will bet on going forward. </div><div> </div><div> </div>
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