Start-up IPOs will start happening over next 5 yrs: Accel's Subrata Mitra

'We love to invest early in tech-driven companies solving large problems', said Mitra

Accel India, one of the most prolific venture capital (VC) firms in the country, recently closed its sixth fund at $550 million. Since its inception, the VC firm has invested in over 120 companies, 44 of which are now valued at over $100 million, while the firm’s early bets in Flipkart and Swiggy have earned it rich dividends. In conversation with Yuvraj Malik, Accel India’s Co-Founder and Partner SUBRATA MITRA talks about the firm’s investment strategy, the newer areas it is betting big on, and expectations from entrepreneurs it is backing. Edited excerpts:

Having invested $1 billion in the start-up space in the past 11 years, where does Accel India stand now?

We love to invest early in tech-driven companies solving large problems. We want to back founders who can scale their businesses faster. They don’t necessarily come with all the knowhow from Day One, but we can help them learn quickly. In terms of sectors, we look at tech-enabled companies in five broad sectors, including consumer, software as a service, health care, fintech, and business-to-business (B2B). 

You recently backed social e-commerce firm SimSim and led a large round in Bounce. Are you experimenting with newer areas? 

Commerce is all-pervasive. The question now is at what pace you can shift it online. Take the example of Flipkart. The company started with focus on just top 10 million (users) before going to 50 (million), and today it serves about 90 million shoppers. Now, there are these next 100 million users who are ready (to shop online). Are there specific solutions that one can think of for these new users? Bounce is our bet in the mobility space. There are hundreds of millions of users who need to commute on a daily basis. We think there is scope to solve this problem better. 

After the Flipkart-Walmart deal in 2018, and secondary exits picking up in the recent past, it looks like the Indian VC industry has completed a full cycle. What does the next cycle look like?

With 500 million people on the internet, we are definitely in the second cycle. Consider this. There are around 400 million people using WhatsApp daily, while 300-400 million access YouTube daily. When the same people are working in an office environment, they want the tools to be as simple as YouTube and WhatsApp. Some of our B2B companies, such as Moglix or Blackbuck, have replaced pen-paper systems and excel spreadsheets with easy-to-use enterprise workflows.

Does it mean it has become harder for you as an investor to find the next disruptor like Flipkart?

While in the B2B space, companies are still in the early phase, consumer space is fairly matured now. In the consumer space, people are trying to do things differently. New entrepreneurs are thinking if they can come up with tools as simple as WhatsApp. 

While limited partners’ interest continues to be robust in tech start-ups, they want to see a steady stream of initial public offerings. How long do you think it is going to take?

It will start happening in the next five years. Investors have to first get aligned with the fact that they ‘want’ to invest in this category. Most (public market) investors today are looking at profit-making (companies), which may not necessarily be growing very fast. If there is sustainable growth and profits, they are happy with that. This has to change.

With so many companies in your portfolio, how do you allocate time?

We are assisting the founders to run their companies. We have seen that good founders are always able to scale very rapidly. Like Harsha (Sriharsha Majety) from Swiggy or Mukesh (Mukesh Bansal) from Myntra (who has now co-founded Cure.fit). They are all second-time entrepreneurs; they have segmented the process. It is a question of prioritisation and being able to segment by handling businesses efficiently.