Episode 105 / February 21, 2021

Bhaskar Majumdar of Unicorn India Ventures on Investing Risks

25 min

Episode 105 / February 21, 2021

Bhaskar Majumdar of Unicorn India Ventures on Investing Risks

25 min
Listen on

In this episode, we chat with Bhaskar Majumdar, Founder of Unicorn India Ventures; an early-stage fund with portfolio companies such as – Inc42, OPEN Bank, and VLCC’s VanityCube among others.

Bhaskar spent his early career in various Media companies like – Zee Network & Times Group. He also had an entrepreneurial stint with Recreate Solutions in 2001, which he later sold to US systems integrator.

He has since been an investor in several early-stage technology startups over the years, in India and the UK. For anyone looking to start up in unconventional sectors, this conversation can add a great value. From identifying the problem statement to creating digital solutions, by leveraging trends & technology, this podcast will guide you through it all.

Notes –

02:04 – Early career in Media domain and founding Unicorn India Ventures

04:25 – Traditional mistake – “Finding a Co-founder whose skillset is exactly complementary to your own”.

06:26 – Identifying portfolio companies in uncommon sectors

08:04 – Thesis behind investments: Digitization of old, rugged & broken systems

11:07 – Investing in Neo Banks based upon the trend shift in large banks abroad

16:59 – Enabling Indian portfolio companies to go global

Read the full transcript here:

Siddhartha 0:00

Hi, this is Siddhartha Ahluwalia, welcome to the 100 x entrepreneur podcast. Today we have with us Bhaskar Majumdar, Founder and Managing Partner at unicorn India ventures. Bhaskar is a media and technology, executive and entrepreneur. In the past decade, Pascal has established himself as a well regarded early stage investor and advisor, especially in UK and India. He has held senior positions with Times of India, ZEE telefilms in Alta Vista UK. In 2000 he started his post entrepreneurial venture, Recreate Solutions a company within digital media and backed by Insight partners. After scaling, he sold the business to a US systems integrator. He has since been invested in a number of technology and media, early stage businesses through his proprietary from Heath ventures, an alumni of IIT Kharagpur and AMP from Howard. Bhaskar is very active in the angel community network in UK and India. So Bhaskar, this is a summary of your journey would like to hear from you how these trends connect together in your life to you opening up unicorn India, and the second one is in progress.


Bhaskar 1:15

So, Siddharth, thanks for having me on the podcast. You know, if you step back and see it’s more or less everything is linked up. And I was always very, very passionate about technology and media. Early on, you know, where people from my backgrounds were usually joining banking or joining fmcg I wanted to join a sunrise industry and I joined media in early 90s, which at that point was literally a sunrise industry, I joined Times of India, had a great stint with them was a brand manager of economic times. Subsequent to that, you know, I joined ZEE in 96, which started in 94. So it was almost like a startup in those days itself. And again, you know, with there had a number of roles. Finally, I was responsible for the rollout in the international business so and then I joined AltaVista as employee number three in UK as Chief Operating Officer and then build a whole team of AltaVista, which at that point in time was a bigger search engine than even Google. So if you see, although I’ve been in my corporate life has always been in entrepreneurial stints within an enterprise. And that the natural progression of that was to do my own venture. That’s when I started Recreate Solutions, simple to like brief, early days of broadband. And my thesis was all legacy content had to be digitized for the broadband. And that premise started the business to scale it up, sold it to a large US systems integrator. Subsequent to that, to the role of a proprietary investor investing my own money, you know, some good bets, some not so good bets. And then I started Unicorn India ventures, the fund. So if you see the progress has been quite natural progress. And yes, unicorn has been a very good journey for me. And now we’re on to our third fund actually.


Siddhartha 3:16

Can you share how can you identify your co founder Anil Joshi for unicorn, India? And how did you both team up together?


Bhaskar 3:26

It’s a great question. And recently, I had mentioned somewhere that, at the end of the day, fund is nothing. Starting a fund is exactly the same as starting your own startup venture. And one of the biggest challenges in that is to find your co founder. And most of us even whether it is in funds, or even in startups make the traditional mistake of you know, taking someone as a co founder who is exactly complimentary to you, who you know, or someone with whom you can sit down and always like to have a drink or a beer. Not that with Anil I don’t like to have that. But you know, we are very different individuals. And both in terms of complementarity of skillsets. We complement each other, as well as when it comes to, you know, the whole mindsets. So whenever one of us is at a high, he sort of the other guy sort of brings him down to ground or vice versa. So you know, complementarity of co founders is a sense for me, although I spent substantial time in India, and I am well to know to the Indian ecosystem. But given the fact that I do spend a lot of time in UK as well. I needed a co founder who obviously was based in India and who was really from the heart of the ecosystem. And as my background you’ve seen I’ve been more an entrepreneur scaling of businesses and exiting, so I needed someone who was more an investor in the system. And Anil was one of the better known names in the Early Stage ecosystem ran by angels and when he quit and was looking at what next do for about a year and a half, I think we would have ideated together and because investment philosophies matched, so we started to commit your senses and it’s been a very good ride.


Siddhartha 5:16

For some diverse investments, which are new diagnostic startups Sascan,Sequretek , blockchain-based chit fund platform, ChitMonks and Probus. digitizing power sector. So these are not very popular sectors. How did you were able to identify these rising sectors at the time of investment? What is the thesis on backing these companies?


Bhaskar 5:43

It’s a great question Siddharth and one of the things you know, our fundamental thesis is we stay away from consumer you know, consumer internet, classical b2c businesses. If you see my background, all the businesses where I have sort of either ran or you know exited myself have been in businesses, which are if you will, on the boring side of the supply chain, where it was all about digitizing of existing business processes. And I fundamentally believe that given where India is the size scale, the broken supply chains, the fact that there is still lack of transparency in a whole lot of sectors, this whole area of digitization of business processes is going to be massive. And that is the theme which basically runs across both our first fund and second fund, except for a few we might have taken conscious calls to do otherwise. And with that theme is where we have invested in these three businesses, if you see you know, if you see let me take one at a time if you see the power sector in India, that’s one of the areas which is ripe for complete rehaul and digitization even today there is especially on the distribution side, even to the on the distribution side there is pilferage there is leakage and obviously technology will play a big role in this whether it is the rollout of smart meters whether it is the rollout of you know these technologies like Probus which is helping to reduce the transmission losses so with that thesis we invested in Probus you know and they are scaling up very fast have a whole lot of state electricity boards as well as private liquidity suppliers on their client base and scaling up very fast and coming with newer products from within the transmission and distribution side. similar logic was with chitmonks. I think that’s a great investment. The chit fund industry in India has been existing for a very long time whether we like it or not, you know chit funds remains one of the best credit sources for below the poverty line or are not necessarily below the poverty line even the lower and middle class in various states especially in south and in eastern part of India. Unfortunately, it is got a bad name associated with it because of the lack of transparency. What happened was in early 2020, the government brought the cheap funds under the stipulation of RBI and there is a clear mandate for RBI as to how chit funds will run. You know how chit fund reporting will happen. And there’s a sunset date by which all chit funds have to be electronic chitmonks as a company was doing exactly that they have created a platform through which if you are a old chit fund, you can digitize yourself over a period in time. Or if you’re a new fund, you can just go on and launch yourself. And again, they are not a chit fund company. They are a platform for chit funds, you know, handling all the compliances, GST in making the relevant payments. So that fitted in perfectly with our thesis, and that’s how we invested you know, and we can see the scale of what’s happening in the company. Sascan you mentioned again, you know, that’s not within the digitization area. But that’s a medtech company, you know, run by very, very senior experienced doctor, Dr. Narayan, they are launching various products. The first product they have is for various cancer related products is for oral cancer. The next one they have is for Cervical cancer. And one of the things which not many of us know, or doesn’t come to the media to that extent is there’s a whole bunch of very early med tech companies out of India, which in the last two or three years may not have been most likely have not been these invested, but have been acquired by the likes of GE medical and others. So, this is a below the radar sector if you will, which is mushrooming. And, you know, we obviously wanted to play a role in this sector.


Siddhartha 9:58

And you all have been only betting in neo banking, for example, OPEN and Finin. How can you spot the early trend in neo banking? How do you identify these companies to back?


Bhaskar 10:11

Let me step back to what 2015 we invested in, in open bank, I guess it was in 2017. But as you very well know, Siddharth, UK and especially London remains the neo banking capital of the world. So to say, the whole open bank architecture has been spearheaded out of London. FCA was the first ones to legislate open banking architecture. And being in London, I had a strong sense as to where the banking industry was going. If I give you my broad thesis, if you see where telecoms have gone and utilities have gone, especially in the West, is today the old utility companies or the old telecom companies are mere infrastructure providers, it is on top of that, you have various equivalent of MVA knows the old MVA knows in the telecom industry, who came and started providing consumer-facing propositions you know, different price ranges, different propositions, and the whole telecom industry has been decimated because of that. I saw similar trend happening over here in the banking what the traditional banks meet in UK in NatWest, Barclays, all they would do was become the infrastructure provider, which in case of banking meant compliance providers be the depository, the treasurer, all of that, and a multitude of front end applications started to be built around that. So in UK, you had revenue, you had Sterling bank each, you had a number of other credit card type of companies, Henry, which was providing credit card for kids. So you, I could see where the space was going. And the moment in India, of course, it was very new. And the moment in India in 2017, we heard about, you know, the team from open, a fantastic team, and they were talking about Neo banking. So we said, I mean, I saw where the credit was going. And so I said, We must have a space to play with in that. And that’s how we ended up investing in open, very similar with Finin. Well, you know, having invested in open and seeing the success in the SME area, we were looking at a consumer proposition as well. And then when Finin came to us, we said we’ll be an active investor and Finin, as you will know, is the first new bank to be launched in India from the consumer side.


Siddhartha 12:52

And you also mentioned early in the podcast that you have avoided consumer as a fund thesis, why did you make an exception in this case?


Bhaskar 13:02

It’s great, it’s a good one. And we’ve been asked this by our LPs as well. You know, honestly, it is the size of the market and the kickstart I think that Finin had over some of the others, which made us you know, deviate from a standard non consumer type of play, even in the first of or finanace from the second fund. Even in our first fund, we do have a consumer lending company Smartcoin, which has done phenomenally well. So it’s not that we are apathetic to pure consumers, we have to see a transactional mode, rather than you know, constantly the companies depending nearly on, you know, equity funding to scale up so that’s not in our DNA. So I’m sure Finin will be one of the success stories in the consumer we will have.


Siddhartha 13:56

You also have the United Kingdom India cross border fund called Unicorn Ascension Fund, which helps startups in UK enter Indian market any examples from that fund, for success stories or case studies.


Bhaskar 14:11

So let me tell you the rationale of that fund. The rationale of that fund was you know, while in India, businesses scale up extremely fast given the size of the country and given the size of the funding associated with the demographics of the country. The UK startup environment is very, very different. In a way it is an environment where the founders tend to be older founders, they tend to be founders who worked in a particular industry for a long time and then come up with propositions within that industry. And therefore what happens is these tend to be very deep tech and very resolute type of industries. Let me give you a couple of examples. You know, UK is known for its medtech. UK is known for, you know, all these things in the E-governance area. So I saw potential where some of these companies, they couldn’t scale up because of the size of the market, but some of the technologies they had would do very well in India. So because of that logic and rationale, we created a fund it’s a joint venture fund along with another local fund over here called Accenture ventures, through which we have invested in what eight odd companies all of whom have a potential to go to India, one company, which is really scaled up in India is a company within the eye care sector, you know, they have, and they typically have a product which is meant for emerging markets, if you will not meant for UK, US. This is a product where through an iPad, you can sort of do recreate an opticians clinic, through which your whole prescription will be told to you what it is. So this is like, you know, moving eye clinic, if you will, this company, we enable them to do a joint venture in India. And because the joint venture is not yet inked, I’ll refrain from saying the name but you know, this company is on the back of this will have immense scale of potential in India, again, classical company, IP technology held in the UK, you know, rock solid people over there, deep tech guys, but the scale of which will happen from Africa, India, and places like that. So that’s basically the thesis of the fund.


Siddhartha 16:44

And any case studies where you have helped your portfolio company from India to go global?


Bhaskar 16:51

There’s a number of companies, again, as investors and as early stage investors, you know, we don’t want to turn the hat of the founders. But we obviously work very, very closely with them, when they roll out, given the fact that we have a fund in UK and obviously along with that the whole ecosystem. companies who are looking to come to UK obviously call on us, not only from our fund, but you know, a lot of portfolio companies of our friendly funds as well. And we enable them to come to UK in terms of both the regulatory infrastructure, the usual how to set up the company and all the ills around that, as well as you know, providing them the connects that is needed to make to give shape to the business in UK. Apart from that number of portfolio companies have us at least three, you know, we’ve enabled them to set shop in the US and then do the partnerships over there. Right now what we are doing in a second fund very strategically is we are getting two venture partners on board which will be announced very shortly one is in us and one in Canada. Both of these folks are very senior execs one is exited exec who sold his business worth of $100 million to a telecom company. All IIT, alumni of mine and they are coming in as investors in our fund as well as venture partners to enable to scale up our portfolios in those markets.


Siddhartha 18:31

Okay, can you tell us about the latest fund of unicorn how much it raised and its size, how much it has been closed?


Bhaskar 18:39

Yeah, so first fund, as you know, which we started in 2016 is 100 crore fund, we’ve deployed the entire amount. This is a slightly larger fund it’s 400 crores of which we’ve done the we’ve announced the first close I think it was March last year before COVID really took shape in at 90 crores subsequent to that we’ve not announced any closure but we’ve raised about another 150 or close. So, we are close to about 250 crores we are looking to raise the remaining 150 crore by September October. So it will be a 400 crore fund from the second fund as you picked up some of the names like Finin and ProBus, Sascan. These are all investments from the second fund. We’ve already invested in six companies. And I guess two of the companies will go into our probes before we close our fund itself. And this fund unlike the first fund where the entire money, where the entire LP money came from local Indian investors in this fund, we have a fee structure through which we raised already a substantial amount of money from overseas.


Siddhartha 19:53

And will you continue to be big on b2b?


Bhaskar 19:57

Yes, that thesis is not going to change that thesis is b2b digital platforms, b2b SaaS, you know, fundamentally, what plays to our core of the digitalization process across various industry sectors?


Siddhartha 20:14

In one of your posts on social, you mentioned that, you know, “a business fail, entrepreneurs don’t”. Bhaskar, Would you like to invest in entrepreneurs whom you backed earlier but they couldn’t take off and now they’re starting again?


Bhaskar 20:33

It’s a very interesting question. The candid answer is yes. Obviously, on a case to case basis, and we have backed a number of entrepreneurs, in fact, one of the themes we have, which again, is slightly different from quite a few VCs, and I guess, it’s linked to the fact that we don’t tend to do standard, b2c consumer internet is most of our founders tend to be older founders, you know, the average age of our founder in the first fund, when we signed the check was 41 years. And, you know, we tend to back entrepreneurs who have either been second or third time entrepreneurs who are rather second time entrepreneurs, successful or having failed, or we tend to back seasoned executives, exceptions are always there. But that’s usually what we go for. So we have a number of entrepreneurs who’ve tried their hand at one or two ventures before but have not taken off. And in some cases in our venture has really done well. We, in fact, when building the team loves to take on people who have been who have tried their hand at entrepreneurship succeeded or may not have fully succeeded, but you know, tried their hand. And we tried to recruit those people within the team. So our team today is full of people who have had a couple of years stint in their own startup and then joined us, I think that gives them the view. I think there has been one case where we have backed an entrepreneur who has not succeeded once the second time over. And in fact, we have backed recently a company on the basis Well, not on the basis on the basis of a whole lot of parameters. But one of the driving factors, which made me take the decision was he had an angel who had committed substantial money in his first failure or business, which failed. And the same angel came again. And the angel in the conversation told me that the failure was because of market and nothing to do with the entrepreneur. And that sort of gave me huge confidence. So I strongly believe in it that, you know, entrepreneurs, true entrepreneurs don’t fail. It’s the businesses and the circumstances that lead to failures.


Siddhartha 23:02

Would you like to share which is the largest company in your portfolio by value and the largest company in your portfolio by revenues?


Bhaskar 23:14

The largest by value, I think, in our first fund would be OPEN bank. And I think the largest by revenues would be a cybersecurity company we have it’s a company called Securetek, very seasoned founders, you know, people in their late 40s, early 50s. We back the main founder, or the main technology founder was heading Symantec in India, deep domain expertise in cybersecurity building a fantastic product cum services business already there in the US with market names and in India. So yeah, from a revenue perspective, I guess that they will be the largest.


Siddhartha 24:00

And which would be from the second fund. But the second fund is still young,right?


Bhaskar 24:06

The second fund has just started. And you know, all the companies are at early stage because as you know, Siddharth, we position ourselves as the first institutional investor. So we go in very early. So the second fund has just started. We’re just building the portfolio. And yeah, it’s early days.


Siddhartha 24:24

Thank you for much Bhaskar. It’s been a pleasure hosting you on the 100th entrepreneur podcast.


Bhaskar 24:31

Thank you Siddhartha I look forward to the success of you guys. I’ve got quite a bit more of the good work you’re doing in the ecosystem. So all the best.


Siddhartha 24:41

Thank you for Bhaskar. It’s been a pleasure.


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