New Age Investing: Mukul Singhal | Tej Kapoor | Manu Rikhye

[00:00:09] Thanks Mukul, Tej and Manu for joining us in the first episode of The Viewpoint. Joined by my co-founder and CEO, Ankur as well. We'll let him say a few words as well. We're excited to be here. We are launching a very new product at IPV, The Viewpoint.

[00:00:25] Excited to have you guys here. Happy to be here. Thanks Manu. So you know, we at IPV, we are very kind of uniquely positioned with more than about 7000 investors who invest with us regularly. With about 170 plus portfolio companies built over just a short span of about four years.

[00:00:48] And I think we're very focused on building the ecosystem, not just investing. Building in the expertise to help the founders grow, businesses grow. And then also building relationships with the next level of funders as well. So that's what kind of we have done at IPV so far.

[00:01:08] So not just monetary capital but also a lot of experience, support and Building out for the future. What we wanted to do today was to look at how things have Changed in the last ten years. You know, what has changed?

[00:01:23] How have things evolved over the last ten years? And then look at probably try to understand why have those things Changed over the last ten years in investing and in the start-up world. So that's where we wanted to do the first viewpoint episode on.

[00:01:41] So Ankud if you want to add to it, happy to. I think one of the critical questions is what is the viewpoint? The way I look at it is that today shows like SharkTac India have brought Start-up investing into every household.

[00:01:52] If not every household and in many households. And what happens with this popularity is that there's a lot of questions. There's a peak of interest of what is start-up investing. And in my observation whenever there is so much interest,

[00:02:06] There is an equal dose of information and misinformation that starts floating around Of what is start-up investing. But personally we think start-up investing and we all are the beneficiaries of it. Has a very long and profitable run ahead of it.

[00:02:21] And therefore it's an important asset class for people to view. And so the objective behind the viewpoint is to bring the key stakeholders, The founders, the investors, the businesses, the consumers. Basically to bring them on a single platform which we are calling the viewpoint.

[00:02:35] To help the experienced investors, the nurses, the students Who want to know more about start-up investing. So with that endeavor we are launching the viewpoint. Thank you. So again, since the first episode, Very respected names. So thanks for being here. So let me just start with mucl.

[00:02:57] Mucl has about ten years of experience in venture investing. Has witnessed a transformational period in indian Start-up space. Led investments and served on The boards of companies like urban clap, no broker, auto ninja, Prop tiger, bobble lap and traction. And we all know traction.

[00:03:18] IP has done so well. Mucl personally primarily Invest in consumer internet, mobility in market places and isn't Averse to investing in companies at concept stage either. So what we understand about pravega is that pravega believes deeply In the transformative power of entrepreneurs and invests in

[00:03:36] Financial and professional resources to help them build their vision as well. Also joining us today is my dear friend and managing partner of Ivy cap ventures, tej kapoor. Which is one of, you know, Don't go by his young looks but he does have 20 years plus

[00:03:51] Experience in investment industry. Prior to joining to ivy cap, He was the global partner at fosun. And head of fosun rz Capital and south east asia. His investment portfolio includes some recognizable names like delivery Which he exited by ipo. Also exe go kesh where he was able to

[00:04:11] Deliver some good exits for his investors. He is respected by his founders and his peers alike and is a Regular speaker at industry vent and so great to have you tej. Ivy cap is one of the earliest Indian based, you know,

[00:04:27] VC firm which was able to successfully tap into the i2lm9 network Across the world. We have built deep Communities at different i2s as well. So something to learn from ivy cap as well. So welcome tej. Thank you.

[00:04:42] I guess the final guest, manu, thanks for being here. Let me welcome manu rikhei. He is an accomplished professional With 16 years of experience in financial services businesses. His expertise goes beyond financial services. The core business strategy, mnda leadership are some of his

[00:04:57] Core strengths. Manu is a founding member of The land credit management in their private limited. He has also worked with established brands like global Vantage and g cap international services and g is something we Share as well. Manu is a co-founder at

[00:05:17] Merak ventures where he focuses to invest largely in b2b And they are keen to invest in electric vehicles, batteries, Carbon and digital solutions along with climate finance. While merak is sector agnostic, it will look at almost everything

[00:05:32] In b2b with a particular focus on climate tech, insure tech And sass. Aluminous of iam calcutta and University of deli is an avid golfer in his free time. So welcome to the show gentlemen. Thank you. Wonderful being here.

[00:05:46] As I said earlier, we wanted to kind of go into what, Why how things changed in the last 10 years. What i also believe is that because things are changing so Fast everything is new, nothing they have seen in history, it

[00:06:01] Becomes a challenge as well. Identifying the right sector, Identifying the right business, road map to success, Nothing is guaranteed. So let me today start with you, Mokul. And i think the question is while You have seen both early stage and kind of seed stage

[00:06:20] And what has been the change in your approach into investing In the last 10 years? Sure. Just to, and i am a little bit going More back in the history out of the context, i started my Carrier in 2006 with ken and partners and i was checking my

[00:06:39] Notes sometime last year and at that time all these us VCs were there, sikoya was there, dmj was there, You name these top 10 vcs, they were all there. And all of us put together used to invest around 60 Million dollars, sik zero. That number is today 30,

[00:06:57] 40 billion dollars. Even in 2010, 11 that number was A billion in change and billion was also with a lot Of struggle, lot of fight. You have to, Billion made a really big tiger round and flip card. That's when we reached to billion. So 62 billion then

[00:07:16] Probably 3, 4 billion and 20 billion. So obviously change is Bound to happen. Back then it was not even considered as An asset class the way we know it today. In my interaction many times with investors it was used to Consider as some projects without revenue, without

[00:07:35] Profit, without company. KK arts of the word will Not even define it as a company building exercise. So that was the time and today we know where we are. So obviously bound changes are bound to happen. Few things to specifically answer when I your question

[00:07:52] To few things which have changed my, which has impacted My working style way of thinking, way of investing is That one, the volume of data has been phenomenally high. I even remember my deal flow tracking sheet back in 2006 was the excel sheet with 60 rows. And that was it.

[00:08:11] With the entire year you will keep analyzing those 60 Rows and today you know that deal flow data isn't it? So the volume of data, volume of information, The volume of entrepreneurs hitting us on a daily basis Is humongous. So at a fund at least we try to

[00:08:30] Say how do you feel noise and signal, what you like What you don't like, you can't do anything. You have to focus, you have to define your niche, you have to Define your own investment style and do, you can't cater To the entire market.

[00:08:44] Even today I may not even know what my own firm is seeing On a particular month. I may not have seen all the Companies, I may not be in loop of all the companies. So that's a very big change the way as investors at

[00:08:57] Least I have evolved 60 rows and probably couple of Thousand rows keep adding on a quarterly basis. That's a very big change. Second I think the pace of technology change has been A lot. Historically the way we have seen like in India

[00:09:17] If we see the addition of a smartphone 8, 9, 10 It was very linear in nature. It was going at 25% kegger, 30% kegger. It used to we can model it on excel. These days at times we can't model it on excel the way the

[00:09:34] UPI has evolved, the way the geotransfer the mobile Internet in like three years the game change. So that pace of change and to identify that what can hit you And what may not hit you is like you need to think through

[00:09:47] That part that you might not even get time to react to That change. And third is largely because the sector is not so big There are a lot more external factors. There is regulation, there's a government change. Lot more players are participating in it with all kind of

[00:10:03] Interest and all kind of intentions. So which is at least we need to think through from a Governance, ethics, company structures. Those are like largely three or four things that are In my mind. These are phenomenal. At least for me it's eye opening that you could manage 60, 70 rows.

[00:10:23] The deal part plan today we have a CRM. We do sales force to manage. I still have that excel and I keep looking at it. Only 60 rows. No, no, we do 60, 70 deals a year. We invest in our 60, 70 each. So the pace is changed.

[00:10:41] I think how many startups have survived? I've not seen that. But I'm sure see Bharat Mataramani was in that excel Which I can definitely remember. Car trade was in that excel. Make my trip was in that excel. Clear trip was in that excel.

[00:10:56] Shadi.com was in that excel. So those are the companies. Good excel. No, but I think tell us a little bit about the external Factors you mentioned. I mean the governance piece and I think that's kind of I think coming back to the four as well.

[00:11:12] So how do you think about it today and how was it Thought about ten years back? It will be good learning for me personally as well. So see and I think this is related to the business of Managing money and business of investing money and when

[00:11:27] When it increased to a certain limit all kind of Participants start interacting with that ecosystem. So people initially like ten years back it used to Be hardship journey. People used to identify that starting out is a very Difficult exercise.

[00:11:43] People with very good intentions will use to come because It was not even considered as an asset class. So we have seen entrepreneurs like Sanjeev and Deep Come out of that era. But today because somewhere the amount absolute Dollars have increased a lot.

[00:11:59] There are all kind of players coming into the Ecosystem and there as an investor you need to Think through how do you react to. So these questions were not that pertinent at least Fifteen years back. There were cases in bits and pieces.

[00:12:14] There are few cases around but today when there Flow is so much there are ten thousand companies getting Funded on an yearly basis. Historically it used to be thirty companies. So then the governance your ability to monitor your Ability to track and the governance itself has

[00:12:34] Evolved a lot historically if there are three things To be done now there are like fifty things to be Done. So how do you track that data. So it's a question which all of us need to answer at

[00:12:47] Least we spend a lot of time on that and we have been Spending a lot of time since seven eight years. It's not new thing for us but we have been very Very cognizant since seven eight years. Manu my next question is for you.

[00:12:59] So you know as Vinay introduced your background Is a lot in finance so I have a question for you. What are the changes you have seen in the last few Months in the founders approach towards capital Or I'll take a step forward and say what changes

[00:13:16] Have you seen in the last few months and what Changes you would like to see in the founders Approach towards capital. You know I think the founders we work with One of the hallmarks of their character is That they're very frugal right and if you

[00:13:31] Look through our portfolio from the first fund That we raised under the pro expansion brand A maiden fund you find that each one of those Businesses is highly capital efficient right. So from our perspective we're just seeing Greater attention being paid by founders that

[00:13:48] We've invested in or newer founders that Becoming across right. I think more than the founder mindset I think Because of the change in VC mindset The investor mindset founders are becoming More aware that capital is scarce, capital is Finite and they have to be sharply focused on

[00:14:08] Return on investing, spending, Expensing every single model. I think that in itself is very refreshing to see For traditionalists like me right look so my Background finance I don't understand how you Build a business where there is no clear Business model there's no clear cash flow

[00:14:25] And profitability is a Hail Mary right. So for me that's very refreshing to see. I think this will only accentuate as time will go By because the current situation will I believe Further deepen over the next 12, 24 months which Will actually reset the founder behavior and

[00:14:43] Investor behavior in terms of asking for questions Bringing focus into stuff like that. Excellent so Tej same question for you Because you have built some consumer Businesses invested in consumer businesses There the financial discipline was not always there So what changes have you seen?

[00:15:02] What changes you want to see? Yeah so I think I'll pick up just some anecdotes from What Mukul said one story because I was at NASPR's right. I came back from US and uncle was also in US and at AOL we used to see like talking about

[00:15:19] Rows many rows of deals in US market was Over-excited so when I came to India in 2010 You know again I just felt there's no deal flow And I would take NASPR card nobody would know NASPR's. It was very funny.

[00:15:35] I was like these are large guys you know and they Would say like who is NASPR's as a matter of fact Ibo card used to be more recognized than NASPR's And they were in total like four companies I Remember you know which were of significance

[00:15:48] In the internet industry and then I think the Era after that was when the real money flow Actually started to happen was 2015 right When the Chinese got into the Indian system I Feel obviously Tiger was there you know some of The other you know western players were there

[00:16:08] Everybody was increasing their AUMs but I Feel I felt Chinese gave us that pace of Like you know coming back to your question on You know burn and grow right I mean obviously You know PTM is a great example of learning of

[00:16:23] You know QR code and I was fortunate to Like switch from the western learnings to The eastern learnings with working with Fosun But their philosophy was very straight that It's okay to burn for growth but don't burn For unit level.

[00:16:41] At unit level you know you have to be Profitable but if you are burning to grow Business it's fine you know so and that Was a Chinese way of doing things so a lot of Companies you know that we invested in and also

[00:16:56] We did that like if you look at delivery right Delivery used to burn money but at the unit level Was always profitable or let's transport other Company we invested in so that has been you Know the success story of fosun and coming back

[00:17:10] To like obviously ivcap also started in 2011 Right and now we are 400 million dollars probably Just venture fund and all money is Indian money Which is very extremely amazing right and I Think they are also the you know Vikram and Ashish who are founders of ivcap their

[00:17:32] Philosophy our philosophy is very similar that And that's why I was in with them a lot That in terms of like don't go after high Burn models right you can create a consumer Business by being you know true to yourself

[00:17:47] And not to you know just burn your way away right So I think that remains a founder mentality Obviously uncle is changing quite a bit I Think you know like Manu was saying it's Also I would not just blame founders I'll Blame investors because sometimes you

[00:18:03] Know we drive things sitting on the Boards etc and they sometime follow suit So I think now founders are becoming cognizant Of the fact this is not you know the same Old days you know nothing can be checked Obviously we have been through a lot of

[00:18:20] Frauds etc and the companies compliance Has become way important we are taking A lot of time to do deals and make sure That you know that the level of diligence Is deeper I think even the diligence Partners have changed their style so

[00:18:34] There's a whole I would say you know Reflection on what happened in 2021 Which we are seeing in 23 it might Not be like this you know couple of Years who knows but I think everybody Has become very cautious and very Careful about you know both investors

[00:18:51] And founders so I see a very good welcome Change that we needed yeah so Personally think that 2021 was very much Needed for Indian startup ecosystem we Needed that shot in the arm we needed That infusion of capital we needed to See that growth in unicorns you know

[00:19:08] Which has brought startup investing to The front and center of discussion of Mindspace but then 2022 and I think 2023 what is happening currently is Also needed some bad practices see Then and I think this is the time to You know read them out so that we can

[00:19:23] Build a more sustainable business Practice sure I think I follow up With age only you know you said you Worked with NASPR's globally and Then in India and you have worked With various companies in various sectors As well right what do you see are

[00:19:38] Things that have stayed on or are Similar to what they were let's say Five six years back or ten years back And what do you think is no longer Similar and has changed so how Would you kind of back and stack that

[00:19:51] Yeah so I you know earlier the Choices for founders was very limited To raise capital you know they Were like seven eight maybe twelve Funds were active you know and NASPR used to be the biggest daddy In town because we did a hundred

[00:20:10] Million check at flipkart which was The biggest deal of that you know of That year that has absolutely changed Today you have you know like platform Like yours you have a lot of micro funds Which have come into play so I think

[00:20:27] You'll have to be you know going Back to Mukul's point you have to be Really now founders are looking for What's beyond capital right I can Give them a lot of pools of capital Available now is it a relationship With the partner in the firm is it

[00:20:42] Where they can add more value in our Businesses I think that's going to Become more critical for at the Fund level right obviously there will Be you know top rankings of funds Etc but it has to go beyond that You know founders are becoming more

[00:20:58] More and more attracted to people Who can add other value than just Capital right and I guess just to Complete on that story fosun while i Was there obviously the china connect Which was great for founders so they Wanted capital not only fosun capital

[00:21:12] But also excess similarly ibcap we have A mentor trust in which there are Various mentors who guide these founders so That's very attractive to them so i think Every fund has to find what is their niche And by the way fund has become

[00:21:28] Competitive business too right there will Be a lot of funds who will come with Clear like your fund is you know Focusing on eb etc so you know it's Becoming more competitive for so founders Good founders to chase good founders You have to be like something extra

[00:21:42] Just then just more than money right That's very fair and very relevant that Is about you know the strategies on The other side book how has your Investment strategy changed in the Last few months as you know we Have seen the changes you are a

[00:21:57] Consumer internet focus you've Got a lot of new sectors very closely But has there been a change in the Metrics that you use to focus and Are there some new metrics that have Become far more important than let's Say five years back so

[00:22:11] So uncle prevega is from a venture Fund perspective prevega is a young fund We are in a fund too journey so From that perspective it's really young Fund so one thing which we did some Long time back is we started focusing

[00:22:24] A lot on few sectors and few markets Rather than do everything because They said the market has become fairly Competitive so one we have become Very very focused from last few months Perspective for us nothing has changed We were focusing on the same metrics

[00:22:38] Two years back it's just that we Were not getting any deals two years Back today we are getting far more Deals so for us not much Has changed from a how do we Evaluate companies is just That the market has become more Conduble to our investment style

[00:22:54] So only that we have So only that thing has Changed our deal velocity is increased For us as internally as a fund But for us from an our evaluation Perspective pretty much nothing has Changed so what is like the first Thing you look for in a start up

[00:23:11] You know even before you speak to The founder when you're looking at The deck what are you looking at I am still a very old style investor So I have to talk to the founder Before even thinking about it So my first port of call is

[00:23:25] One thing I have learned over time That venture is very Contra to your age in venture Because you started Become more and more pessimistic This is not going on this is how it is And it's a biggest enemy in my opinion It's my biggest enemy

[00:23:41] And for any venture capitalist And I have seen lot of deals we have missed In Saif because We said that this is how it is in India And venture as the Entrepreneurship as the habit of In each of those past trends So over the years I have started

[00:23:59] Pushing myself to not put that lens And start my evaluation after talking To the founder but it's a daily struggle I can't say that I've learned it Because every time so I let my junior team Also I hear them and they push back

[00:24:13] A lot and then I think a lot about it And I try to remove that lens Of K.A.T.S.A.Y. Very interesting Very welcome to Manu then You do a lot of B2B as well And a lot of clean tech

[00:24:28] Are you seeing more founders picking up Agree, clean tech kind of ventures Help us understand how that is changing Interestingly when we invest in B2B Tech businesses we find that often Founders that are addressing Attacking these problems are people That have spent years and have

[00:24:48] Experienced to intimately understand From our perspective what is exciting Is now is that top talent of India Is now taking on really big Challenges and tough problems So from our first fund we'd invested In a company called Pixel which Is started by two young boys in

[00:25:08] Their college who when they pitched To us had a vision of achieving Asteroid mining in 2050 So very often you meet founders Who have bold visions but what They demonstrated was they had the Ability to think through a lot of detail And had a clear plan for next

[00:25:27] Six to twelve months in detailed Excel sheets which is very encouraging What we are now seeing is people Like Avesh and Siddharth are more A number and that number is growing Very rapidly. Interestingly India Is a very ripe ecosystem to find Problems that affect humanity

[00:25:47] We talk about agriculture I was just talking to someone yesterday Who is India's second largest Feed producer and supply animal Food producer and supplier and he Was saying look the math for a Dairy farmer just doesn't stack up So our social traditions heritage Tells us that every household

[00:26:08] Should have a cow but whoever Has one is unable to make any Money of it just because the cost Of raw materials is very high and The cost of milk is stagnant Someone needs to address that problem Till someone figures out how to

[00:26:26] Either provide better feed so that Milk production goes up or provide Lower cost of raw materials so that The farmer can make more money Problems like those two wastage In agricultural supply chain very Large problem it's not like India Produces enough food actually India

[00:26:45] Produces enough food to cater to the Whole world but India also has the Most inefficient agricultural supply Distribution so how can you solve That and there is business that we Are now looking at that is just Trying to solve the problem that

[00:27:01] You and I as consumers don't fully Embrace so you and I go out to Shop for fruits and vegetables Often we pick the very best looking And the most profitable but nature Is not perfect so what happens to The rest of the producer gets thrown

[00:27:18] Away but 20-30% of the producer Is getting lost is a huge wastage So now there are founders looking To solve those problems so from Our perspective we are very excited I think we are now seeing very High quality deal flow I think

[00:27:32] In the last five years I don't Have the experience that Mokul and Paj have but in the last five Years we've seen some tremendous Businesses and it's just stepped Up and people are really serious About setting up companies solving Hard problems are now taking the

[00:27:48] Plunge and very attractive and Exciting businesses we're now Unfold three to five years from Today that are being germinated Now that's awesome I think we Did similar investment with OTP idea was to cut the Supply chain was down from 30 To five and I think that's where

[00:28:06] We're seeing the magic kind of So one of the things that People would be very excited to Are not excited about interested to know In Delhi the summer is here The jackets have gone away When is this funding winter going away So Tej let's start with you

[00:28:24] But Mokul and we will Have your opinion as well None of us have a crystal ball So we can't predict but We all have students of macroeconomics So what do you think May precipitate the change And when do you really think We can start seeing some spring

[00:28:42] I think there's in my view There is no funding winter per se But like all the investors are Looking for returns and they are Saying boss build good businesses That's not valuations And I think we are We are still writing checks Early stage I mean sure

[00:29:02] The gentlemen can comment But there's still people who are doing deals Right By the way worldwide there is $570 billion raised by venture capital And Different funds so they'll be under deployment Pressure I think our internal view is that Late stages where

[00:29:22] I think there will be a lot of pain Because you don't have the big daddy Like now and they are They are becoming conservative They almost have to revisit Like It's like known public figure Tiger is down 40% And the public Public market in US is so attractive

[00:29:42] That you have to put money there At an individual level also So the private Investments will slow down Especially if you are not valued You have definitely funding winter But early stage I don't feel If you're building a good business I think funds will still write checks

[00:30:00] There will be more scrutiny So you have to be and also Differentiated I think everybody Is looking for some differentiated Player rather than run on the mill companies So I feel Whenever we turn around No one can tell I don't think we can ever get into

[00:30:16] 2021 kind of a phase That was you know $7-8 trillion Printed I don't know that only happens once in 20 years Some black swan event something has to happen So I think it'll get to regular business Hopefully by you know I would say in second, third quarter of next year

[00:30:34] Yeah My feeling personally Mokul do you agree with that timeline Or I think it should be shorter I'm glad Tess said that there's no funding I also think there's no funding winter And since you talked about macroeconomics Pre-COVID we were $17-18 Billion every year of venture investment

[00:30:52] And we are a $3 trillion economy So if you see those ratios Racial ratios are fine So there's honestly no funding winter It's the time of some cleanup will happen Non-competitive businesses will weed out Premium businesses will get more Value will get more pricey

[00:31:08] And that's how in every asset class It happens even in public markets That's how it happens So probably I don't want to comment on It's 12 months, 18 months But we'll be pretty much Business as usual maybe next year But it's fine So where is this

[00:31:26] Term funding winter coming from I think it's coming largely from North America And I think if you look at The US there is a funding winter There is a pause in how Both investors are thinking and their LPs Are thinking in terms of investments

[00:31:40] Things are going to get scary there Because fundamentals are questionable So we were talking about macroeconomic Trends, you've got the Highest lowest Unemployment rates in last 50 years But inflation is still high GDP growth is still uncertain US hit a recession

[00:31:58] So I think you'll see a lot of that Noise also percolating to India So there is going to be The pendulum will swing in the other direction If 2021 was the year of exuberance 2023 from a media Standpoint is going to be a year Of scarcity and fear

[00:32:14] Now the situation The ground in India is that There is a constraint That investors are putting in In terms of which companies they want to invest in Investors, investors, dollars may remain the same But you would see far fewer Companies attracting that capital

[00:32:30] Which is actually a good thing Because this will ensure that there are Good companies, businesses with Solid models have a greater chance Of success So whether it's early stage or late stage Dollars are being deployed Actually from our perspective This is a great year to be investing

[00:32:48] Brilliant year to be investing, especially in India Because while 2021 we deployed So much money across so many companies To me the fundamentals Around economy were still questionable I was still uncertain So in 2021 we as a fund only made 3 investments

[00:33:02] Because we weren't sure where this was going to go And also the prices were very high Even if you took on the risk Of supporting someone you weren't sure If as a fund you'll make the return that you want 2023 is a great year for us as an investor

[00:33:14] There is like I was saying earlier Great talent available People are going to solve real large problems Economy in the real world Is in a very short footing You walk around, you talk to people on the street They're feeling much better

[00:33:28] About themselves, about the outlook for the year And actually next 5 years Then they were in 2021 so why won't you invest So I think all of us feel the same way And I think most investors feel the same way We're just going to be more prudent

[00:33:40] In the businesses we invest in Absolutely we actually did it Because we deal with a lot of retail investors If you will And so we actually did a masterclass on why now Is a good time to invest Because that famous saying of Fortenbuffet

[00:33:54] We're fearful when others are greedy And we're greedy when others are fearful 2021 people were being greedy So it was good you were being fearful Like for example in 2021-22 Everything EV was getting funded And we invested During that time period and I think 3 startups In that space

[00:34:12] Because the valuations and the business models Were just not making sense Even though the long term strategy was very clear Now people are being fearful So there will be some good startups And just continuing from the discussion We were having earlier

[00:34:28] I often believe that not only India is a growth country India is a country of problems So wherever there are problems There will be solutions and interesting solutions Will find their own backers I just want to add one data point So I think if you look at

[00:34:42] Different markets All these new age investment Startups everything put together Is 200 billion roughly Which is 5% of our GDP Like 3.5-3.2 trillion Now you compare that to China China is at 35-40% Of their economy size Which is at roughly 18 trillion So And if you believe in India's story

[00:35:06] And US is about 30-35% Roughly Which is Apple, Microsoft All the other Facebook, Meta So I don't think we are there yet There's so much So much room to grow And even if we become 15% Of India growing At like let's say whatever If we add another

[00:35:32] 2-3 trillion in next 10 years That pace would be faster So you know and if we take 10% of that You know you're looking at 1.5 trillion or something like that An example you know that comes to my mind is I read somewhere when Jeff Bezos wanted

[00:35:48] To start Amazon his stepfather Road to 300,000 other check This was like 80s That's the amount of check we write today So just to understand that's the perspective That's where we are 30 years behind where US was 20 years behind where China was And like you rightly said

[00:36:06] A lot of fundraising was done And in the last one year I think There has been some shift the way Western funds look at India So there has been some diversion Or some extra allocation for India Versus let's say countries like China Or some other Southeast Asian countries

[00:36:22] And that capital is raised It's there with the funds ready to be deployed So at some stage the money has to be put to work I'll pick on what they said China is 17 trillion A large part of this comes from their exports as well

[00:36:36] How do you think that can India Produce services or products in new age Which can be exported we already see a lot of Exports in software and TCS And emphasis etc Do you see more exports coming from India As well and I'll start with you Tej

[00:36:52] In the next 5-10 years from the new age Products etc or services So yeah we are already seeing signs of that I wouldn't say we are nowhere close Right to what China exports And I hope we can get By the way that news about Lithium In JNK

[00:37:08] That's phenomenal All the EVs Like that I think we will all be flying soon To India So there are a bunch of start ups That I have seen recently Which are focusing on this Whole export China plus one I think one thing with Covid which helped India

[00:37:26] Is definitely all the large Manufacturers of the US Have started to look at Not only India I would say but Vietnam Bangladesh Entire South-East Asia has an alternate Channel to China I don't think we are Because China is They know manufacturing like nobody's business Right and they have

[00:37:48] Figured out the whole ecosystem around it I think there will be a lot of effort We'll have to put in Which I think Modi government is Doing it If you see the road infrastructure Is amazing Changing leaps and bounds So I feel That proportion should increase

[00:38:08] It is increasing If you look at the data also it's increasing Now with the new age Guys think about Manufacturing instead of building Software I mean that has to be Seen because we have a lot of engineers Right so we tend to build software And go into manufacturing

[00:38:26] But I have seen few start-ups now Improving the efficiency Of the manufacturing Which could be the first way to Start increasing the export With iPhone 14 getting kind of Mg getting manufactured in India Stuff like that is moving Any of you from you Mughal

[00:38:44] And then we'll come to Manu Vinay sir on that The way we have simplified for Ourself and because Of enterprise s and fintech And we ask ourselves that QI Is the right Right bank of the bug club Is it the right for us To spend time on this

[00:39:04] And if we stepped on everything Everything India is today Is around 150, 160 billion Dollar export services market Growing at low single rate 2-3% for last 6-7 years And initial days it grew at 25-30% K-Gurl is it all of us know that Today in enterprise s products

[00:39:22] India is a 4-5 billion dollar Export revenue market 4, 5, 6, 7, 8, 9, 9, 10, 10, 11 All these companies are included Some of it is part of venture Some of it is not part of venture Which is fine, it's a different thing altogether If you read lot of other statistics And take some growth of 25

[00:39:40] 27% K-Gurl because it's at a low base Easily India will add 15-30 billion dollars Incremental revenue in next 10 years It's not out of bounds Because base is very small Services have grew at 20-25% K-Gurl in earlier days So export revenue And products can also grow

[00:40:00] And if we add 15 billion dollars In next 10 years by Very conservative 6-7, 7x of multiple We will add around 75-80 billion Dollar of market cap So for us the answer came out We just need a single digit market share Of 70-80 billion dollar market cap

[00:40:16] And we will be done I think I totally agree with you Because the covid times have taught us That any services are transportable We saw a lot of IT folks Working out of India for the globe We saw a lot of doctors Working out of this place

[00:40:34] Now we are seeing a lot of lawyers And accountants, et cetera Now sitting here working for the world Earlier a doctor could not have Sit sat here and work there Indian doctor sitting here Etc. So I think what you are saying Totally makes sense to me

[00:40:50] And if we do it right we have a demographic advantage If today any company has to do a thousand developers Anywhere on the globe India is the only place Mesh is picking developer India is the second largest population after US So if you put thousand developers

[00:41:04] Can't help it You have to come to India I will back energize and charge out of the room And if you look at all the large And run by Indians right So I think that's where India has Massive advantage over China Because Chinese

[00:41:22] At some point we don't even need to Compare to China No need We had 75-100 billion dollar market cap In one sector It's a good enough market cap In fact I was at this event yesterday evening At Josh Towne event And they were like

[00:41:42] So uncle what is your advice So I was like The Dean of business school was also here And so I was like she will kill me But I don't think you should leave India That's my advice I'm like this is the worst time to leave India

[00:41:56] I mean the next 10 years belong to us I'm like the amount of money You are going to spend on your MBA Invest in a startup You know This will get you more returns And then when your own family office 10 years later And both intellectually because you will be

[00:42:12] Invested in learning that Because you will be This is not a good time to leave the country This is the time to stay But I truly believe in that Because this is the time to dig your heels in Just to add to you When I visit tier 2 cities

[00:42:28] Is when I get even more excited Yes absolutely When I went to Covalam And I went with no expectation That the startup we went And I said Resort is nice to be honest with you I said resort That property And I went and there were 150 entrepreneurs

[00:42:48] And you know I would say If not At least 2030 or easily VC investable I met a Unicorn founder He is between Covalam and Miami I was like what's happening Sass business kind of And then I went to Jaipur Again same story Tai went again 150 guys Very enthusiastic

[00:43:12] Selling whatever they are selling Chandigarh all these places Kanpur I have heard now there is a lot of stuff happening So I think that's What is super exciting Other than just tier 1 cities This happening and also Shark Tank movement I think in some ways We have to maximize

[00:43:30] Our advantage on the cost So we have in the past demonstrated That India has top talent available At a much lower cost And huge services businesses From IT services to off-shoring got built We have always said We have the prowess to build the products

[00:43:46] Large tech companies are being led by Indians I think the next wave Should focus around that Which is you know Rather than just supplying the lowest end Of our exporting the lowest end Of our capabilities We should be exporting Value add services For example product companies from India

[00:44:06] Which have the advantage of building in India I was just talking to someone else Who runs a large VC fund Focused on space tech as an example And they were saying look Is it easier to build a space tech company In India and my answer is absolutely yes

[00:44:20] If you want to Access top talent from ISRO Many of the gentlemen That work for ISRO will give you their advice For free because they have reached You know in Maslow's So they are not doing it for money But if you wanted to tap into top expertise

[00:44:36] In NASA it is still a top dollar You need to pay half a million dollars So here you could put a satellite and operations In two three million Whereas in US It is tens of millions From there to product thinking Product mindset Has to be exploited

[00:44:54] To capture more value Going back to manufacturing There is a lot of excitement around manufacturing And as a country I hope we Crack the code on it Because it is needed to lift The poverty People are below the poverty line out of it But I think

[00:45:12] Despite this China plus one Push to Tej's point We have only been able to capture 5-7 percent Of it. Countries like Vietnam still capture A lot more of these Business being shifted out of China But India has been able to And I think we are making some strides

[00:45:28] Like you mentioned Apple 14 is a touted thing And a great example Because that should inspire us to do more So and that will happen But more as a nation From our industry stand What I feel is it will be more product led Growth, tech led growth

[00:45:46] Which will drive exports than manufacturing Thanks Manu. I think I will probably shift gears To the opposite question as well We were reading this And I will quote it right Peter Thitz founder's fund says That venture capital is broken It has shifted from backing Transformational technologies to becoming

[00:46:06] A funder of features, widgets and irrelevances That is what he has quoted What are you guys' views here And maybe we will start with Manu And then go. So that has been one of our struggles We talked a little bit about what is changing

[00:46:20] In the approach. So when we started Our first fund we took very bold bets Space tech, one semiconductor company Or light speed We invested in one robotics company That is solving bin recognition And manipulation of objects problem We invested in genomics And life sciences company Attacking cancer

[00:46:40] All of these companies are doing Just outstanding work Like building world leading products But unfortunately there is lack of availability Of late stage capital So now as we building the next fund We want to be bold and we are going to be bold

[00:46:54] The one thing we will try And more actively figure out when we make an investment Is how will we help these companies source For late stage capital Fortunately that has happened in abundance For space tech as a sector And now it is beginning to happen in electric vehicles

[00:47:08] We talked about electric vehicles We started investing in electric vehicles In 2019 we ran a whole accelerator program Was a big focus for us And now we are trying to figure out How will the company find follow on funding 2021 early stage funding is happening But large pools of capital

[00:47:24] Is yet to come to this sector So I think that is one thing That plays on our mind a lot And we will try and see And hope that all we see Is go back to finding these Large problems, relevant problems

[00:47:38] And capital starts to move in that direction We invested in blue smart And we invested in Kazam And we will try to see what you are saying Absolutely So we have to At least what we think about it There are high alpha deals Which are in these

[00:47:56] The new emerging Sort of sectors Which you cannot ignore So whether it is EV Space tech And then Clean energy is huge Blockchain And so we have Raised 2,000 crore So actually we can do both I also think there are fundamentally Issue of roti, kapala, mgaan Still remains

[00:48:24] You cannot ignore that Maybe not for India But maybe for Bharat It depends on how you slice it So you cannot ignore that Like Biryani Vaikilo is doing extremely well The consumer story in India Is going to be strong As GDP per capita improves

[00:48:42] And we have seen it in China Other markets Surface has become a 1 billion dollar brand 1 billion So I still believe In the consumer story Just that you have how your model Changes and How you do it efficiently So definitely our focus will Still remain part of the fund

[00:49:04] To feed those businesses And then we will have The approach of Co-investing Money with Some of the people who are actually building Or investing or supporting In some of Manu's Companies etc That is also getting a lift And then obviously fintech Logistics 16% of GDP has gone logistics

[00:49:30] So that always Remains evergreen sectors There will always be opportunities For the next model So that is how we think about it I think Peter Thiel has gone to the next level Of Maslow Maslow has ended for him He is on top of it

[00:49:48] He has got his own model One of my hopes Is that in next 3 years We have more capital invested In these problems In India, inclusion, hard problems Then for example In businesses solving 10 minute delivery Because I think we can do better So when I look at that

[00:50:08] That frustrates me But I guess there are things I just don't understand That ties into that feature You really need that But also the thing is There is a different audience I belong to your school of thought Who needs 10 minutes delivery My 8 year old does

[00:50:28] We fed them that When he wants something He orders it on Zepto And I say it's not on Zepto There is Blink-Aid, there is Swiggy Just order it So it's not I don't know if it's even Morally right to promote that But the kids do

[00:50:48] So there is an audience out there But again it's the beauty of India It's India, Bharat or whatever it is There is an audience for every product But then going back to What you guys said earlier Will be positive Till you can't solve that problem

[00:51:04] Then this 10 minutes delivery will not make sense They are unable to pay for it That's the point Will somebody pay for a 10 minute delivery The premium that comes with it Pretty much the same I think the context is very different On where we live For us cheap EV

[00:51:22] Vixia is also transformative technology Because it helps 10 million people To ferry from one point to another Different context. I personally think the venture Has now become very big from a amount of dollars perspective It has become an asset class So it will get diversified

[00:51:38] There are different kind of investors coming into the play Then each investor has their own Everybody is not behind transformative tech Somebody may be behind NBFC Somebody may be behind businesses So that's bound to happen If the asset class has to grow It will not get limited

[00:51:54] To a certain section only Now just to quote a number In a ifs in India is 30% of the mutual fund base It's very big That's why SEBI is sweating That we need to regulate it 30% of the mutual fund base So it's a very big asset class

[00:52:10] You just can't say Everybody has their own Everybody will have their own sweet spot Own criteria, own thesis And they will And then our context is very different From the market And then our context is very different From Peter Thiel's concept Our problems are different I'm more real

[00:52:32] We have to take Peter Thiel To a village in UP Let's try that I will come to the last few questions And maybe I will ask one Which is coming to my mind As you look at cap tables To invest behind And as more angel investing comes in

[00:52:50] Today do you think that More angel on a cap table Is a concern for you guys Not a concern Especially when there are enough safeguards built in For example at IPV we have General Parapetani from every investor And we take those decisions

[00:53:06] As a VC even though there are multiple Capable entries So how do you guys think about it And what's the thought process right now There Maybe we will start with Makul Sure So at this time Historically 78 years back Only very few angels Who were like tech founders

[00:53:28] Technology people They were only angel investors 10 years back Today the color of angel investors Also changed There are few positives Few negatives positive That founders ability to raise capital Has become better Different people with a diversified thought process Founders are able to raise capital I think the challenge

[00:53:50] Where we have seen with Too much fragmented cap tables One it has to put in the right structure In the sense that A very small section of angel investors Should not be able to hold Certain decision making of the company That's a very important part

[00:54:06] That's a core and second At times we have seen Which I can say that it's none of my Worries that people do invest With a very Wrong thought process Founder have promised them Something different They have thought something different Something else has been communicated

[00:54:26] Something else has been invested But that's a more of a majority Evolution phase as long as there are Right structures put in together from A decision making perspective it's fine Because the number of angel investors Have exponentially increased I think that's good in my view

[00:54:42] Because a lot of experts a lot of senior Folks who are doing angel investing They can bring a lot of value in If you're controlling it through a GP way where Whatever that structure is There can be SSH, power of attorneys As long as there is a right

[00:54:58] Decision making structure in place It's fine Any views from human usage I'll add to that I think When I see on cap table Like some entrepreneurs Most of it 100 people have invested That's in my view is Bullshit sorry to say That's good endorsement to you

[00:55:20] But how are you managing these people It's very hard so I think it is better They come to a channel like you And I feel that That angel also they are going through Their journey they have not seen That money can be lost

[00:55:34] What right does an angel investor Have on the cap table like zero Right so if they are coming Through a platform there they can be represented I think it's much better Other than just putting some of the Season one People who understand this I think will is fine

[00:55:52] Like even I when I was At force when we couldn't invest I did 40 angel investors but I understand the game But if you know you have the person Investing who starts losing his money Then he will be like Then he'll lot of dissonance I think

[00:56:06] So it needs to be structured Better in my opinion even for We see it's better to see like Two three names rather than You know 30 names on the cap table So I think it's been said Consolidated with decision making Being held by an entity is better

[00:56:22] Because then it's easier to deal with I think like you said It's an important Development that's taking place In India you know Tej was just talking about How there are Founders in Different parts of India In tier two, tier three cities For them to reach out and present

[00:56:42] To some of the VCs is hard They don't have access they don't know who to Reach out to etc. For them to be able to raise capital Build businesses will make it easier Also you know I've come to realize VCs have frameworks Bases which we invest

[00:56:58] If you don't have a check box You don't look at the company Often angels provide initial Pool of capital to folks like those To get the idea off the ground Get enough momentum for everybody To start to take notice of that business Right and which is great

[00:57:14] For the founder which is great for those Investors it's great for the whole ecosystem So I think it's a very positive Development I think we've also gone through The learning curve of that And how best to manage it and platforms Like you know others that are doing it

[00:57:28] Effectively help founder and Investors like us deal with those Issues later. I have a question for you guys actually So because you've been doing it for Seven five years how have you seen Like the angels you know grow On the platform the excitement level

[00:57:44] Now given there have been But they're not disappointed with all the You know whatever projects So we have seen a Phenomenal growth I mean we started With 40 50 today 7000 Plus are active and we Deploy about 150 crore kind of year You know we'll deploy it this year

[00:58:04] And we have had 180 Capital seeds also We have had Phenomenal returns for these investors Because very early stage right Think about it Bharatpe we invested A 3 million dollar valuation Blue smart we invested 5 million Fable at 3, 4, 5 million You know at 3 million today They're all above 120 million

[00:58:28] North of 50% for us Average IRR with only Six failures out of 170 right So we've been able to prove to them That if you do a portfolio of 20 You'll be safe and you will have 25 to 35% IRR guaranteed kind Of stuff right that's what quality

[00:58:44] Of work that has happened and That is what's happening is without The sales team in place we don't Have a single sales person the word Of mouse travels very very fast and That's where we're seeing a swelling So when we launched our category 1 AIF April 21

[00:59:00] It is today the largest category 1 AI by number of subscribers And today 70% of our Money flows in through Category 1 AIF right so we are seeing An explosion here to be honest And that's where my question came How do we really change that kind

[00:59:16] Of framework or thought process that And this is all regulated by GPOA Every person who comes on the platform Gives us a perennial And we have all investments they do Through ipv so we have the right to Overwrite their thought process at any

[00:59:30] Point in time and the proof of the Putting lies in we have done deal With reliance last year with milk Basket which sold off not a single Issue from ipv we did fable with TPG not a single issue we were Taught with us investors

[00:59:44] Not a single issue all of them Went very smooth so that tells us That this kind of way can work And this can create wealth for A class or a section of society That was never available to them So democratization really of this

[00:59:58] Asset class which was not even an Asset class in mckels view 10 years Back is happening and to Testimony what you said 30% Of mutual fund based today's AIFs we believe it can be as big As mutual funds so I hope I don't know if that answers

[01:00:14] Your question and are you seeing That there is better awareness Amongst the angels has that Learning curve Significant they tell us your Valuation looks high they will call Us and we have a social platform on Our app they will post stuff it's Publicly posted right we do

[01:00:32] Master classes every saturday Sessions like these are going to go To them right they are far More learned and as you said Shark tank has added on top Today you know my intern comes In and says you know when i joined As an intern they are very

[01:00:48] You know when i joined as an intern I was not sure or my family was Not sure we are going to work today My younger brother asked me what is A bit 10 what is gross margin so I Have a very good position in my

[01:01:00] Family coming from a tier 2 Tier 3 town so you know absolutely It's changing phenomenally last What's the 7000 how much is Tier 1 and tier 3 Out of 7000 I would say We have NRIs as well so Maybe about 15 to 20% Would be an NRI base Coming through category 1

[01:01:20] So it becomes the local money Tier 2 tier 3 you will see towns like Ahmedabad Calcutta I don't know Which way you want to put it Ahmedabad Pune, Hyderabad Chennai All of these places You will see investors from Raipur so you will see investors Spread out of course domination

[01:01:38] Comes from Delhi Mumbai So by quantity it will be about 20% By value it will be lower So we are going to spend a single Rupee going there I am going to Chennai Hyderabad next week First time right So we are no more scared with Fragmented captives obviously

[01:01:56] There is a GPA then it's the best Scenario but if there is not Then we tend to deal it With SSI, SHA in the sense We put threshold limits that Let's say 30% 40% 50% People approve then decision Goes through Those disclaimers It also works for angel investors

[01:02:16] Because a lot of times they get Scrued by No rights so it helps both ways So you have to be fair They should get Information rights They should get fair economic Rights at par with future investors And you know we do this service

[01:02:34] By we may do this service to ourselves By moving them out with Even information rights because It should be the sharpest finance Brains who may look at the financials And say these numbers are not adding up Now your analyst may not be able to figure it out

[01:02:48] By even going into the excel But there would be a sharp investor Who has built the business And then they are looking at this Financial and they are like these numbers are not adding up Please go and look at them Keep us on list and transparent

[01:03:02] Our investors we have a quarterly call After the investment they will come They will look at the numbers Revenue increased by this but your cost There is something wrong here They will just look at the number and they will tell you

[01:03:14] And so to your point also one way you ask It's both so some investors have come through the learning curve So they have become far more Informed and they have Spend time educating themselves Right many of them tell us that This is a MBA for them

[01:03:28] Because they learn By coming to this But at the same time there is a new class of investors Which are very new And they get carried away By a lot of misinformation that gets Spitted around right And they will come with a notion that

[01:03:44] Oh is it a fraud That evolution journey will be there Pardon that journey is there Beauty is that the people Who have learnt earlier one year back Are the ones who are answering them We don't have to reply Those investors are saying no

[01:04:00] Like even today there was a question that somebody asked Will I get an investment opportunity And then there was a person like yeah I have been able to invest In 90% of these startups Like those kind of things Or how do I evaluate or how do I think

[01:04:12] So I think when you create a community And you let that community grow And that's what we are seeing in IPV Where experienced investors who have learnt Through it People who had no idea what startup investing is They have spent time

[01:04:26] They now respond to the investors coming in So everybody is satisfying their own self-actualization Needs actually there That's a very substantial number Also by the way I have seen in My circles at least it is also Once they make investment it is A discussion point right Social

[01:04:44] It's a new visiting career It's a bragging right you carry It's like I think that's Interesting thing I am also a Shaq basically That's what they are telling That's why I explain my mom what I do I play this everyday Maybe I will then ask the last question

[01:05:06] My favorite one Do you guys have any anti-portfolios And if you want to explain some of those We will start with you Tej and then go to Mokal and Manohar Oh my god I have Tons of them You are a very good investor

[01:05:20] That's the only way you can be a good investor So we had opportunity to invest in Swiggy It was little bit later from Fosun At like I mean I love the founder But My colleagues are not sure about You know whether the market will translate

[01:05:38] Into making money and obviously it's a high Bond model so but I still think it's A massive miss from our side Even the where Swiggy is today The other big one is Rapido So Rapido I saw at 10 million I saw at 25 million I just couldn't build the conviction

[01:05:56] And going back to Mokal's point about You know how would women sit behind In a pillion ride I just couldn't get over that Bias So I was like So that was a huge I think a huge miss for For us I think

[01:06:14] And then we had big basket also Then a bunch of them Which come to mind But I think these two stand out I have many Because we have been investing since You have 60k The biggest ones are I think Flipkart and Fresh Desk

[01:06:32] Flipkart came to us multiple times Multiple multiple times But always couldn't able to get through it And then Fresh Desk came at He was asking 12 million We were stuck at 8 million Didn't happen So those are like very big End-day portfolio So your mind are open banking

[01:06:52] Which is a very fascinating business And the other is Bharatpe So we saw Bharatpe When he was raising to 1.5 crores Till 2 years ago Everybody said it was a Big miss I think the duty is now out I think the third would be Kenco Which is an insurance play

[01:07:14] Yeah, great business I think they have got great traction We just couldn't get conviction We are not studying that Best friend kind of stuff College, yeah Anything else? Thank you Awesome Hope we will do more investments together I look forward to it

[01:07:36] I think a few we will continue to evaluate Anything you guys want to ask us Open Transparence I have question How do you pick Your companies You get a lot of deal flow I am assuming through VC Directly founders reaching out Some of our companies

[01:07:56] How do you guys select So we are very open about it Or criteria is out in the public We look at 5000 to 6000 deals a year We have sector agnostic so we see everything So three main ways of thinking Is in three buckets basically

[01:08:10] One is is it a great business Is it a great team And is it reasonably valued About 10 parameters Will somebody pay for it Is it a big problem Is it a good economic positive Will it grow and scale And a founder bucket

[01:08:28] I think that is a tougher one And that is what we have tracked The vision, the ability to articulate The ability to communicate The ability to work hard Having the right technical capability The ability to network The ability to handle various stakeholders Customers, investors The board

[01:08:48] Distant until customers And the like The ability to get The right people on board The ability to hold people together The ability to hire So that is our core where we are able To look at the founders very sharply Very early on because those guys

[01:09:06] Don't change much over the next 10 years Whether it was Bharatpe we did Whether it was BlueSmart we did All at like 2-3 million dollar valuation Each So I think that is where our core becomes And therefore the kind of culture We drive and the kind of discipline

[01:09:22] We drive is there Reasonable valuations also we look at So we are fine if we lose something At a very significant valuation Because to your point Right will as a fund will make money My angel investors make money So that's the broad piece

[01:09:38] But we have 100 checklist in bucket one And about 30 checklist in bucket three That we diligently go through And keep dropping deals Through the process It's a large team it's almost a 180 people Team that we are on Wow Like 5000 companies how do you evaluate them Like 180 full time

[01:09:58] Full time employees yes Wow I don't know how to see you 170 portfolio companies and we don't Stop at investing right We have a large network of CXOs Who help every company Get from one stage to another OTP Being a great example we have brought in 6

[01:10:14] Experts on the various areas After we invested to take them through series A And then to series B And beyond So with that we come to the end of the first episode Of the viewpoint Really big thanks to Mukul, Tej and Manu

[01:10:30] Thanks for being here it was great having you on I look forward to staying connected