Q1: Welcome to the Morning Show. Recently you have announced around Rs 370-crore investment in your subsidiaries. Can you help us understand -- many of these subsidiaries do not even have revenues -- what is the plan now with these investments? Ans: * The subsidiaries are vehicles to invest in different startups * The purpose of the fund is to continue investing in startups Q2: You have started with a Rs 750-crore fund and made many investments in the last few years.
How has been the growth this far? How is the success rate? Ans: * Rs 750-crore fund was created two years ago * With Zomato for 11 years and still holding * With Policybazaar for 13 years and still holding * It takes 3-4 years to determine if an investment is working Q3: Which are the startup areas you are looking at? Ans: * Broad domains: Consumer internet, B2B, SaaS, mobile, emerging technologies like machine learning, AI, analytics, etc * Look at 1,000 startups in a quarter before investing in two or three of them Q4: What is the change that you see in today’s startups compared to a decade or more back? Ans: * Many more startups * New technologies * Ambitious founders * More investors coming in * More capital being deployed Q5: Private equity funds usually look for an exit route within 5, 6 or 7 years. You are different by way of sticking around for a longer period… Ans: * Continued to invest over the years * Indian startups need capital * It takes a decade to build a company * Private equities put undue pressure on a company with their 6-7-year horizon. * 6-7-year horizon may also mean early exit by the private equity * In India, private equities should engage with a long-term approach Q6: If you look at the interest for IPOs among startups, and the series of big-valuation companies that announced going for IPOs, the valuation of those companies (for example Byju’s at $18.5 billion, with the expectation of Paytm), a lot of people ask if these companies are overvalued. Ans: * Each company is different and valued accordingly * Investors made money in a lot of IPOs * Some companies debut softly, like Paytm * Valuation comes back if a company is fundamentally strong and growing Q7: People are used to looking for profitability, on which there is no clarity for many companies. If you look at some recent IPOs, they have not given a clear picture of when they will become profitable. Is that an area of concern for investors? Ans: * SEBI rule for loss-making companies going public – 75% of the IPO should be allotted to institutional investors * Institutional investors do the research thoroughly * Institutional investors don’t go in without diligence and study * IPOs have done well because institutional investors must be seen potential in them * Companies often prioritise growth over profit