Episode 122 / June 20, 2021

Ashvin Chadha, Anicut Capital on backing the best D2C companies

47 min

Episode 122 / June 20, 2021

Ashvin Chadha, Anicut Capital on backing the best D2C companies

47 min

About the Episode

Venture debt was introduced in India 15 years ago. However, it has gained traction in the last decade.

In the last 6 years itself, approximately $4 bn of debt has been deployed across 150+ deals in India.

But, not very often you come across an investor talking proactively about both debt & equity investments in the startup ecosystem!

That’s why in this episode we’ve brought Ashvin Chadha from Anicut Capital.

During the podcast, Ashvin talks about the various debt funding deals he came across at Anicut, and while he considers debt funding to be lucrative over equity investments over a short period, but for people who are willing to stay invested for over 10-15 years, he points out how we are in the golden age of early-stage investing.

He also talks about how a lot of VCs in the Indian Startup ecosystem are already getting 100x returns on their equity investments, we shouldn’t be surprised to see 1000x returns becoming normal in years to come.

Notes –

01:56 – Setting up Anicut Capital

03:24 – Initial equity & debt investments

04:51 – Structuring debt investments by setting up an AIF in 2015

06:04 – Investing in Sharechat during an internal bridge round

09:19 – Exits & thesis with debt investments

10:52 – “In my view it takes 10-15 years to build brands in India and if you don’t stay the course, your compounding doesn’t happen.”

13:55 – Parameters & mental models while making equity investments

15:56 – Learnings from portfolio companies hitting a roadblock

24:12 – “We are in the golden age of early stage investing.”

26:56 – “A good company will last even in a bad market.”

27:07 – Backstory & thesis of investing in Bira 91

30:51 – Backstory & thesis of investing in Wingreen Farms

42:02 – Backstory & thesis of investing in Neemans


Read the full transcript here:


Siddhartha Ahluwalia 00:00

Hi, this is Siddhartha Ahluwalia. Welcome to the 100x entrepreneur podcast. Today I have with me Ashvin Chadha, founder of Anicut capital. Anicut is a debt as well as equity focused fund investing in startups in India. Ashvin, welcome to the podcast.


Ashvin Chadha 00:16

Thanks. It’s a pleasure to be here.


Siddhartha Ahluwalia 00:18

I would love to know more about Anicut capital first. And then about your own journey, how you came into, you know, startup investing?


Ashvin Chadha 00:29

Anicut, we formed in about five years ago, late 2015, early 16. And my partner and I, my partner’s name is Balamurugan. He’s been a career banker. We were we started off with what we call a mezzanine credit fund, doing private credit in India, for the last five years. That’s what we focused on. We manage about 1000 crores of capital across two credit funds. And more recently, about a year and a half ago, we launched our first angel AIF so then we’ve been particularly active over the last 18 months we’ve done north of 30 transactions there. And that’s how we that’s the entity where we do early-stage investing.


Siddhartha Ahluwalia 01:16

your previous background has been in financial services, would love to know about, you know, you’re growing up in Delhi and moving to USA and then moving back to India and setting up Anicut?


Ashvin Chadha 01:26

Sure. So, I, as you said, I was I grew up in Delhi, I went to school here, for my undergrad, I went to the US, and then worked with Morgan Stanley in investment banking, in New York, and then switched to private equity was with general Atlantic, again, in New York. post that I moved to Mumbai with a fund called India Equity Partners, and was with IEP from 2006 to end of 2010, doing private equity transactions in India that was out of Mumbai, came back to Delhi in late 2010. And set up a small family office, from where we started doing private equity transactions in consumer and financial services space. So that’s a space we’ve been investing in for the last 10 years. And private credit from our balance sheet. We started in 2011, that rolled into Anicut, which was a credit fund. And then more recently, like I said, we started the angel AIF, where we are a syndicate, we are not a blind pool, we, but the only difference is that we actually put 10 to 20% of our own capital in every team. So, it’s somewhere between a fund and pure syndicate.


Siddhartha Ahluwalia 02:42

Well, tell us about your view for five to six investments in the startup sector in India, both on the debt side as well as the equity side?


Ashvin Chadha 02:50

Sure, that’s an interesting question. So, the first I had the debt business, we actually came by chance, I wasn’t planning on doing it, there was a common friend who, whose company needed short term capital. So, this was a sub of a US tech company. And for some reason, their US company was not able to send money into India, some issue or something like that. So, they needed money for six months, just to pay salaries, etc., all the billing was done in the US, highly profitable company. So, you know, it looked very interesting. So, it was a very small been short term opportunity, we were managing our own capital at the time. So, it looked good, I went ahead and did it. But the interesting thing was, I spent more on structuring that transaction getting lawyers involved than the actual money I made in that six month of interest. But what I did realize is that there is a huge market here to do private credit, you know, banks are very limited in what they do and then whatever they want to do, they want collateral. First generation founders don’t have that flexibility of offering you know, large house or legacy property etc. So, there was a gap and we started doing cash flow lending, the first 30 deals we did from our own balance sheet. And then you know, friends and family started saying that, we would like to put capital alongside you. And also, it was a one-to-one matching. So, Sidhartha had some extra cash flow, he gave it to Ashvin for small deals, it was okay. But when the volumes became larger, then it was too much risk that both Siddhartha and Ashvin are taking on each other. Right. So, we wanted to put it into a structured entity and start with the AIF back in 2015. So that’s the on the debt side on the on the equity side or on the angel side. I probably now over the last 10-11 years, you know between what we do at Anicut Angel and sort of the own personal portfolio that we’ve built. We’ve probably done 70-80 transactions on the angel side. So have been quite the first, I would say 30 transactions were through Indian Angel network. I was an active investor there to leads in bunch of companies. Wow Momo is one of them that has done well. But, you know, it’s been it’s been a fascinating journey to see the startup ecosystem evolved over the last 10 years, right 10 years ago, so that I think there were a handful of angel groups or even Angel, large angel investors. And now, that has completely changed right.


Siddhartha Ahluwalia 05:31

Ashvin, tell me about, you know, you were part of sharechat journey, right, how you came to invest in sharechat and what stage you invest in? I’m interested to know, and have you taken exit?


Ashvin Chadha 05:43

Sure, sure. So Sharechat is from our Anicut Angel portfolio, I have known the IQ guys for a long time. Both Madhukaran, Anand have been friends, and we do a lot of work together. So, there was an opportunity that they had in our internal bridge round that only insiders were doing. And we were able to get some allocation there. So that’s about a year ago or just about and, you know, from then on, that journey has been quite fantastic. they’ve raised multiple rounds post our investment. And obviously, we’ve all heard about how they become a unicorn. But you know, to be honest, that investment is all credit to the IQ guys, we are more thankful to them to give us an allocation. But, you know, we’re very happy to be part of the journey. No, no, we have not sold any shares that I think it’s too early for us in the journey. But of course, it’s one of those where, you know, the valuation has gone up significantly since we invested but I think we are very confident of the company and the performance over the next few years.


Siddhartha Ahluwalia 06:52

I think that is an amazing journey, right? Just around one year ago, when tiktok was at its peak, I remember that point of time, and Indian social networks were considered like, will there be a future for them or not? Right? I think at that point, the same round you’re mentioning the sharechat round was roughly at a 500 million valuation correct, right. And today, the valuation just one year span of time things has changed, tik tok got banned in India, sharechat is the number one social network for Indians, the valuation they have raised 500 mil round at two billion


Ashvin Chadha 07:30

correct. So, Siddhartha you know, the startup ecosystem probably better than anyone, you know, these things happen, right, one off, you could have, you know, now there is so much activity going on in early stage, before a round closes, you know, people already start discussing the next round in hot companies. Right. So, but, you know, that’s not the, you know, that’s not of par for the course. Right? That’s a one off its exception markets are heated right now. But, you know, just like things go up so rapidly, things can go down as well. Right. So that’s all part of the journey. And that’s why I suggest to everyone who’s looking to invest in startups to have a portfolio approach, right? Let’s not do one, two or three deals, you please allocate the money that you are investing in startups over, you know, over time, and let’s say over a two-year three-year period, get try and get 15-20 companies, because that’s when, you know, the ones that you suspect will do the best may not. And the ones that you don’t know from somewhere, they will, you know, suddenly pivot and do very much


Siddhartha Ahluwalia 08:40

you have also taken 10-11 exits? Can you share more about those? Right? Were they from the debt part or the angel part? And how what was the size of those exits?


Ashvin Chadha 08:50

See one on the debt part, it’s a very simple business, right? We give a loan; they pay us the interest and the principal. So, we are very regular with exits there. And you know, we’re very happy when a company pays us back, right? We never, you know, not take, we’re always open to take premium prepayments. Our thesis is we’re giving capital for a particular opportunity, it’s short term in nature, we charge a fee for, you know, the ability to close quickly and for the flexibility that we provide. But you know, it’s temporary capital. You know, it’s a bridge in nature or mezzanine in nature. And it comes at a fee. So, founders use it, you know, let’s say that you’re raising a next round, you’re not getting the valuation that you’re looking for, but you’re very confident in six months, nine months, with the pipeline that you have, let’s say you’re a SaaS company, you can double triple your you know ARR so you know, you will get the valuation six months from now, and maybe your existing investor is not supporting you on that valuation right. So, you can come in and take a bridge from us. Once that next round is raised, let’s say, well, 12 months from now, 18 months from now, we’re very happy to get paid on so. So, on the debt business, we see exits very regularly, it’s part and parcel. On the equity side, our view is slightly different here, we’re very long term in nature. So, in my view, it takes 10-15 years to build brands in India. And if you don’t stay the course, right, you’re compounding doesn’t happen. So, I’ll just give some examples. So, if you look at Nykaa, Nykaa is, you know, we’re all hearing about how hot the company is, when there’s going to be an IPO soon, etc. It’s a very recent company, a brilliant founder, she’s done exceedingly well. But they’ve been a bunch of investors who’ve taken exits, let’s say two years ago, right institutional capital also. And they made good money, maybe, you know, they made 3x-4x. But had they stayed for another two years, three years, you know, they would have made a 10x from them. So. So that’s the difference between a you know, let’s say, a 3x, or 30x on an investment. So, it takes time we try to align ourselves with founders saying that when founders will sell the company, that’s when we will exit


Siddhartha Ahluwalia 11:19

and same you’re staying the course of your early investments, like wow Momo?


Ashvin Chadha 11:23

yeah, correct. haven’t sold a single share. Bira, we have, you know, one of the early investors there, wingreen farms, again, very early, you know, great company just did an acquisition of Raw Presley, that company is doing really, really well. flinto box, you know, another company actually pivoted really well. So flinto was in the activity kit business, right. So, your kids used to order subscription boxes, on a regular basis from flinto box. But in the in the first lockdown, that business effectively went to zero for the first quarter of last year, April, May, June, we had zero sales because logistics were closed, warehouses were closed, we are not able to ship boxes, and credit to the founders, they completely pivoted to online, they preschool business online. So now if you have children, who cannot go to preschools, in, in real life, in the, you know, in the offline world, they’re going to miss one year or two years of learning, right? Will they be prepared then when they enter regular schools, so they pivoted and that company over the last, you know, I can say that, in the last three months, the cash flow that they’re generating is probably going to be more than not three months, but let’s say this year, the cash flow that they generate, will be more than multiple times the revenue of last year. So, like, we were discussing that I think we are very long term in nature on the equity bets that we take. So, we’re very happy to stay the course, and eventually exit when you know, the company is going for an IPO or the founder is ready to sell the business. So, on the equity side, we take a very, very long run?


Siddhartha Ahluwalia 13:18

How do you think because they are both different instruments? So how do you think about while investing debt in a company, right, whether they’re going to pay back will be able to pay back or not in such a dynamic environment? And how do you think about what are your parameters mental models to invest when you are as an equity investor?


Ashvin Chadha 13:38

Sure, sure. That’s an excellent question. I think you’re absolutely right. The companies that we fund on the debt side they are much larger. So typically, 100 crores of annual revenues may even go to 1000 crores of annual revenues. So, very large companies typically be backed companies and companies that are profitable. So that’s the model that we have on the debt business. That’s a blind pool of capital. The investors give us money to manage we obviously we have a significant contribution of our own money in the fund, but it’s largely third-party capital that we raise or domestic capital. And interestingly, so that we raised all that 1000 crores without a single distributor, we’re probably one of the only funds out there who have largely raised money from references, friends and family, etc. So that’s the debt business, on the equity business. We take we’re open to doing very early stage. So, seed stage investing two to four crores typically, first check in into the company, but we do love to partner with other investors, the groups and other VC funds. So, we are very keen on you know, sharing the expertise that people around us have developed in ecosystem. So, so that’s where and at the same time, we’re also happy to lead these. So, we’re just going to announce a deal probably next week, we’ve led a deal in a company called Earth rhythm, which is a direct-to-consumer skincare brand, great story, fantastic founder, started, you know, this business or self, or the, you know, with a personal need, you know, her child was born with a very sensitive skin condition. So, she wanted to, you know, not use off the shelf products for a son. And from then it went to neighbors, and then neighbors’ friends, and, you know, all of a sudden, she was, uh, you know, one and a half crore a month, direct to consumer brand. And, you know, so you know, that’s, that’s the type of company we’d like to come in early, get it ready for a larger series A, because, you know, our viewers, we can work very closely with founders. And because we have, you know, experience on the debt side, also, we know what larger investors, funds etc., institutional capital will look at, we can get some of these companies ready for those investors. So that’s, you know, that’s how we look at the financials


Siddhartha Ahluwalia 16:18

tell me, you know, for a picture cannot be all rosy. Right. So, what are some of the things that didn’t work out for you, as an investor or in your investment journey?


Ashvin Chadha 16:28

Yeah, absolutely. I think we all have a habit of only talking about our winners, right? No one really talks about how difficult this business is. And you know, well, that out of 10 deals, four or five deals will not work right in the angel business, early stage investing business. So, we’ve had lots and lots of learnings. On the debt side, we’ve had restructurings, we’ve had, you know, we invested in a restaurant company restaurant chain, which had pan India presence, up until, let’s say, February of last year, that company was one of my best performing companies, not a single day’s delay. We are an escrow on their receivables, to first year second co before even the landlord’s get rent or the employees get salary, our money, our payment used to hit, you know, direct debit we’ve got we were there. And suddenly, you see that the world has changed, you know, for six months, they had zero sales. Now, how can the business that was doing 150 crores a year and profitable survive when you have six months of zero sales? Right? You have to manage your expenses, you have employees, you know, we had 1250 employees in that business. So, it was a real struggle. But having said that, you know, we had great founders. And we were lucky that in that business, we had some deep pocketed investors, they came in, we sort of led a $3 million round an equity round for them, which was done at a much lower valuation. But you know, that seemed fair at that time, right. So, we needed that capital to restart operations we picked up you know, in this Jan, for March quarter, when, you know, right between the first and second wave of covid, we were almost back to normal. You know, in fact, March was a profitable business for us as a month. Now, then, again, you know, April came and may we’ve had significant lock downs and but you know, the strength of the, again, the founders, they’ve pivoted to a largely delivery-oriented model, and are doing, you know, fantastically well. So, so that’s the kind of examples on the debt side, where one has to be alert on the nature that this business cycles in every business, right. So, some cycles are positive, some are negative. So, like I mentioned, flintobox was able to, you know, pivot to an online business and had lots of tailwinds. But they’re just like this, the restaurant business had a tremendous challenge. So, one has to be ready. Rather than you know, our view is, we on the debt side, if we can avoid litigation, Nclt bankruptcy etc. to do settlements as much as we can, to do restructurings, if required, give people founders more time. If they’re good founders, if you haven’t funded a fraud, you will get your money, you know, 99 of 100 times it may take you an extra year, you may have to take a little beating on interest, but capital preservation will happen. So that’s the way we look at the debt.


Siddhartha Ahluwalia 19:31

How do you look at equity side, which is very different from equity?


Ashvin Chadha 19:36

equity side, see if you’re writing first cheques, 4 out of 10 companies will not make it right. In fact, there we are more sympathetic to founders saying that, you know, okay, we put in capital, but you put in three, four or five years of your life, you know, so how do we get you back to either maybe the maybe startup isn’t the right thing for you, you know, it’s not like startup is the best thing for everyone. Right? I’m not fit enough; I keep saying that I’m not smart enough or qualified enough to run my own venture. You know, so we are good at investing in behind other people and sort of cheering from the sidelines. But we are not the guys who can run companies operate companies, startup companies. So, it’s a very different skill set that is required. And it’s a very hard and lonely journey. You know, when, when things are great, you know, everybody wants to be around you, you’re in media, you’re, you know, you’re on podcasts, etc. You’re the, you know, sort of eye of the nation as it were, right, you’re on the front pages of ET. But when things are, when you’re not able to make payroll, when you don’t know whether that, you know, you’ll be able to pay your vendors, your employees, and you’re fielding those calls, right, and leading that business is very, very difficult. So very sympathetic, we’ve had lots and lots of, you know, cases where we’ve either been able to help the founder pivot, and we found success, maybe sometimes, but sometimes we don’t, then when we just find the best way to then shut the venture. And sometimes a founder wants to start a new venture, we’ve actually backed founders who we had backed in the past and did not have a successful journey. So, you know, it’s, again, when you do 70-80 transactions, you’ll see all shapes and sizes.


Siddhartha Ahluwalia 21:32

moving from 2021, right? What would be a preference for? The question should be no balance would tilt towards which side more would it be debt or would it be equity in terms of your own IRR.


Ashvin Chadha 21:45

So actually, there are two separate pools of capital, see IRR. So, if you’re in early-stage venture business, you know, your IRR have to be, you know, you underwrite to much higher IRR, right. Whereas on the debt business, we have delivered something like net of fees for the last five, almost five years 17-18 quarters, we’ve delivered about 13, 13 and a half percent net of fees in our funds. So, it’s a different investor, who is a debt investor, who’s happy with a quarterly payout, like an FD, he’s getting anything between 12 and 14%, he’s happy with that kind of return. Whereas in early stage, you know, if you’re underwriting to 12-14%, you’re a God because only two out of 10 will work right. So, we have to go for 25-30% IRR is on the early-stage equity side. So, in fact, we have many of our investors who started with us on the credit side, saw our track record invested across two funds, and now do a lot of early stage investing with us on the venture side. So, it’s, it’s a different mindset, a different pool of capital. But you know, today even the most conservative debt guys have seen how early-stage angels have done you know, you’ve you talked about 100X’s etc. So, you know, they’re also wanting to get into the stock startup space


Siddhartha Ahluwalia 23:16

and Ashvin because you are doing both of things right, you are doing debt, which is more of you know, fixed in nature, very less risk, and there is equity, which is very high risk at the early stage. So as what would be your preference the same this decade, as an individual?


Ashvin Chadha 23:38

So, I, you know, I, as I said, I think that, okay, let’s put it this way, in my view, so that we are in the golden age of early-stage investing. I think that it’s a parallel to how the US was, you know, in the sort of 90s, maybe early 2000s, you’re gone have some of the biggest companies built in India, servicing India and rest of the world over the next 10-15 years. So, if anybody asked me, you know, I have some extra capital, which I don’t mind parking away for 10-15 years, right? Not for a two-year three year and I’m completely okay losing it in the sense that if you know, if I owe 100 rupees, these 20 rupees even it goes to zero No problem, right. I would definitely suggest you put in in early-stage startups because you’re going to see some of the best companies and then parallelly some of the best returns coming from early-stage startups in the next 10 years.


Siddhartha Ahluwalia 24:40

having said that, we are at the, we are sitting in, you know, in June 2021. is said that we are at the, you know, just on the cusp of the ending of bull cycle, do you believe that or the Bull Run going to be for another two, three years at least?


Ashvin Chadha 24:58

See, I think no one knows. You know how long this party will go on for? I think, you know, we’ve had a, like a 20 year plus cycle. So, I think the odds are that it will end sooner rather than later. But having said that, you know, if you invest, you know, in fundamentally good companies, good founders, right. And that’s not that hard to do. If you’ve been doing this for many years, right? ki founder chor nhi hai, he’s very passionate, she’s very passionate about her business, you know, the market size is there, you know, the unit economics are there, you can see that, you know, maybe not today, but over the course of two, three years, as you scale will make money, those businesses will test, you know, will stay the course, right, any market cycle, good, bad, ugly, you know, your, maybe your valuation will not jump as quickly. But again, if you are building businesses for 10-15 years, even in the down market, or even in a bad market cycle, you will find the best of investors. You know, some people say that when the markets are actually not so good, is the time when the IPOs that come out are the best in the ones to subscribe to, right? Because in a bad market, somebody who goes public is already fighting, you know, not only a bad business environment, but you know, the capital markets are not as friendly. So, only the best of the best makes it right. So, so that’s my view, a good company will last even in a bad market.


Siddhartha Ahluwalia 26:33

And, you know, tell us about your favorite consumer stories, you have been part of Raw Pressery. BIRA right. How did you get into these companies?


Ashvin Chadha 26:45

Sure, that’s an interesting one. So Bira were one of the first you know, very early investors. I knew Ankur for a while before we invested actually Ankur started off with business called sirana, where he used to import some of the best beers from Europe and the US and sell them through bars, Unfortunately, the challenge was that the duty structure was such that the beer used to be for 600 rupees in a bar. So, I used to joke to Ankur that I can’t even afford this beer, right. But those meetings were the best meetings, you would go and Ankur would have a, in his office in some room, or in a very tiny office in Delhi, he would have about six or eight different beers, and he would insist that you try a little bit of every beer, right? So, if you’re talking about a different, you know, high quality beer, some had 5% alcohol level seven 8% alcohol level, you never walked out of that meeting, you know, in a straight line, you are always tipsy. So, those are some of the best meetings you had. But, you know, so, it took us a while, because, you know, that was my, you know, fundamental issue with that business, I was telling Ankur that, you know, I cannot buy a 600-rupee beer when I go to a bar every time or a restaurant every time So, and he, he found that and he found that nation, he said, in India, people want fresh beer draft beer, he started importing chiggs. And that was a big hit, he was seeing that people were willing to pay a premium when they go to a bar for freshness, high quality beer, you know, because bottle beer also doesn’t travel Well, in India, the temperatures are 40-50 degrees, it’s very difficult to you know, maintain the sort of consistency, taste, etc. And he went to Belgium, you know, got a brew master to you know, bid BIRA the taste was perfect. It was India’s first wheat beer. And that’s when we invested when he you know, got into the brand so that journey has been great we’ve you know, seen lots of ups and downs, Ankur has raised a lot of capital we’ve built you know, he’s built tried to build a global business. We’ve always struggled with you know, a lot of my friends would say are the beer is my favorite, but I don’t get it right. So, we’ve struggled with logistics and making sure that the beer is available. Having said that now I think most recently we had a new round led by Kirin of Japan which is one of the largest beer companies in Japan and the company is completely turned around the refocus to India got four breweries now across different geographies. So, I think that for instance, for me is again a story for the next five years, seven years, I am sure we will see Bira being listed on the Indian markets. And then we have fantastic journey right to have a company that goes from really seed check to then raising a lot of private equity money VC money before that, and then finally hitting the IPO market which I feel is the true testament of a real business, right? Can you actually list that business? So, I think we’re going to see that and, again, very, very big supporters and fans of Ankur and, Bira


Siddhartha Ahluwalia 30:10

and I believe, you know, the current valuation of the company would be somewhere north of 500-600 million. And you know, you would have entered at seed stage, back then seed round was, very small and valuation used to be one and a half million. So, kudos, you know, that totally 100x winner for you


Ashvin Chadha 30:29

you know, so that I think when we started in this business, a 10x was fantastic return, right? I mean, like, you, you, you thought that you were cat’s whiskers, if you had a 10x in your portfolio, right? Now, people are talking about 100x, okay, and people are, you know, we are seeing 100x returns, and cash returns, not just paper returns, right, which is amazing to startups ecosystem has evolved so much over the last 10-15 years. But trust me, I and maybe your, you will have to change the name of the podcast, I am going to see, you know, not just in our portfolio, but in general, we’re going to see 1,000x becoming what 10x and 100x were there in that timeframe, very soon. So, you’re going to see those kinds of returns being generated. There are already a few companies, maybe a handful of companies that have generated 1,000x for the early-stage investors, but you will see more and more of that over the next 10 years


Siddhartha Ahluwalia 30:30

and tell us no coming back to the story of wingreens, how you came to be associated with wingreens.


Ashvin Chadha 31:24

Wingreens is also very interesting story. So wingreens actually, the founder, Anju is my cousin Massi. So, she’s my mother’s first cousin. We were in touch as kids and then lost touch. And then all of a sudden, she called me one day and she said, Ashvin I believe you do something with startups? You know, this is now five years, six years ago? And I said, Yeah, I do. You know, so she said, can you come meet me? So, I said, Yeah, of course, I had no idea that, you know, she was founder, she has, you know, was doing you know, farm to table doing this, you know, wingreens, W I N stands for women’s initiative network. So, it was a women’s collective that actually she had built. So, I went there it was, again, a really small factory come office, in one of the villages in in Gurgaon. And, you know, what I saw was amazing. You had all these women who were from the, you know, nearby villages, making hummus. How many of us, even in India knew what Hummus was right? And they’re growing their own vegetables, seeds, condiments and producing from this factory. It was the most powerful thought, you know that? How to empower women from a local village who you know, in fact, the panchayat doesn’t even allow them to leave their village. Right. So, for them to work, and then transition from that small factory to a state-of-the-art factory now. You know, Anju and Arjun, the founders have done a fantastic job there. We’ve then we’ve got funding from wingreen from Sequoia, they’ve done two rounds there, more recently we’ve had a investor in responsibility, which is one of the most interesting sustainable funds from Switzerland, they’ve come in, company has been able to diversify and get into beverages in a big way by acquiring raw again, that was something that we were given that company had common investors in Sequoia, we worked, we structured that deal very hard. And in fact, this is a company that we have, I would say, in a way double dipping. So, we are early investors in the company on the equity side. And we gave we gave them money to debt money to finance the acquisition of raw. So, we are both on the both sides of the capital, equity and debt. And, you know, this company now is moving quickly from you know, when we first saw it was a three cr business, this year, they’re already on track to be a 250-crore real business and maybe in a couple of years will be a 500 crore a business. So, again, our journey from maybe three to 300 crores over a short span of five years. You know that that’s been very fulfilling.


Siddhartha Ahluwalia 34:44

I think that that will be our second IPO in the next five years.


Ashvin Chadha 34:49

Yeah, I think, you know, in fact, two of our financial services companies are IPO this year. They are Aptus and five star, again, we have held them for seven, eight years came in very early, both our marquee companies that have lots of PE funds, right? The best of the best has invested. But you know, those companies generate not all north of 250-300 crores 400 crores of profits every year. So very, very large companies, which will, you know, be valued at who knows, few billion dollars, it’s not just a unicorn, it’ll be a, you know, many times unicorn. So, again, you know, as I was saying, you cannot stay the course, in 8-10 years, it takes to build some of these companies. So, though I’m very excited about those companies, we are, again, very early investors in lending kart, they are one of the pioneers in FinTech, Harsh has built a great business. You know, in some ways, we say that, you know, financial services in the last five years that has seen the worst of time, I don’t think you will ever see a five year period where you will start with D’mon, then there will be all the issues around GST you will have the ILFS crisis, the yes bank crisis, you know, you will have the Franklin Templeton, mutual fund crisis, then coming to more recently COVID, one COVID Two, I mean, this financial services sector as seen, every single stone that could have been thrown on them has been thrown. But you know, the resilience of these founders, that they are still active, they are putting they’re growing, you know, lending kart is from initially, you know, losing a lot of money, because for running for growth is, you know, tremendously profitable. So, there I think the I very confident I’ll see, we’ll see an IPO in the next two, three years as well. So, lots of very interesting companies.


Siddhartha Ahluwalia 36:46

Angel in five star, lending kart, all of these companies?


Ashvin Chadha 36:51

Correct. Actually, you know, this is one of the first few podcasts that I’m doing. As a by nature, Bala and me, my partner is very, very media shy. So, we don’t openly talk about our portfolio. So, you’re the first one who is getting access to, you know, all these, you know, names in our portfolio we have, we never talk about it in the media, etc. But, you know, we’ve been very, very fortunate, I think, we have an enviable set of founders that have chosen us, you know, I always say, we don’t choose founders, founders choose you, you know, they’ve decided to let us into their, you know, their journey of building a company, you know, that, for me is, you know, to have that honor and privilege of being with a founder through the good times, and also bad times Siddhartha I think we’ve done a lot of things for founders that VC funds, or PE guys cannot do, you know, personally, for instance, when founders are really struggling, unable to make payroll or things like that, you know, we’ve given them a short term loan, that effectively we are written off, right. So, we have to do things like that as well, which we can, if you’re a private investor, managing your own money, you can, you know, be more flexible, you can, you know, given money, we’ve done, you know, things that, you know, institutional investor will never dream of giving money before documents are signed. You know, I think all of these things may sound crazy. Now, when you’re running institutional funds, you cannot do any of this right? When you’re managing third party money. But you know, that flexibility and for that founder to get money on that day is the most important thing, right? If he doesn’t get it, maybe he won’t be able to fund the company or keep the company going. So, we’ve done all these things. Some have not worked. And you know, quite honestly, when we wrote that check, we know that it’s not for a comeback, right. But you have a founder relationship for 5-10 years, and you do it. So. But some have been able to turn around and build very, very large companies.


Siddhartha Ahluwalia 39:08

Fantastic, you know, great to feel thankful to you share these stories, which will inspire other set of founders and investors to stay the course.


Ashvin Chadha 39:18

Yeah, absolutely. Absolutely. It’s the easiest thing to give up. So that I think, you know, it’s almost like you’re an athlete, right? The startup journey is of a marathon runner, right? I can’t even run a kilometer, but that’s why I am not a startup founder, but the point is that you will have hardship every step on the way right that is the easiest thing to give up. But you know, to go ahead and complete that journey, take that pain. You know, for instance, we are I give you another example, actually, these are runners. So, Vineeta and Kaushik of sugar, we invested, we were the first lender to them from Anicut debt fund. And this was before the A91 rounds. So, they’ve done a fantastic, you know, pivot, starting in back, then launching sugar. And then now growing sugar to be one of the I think hottest d2c companies out there. Right. So, we still are small equity investors from the Anicut Debt fund side, we also take warrant, sometimes the founders are lucky and give us something. So, you know, I see them being fantastic founders, I see them. Now, in a position where every single VC fund wants to get into the action, right? They have literally investors lining up to get over capital. And nothing could have been more different. Maybe four or five years ago, where every single, you know, forget about fund, but even angel investor looked at and pass. So, there’s a fantastic quote from, I think, from Vineeta or Kaushik, I don’t remember from whom, but you know, that IQ was like there, I think, maybe number of 15 or 50th, or someone pitch that they did, right, so the first 50 of them failed, but IQ was the 50th one who gave the money of the 51st one. So, you know, just talking about resilience there, right? They could have, at any point in time, given that they were, IIM grads, they could have taken up a super well-paying job left in the course. But they had a dream, they had a vision. And, you know, look, look what they’ve done. Now. I mean, it’s, you know, I don’t want to comment on numbers, because it’s not my space to do that. But it’s one of the hottest companies out there right now in the digital space


Siddhartha Ahluwalia 41:48

and to conclude our podcast, you know, let’s talk about a journey where we are both, you know, on the same path, right, Neeman shoes. Right, how is your experience in the last two years?


Ashvin Chadha 42:03

I mean, very, very exciting. Again, Neeman was the first deal it’s and it’s a very special place in our hearts because I was the first deal from our angel AIF, the Anicut Angel portfolio. So, the first one you Always remember, and I always give to our team that usually the first deal is your worst deal. Because you’re in a hurry to do you want to show this that first and last these over portfolio are ones that you should never back on. But here Taran has completely proved us wrong, I think, you know, he has built a very high-quality product, the brand has really taken shape now. Very interesting, one of the top industrialists in India, who I happen to meet him on the golf course, actually is a is a very ardent golfer. And he spotted I was wearing Neeman shoes. And he said, well, these are Neeman shoes. And I said, Sir, you heard of the brand. He said, Yeah, they’re my favorite shoes, I have six pairs, I only wear them they’re the most comfortable shoes. So, you know, really, one product is good. B how they have branded, it has been great. And their journey is fantastic. You know, hopefully in the next 30-30-45 days, they’re going to announce a new round, as you are aware, you know, it’s, it’s being done by one of the best consumer investors out there. And, you know, I think, again, still early days, one and a half years since we first came in, but lots of room there, you know, to build that whole sustainable category has, and we haven’t even gone offline a lot. So, it’s just online business right now. You know, they launched flip flops, they got sold out in a few hours. So, you know, there’s a bunch of fans out there for Neeman, like you and me and, you know, I’ve been on wearing Neeman shoes for myself even before we did the deal. And now I hate wearing any other shoe. So, if I have to go to a formal event, and I have to wear a slip on, it’s a pain form. So, you know, so we are in a way our own ambassadors have the potential


Siddhartha Ahluwalia 44:22

I remember the story very well. You know, just to recall that for how I met Taran was I found Neeman’s ad on Instagram and they have been like, really doing well on social media. And then then I reached out to Taran, ordered a shoe. Right and we met Hauzkhas just opposite to IIT Delhi. And I was blown away by the passion he had the amount of time he had put in right. And it was for me, you know, I was I had just started building out the podcast back to two and a half years back then. And he came out as a sponsor for the episodes of the podcast I thought like this is so young has the guts and i decided generally you know and I’m glad to buy you know back Neeman’s and after and you know if I could have you know if you could allow me to be a part of this and he kind of allowed actors then you know I connected to Rohit Anand and a good friend and part of Anicut now and fantastic journey right and how they have the lead in that how they have navigated pandemic. This is beautiful, right more radio stories to be told five years.


Ashvin Chadha 45:51

Oh, yeah, absolutely. Absolutely. The same thing, you know, Siddharth when they were going through the first phase of lockdown. You know, you had warehouses were shut, you could not open them logistics were shut. You know, courier was not working, only essential items were being delivered. So, it’s been, you know, the last two years has been you know, of course, we only talk about the good side. And you know, how founders have done well, companies have raised a lot of money and all that. But it’s been a very difficult time for founders, and, you know, hats off to them for, you know, navigating these turbulent times


Siddhartha Ahluwalia 46:26

You know, now we come towards the end of the podcast, Thank you so much. It was been a beautiful, last 48 minutes, living your journey and learning from you.


Ashvin Chadha 46:37

It’s been so much fun. So that I think, you know, as I said, this is one of my first podcasts. I didn’t know it was going to be this much fun and I wish I’d done it much earlier. And we should continue to be in touch and hopefully, we will have many more common investments like Neeman’s in the future. I look forward to that.

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