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Funding the next generation of tech giants | Shailesh Vickram Singh @ Climate Angels
201 Plays1 year ago
Shailesh Vickram Singh is an entrepreneur who believes that the current generation of global internet start-ups have reached their peak. His thesis is that the next generation of tech giants will be focussed on sustainability and tackling climate change.
He founded Climate Angels, a fund that focuses on investing in start-ups that are building a sustainable future through Innovation & Investment. Learn about what the future of climate-tech looks like from the lens of a seasoned investor.
Get notified about the latest releases and bonus content by subscribing to our newsletter at www.founderthesis.com
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Transcript
Introduction and Background
00:00:00
Speaker
Hi, I am Shelly Shukansing. I am founder of Massive and Climate Angels.
00:00:17
Speaker
The era of giant internet startups is coming to an end. That's the big theme of this episode featuring your host Akshay Dutt interviewing Shailesh Vikram Singh, the founder of Climate Angels.
Climate Tech and Investment Insights
00:00:30
Speaker
Climate Angels fund startups who are solving problems around climate change using technology. Shailesh puts across a compelling argument that the next trillion dollar companies will be climate tech companies and we already have seen Tesla as a trailblazing example of this.
00:00:46
Speaker
Shailesh is a veteran venture investor who shares his lessons from his journey in investing and his take on the upcoming trends. Stay tuned and subscribe to The Founder Thesis Podcast on any audio streaming platform to learn how the savviest investors in India think.
00:01:11
Speaker
Suppose I am Latino, I got a job with UTI, Unit Test of India, which is one of the largest mutual fund those days. I think this ICICI of the world was not born. And you gave us the largest market maker to manage to $6,000. And to give a sense of the investment speed which we used to do. So I was part of a department of investments, which was, I think, a team of probably six or seven people. And we used to apply 200 reports plus every month. 200 to 500 reports every month.
00:01:41
Speaker
Unlisted markets. I'm not talking on the listed markets, right? Into NCDs, into the pre-IPO deals. In fact, Nohini.com at that time, Sanjeev, in other companies, the government is just off with this deck. I spend a lot of time on this. And how old were you then?
00:01:59
Speaker
I was 25, I think. Yeah, those days, you know, everybody, because you do have the big daddy, so whether it's Aniram Mani or whether it is...
00:02:14
Speaker
Everybody used to come. Because UTI was the major. In fact, you would be surprised till 1999 or I think 2004. Every balance sheet used to have a clause line, investment from UTI. So UTI was like, every company has a term.
00:02:31
Speaker
I remember NIT coming in pitching about their dot com model and we are saying that we own you. We are the largest year older in NIT. So you are pitching us our own company.
Shailesh's Early Ventures and Cool Avenues
00:02:43
Speaker
So there's not a company in India whose file was not in UTI. Any company.
00:02:49
Speaker
So we've got the largest investor in the market in every company we used to be there. Yeah. So that'll be interesting. Yeah. You fairly quickly, you decided to like move out, become a farm. Yeah. What was the trigger?
00:03:04
Speaker
So, no, I was, I think I'm a born founder because from a childhood days, I have always doing something, I started something like same college days, it's cool that I was running a full library, you know, I wondered of comics, I think I'm all running it. So I always used to be those experiment, I kind of ran, try to run a advertising agency also in engineering days times, right? I tried to call it SVSAD, shillage consulting associate design, you know, so I think I have a guy who always get a kick when they start something.
00:03:32
Speaker
So, when I was at UTI, I saw the dot com happening and I realized this is the boom. This is going to be much bigger than what is going to happen. It was 99. It was really exciting and dot com boom is happening. And we are sitting in the middle of dot com, right? And UTI in both ways. And then I decided to do this cool avenues. So, one of my other partner, Rupal Lokkain Tomat, he was also from Amnato and we were usually in the same flat. So, UTI used to provide you a very well furnished flat in both ways.
00:03:57
Speaker
a nice three bedroom house with a hell band hole everything the only thing you need to carry applause even the towers were given by company right so so then so that you know companies would get masseter cars to their employees yeah yeah you didn't you to give that but the house is very nice right and uti used to get promoted the house you to ship so from mallard you can retook afraid into a 30 years time
00:04:22
Speaker
So, that was DPI. So, looking and I kind of got really excited and debated what can be done.
00:04:31
Speaker
Job definitely seems a good idea. Knockery.com was there but it seemed very mass thing and we thought there is something needed for MBAs. We thought that the McKinsey's or Goldman of the world will not come to Knockery.com to post their jobs. So we created site called Cool Avengers which is the focus only on MBA jobs.
00:04:52
Speaker
And what we did, so we registered this thing, worked part-time what we call on the building side, we got a kit to design our website but we couldn't do much. Then I ended up writing the whole HTML myself, manage the server and when we launched, we did it like very crazy thing. What we did, we went to IMM in the bath and did the placement coverage live.
00:05:16
Speaker
So, what we are doing, as the offers were given, we were constantly updating on the website. And this went viral. It went really viral. Because what happened, the team, those are the places where the wars were going on. I think Lehman Bhattar in the goldmine sites were there. Then Lehman Bhattar guy called his team. He said, you have not made any offer and the goldman has made 10 offers. What are you doing? So, he said, how do you know? He said, I am watching on cool avenues.
00:05:39
Speaker
Yeah, perfect. So, we were sitting in the, I am at the VAD campus and I was Indra Parikh, she was the dean then and she said, yeah, you can, so we were just making the page and I was uploading the page constantly every minute.
00:05:55
Speaker
What you like to think is that at that time you are doing it. And it went viral. Like say, who didn't know? Who didn't know those days? Every IAMBai. So, IAMBai, then they came out and inspected. Then we became the first print story. I think CNN did the story on us. In Newsweek, they did the story. So, we went really crazy viral.
00:06:16
Speaker
Quickly a job like this. No, I'm not. And then we thought we should resign because you know, we already, then we resigned from the job. But we did all these IAM placements. And in fact, we started this train and then business came to us and they said, can we do a joint survey? So then we gave what we call business to a cool and nice joint survey. And those days print magazines used to be a very big thing. So business today was great. It's like an e-school ranking survey.
00:06:43
Speaker
Yeah, so we did that. We didn't do ranking, but we did the placement survey. Then I think that went on for 10-12 years. Earlier it was with business today, then Mint started doing it. The whole page is to come and you get cool events, all that. So we achieved all this without zero marketing.
00:06:57
Speaker
And if I think of those days, well, in fact, I remember the kind of service we managed, we managed more traffic with much less tech and something with today's startup, I think they are much overloaded, right? They are founder, they are five founders, right? Five things, they are still raising million dollars before doing anything. And here we have done the whole thing without even a single penny spending. I think the token only we spent was less than a lakh rupee.
00:07:24
Speaker
And we switched from university at least. We may have some more savings, right? So, we did some lakh rupees. That lakh rupees happened because we have to travel to Bombay and the bus by flight. We couldn't, because Bangalore was far away from Mumbai. And the placements were happening very, very fast. So, we just travel cost was there and some quarter cost. The guy who we also used to build aside, he charged us some lakh rupees, 30,000 rupees.
00:07:47
Speaker
So with that we got in business and this started very very well and we got a good funding offers I think. But I think we got greedy or something happened. We are still in the top sheet and now stuck well. So we thought everybody the logical choice was to go back to the job. We didn't do that. That's why there was no revenue.
00:08:10
Speaker
Yeah, at that time, there
Investment Career and Market Shifts
00:08:11
Speaker
was no revenue. So what we did, again, we had found us. So I could have gone to, could have searched or whatever it was doing, but we thought this is run it. So we quickly, what you call, what happened then, Reliance is launching their telecom thing. And we got a call from the single guy from there and say, we are, yeah, we are not the main guys who are launching MDA's office. So from them, we got a call that we are looking to hire. Can you help us? Because you know everybody in MBA.
00:08:38
Speaker
So we quickly morphed into vertical equipment and we have a job section, but then we made it. And I think within three months, we got some 50 clients.
00:08:48
Speaker
So whether it's in the San Levar, whether it is Bank of America and crazy things. So why we like say we are hiring for the San Levar and we become on the top recruiters of the San Levar. Because we knew what they want then we were the stuff we're doing. So we got from 50 odd clients in the next four months. This was like a services business? Like you were like an agent thing? Yeah, we are like a recruitment. What's the point of that? But classified.
00:09:15
Speaker
No classified, but the point of the region was far bigger. In fact, even Nokri, the identity team, used to come in and buy the cool avenues. So, we are charging money for it, but that's too low, right? Here, we are, my single device used to be 3 lakh, 4 lakh, and those it was good. So, I think we are running some 40 ft lakh. We are not running 40 ft lakh. Just two ways, right?
00:09:34
Speaker
And Kuna has become such a big brand name that a lot of people used to know. Everybody knew about Ulevineers. Nobody knew that it is done by two guys sitting in a small room. They were not there and cheers, just mattresses. And there's one guy, my team, he said, oh, what you do? I said, I work with Ulevineers. He said, oh, I do the honors very well. If you want any help with me, no.
00:09:59
Speaker
I said, sure, I will ask you for a word. They are good friends. So I don't use to assume that. And I remember once upon a time, I think some very large bang in their head. And she said, can I join you wise? I said, sure. And she said, why do you come over? So we went to meet at home. I think it was a
00:10:21
Speaker
in the Appian Sea or somewhere, sea facing Bangla, not Bangla, sea facing apartment, but a 5000 square foot kind of apartment, right? Overlooking the whole Arabian Sea. And she said, can she come to our office tomorrow, and we didn't have an office, and we were thinking, will she, I will only be to Malahad or Amderi, and there's no, nothing to offer. We said, yeah, you can work for a home, why need to travel? We are not very keen, you guys are really building something very amazing for the next level, and we are large, but you guys are in the league altogether. So, that was that.
00:10:51
Speaker
So that generally became very, very exciting. So I think we became profitable within six months time and fairly good money was coming in. But recruiting is a very people intensive business because you need telecoms who will call, who will do interviews, scheduling, all of that.
00:11:12
Speaker
So, ours was much simpler. So, the point is we have built this size. So, our reach was much, so we, what we built, so our model from day one was basically passive job seekers. We say the market is not for IT job seekers, for passive job seekers. So, what we built using content, we have large list.
00:11:28
Speaker
We just used to post a job there and everybody used to send a CV and call and immediately you know it was much efficient we used to do that. So for us the what you call the conversion ratio was far higher than anybody else. So in fact I remember some lady was sending us a call saying there is a check pending for you. I said what? He said you have referred a guy and he is hired and you have not collected
00:11:51
Speaker
So that was the level that takes there. I think you would be some highest commissions and very ethical company. So that was a very big thing. So that was really exciting.
00:12:03
Speaker
And you were there for three years, so it continued to earn recruitment services. Yeah, so what happened then, we went to one college, a very large college, and they said, can you do our Dean intro? And we used to do that, because I was editing everything. So we used to do a lot of content. So a lot of content used to come. We said, sure, we'll do the intro. Then that Dean said, so what is the cost for this for a year? So then my friend and I, we said, yeah, it cost you 11 rupees. We said, yeah, fine.
00:12:29
Speaker
So, that channel started. So, suddenly, everybody was paying us money for equipment, everything else. There are a thousand things with this happening. So, in fact, we did a very funny thing. In fact, what happened? We created a classified section.
00:12:48
Speaker
So, I was sitting in IMS office, I said, why didn't you advertise on this? And he said, I see in classified, people are selling old notes of IMS. So, we have a huge inventory, unsold inventory lying with us. Can you dispose it off? Because we can't sell it. Can you sell it? We said, sure. I think we have, we sold on old IMS package, which are lying in there, go down in three months.
00:13:10
Speaker
It just got sore. There are people who are from Bharush. I remember buying 100 copies. So we used to get the order. And we used to keep the money. The money we used to transfer to them. And they used to ship it. Our job was to just pay the commission. That's all. How did you manage the payment gate? Was there a payment gate? No payment gate was there. People used to ban transfer. We used to get an email. And then we do that. Or people used to mail us courier checks. All the time the checks used to come.
00:13:39
Speaker
So, and we started with so many books also. I remember there was a Peter Doperka series. Some book used to sell for 3000 rupees. I think we sold some hundreds of copies of that. Those manmade books. When high-end stuff we used to sell. Anything, your school unit has a very high-end traffic those days. Very, very high-end traffic.
00:13:56
Speaker
And we were doing this without any funding. There was no funding, nothing at all, right? So that... Okay, okay. So you had recruitment services as one line of revenue. You had capital street as the second line of revenue. Then you had commerce, which was like both. Yeah, both, everything, seminars. People used to sell their seminars, list their seminar section on our site, pay us listing fees. So not a plastic band money. Like somebody's organizing some training seminar, you know, some polish. They used to pay us, MDPs guys, they used to pay us listing fees.
00:14:25
Speaker
With small, small checks, all the time I keep on collecting checks and depositing it. You know, what happened at the end of three years? So it was going fine. The two things happened. One was... So it's a really sad thing which happened. So we were going fine. But we were always thinking that fundraising is not happening. We should raise money, raise money, right? And money raising was not happening.
00:14:52
Speaker
So, we are getting tired of this thing and we are not supporting, parenting is not really exciting business. Then what happened, we had two very large operates in India, very ethical operates, they didn't pay us money. Alright, they hired the candidates, they never sent the check. In fact, one guy I have to almost threaten the senior HR director and they paid the money but cancelled our contract. Very, very respectable in company, in-depth promoters. Very, very highly ethics. And then I realized, see, I was in UTI where, you know, everybody come and
00:15:18
Speaker
or kiss your feet to give you money, right? And we see we don't want that. So for me, the ethics is something non-devishable. And I said, if I have to win this service business, where the HR guy is going to pay money, I'm not going to do that business. I don't want to do that. And which has happened? So they want to spread them, Houston Lever, one of the most ethical companies. And then you have this so-called high ethics companies, but where the HR department expects to pay the money. I said, we are not going to do that. And then the old school, traditional Indian companies,
00:15:47
Speaker
Yeah, we dealt with the old school and then companies because it was more banking, finance, IT, you know, high tech, all those things were there because that's where the MBS goes, right? I am very excited about it. I said, I think I'm going to go back to investment. That's why Lopin also said, yeah, we are not going to do this.
00:16:06
Speaker
We are not here to make money. We are here to change the game. And if it's not exciting, we are not going to do it. So then we went back to finance. You shut down the school avenues. No, shut down. So there's a guy, there's a family. There was something. So they said leverage take over them. Then we transferred the business to them. Then I wrote a... I write a mail to MDR for GFL, Mr. Vashney.
00:16:33
Speaker
And I said, I am an entrepreneur. I'm looking back to join this. And he said, why did you look at war? So I went there. And yeah, I went back to which? By looking at the joint, I think this emphasis guy is Jiri Rao. I think he joined Jiri Rao in this office. So that's what we did.
Climate Tech's Future and Opportunities
00:16:55
Speaker
So GVFL is like a proper VC, except that it's government-backed.
00:17:03
Speaker
Yeah, so it was backed by CDC and the government of Gujarat and it was a very proper VC and I did very interesting deal here. There's a company which in 2003 said that the mobile will blow and mobile force will need an OS and always building an OS because those days people are doing those simian and all that and that is very, very bad. So we will create an OS for mobile because Chinese and the mobile when they take off, the China will take off and China will need an OS and we will provide the OS to Chinese mobile. That was a thesis in 2003. Can you repeat that?
00:17:33
Speaker
So, and we put that money in that but market happened when it happened in 2008 not in 2003. So, it was net, I cannot even recall that name. It was something with a net something.
00:17:50
Speaker
Very smart guy, very smart guy from my US. And they said we can give you a ringtone, customizing tone. That was a big thing. That I call you, they will get a customizing tone. You can edit a photo, you can put a mustache on a photo. So, they are building everything else. The office was in Kundan, Signature Towers. I had come and visited them, the large coding team. And that those, they were building those whole OS. Because they believed that the mobile rate take-offs
00:18:14
Speaker
China will rule the world and China will need an OS. Because China cannot create a word, follow the word. So we will create that OS. Right? So it was prior to Android. But the point is, we funded but there was no VC ecosystem at that time in India. So second round of funding and all that become impossible. And we funded a company in district name in those days, which was doing smart card to pay. Because again thesis was that the micro payment will shift online.
00:18:43
Speaker
That was our thesis, very, very strong thesis, right? And so this company has these smart cards. So there's a mobile again, right? So market just shifted to the, what do you call, non-guess, but of course, not from the card, but more to the mobile, right? That was, we knew that mobile will come. But two and three, four, that was not there. So we just took those bets. We did a company in a hardware, also in a manufacturing company. There was a company called location machine tools, very interested in that. Location went for IP and all that, that time.
00:19:11
Speaker
So, it's pretty interesting to send companies. Okay. So, then what next after the GVFL? So, GVFL, because of my personal reasons, I moved to Delhi, then I worked with Escorts. So, Escorts has a rural NBSC. So, I headed there and they also trying to set up a legal outsourcing business. And they are looking for some entrepreneurs who can come and join. I will also tell you in 2004, being an entrepreneur is not easy to get a job.
00:19:40
Speaker
I still remember when a large agency, they're asking me, how can we use so double to start a company? Another guy, he said, yeah, we can hire you, but you have been already a founder. So you already a CEO level. So if I hired you, you'll become a CEO manager. You want to report to somebody. Very difficult for you. So you should only do further CEO jobs and get into this thing.
00:20:09
Speaker
So luckily Scott was looking for somebody like that who can lead the legal business. So I start building that up. So we build it to some level. In fact, if you know that the whole Indian court system today runs on vertical legal cases. So having legal case in the computerized. So the whole Indian high court legal case are now computerized.
00:20:29
Speaker
So their database called Manupatravi, every large subscribe, and you have you fought any case, you do search for it, you get the whole case note. So there's something, so every case you summarize, what you call two paragraph summary of the case, not two, one paragraph. Every case is summarized there, right? So that's all I've been searched. So the whole thing is done by waiting. So every Indian court case today, which has been bought in data bus was done by my team. And I use it.
00:20:58
Speaker
Manu Pata has outflow this up to the escorts.
00:21:03
Speaker
Marupathwa was done by these guys, Polyclux. They used to own Marupathwa. I don't know what happened then. So, I'm talking about C4. And all legal cases are summarized by the team. And I use those manufacturing process to build a whole churning out of the summarizing of the cases. I have some 70-odd lawyers working on full-time summarizing cases of all iPods. So, we build that database those days.
00:21:31
Speaker
So I did that and then the squad went to three or one thing because the group was going to financial turbulence. So I think they were selling and buying everything else. So that time, someone of my friend whom I had known for a long time back was running a PE fund, R2I capital. So then I joined R2I capital.
00:21:49
Speaker
And to our capital, we had two investment earlier is investments we have done. There was a company called Equivalent databases called Indalegal databases, which are acquired by Reuters. So we sold that to Reuters. My friend was a very early investor in India for line, angel investor in India for line. All right. So those are deals we did. There was a company called QAI. Then there, we were early investors in theta gragans, ideas and words. It was a large big fund. So did those very interesting deals, right?
00:22:17
Speaker
But I was fundamentally a what you call a tech VC. So my LA is not a late stage, more of the early stage because the thing I've done, the thing I've done. So those days what I happen, I use this one I use to come, there's a company called Inkfruit which came to me and I can have supported them.
00:22:36
Speaker
We kept on talking all the time. So, Loonia said, why don't you join the seat one? Because you are a startup guy, you're not a P guy. I said, P is not something which is easy, is much more comfortable than a VC. I said, for sure, but not something. The universe of investible deals is very small.
00:22:58
Speaker
You are very small, the number is very simple, you made the company, you know, okay, what is the average amount of money to be a no, this, this, this, all this mass in a minute, you know, right? But the exit is almost impossible in India. So in India, PCMC is much tougher because 90% of founders don't want to give anything.
00:23:17
Speaker
So anyway, and then what happened, our fund went through this very huge year profit with 11 prices. One hour will be defaulted. So we had done the first dot on and just a million points and then the one will be defaulted. And this was from outside India?
Building a Climate Tech Ecosystem
00:23:35
Speaker
Yeah.
00:23:36
Speaker
No, they have nothing called Indian LP. In Indian LP, they have no understanding of what happens. So, it was their malicious point and when we have a foreign LP, we defaulted. So, then I thought, okay, and then that time, seat one has raised his point. So, Lunea said, why don't you join us? And I thought, okay, and I liked that. By the end, they were looking for somebody who did Delhi and I was in Delhi.
00:23:57
Speaker
So I then joined Seed Fund. And Seed Fund was very, very early, Mahesh Murti, Parin Gai. So Parim Danti is one of what you call, he is an Indian investor in a company called, say, India Bulls.
00:24:08
Speaker
He's an engineering company called Avengers. He was an engineering company called India Games. So these are very, very marquee companies of 2000 era, right? When there was nothing. And he was, he's that guy, what you call, real passionate about startups. That's what he, what you call, he bleeds his startups that way. Always a little backup founders, build it up. And it was a great, great working with him, learning him.
00:24:30
Speaker
So that's what I did. So then I joined seed fund. Where is the money? So seed fund's early first one, money has gone from Google, Motorola, there is your ventures, his own money also. And then next one we got from CDC, UK, IFU, Delish one, all this kind of thing, very remarkable all the time.
00:24:53
Speaker
Yes, yeah. Proper, premium, proper investor. In fact, my first deal which I invest and I did, I think I generated was a company called Lenscart.
00:25:02
Speaker
So, I liked his card, I thought it was perfect, e-commerce model, business shape, large number, great business. So, I really loved his card, I liked it. I spent a lot of time with him. I put two or three months working on it, and then I said we should do it. But somehow, our whole eyesight kept on debating this, this, this, this. And then he got two offers, one from TCM.
00:25:24
Speaker
What a fun name. IDG. So IDG, TCM sent a mail. In fact, TCM said, told me that he asked this guy sending a mail, asked him, whether he should go and sit in front of his tub. He said yes. Because he said that, sit in front of the other tub. So I think, why he gave a tub sheet and TCM gave a tub sheet and that was more money than what we are giving. And we were very keen to have us. But the money was high. So I told you, you should go with the money, which is large. Though we really want to do it.
00:25:53
Speaker
But since that guy is giving you almost four times more, so you should go ahead with that. So that was an interesting way. That's your anti-portfolio. Yeah, I have it. Every company in India used to come to seat fund, right? Because we are the only one doing this. So every company that would put anti-portfolio, this Flipkart or Snap, you name the company, it was anti-portfolio. You evaluate it like you bet the buzzers and all that.
00:26:21
Speaker
I have not met before you guys have met, but yes, they have met and I think a lot of time going along with him that time he used to print vouchers. It's time to start with a voucher kind of business. And definitely there's a company I met them at. So yeah, every company which is there big today will be already performing because there's no deal we won't see.
00:26:42
Speaker
Because we were the one who called the deaf one. We never started to do those in the Redbus. No, people don't even remember the Redbus, but Redbus was really large. So, to give a perspective, when we invested in the Redbus, it was used to do probably one to get a month or a week, something. And when the Redbus sold, and it was sold quite cheap, frankly speaking, it was doing those to 450,000 tickets a day.
00:27:04
Speaker
And then when the Make My Trip acquired, the most level company there was Adpos because it was tracking a lot of profit and huge numbers of tickets. So, I think most of it was a billion dollar plus valuation. But yeah, for C12, it made a lot of money. We were happy. Fanny was happy. So, that is overall.
00:27:26
Speaker
My same seed front like the Sequoia of India like there are so many funds which came afterwards like say Prime, which ever happened. So what happened seed front basically so we have three core founders called Mahesh Murti, Parthi Jacob and Purim Bhai. Somehow they decided not to continue together otherwise we would have been there.
00:27:50
Speaker
And then what happened? Bharti and I took that. So Bharti and I were ready in the front and we got commitment. So we would have become much bigger than them. But then I kind of lost my interest in Kazu internet. So in 2017-18 I thought that it is done. I don't see any value here and I want to solve for climate. So basically I have a big change of art.
00:28:09
Speaker
So, you can blame me there. Yeah,
Advice for Founders and Investment Strategies
00:28:14
Speaker
because we have this first closing. So, think of it. We have 20 million committed, 10 million from CDC, 10 million from CDC. Nobody quiz that. I mean, I quiz it. So, in 2016, when you had... Yeah, yeah. So, commitment done. So, it was way small. So, we have become much bigger than Blooms of the world. We want anyway much bigger than them.
00:28:44
Speaker
So we kind of, so I kind of, I lost interest in Kazuo Internet. I found, I start finding it very boring, with all due respect.
00:28:53
Speaker
And that's the way it happened. So, then I see that. But, consumer internet continues to be where every other fund is investing in. So, my case is all that converter is jacked. That I took 12 to 17. Oppose I was wrong. Because every fund inside came from 17, I will do respect, you know, monkey would have made money.
00:29:14
Speaker
Every company has gone multiple app rounds. Every company has made multiple app rounds. But frankly speaking, I tell you, I'm going to make a very strong NP statement, which is, the presenter is dead. The only thing is the VCE founders are not aware. Because the fundamental thing is, it is not fitting in the VCE host system. The game is over.
00:29:40
Speaker
See, I'm going to publish a paper on this, so I won't go much to get out of it. But the point is, at the end of the day, VC business is about what you call creating a flywheel or creating something which can turn a lot of revenue and everything else. So in consumer internet, that doesn't exist.
00:29:59
Speaker
The edge has been taken by the big daddies. The point is earlier there was a first one time there was an out-of-air pocket where the Microsoft of the world when they were still in many films couldn't move to cloud. But once all the daddies had moved to cloud, almost every business has disappeared. Look at Calendly. Microsoft team has consumed it, right? Look at Zoom. So, see the Zoom call number of Zoom guys today versus number of team guys today, right? Or Google invite invite today. It is eating it up. 20 single businesses where the companies had any edge.
00:30:28
Speaker
So, human internet has no edge, right? It's the bridge norms. Human internet include companies like Zomato? Yeah. What is the edge?
00:30:40
Speaker
I mean, these are businesses which are like... Which we die. Yes, which Uber has, right? Like what Uber did for transportation. So, I think Uber is the biggest case study and biggest tragedy. In fact, I really like this analogy of Uber, because everyone says Uber has no cars. But think of it, they have raised probably 20 billion dollar no cars.
00:31:03
Speaker
and still not begging for any. So, joke is on Uber. Joke is not another instructor. Oh my god, they don't have car. I think the whole consumer internet that the asset like model, the fantasy is destroyed. Because for a company like Netflix, not Netflix, for me like Airbnb and this, think of it for just a website engine, the kind of capital they consume. Billions of dollars for running a pretty website.
00:31:25
Speaker
Right, they are precise, you know, companies which are busy, I call them call center with a mobile app, right? They have. And they'll get those 100, 200, every time multiple for what? If the companies cannot generate cash, like crazy cash, you know, that business should not exist and won't exist, frankly speaking, because this era was funded by cheap money. Now, cheap money is going away, right? Cash will have, see, at the end of the day, every business has just one role. Free cash flow.
00:31:55
Speaker
free cash flow, right? Forget about profit, you know, I don't care. But if you can't generate free cash flow, you won't exist. Later on soon. So, the Uber need to really wonder and I also wonder why you lose money. You will take very 30% commission, have millions of rights and this is just 400 crown business in India. That's all. Right. So, then there's a very fundamental problem in everybody who is looking at this business.
00:32:19
Speaker
What is relevant? What? Then basically, vanity metrics, there are so many people are downloading, so many people are forwarding images. How does it matter? At the end of the day, every business, you know, see, I tell you what is the problem in the whole ecosystem. And the problem is that the VC world is obsolete storytelling. Every fund is telling you, the founder needs to tell storytelling. So when you tell storytelling, it's a poetry, right? While not sharing, marketers don't care about poetry. They are pros. They need hard work.
00:32:48
Speaker
We don't know with the CFO ocean page, do you know? Do you know with the CFO ocean page or Tata consumer or this is the lever for that matter or you know, other chemicals or polyplex, you won't know. But the number, quarter to quarter numbers, that would have numbers is all that we need to know. Share market doesn't care about the poetry. The problem with the founding word, the VC word that it has been obsessed about poetry. Poetry is not in the industry today because you have nothing.
00:33:18
Speaker
But beyond series 8, it becomes number. You know, it's a hardcore number-trenching. I was a P-fun guy. So, we just used to do models and models. Tell me that show models, numbers, where it will touch 25% every time multiple or not. If it doesn't touch, you will drop. You will see whether this company will become commodity or not. Where is the IP? Will you be able to maintain that? See, the point is, if you have IP, it will touch into higher matches. If your IP doesn't touch into higher matches, then you are commodity.
00:33:45
Speaker
So, when there is a fundamental flaw, right? I said, I have an IP, I have the true effect, but still I can't demand premium. Then there is a flaw. But the market is there, no? The world is not going to go back to the old way of ride-hailing or the old way of ordering food from other countries. No, no. The point is, somebody has to solve it. Now, see the market, you are not willing to go for ride-hailing. But will you give the premium? If you are not willing to give the premium, then you will go back to ride-hailing.
00:34:11
Speaker
I mean, eventually weather is so diverse, right? Like, right now, because of sneaky, the weather is not profound. The point is, the point is, who will give, if the IP is not giving you the edge, what's the point of this IP? See, you are dating potatoes, right? You are making 2%, 3%, you are data, you make 10% margin rotating capital, what you do? Then you say, I bring IP, you become Microsoft, you say 80% average margin, right?
00:34:39
Speaker
You are saying I have IP, but my margins are even below trading. Who will find it? So the problem is, I tell you, problem is either the salaries have to come down drastically, what Elon Musk is doing, right? Or your IP costs are somewhere, the correction has to happen. There is somewhere error in the equation. I am not debating that the market will go back. I am saying probably the number of people working in Uber have to drop by 80%. Your power stock hosting cloud should drop by 90%.
00:35:10
Speaker
Otherwise, it won't. You are saying these companies are overvalued and because of the overvaluation, they have bloated the construction. Yeah, they have been overfunded. That's why they have bloated. The point is, my sense is because this company, some other will come, some new company will come with 10% commission and 1% cost structure, we will eat the market. Yeah, or like what Zepto has done to a tragic state, how it has shaken up the market.
00:35:36
Speaker
I don't know. Even it is losing money, right? The point is, the fundamental thing is, convenience is good. But why people are not being paid for it? Then that means they don't care, right?
00:35:48
Speaker
See, at the end you have to price it, right? You say, okay, I, I, I, you go to a 5 star, you pay 600 rupees to coffee, why? Because you value the ambience, whatever you value. You have the option to have 30 rupees child, right? You don't. So, it is able to come on the premium. If now 5 star guys come to me and say, boss, I cannot, because market is 60 rupees, I have to sell 30 rupees. So, whose problem is this? Is it 5 star guys' problem or customer's problem or customer's problem?
00:36:17
Speaker
It is a high start problem. Now the models are not right because they are not able to demand a premium. So you say I am giving you premium but I cannot charge premium. So I am doing all value but not getting paid for it. Then I have problem. So then there is a fundamental economics problem. Are there any consumer internet businesses that you are bullish on? You think there is opportunity to invest?
00:36:38
Speaker
No, no, I am bullish on government. We have invested in a company like Bekor and all and there is a bullish. The issue is the capital value. Okay, valuation. Yeah, yeah. So, depend like say, see in India for early stage because company is zero and company creates units called revenue, right? It is always a huge. So, I am very bullish there.
00:36:59
Speaker
Alright, but I am not below it. So, where there is no IP, where you are dependent on your platform. So, your platform will lead you away beyond the point, right? That is the challenge. What do you call it? Info edge as a consumer edge company? Like a B2B.
00:37:15
Speaker
Because it is an infrastructure company, it solves the need, right. It is basically fundamental consumer internet company, right. InfoH. Now they are following a fundamental business problem, they are solving it and they are willing to maintain that. But and they have been able to pay profitability, right. The point is, are you able to mitigate the profitability and whether people will come or not. The good point with infotages is all the pie is not so large where the Microsoft will bother in getting into the business.
00:37:42
Speaker
Okay, like you're talking about noxy.com. Yeah, correct, correct. It is not so large that the people will come and kill it and monster is dead globally, right? So it is a sweet spot where it is good, but not so big that everybody also will take the pie of it. So my sense is internet, we create its own set of Dhaba businesses, right? Like you have Suvdaya Dhaba, which is 60 core, 100 core vertical valuation, though nice small businesses will be there.
00:38:15
Speaker
I think I think you have to see the mass. They must be doing more than that revenue. I think every day how many people they're serving. Must be lakhs, people serving, lakh into 300 rupees. Every day, I think yearly they're churning out probably 100 crore revenue.
00:38:32
Speaker
But it is not something where the big daddy has said, I will set up 50 dhabas, right. So, I call the internet which create this new dhaba businesses, which will be tiny in a way under 200 crore, 500 crore, 1000 crore revenue, 1000 crore today. In a share market, 1000 crore company is a small medium industry, right. Beyond 10,000 crore, you are there. So, these are only 1000 crore, 1000 crore, 200 crore profit, 300 crore profit, nice businesses.
00:38:58
Speaker
dokri.com is also I think sub 1000 crore. That's what I'm saying now. So this is an internet will create our businesses because the problem is internet is something more. The internet has a low scale is very low cost internet at a high scale is very complex.
00:39:13
Speaker
If you have millions of people logging in, for every city, you have to become very costly. But if you are just in Zomato for Gurgaon or Delhi, it's much cheaper. Probably one kid can manage the whole code base. It's complex. So my view is, consumer-intended business will create this dhava businesses.
00:39:34
Speaker
small, tiny businesses. Tiny means 1000 crore plus businesses, but we will have this coolant value, right? We will generate profit, good profit, you know, 1000 crore, 100 crore profit is not a small profit. So, they will give this 500, 1000 crore profit, but not of the Google league, you know, which will be 100 billion dollar. I do not see a 100 billion dollar company coming, as I mentioned, as a product. Probably like, open GPT, chat GPT kind of things will come. These new models will come.
00:39:59
Speaker
But existing, I don't see any classified this mega business has been created. And that's why you have to be careful about the violations.
00:40:07
Speaker
If you are looking at SME valuation, you should look at SME valuation from SME perspective only. You don't do that and you don't go there. What about at-tech? Do you think at-tech companies are also overvalued? So I have no opinion on at-tech because, fundamentally, personally, I never liked at-tech. I think education should not be the view of this area. So I have no opinion there. I don't like education. I personally don't like education as a preferences.
00:40:37
Speaker
So you're focusing on climate and sustainability as your theme, as your investing theme. Is it for return on investment or is it for impact on, like impact of investment? Like are you looking at returns or are you looking at impact? So I think we are looking for returns, right? But with the investing only the time we are creating impact.
00:41:05
Speaker
Look at Tesla, right? So, point is, I think, what I say, and I will borrow again from Mark Henderson, our A16Z, he said, whenever you give founders two, two, what you call, things to monitor, it will become complicated, right? You say, like, example of houseboat, it's neither great house, neither great boat, right? So, never give two meters to founders, give one meter to founders. So, we look at a company which can scale very large, right? No, why climate? Because I see that climate is the
00:41:34
Speaker
area not from the climate climate basically I will step back a little if you look at the whole engineering model today the only engineering which has grown like crazy is the IT right.
00:41:45
Speaker
IT means hardware software hold on mind. But if you look at the basic engineering, it is way towards 1800. So I give an example like say if you bring a computer engineer from 1980 and show her the computers today, she won't recognize what's going on. She won't have a clue, right? The desktop computing cloud, nothing. From the card punching to this, it's a 30 years, 50 years, right? 50 years the game has changed. Now, break your turbine engineer from 1880.
00:42:11
Speaker
and show taken by the power plant. He will know what is going on. He can depunise the power plant, he can depunise everything else. The challenge is the basic engineering has not seen the technology shift which the IT has seen. Because the basic engineering globally was not a pain point. Because US has large land, large sources, nobody bothered. And this whole pollution, whole emission everything is fundamentally an engineering error, right?
00:42:35
Speaker
You have to solve the error because nobody bothered to create a fuel which can give you 100 miles per gallon or something like that. Nobody bothered. So that engineering need to solve it. And that's why, and today, basically, what is the source constraint word? So from the 19th, when the day was unlimited, you know, everything, today, when there's nothing, no air, no land, no water, you have what to call the source constraint word. So you need engineering to fit this word.
00:43:02
Speaker
which doesn't exist. And that will create alpha. So, if you create an air conditioning which is cheaper, better, faster, won't it create a billion dollar company? It will. And if you create a power generation which is far cheaper, far less emission, will you not create alpha? It will. Right? What Tesla did. Same way, everywhere. It's not electric only, probably hydrogen only. Everywhere. So, the point is, the era of engineering has come back.
00:43:27
Speaker
whether it's generation, whether it's transportation, whether it's housing, because there is no sign also. You might be surprised or you might be aware, there is no sign in the world. The biggest import of sign is Saudi Arabia, because construction you can't use the desert side. You only need the river side, right? So, you can't live in this world where everything is constrained today.
00:43:46
Speaker
I'm not do is that the word is ending not that but the point is the consider to I but there's a water pool everything so you need to now find engineering and technology of products which work for this customer environment and that is the big alpha and there's a huge alpha and any company which will come will end up creating those flywheels which should generate tons of passion and that's what our hypothesis is.
00:44:09
Speaker
And when those companies will come, they will, of course, will get impact. Because that is what their gene is, right? That is their core is. Because core is impact. And I tell, in fact, I now know what you're doing, but now I just generate Alpha, just create a large scale. Can you build a thousand board company? Can you build a thousand and thousand board company? If yes, why not? Okay.
00:44:33
Speaker
So you're saying that companies with solved resource constraint challenges are going to be the next $100 billion companies, as opposed to today's $100 billion companies which are essentially consumer internet, which are like data analytics based. What is there beyond the point? Tell me, what is the value there beyond the point? What is the edge? Any company you see, there's no edge.
00:45:00
Speaker
So, within this resource constraint as a broad theme, what are the sub-themes that you look at? So, everything. So, look at agriculture. You need companies which have much more position in agriculture, right, which consume less than, like today India, whole India use flood.
00:45:14
Speaker
flood irrigation, right? You waste millions of liters of water. There's no water in whole Punjab bull north, right? Now you need to go to plant just one mm or two to empty water, right? So you need this engineering. Same way the fertilizer. Why is the fertilizer? Little fertilizer. So clean food, clean tech, right? Can you grow organic food at cheaper cost than not warm your plate? Can you do that? How you do that, right? What are cycles there? Those are the things.
00:45:40
Speaker
is not simple engineering. They are very high in engineering. Better seat side. So, this is what I call constrained environment because you cannot have so much of NPK again. You cannot have so much of fossil again. Can you do this? Can not pump so much urea in the soil? So, that is there. That is the opportunity. So, food is, clean food is huge.
00:46:00
Speaker
energy issue which right how you transition to hydrogen or transition to nuclear you know a new area of energy then for nuclear environment can you create a building which is much cheaper much cooler than what it is today right. So every year so the sectors are so many you know so we look at the shift bar sector but there
00:46:21
Speaker
multiple team inside so there are some thirty forty mid-sector there and everything is very deep, very, very Indian driven, very, very complicated and very, very exciting. The kind of learning I'm doing here is next linear way I never learned so much.
00:46:37
Speaker
So, let's talk about this journey of setting up a fund. So, you set up a massive fund. What's the process to set up a fund? You need to get an anchor LP. So, the point is when I announced climate, that was 2018.
00:46:56
Speaker
It was quite ahead of time, right? In fact, I always do things ahead of time. So, I did a very large announcement of the fund and in fact, Vijay and I said, Vijay Shikara PTM, I said that, okay, we'll do this large fund, a $200 million fund, only to solve climate. But then, we did the announcement and then I went deeper and I realized that there are no startups. And second thing, the finance business is one business where you cannot have ownership of the market.
00:47:20
Speaker
Like say what we in GFL, right? If you are the only finance here, then the market will fall apart, right? Because you will end up under vision of the risk of the market.
00:47:27
Speaker
In finance, you have to distribute the risk. Why the funds are successful today? Because the risk is distributed. So Blue takes some risks, you put at least some risks, XSF takes risks. We always want to do winner-take-all, but this is a very interesting thing that as an investor, you don't want to take all. Yeah, it is a content to take because then you will end up the overall risk. Finance is always a risk. The first question in finance is not about return, it is a return risk.
00:47:56
Speaker
And this is because you cannot eliminate risk. How to mitigate risk? And you can only when you share the risk, right? Because it also brings more knowledge, right? Because you are not the God. You don't know everything, right? And you learn more from other than what you have.
00:48:09
Speaker
So we realized that we will end up owning the market. That is the most dangerous thing. But we are very passionate about this. We need to solve it. So we spent time. We set up incubator. We saw the company start engaging them. And I'm very surprised that Malav is very encouraging also. The quality of company almost was doubling every year. In dot-com days, from 2005, I invested. Rather I invested from 2003. The quality of company used to double in three or four years. You know, the way we used to shift.
00:48:40
Speaker
What are the quality of companies here? So when I say the depth of the founders, I'll give you an example. Like in two or three, we'll see very, very basic companies. You know, I remember once, Vijay and I were sitting in IT Delhi, both have bought, pitching. So somebody was pitching a cow, dumb company. This is your very, very dramatic business is what you call. And then suddenly you'll see that people are getting data, then they, you know, the shift is happening and it happened very fast.
00:49:07
Speaker
Everywhere, yeah. And the level also. Like say earlier in 2004, you can see the difference between Indian company and US company. From the pitch, the UI, US. By 2010, it has merged. 2015, probably Indian company was far better than the US pitch. The 2010 qualities, and you see 2005 deck, you can see, you know, it is ancient and this is what. The same way here, the technology was separately shifting, right? Earlier technology, well, everybody was solar, cleaning of solar, some manual intervention, planting of trees.
00:49:35
Speaker
Now it is coming to much, much deeper, right? Data analysis, IOD devices, water capability, turns out things which are very, very deep, right? People are talking of changing motors. So, there is a, what you call, BDLC motor to excellent motors, right? Next level of engineering, which can't even imagine.
00:49:53
Speaker
This is an SR motor, software driven motors, where the whole software make the motor pass away. So, there is a lot of engineering which is there but not possible because software is not there. Today, because software does technology are becoming viable. Now, BLDC uses rare earth magnets. Now, this motor doesn't use rare earth magnets. Think of it. No money is needed. The problem with this motor, when the speed starts, you cannot control it. So, it can break apart. Now, with the software, you can control it.
00:50:21
Speaker
So certainly software makes it viable, right? So very, very next level engineering you are seeing that, which you think is not possible in India altogether, right? So we thought that we need to build a whole ecosystem. And that's why we kept working, we ran the incubator, we ran multiple computations for UN, for M plus. We saw some 400, 500 startups, right? To run some pyocys, boot camps.
00:50:47
Speaker
And then when we rely the market is getting so first we set up a angel fund which is diamond angels where we are not done some 12 investments I think which is basically again created ecosystem because for climate
00:51:01
Speaker
So I consider climate does almost as a B2B size. You cannot see B2B size until you have a very good connect with the corporates, with a very good understanding of the corporate world. And the majority of this company will solve fundamental unit problem where there is this big corporate aesthetic. So we are kind of creating this ecosystem and today we have some 400 corporate members, everybody there. So we are a much layer and where we think now we are ready to launch the fund. So it has taken five weeks to create the whole ecosystem.
00:51:28
Speaker
What have you done in these five years? You've not invested in startups? Like you announced the $200 million fund. But we didn't invest. We didn't start that. We just kept waiting that. We gave the ecosystem and we invested small money on this small company. So we did this $12 million investment, we did. So we have done that. So we are getting ecosystem. Now I think we are ready to roll out the fund, which we have been taking on it.
00:51:54
Speaker
What is the value of the ecosystem to a founder? What would be a pitch to founders who are building the kind of business? With our ecosystem, we don't exist. To give you an example, when we did Cool Avenue, the cost of internet was 30,000 rupees. Obviously, the net potential was not low at large. So when the 1,000 rupees internet started or 300 rupees internet started, it was a good ecosystem. You could not launch it without Google Map.
00:52:23
Speaker
So every problem gets solved when the ecosystem gets ready. When you got mobile phone, you go to Google Maps, Uber is a possibility. Otherwise, you go back 2 years back, you can't do anything. See, today, a lot of tech is there. Today, I have what you call excellent operations. I can open those large quarters where you need to go and fetch. I can connect those things. So those three ecosystems, we see always the biggest value we separate is the ecosystem.
00:52:51
Speaker
Right? Not the money. It's that, can I open those doors where you need as a founder to go and reach? Can you go and meet that guy? Whether it's investor, whether it's your corporate acquirer, or as a client, wherever it is. So it takes time. And it takes a lot of time. Today in the whole consumer, we see what is thriving because of a lot of work done by Thai, which builds a whole ecosystem. Thai really did a lot of job on that part, right? Then IAN came, IAN did a lot of work. So I think what Thai, IAN, Mummy Angels, all this network did, then all this
00:53:21
Speaker
got ready to launch. You cannot launch one fund on your own. As I said, right, that you have to have the flow that you have to sell there to somebody else, right. Ecosystem is the agent. So that we see took 15 years to grow. And then you have hundreds of micro-visuals today. They all exist because somebody else has done the hard work, right.
00:53:41
Speaker
So same way, and I'm in pressure of climate. So I wanted to create that pathway, right? So we did a lot of things. We tried to bring down the cost for the founders. We tried to bring down a lot of capital to the owners. So we did whatever we can do. First of all, you said you have about four corporate partnerships. What is the detail of a partnership here? Are they putting in money for investing or have they signed some
00:54:05
Speaker
MOU with you? Yeah, so MOU is very standard. When we say the partnership, basically, yes. So, they had the first intention, you have to put money in the game. If you don't put money in the game, then it's all poetry. So, their intention, have they put the money? No, not all of them have put the money, but yes, a lot of them have put the money. So, first is the access to put the money is there. Then there is some strategic partnership there where they say, okay, I'm looking for these three things.
00:54:29
Speaker
If you have something, I'd love to engage. I can do investments, whatever we can do. So you get that part. Maybe someone like Coke and Pepsi would want something on water. On water, on packaging, on plastic, anything else. So first thing we said, I'm going to make a very controversial statement. Basically, we like that you have to solve the climate environment. You have to save it from the environment.
00:54:57
Speaker
Because solution to not every problem is ban this. Like everybody say ban fossil fuel. Then what will you do? Do you want to go to foresters? You can't, right? Consumers want it. No company is putting the throat down in your throat, right? The idea is how do you solve? How do you get a partnership which solves this problem?
00:55:16
Speaker
rather than banning or naming and shaming, how do we become a partner where we use your, you know, engineering technology or reach whatever to solve the problematic speed. Can I give you a solution? And that is much more different way to add this problem rather than, you know, going to the woman and saying, ban them, ban that. So that's what we try to help and we are seeing what can be done. Okay. Okay.
00:55:39
Speaker
So, in a way, these 400 corporates are either LPs or potential LPs. No, no. These are corporates. These are individuals. But I'm saying these 400 guys are individuals. They become individuals. Who represents the corporates? But they are senior levels and all that. So, I answered through that. So, I said, this is my company doing this. Can we set up a call and can we dock on this?
00:56:00
Speaker
So that's what it is. So the idea is that ecosystem is always worried about visuals. Because corporate is nameless, faceless. And then no ownership there. So the idea is to basically have to create a momentum. So what I see climate tech where the internet was in 2004 or 2006, when the IAN and Thai were doing all the hard work. So I think we are doing all the hard work right now. So that this sector takes off because we saw the climate.
00:56:24
Speaker
Yeah. And you said that you have done work around reducing cost of capital, reducing cost of operating. Yeah. So the point is funds are expensive process, right? Especially engine funds are also expensive where they charge 2% fee to founders, this, that. So we have tried to eliminate them. Like say climate engine has a platform where founders don't pay anything.
00:56:46
Speaker
Then the investors don't pay any fee and somewhere they don't pay any carry also. So idea is whatever is to bring the capital. So I'm investor, I don't have to pay any carry. Yeah fine, you can do that. I don't want to do this. Fine, you can do that. So the idea is how you can make the whole thing much more attractive. And second thing also give the comfort. I want to invest but I don't want to be the soon guy. So can I get 30 other guys to come with you? Then people say fine.
00:57:13
Speaker
So the idea is, you see, at the end of the day, you can talk anything.
00:57:17
Speaker
The only thing that matters to a founder is capital. Anything is poetry, right? So, until you look at the capital, and to make the capital come, you have to do what you need to do, right? You have to create those vertical checks and balances so that, you know, people don't invest in the wrong companies. You have to create the whole ecosystem. You bring more people on the board. You bring more knowledge on the board because the subject is very new. Then you also need the future parts, right? So, you have to create a vertical environment of trust.
00:57:46
Speaker
where things can happen. And creating trust is the toughest thing. It seems the easiest part when the trust is everywhere, nobody cares. But when you are the first guy doing it, it is just kind of a possibility. So that is very, very critical. OK, OK, OK. Fascinating.
00:58:05
Speaker
Can you just go through those six investments? What was the thesis for each of those? Give me like a quick summary of this investment. What was the thing that attracted you?
00:58:20
Speaker
So the first company we did was consumer internet, which is basically a diet to consumer brand. It basically is making what you call sustainable, we are washing, powder washing thing, whole sustainable thing related to whether it's paper, bamboo paper based and they are making these water bottles, floor cleaner, washing, everything.
00:58:46
Speaker
So today, the biggest source of water pollution is busier soap. Because on, what you call, use soap, water into the water, destroy the full water area, right? Which is a very, very big issue, because all marine life dies because of that. So these guys have built cleaner, which is completely biological, safe, and you know, can be run by anything. So not costly. Indian was enough method.
00:59:11
Speaker
Yeah, some sort of years. And they are doing very, very good growth, growing very fast piece, I think, almost, I say, a rate of half a million or something per month that way. So when we strong company, and I think there's a space to create it in the 400 crore kind of brand. That's what we see. So that drove us, I think, probably 1,000 crore or so. Because in those settings, the brands are very big, like SurfExcel alone, there's around 7,000 to 8,000 crore brand.
00:59:41
Speaker
So, to create a 1000 gram brand is not so tough. So, I do not tell you that you have to be clear, the margins should be very clear and if you can create a product which is sustainable but not more than 10% premium, then you want a winner. So, that is where the thesis is and I think the founders are understanding that and they are really cracking it. So, that's what very exciting for us.
01:00:04
Speaker
because change the game. The other company is a very interesting company. They are trying to solve vertical lead-acid recycling. Globally, lead-acid is a very big thing because when a Tesla will have a lead-acid battery, everywhere there are lead-acid batteries, then resettling of lead-acid is very, very polluting. From the draining of the lead-acid to the vertical burning of the lead, if you see whole Delhi, how the pollution comes from this burning of this lead.
01:00:31
Speaker
Because you have to send this lead battery to a smelter at a high regime per the lead and then reclaim the virgin lead. It is such a political industry that no license has been given to any lead recycling company in Europe in the last 30-40 years. It is very regulated and complicated. So all lead acid batteries end up coming to India, Bangladesh or Africa.
01:00:51
Speaker
Now this company has built this tech and they have got a license to build a plant in Singapore and US. So they basically turn this lead into a beast and recover the lead and improve the lead collection process and no selectors use it. So, you know, low energy, everything else. So this is a tech which can change the game of the way lead resetting happens. So we just say. And it's given us about ACE. ACE resetting, yeah.
01:01:16
Speaker
Yeah, so if that happens, so obviously that is always if it happens, right? So, but the possibilities are huge because venture is always one of the possibilities, right? So, the possibility is really game-changing there. Then there is a company called Shiroo, which is into, not let us say they are into this EV battery swapping and building it back into grid model, where these batteries can be used as the load balancing for a grid. So, they are building the holes
01:01:45
Speaker
software everything is allowed to grid to echo kind of a balancing system. So that spare energy in the grid can be used for the charging batteries and that can be used to balance the grids. So all those kind of software they are building very very dedicated team from Vetspaladi have been on it for a release a long time now and we've been committed on this. So these are three, sorry I forward. So
01:02:12
Speaker
Then we have this pran. Pran is very exciting. So, see, air pollution, whenever we think of the air pollution, we think of, you know, the broader air pollution in Delhi and everything else. But every small industry has a huge air pollution thing. Think of a, even not a Tamil, think of a cement-bagging plant. Or where cements are just, you know, dumped and thrown away. All these poor people, they just put some cloth or even don't put anything else and they really suffer from this. Now, pran has built this technology which is very good for the large spaces to capture air pollution.
01:02:42
Speaker
So, they have this ionization within the pipe they do it not very costly but they reduce the pollution in this large areas. They already run in tile with Tata Steel with Tanish right where all this high polluting thing happen and here is a huge key mark. Everything of this adhesive buffing or vehicle buffing, cleaning everywhere the pollution is very very high and you cannot use a what you call a filter there because filter vector will be in every 10 minutes.
01:03:11
Speaker
And it's very expensive, right? So, nobody is going to do that, but people are happy to spend something. Well, I see the fundamental thing which should drive us is the basic VC tools. And basic VC tools are faster, better, cheaper.
01:03:24
Speaker
If you can build a technology which is faster, better and cheaper, you got them up, right? And that's what the company has to do this, right? So, in fact, it will automatically happen. So, if the plan is to see if so many people will be, you know, able to breathe in here compared to what they are otherwise, forces of a day in, day out. So, that is the plan which is doing it.
01:03:45
Speaker
Then we have done a company which is into high-speed racing bike they are building, where they have the gear as our day, not electric motors, but it's an EV bike. They're going to launch, I think, next one month or so, matter.
01:04:00
Speaker
So that is also, I think, can be a game changer because the whole EV market is very focused on scooters, while India is a bike country. So if something bike with a whole look and feel of the bikes, gear changing and all that thing come, I think you should be able to get it done.
01:04:20
Speaker
Yeah, correct, correct, correct. So that range and a very, very speed kind of thing. So that is there. Then we have a company, which is freezing, so they are doing that. Then we have an EV charging company, imprecating the whole EV. So somehow now seems like routine, like EV charging and everything else, but yeah, so they are for number three doing something which is very different.
01:04:41
Speaker
We have been looking at this very many other companies which are kind of working on polymer science, which are something. So, if you see the word of chemical is also very complicated. A lot of chemicals are very highly polluting and there is now a shift going on where people can replace this fundamental chemicals with something which is more vertical biodegradable and more health sustainable, something like that. So, looking at all the spaces, not done any investment so far, but yes, looking at multiple shapes of it.
01:05:06
Speaker
What's your advice to founders who are looking to raise funds from someone like you? Is there a preferred way in which they should connect with you? A lot of VCs feel that founders should be able to get a warm introduction instead of sending a cold email. What are the metrics you look at? What kind of founder would you be looking to invest in?
01:05:29
Speaker
We generally, so a lot of these issues are done. I think a lot of have come to the differences also only. One or two have come through what you call cold emails also. The issue is I think founders should not really worry about it. The founders should write a well-doughed email. I think that is the first criteria and a lot of times founders don't realize that.
01:05:49
Speaker
I think writing the first cold email is the most underrated or most misunderstood concept in the world of VC or anywhere, even every carrier also. People don't know how to write and how to pitch, frankly speaking. But in fact, I got so frustrated way back in 2012 that I made a whole pitch, how to pitch to a VC. Very frustrating getting that. And a lot of time, so I tell you, as a VC, we have two errors. One is called Type 1 and Type 2.
01:06:16
Speaker
I don't know how much you've amassed, so you know this or not. So, type 1 error is basically where you think the thing is bad and the thing is good. You think the thing is good and the thing is bad. That is type 1 error. That is a great company but it is fundamentally bad company. So, that is type 1 error. Which happens with VC all the time. All VCs like 30-40% portfolio, you can say that we suffer that everything. The type 2 error, which is ending portfolio, where you think it is bad but it is fundamentally good.
01:06:46
Speaker
And they don't want good founders to lose because of bad communication. Right? With a badly made pitch or a badly made email, right? So you can lose it out, right? So how do you draft, how to do this? So I think the thing which matters is you have to write a small bill. And I think today there's enough material. I think those days in 2010 and all, a lot of VCs were frustrated.
01:07:10
Speaker
A lot of additional like that, how to pick your VC because everybody wants them to know, like we know Kosa did a whole series, how we should make it there, how you do that. Because we all want to appreciate that, why a good guy is using it all, then I am winning for myself or my team that they might be a great company, right? Because of the bad pitch.
01:07:28
Speaker
While we miss on our own mistake, that's fine. But it should not happen on the bad pitch. So, I think the advice is simple. It doesn't matter whether you connect or not. If you're not connecting, that's okay. But try to go to email and I think everybody will see. I think every, no, we see miss a mail. Every missy, look at all the ways which come to them.
01:07:45
Speaker
And today is so easy to find it, right? Invest in the initial case, invest in making a good thing. Yeah, yeah, yeah. Don't make stupid mistakes, right? And then don't make those common mistakes in the fundraising, right? Neither be too overconfident, neither be too decide, so that's there. I think the only thing which matters, the other thing is also, the research should also be to be shown.
01:08:09
Speaker
That is a much more bigger mistake than reaching out. So, first is, you have to make your list whom to reach. Not only funders you are fit, right? End of getting no from anybody who is a bad. Which makes your model down. Because, you know, entrepreneurship is the toughest journey.
01:08:27
Speaker
Despite all the today's yarn and sex, everything else, you are basically the only guy studying on guitar. Nobody is listening. Nobody cares. So, you are a guy who is playing in an empty stadium.
Evaluating Founders and Business Resilience
01:08:38
Speaker
So, you have to be careful how you approach and how you approach. So, doing that research is very critical.
01:08:47
Speaker
Not a lot of people don't do that research. They write to everybody, they will write to series BVC also, CVC also, Angel also, everything else. In Kudak, what every data is available. This NMP data is available today compared to say 10 or 15 years back, right? But still we don't do that research.
01:09:02
Speaker
So, to do that, I think it's much easier today than it was any time. I think it's never better than doing this right now. Because everything is available. And the good part today, because it's slowed down, a lot of faculty will go away. A lot of people who just want to do a company for the sake of money will go away. See, remember, you want to start a company, not because you want to make money.
01:09:29
Speaker
You don't want to start a company because you don't want to report anyone, right? You want to start a company because you're mad about something. And you want to change the game. And that is really irritating you, right? So you want to do that, right? That's what your passion comes, right? Because passion beyond a point is boring. Because you will do the same thing 10,000 times every day, all right? Like say Tiger Woods hit 1,000 balls every day, day in, day out, 10 years, every day 10,000 balls, not 1,000 balls, not easy.
01:09:57
Speaker
No amount of passion can take you through it. You have to become very anal about it, very crazy about it. And that's why the founders had to be there. A lot of founders start because it's cool to be a founder, it's cool to do something and it's good for money. You will not survive. If you are there for money, you will never survive as a founder. So, what are your filters like when you're evaluating?
01:10:19
Speaker
So, filter is always true, always you look at the market and you look at the team and you see the match with the two. A lot of times the markets are made by the founders who are trying to solve it or not. So, you realize somebody will eat their lunch, they will not be able to. Well, it's not that the founders
01:10:35
Speaker
Don't discover markets. Everybody, and what happened a lot of times is kind of wave happens. So everybody is trying to solve the same problem. Like in Trutant, everybody is doing a shared cap, right? Or gay whaling services. Tons of founders are doing. But few will survive. In 2000, everybody is doing e-commerce. Hundreds of e-commerce. Yeah, they are doing waves come. So waves come. Waves happen because of a lot of, what you call,
01:11:02
Speaker
In a user, what is it? It goes system only. Right. Why is commerce starting today? Because lot of right companies are there who can provide you with labor engagement. If you have to organize yourself, you couldn't do it. Right. So today, the right thing solves your payments or UPI is easy. So then suddenly these things happen.
01:11:24
Speaker
So, this is the way things evolve. But the point is, how do we choose a founder? So, first thing I have to tell you is whether they will stay this or not. Why they are doing it? Until you get that, generally I avoid it. Until you know the founder's passion is seen. Ability to stay in the business is very critical. It's very underrated and overrated both times. Because you know when you know when you not to put it.
01:11:51
Speaker
And every business is hard. And I do not take anything against. A lot of people quit because they cannot support their lifestyle. And it's very depressing also. So if you can't, you can't. But the point is we always have to figure out whether this guy will quit or not. This is the bet I try to take. There are some guys who... Because they say, you know, multiple jail cuffs. And jail will always come. So you have to figure out whether this guy will survive or not.
01:12:17
Speaker
So when you're looking at a founder and deciding if he's a good quality founder or not, one thing is you're seeing grit. What else are you seeing? So you're seeing grit and second is hustle.
01:12:29
Speaker
I think that the Hassan is a very very important quality and this is what, because whether this guy will do the himself or will get the Kazakhstan to do it kind of thing, right, it should have been always hack it. Yeah, so has Dardin also hack it? I think, you know, whether everybody is doing a 10 rupees, this guy will do a 3 rupees. Oh, there are some people who are like that. They are both like that.
01:12:52
Speaker
So it should point to those kind of founders, nothing like it. Because they wrestle everything. Because what is the start-up? Raise the asset. You just did something else. And can you create x in 0.2x, not x is equal to x, right? So how frugal they are, how hustler they are, right? What kind of hacking they can do. So that kind of quality.
01:13:15
Speaker
You're not a suited guy. You are basically looking a street fighter. You can do knife fight. Very interesting.
01:13:25
Speaker
Tell me something, you know, like the world's most valuable company, Tesla, it used to be, maybe not now.
Impact Investing and Innovation Myths
01:13:33
Speaker
It was essentially this space which you are operating in of sustainability. But none of the mainstream funds are really focusing on this and we don't have so many sustainability focused VC funds. Especially in India, I'm not aware of the situation in the West. Why is that?
01:13:52
Speaker
Yeah, so globally, I think, a lot of disservice has been done by impact guys itself. I think the biggest guys to be blamed are the impact fund. Because the impact fund, the first thing they tell the investor, they box, you know, a weird impact fund. So, don't ask for returns from us. So, when you say impact, what investor hear that no return?
01:14:08
Speaker
Right. So you are saying impact and blah, blah, blah. And he's saying, oh, my God. So this is donation. Right. So the grants in humans, as we humans are, will never give credit to grants. Right. You get hundreds of investment to do that. And immediately your location. I think the blame is to take my back because, A, if you're solving fundamentally something big, you will create impact. B, if something is solving fundamentally a problem, it will create profit.
01:14:38
Speaker
Look at Tesla, the number of quarterly profit is huge. It's not a small number, right? Because Tesla wants a premium, which is BMW, same as these commands. Not giving the same level of quality, with all due respect, right? And the battery everything is there, but the taste is, that's why it's telling you. If you will give premium, people will pay extra money. There's only way you need the value or put it, whether they are giving extra money or not. So, if you are solving a fundamental bit problem, why you are saying that I am doing impact fund, I will not give you this.
01:15:08
Speaker
And this whole impact has been what you call taken over by women selling handicraft. I think this is the worst thing to do. You know, that this is not the job, right? That's the bummer job to give those. Your job is not to enable this women selling handicrafts, right? This is not the market. And that doesn't damage. I think the platform have to tell that we generate alpha and we'll get better money because this is the way the market is going. See, this is the only sector where the people and the policy both have moved. But investors are not moved.
01:15:38
Speaker
Well, everywhere else has the found investors move, then the policy, then the public move, then the policy move. Right? Look at e-commerce. Look at anything else. And anywhere where the policy moves and our consumer miracle happens. Look at UPI.
01:15:51
Speaker
Now, we have also played in the computer company. Everything just grew like crazy because both are in tandem. So, here the policy is moving beautifully in the movie. Because every VC is going to him and saying, I am Rajiv. Impact fund. And half the time they were invested in calculating impact, hiring ESG consultant. The whole thing has been taken over by this consultant and has been destroyed.
01:16:19
Speaker
This is the biggest disservice because as a fund, I can't invest a single penny on raising my impact. Do you need to miss the impact of Tesla? You know, it's obvious. Backward impact in your measure, you know, every putter just says the chemical is gone away. You don't need 5% to create a 30-page report on that. This is the one thing I think the owners like on the funds because we are still looking from that angle.
01:16:44
Speaker
Second thing is done by the whole game again is climate rise. The blame again goes this. Every time you talk about climate change, everything, they talk of some crazy numbers. They'll say, $500 trillion will be needed to solve climate. You will get $200-500 billion will be made. There's one. And then they give you another figure. We will become net zero by 2017. We will become net zero by 2020-200, right? Who cares? In long term, we are dead, right? You just said that and that's there.
01:17:13
Speaker
And this creates a significant two things. One, everybody believes that the aid cannot be solved immediately. And then you need a lot of capital. Now, I will give an example. But the job innovation is to do the exact opposite of it. Look at the UBI. Look at the banking. If somebody would have come and it's not somebody, there are tons of RBI reports, go back to 2006, 2008 or 2004, when we were investing that. If you make India hold banking access, how many money will it need?
01:17:41
Speaker
Every bank needs to get some crazy numbers. If you have a branch, if you have a branch, if you have an ATM, it will be needed. The service is not there. The volume is not there. So some, again, $500 million would come. That, okay, we'll need to deploy $200 billion to make whole India bankable, right? Basically, like financial inclusion would cost $200 billion. Obviously, no, $200 billion. $300 billion because every bank will do it. Now, if you look at the total money raised by all the fintechs, PTM, Phone Bay, Google, I think the whole figure is not 10 billion.
01:18:12
Speaker
is less than 10 billion, right? This is 6-7 billion dollars. In 6-7 billion dollars, whole India has become banking. That is what the notion does, right? So, you have achieved a whole Indian financial inclusion where every maid has a phone, pay account, everything. One smartphone of 5000 rupees, second handful for 2000 rupees and PTM. You are done. So, what PTM has achieved, the whole financial inclusion, which people have been talking with 30 reports.
01:18:38
Speaker
So, that is the fundamental thing, the investor, the champion of this because they are all looking for the mirrors of 2000 to see all this inside.
01:18:47
Speaker
or think of 1988 reports, how to make whole India acceptable to phone lines. Their report gave me to say many corporate cables, so many phones, but then people would get led in it. The whole capital mobile phones in no time, right? And people made money, not only employment, every telecom guy made tons of money, right? So nobody lost anything. In fact, it was a net posture of society.
01:19:11
Speaker
Money wise, contribution wise, everything is. That is the job where innovation does, right? And so we don't need hundreds of billions of $5 trillion to become net zero. You have to think differently. And then innovation has to be done and that narrative has to change everywhere. Because that supports, then the nitya will parrot that, then the government will parrot that, then the water bank will parrot that, everybody will keep on parroting. Saying that needs some, and since it's such a large number, nobody bothers.
01:19:37
Speaker
because nobody has 3 trillion dollars, right? It's not valuation, it's a money. So obviously it would not happen. So basically it is not going to work. So let us choose some 30-70 target, 20-30 target, you know, mission 2,500. It doesn't matter. It's irrelevant, right? The pollution is here today now. Can I solve it in S2 years? How will it? And what innovation will need it? Because innovation always done at 10% cheaper cost.
01:20:06
Speaker
comes from the thing which you are now taught to, right? Nobody taught to that everybody will have UPI. Any subgival, any subgival, everybody is a pity, right? So basically, what I say is that what innovation solve is the policy cannot solve.
01:20:23
Speaker
I will take another example. The healthcare cost was increasing higher and higher because healthcare is a busier real estate. Now if you have a poor or a poor deal of the world having an OPD doctor sitting there, they have to recover the cost of the hospital. Then the doctor cost has to be 1000 rupees. Now a doctor sitting at home can discover the patients and can charge 200 rupees.
01:20:46
Speaker
So tech has solved with particular solve. You can pass any law that you cannot charge discussion fee more than 500 plus, but the technology has solved it because now any doctor can become available. So certainly you don't need real estate. You don't need the full-off hospital to put patients there, right? Because that patient is looking at the app, is going anywhere.
01:21:06
Speaker
That's what the inclusion does, right? You cannot follow my law. Or I give example of a diver for salary. You can pass a law that every diver has to pay so much money, but the Uber and all, it is so many divers that the salary of autobi went down. Right? So, so, so that is the beauty of innovation. It falls away. And we don't know also what this also, the only way it can do is to deploy more capital. And so that the bar much have to work on that way. And but the hot process that, you know, $3 trillion is wrong, and then it is impacted is wrong.
Blockchain's Role and Future Potential
01:21:37
Speaker
Got it. Interesting. Tell me something. Do you think there is a role of blockchain in sustainability? Okay, so I have thought a lot. I have been looking at blockchain now for almost 10 years now. Yes, for 30 hours. I have been looking at everything. Frankly speaking, I have not been able to find any real use case of blockchain so far. Anyway.
01:22:05
Speaker
Because blockchain says created trust in a trusted society, right? But so why blockchain have not been able to establish the trust given all the heads happen all the time, right? All the classical. So, if we come in like NFT or whatever, NFH, right? Well, that means that blockchain is not working, right? Because the model was anti-racist to it. That far could not happen. But far happened in most classical financial style.
01:22:33
Speaker
where the regulators have to come and intervene. And now they said more regulation. Then the whole, what you call, thesis of blockchain doesn't exist, right?
01:22:43
Speaker
Blockchain has a way to reduce friction around proving ownership. Like right now, proving ownership happens through documents, etc. But it's not very costly today. It takes one keychain, one OTP, that's hardly anything. Blockchain is more costly that way. Maintaining the change, then people create a fork out of it, somebody has this part to create another fork and there's something to start. So I'm saying that it is so complicated.
01:23:10
Speaker
and beyond the point you need the trust because otherwise so far blockchain has not been able to create the trust so far otherwise this kind of not happening right this kind of happening that show the blockchain as a whole so blockchain is still a technology in search for market fit
01:23:26
Speaker
Yeah, I think it is something which is, it's a good type pass for people. And then every evolution, I think, leads to any bubble. Basically, it's a well distribution. So, I think it tends to part money from fools. Yeah, correct. So, it is redistributing well. So, it's doing very well. I'm not able to fight a single business case.
01:23:56
Speaker
And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to this show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in this show? I'd love to get your questions and pass them on to the guests. Write to me at adatthepodium.in. That's adatthepodium.in.