232 / November 6, 2023
Mastermind Behind India’s Hottest Startups – Sharechat, Sugar Cosmetics, KuKu FM I India Quotient VC
This week’s episode is about the mastermind behind India’s hottest startups such as Sharechat, Sugar Cosmetics & Kuku FM as we welcome Anand Lunia, founder of India Quotient, to the Neon Show!
Is The Youth Of India Bad At Saving?
Can India Become The Largest Economy In The World?
Why Has India Not Created a Successful Role Model In Startups?
All these exhilarating topics and more in this GRIPPING conversation about India’s hottest startups. A deep dive into why India Quotient understands the consumers of India so well and how India is at the cusp of glory… Tune in NOW!
Watch all other episodes on The Neon Podcast – Neon
Or view it on our YouTube Channel at The Neon Show – YouTube
3 Lessons Learnt From Anand Lunia | A Newbie’s Perspective
Anand Lunia 00:00
I think as VCs, you have to have a strategy. Our strategy doesn’t allow us to chase people you need ownership. This culture we used to have around business-class family business where people wanted to create wealth, not just name and fame, right? All these young tech bro founders were very qualified, very sharp people they need to aspire more creating. India is the only place where parents will go absolutely out of the way. For even the 30-year-old kid to buy iPhones. We will be publishing the top 100 richest founders of India who have created wealth. Instead, we make a list of unicorn founders. Such a big gap between the two. America the developed country you know why? Because everybody wants to build software for America. So we are all trying to working hard to make America efficient, even we have to reach anywhere. We need to invest in making ourselves productable.
Siddhartha Ahluwalia 01:00
Hi, This is Siddhartha Ahluwalia Welcome to the neon show. In 1999, our guest was the assistant manager of ICICI. Today, he is a founding partner of a VC firm that has raised more than $180 million across four funds. His firm was also one of the first investors in pioneers like sugar cosmetics and share chat. A warm welcome to India Quotients Anand Lunia on the neon show. I would also like to thank our sponsors Prime Minister partners for sponsoring the neon show
Anand Lunia 01:30
There is this audience of Son and Daughter of King and Queen (Speaks in Hindi) a single child with the the single child he knows that he can’t afford a house so gives up on the House. Education Loan single child mostly parents will pay highends. So again, he doesn’t demand for cheaper good quality education. And then what this kid does his aspirations are very high Digital Life is like on on steroids. So he sees all these things on reels and social media wants to replicate this kid income may not be very good. I mean how much does like you know IT job pay, but he spends all of his money and then he borrows on credit card and he spends more. And then he asks his parents for gifts, or her parents for gifts because credit card worst case parents will be allowed. He is Son of a king he will get it. So for me this thing son or daughter of king kind of treatment that has been going on is( Speaks in Hindi).
Siddhartha Ahluwalia 02:29
In the west there is a good culture were by 18 the person gets become independent, now this culture of treating them son and daughter of king(Speaks in Hindi) people are still asking money till 30-35
Anand Lunia 02:36
30-35 Yes, absolutely so true. Which is sort of driving the economy, but it’s messing up with the whole culture. We have a full generation of kids who are dependent. And these kids say get here. My father has worked hard.
Siddhartha Ahluwalia 02:50
And the parents save always saved. Yes, yes.
Anand Lunia 02:52
Yes, yes. And India is the only place where parents will go absolutely out of the way for even the 30 year old kid.
Siddhartha Ahluwalia 03:00
From the retirement to protect a
Anand Lunia 03:01
30-year-old kid to buy IPhone.
Siddhartha Ahluwalia 03:05
In US parents don’t touch their retirement money.
Anand Lunia 03:07
They don’t. And they also want the kid to grow up and take responsibility right here. We don’t have that. which.
Siddhartha Ahluwalia 03:14
We, we don’t see enough kids in McDonald’s. Starbucks they don’t work at these places(Speaks in Hindi) and parents’ status comes in between(Speaks in Hindi).
Anand Lunia 03:23
Your right, now I will tell you about the son and daughter of King culture leave the middle-class class in lower middle kids of maids or drivers. They are spoiled. They will go to some local some college. Many of these kids will get a cheap engineering degree. Now they go to graduation. So they will never come back to the blue-collar workforce. Right. So second generation have maid Absolute Zero conversion to being a maid all the maids pretty reasonably lucrative job right now. Right? Nobody wants to do it. Nobody wants to be a driver also. Like they mostly they don’t want to even do a to this delivery boy job also, all of these kids will hang around search for something or the other you know or afford a cheap job in IT services. Salaries are very low in IT services because you know, huge supply for that they want a white collar life only you like you’re saying don’t want a blue collar life and they are spoiled quite even the maids and drivers they also spoil the kid so much right? And so yeah, we have a full spoil generation.
Siddhartha Ahluwalia 04:27
The dangerous thing is this generation is not saving enough.
Anand Lunia 04:33
They don’t have to know.
Siddhartha Ahluwalia 04:33
they don’t have to.
Anand Lunia 04:34
Parents are there till 30 There is no behavior of saving. And most kids feel that. You know, I am a single child maybe only two kids. So I’ll get the house my parents own or I will get their-
Siddhartha Ahluwalia 04:36
Lets take a loan father will pay the half of it(Speaks in Hindi)-
Anand Lunia 04:51
So, credit card boarding also they dont care(Speaks in Hindi) they don’t. The safety net is a parent’s leader to separately provide and home to can stay on rent right now slug it out but eventually the parents have a house so I’m good. So there’s full for our investor or an entrepreneur this is a good audience. Because this then again like I said earlier, the expenditure people will do is not restricted by the individual’s income, it is about the income of the individual and the parents. So,sort of you know-
Siddhartha Ahluwalia 05:27
2x proxy per-
Anand Lunia 05:29
2x proxy which is which is why if you see Starbucks at a very high base of some 800 crore rupees grew is 71%. year on year right, it’s a premium coffee Starbucks or cup of coffee is more expensive in dollars than in US also, like apparently 10,20% more expensive and dollar basis, not purchasing power parity, pure dollar basis. India’s expensive and yet is growing a
Siddhartha Ahluwalia 05:56
Starbuck’s has a simple philosophy. They never trimmed down their $5 Coffee, they won’t be the $5 US and $5 of Philedlphia and this $5 dollar would be replicated and comes to India exactly .
Anand Lunia 06:06
Siddharth in some countries like Turkey, it is much cheaper Starbucks also. But in India, there is the spoil generation most most other things like Maharajah Mac, Mac your right mac is or mass market thing, hence Mac has had to bring the prices down right? There is a macro index that works. Starbucks doesn’t have an index, because Starbucks is meant for the the affluent spoiled kids who get a free US education, come back to India and hang out in Starbucks. So same thing, by the way, I’ll show you like, we Work, We Work as flogged, and not necessarily working in US. We Work here is very popular, because it’s an aspirational thing right here. Its a status where do you work? (Speaks in Hindi) company doesn’t matter but I work in we work right? So that aspiration thing about we were Starbucks, buying in Zara, all these things is what all these kids who go abroad they come back and they want to hang around these brands at the cost of their parents, more educational loan. So, to a for a founder it’s a very interesting opportunity for the country I think has to be solved.
Siddhartha Ahluwalia 07:17
So, India Quotient has been around 10 years now?
Anand Lunia 07:21
Siddhartha Ahluwalia 07:21
11 years and it has been a huge change because I was a founder when you first the raised India Quotient fund one. That time India Quotient cheque used to be 30 lakhs-
Anand Lunia 07:32
It used to be very small Yeah 50 lakhs Yeah, I was –
Siddhartha Ahluwalia 07:35
50 lakh because I remember Curefy one of my friends company India Quotient was one of the first investors we-
Anand Lunia 07:41
There we wanted to put one two crores there was no room. But yeah, then we put a small cheque because there was no room. But yes, the cheque used to be average of one crore two crore.
Siddhartha Ahluwalia 07:51
yes. On the lower side 30 lakh 50 lakhs.
Anand Lunia 07:54
No, 30 lakh, 50 lakh is where I couldn’t put okay. For example, Sharechat was a 50 lakh rupee cheque for 10% That was the smallest proper cheque. We put 50 lakhs in I am jobs also similar 7-8%. But an average cheque would be would be one crore two crore.
Siddhartha Ahluwalia 08:13
And today the cheque sizes for IQ are eight crore to 15 Crore.
Anand Lunia 08:18
Yes, it’s become like one to 2 million, same thing. Same like, you know, set of people in all yes, it’s become very well.
Siddhartha Ahluwalia 08:26
Has the startup inflation grown more than the normal inflation because the same asset you’re getting at like almost I guess-
Anand Lunia 08:33
So very interesting question, right? I think 10 years ago, we didn’t know how big outcomes can be. And at that time, I would have said $2 million at a seed would be too much. But in 10 years, the country also has changed. So yes, to a large extent, up to 1 to 2 million seed, I think the size of the outcomes, potential or certainty of the outcomes has also improved. Since where we are, but the moment you go into a 3 to 5 million seed on a similar kind of idea, it sort of gets into an expensive zone. Right? I mean, ultimately, it’s about creating a portfolio and you know, ownership and all that. So, but 1 to 2 million Iam comfortable. It’s still so, inflation has happened at the pricing, but the outcome also is proportionately grown. I think the ideal would be like half a million to a million euro. But but it is also doing Irish salary. I know with all what we have seen, I would love to be in 2012. Again, my salaries have gone up a competition for deals also has gone up a very good quality younger funds like yours, who now come into the market now. So a little bit of that too. has been there. Yes.
Siddhartha Ahluwalia 09:58
Can you share the List of IQ fund one fund to fund three and fund work?
Siddhartha Ahluwalia 10:02
How big were they? And how many companies? Sure.
Anand Lunia 10:04
Sure, so first fund was $6 million friends and family. Second fund also was friends and family $20 million. And fund one, fund three was 60, and four is 109. So fund one more than experimental funds, largely my personal money and friends family. We did 20 checks, average ownership was about 9%. Okay
Siddhartha Ahluwalia 10:29
And company like Sugar?
Anand Lunia 10:31
Companies like Sugar where we had a highly higher ownership. We got about three or four winners IIM Jobs was one but low ownership did and the company also was not a big outcome
Siddhartha Ahluwalia 10:35
80 crores I think are
Anand Lunia 10:36
Good outcome, but low ownership also. And plus size was not good, although it was a leader in its niche. Lending cart belongs to my younger brother. So I shouldn’t even count because it was a 2% ownership. So while the company has done very well. So we the sad part was that out of the the three, four winners, we got and we got a company called 91 Mobiles where there was no buyer, the company did a buyback. So sugar thankfully bailed out the whole fund, lending cart was meaningful, but low ownership IIM Jobs was a category leader but small size of outcome. And 91 Mobile same category leader but small size of outcome. So the lesson learned and fund one for modeling perspective. That you have to have high ownership, even ownership, right? You can’t have a fluctuating somewhere 2% somewhere 10% model, you decide, okay, my ownership is 10-15 Or it’s 5. Stick to that across the board. Second is every outcome has to be a big outcome, there is no such thing as a moderate outcome. For example, if you start aiming for some SAS company that 20 million outcome, m&a and some 100 million IPO, it won’t work. Because you don’t know where your winner is going to be right. And winners. One thing we learned again, after fund one was winner will be 10% or so doing two or three in portfolio of 20 like a fantastic performance fund to similar 20 million, but we discovered share chat, which again, while we diluted because of the small funt and we couldn’t put more Purita started with 10. But that’s become like a sizable listing, we put some more money in sugar, which is another interesting way of fun modeling where at least series A occasionally you can take a bet again. And then we have to three other days a company called Octor and Faballey. So outside share chat, the fund will do about four or 5x. And which share chat hopefully, depending on where we eventually exit chair chair that will do a double digit on that. With about some 40% 50% IRR over a sizable period, foreign three realized that 20 companies want a safe portfolio because fun size became a 60 million. So we said let’s do more companies. And the target was to do 30-35 companies. We ended up at about 28 Because it was a sort of bubble period. Everybody suddenly raised a follow on round so we ran out of product. Okay, let’s stop it. And know what happens in a fund modeling. I love, love actually investing where you do 30-40 companies in a portfolio, many of them die let them die. Because eventually number on you-
Siddhartha Ahluwalia 10:43
Hold that double digit equity percentage and 30-40 companies?
Anand Lunia 12:53
No, I can’t. Which is why I want a lot of them to die. I don’t want everybody to raise Series. You feel happy that everybody raise series A because(Chuckles) because you can show to LPs and feel good all my companies a day they don’t right 8-10 years later, you know if, if law of averages is correct for you, and you know you’re a good investor, you will have three or four winners. So why do pretend everyone Yeah, you’d rather have a portfolio which dies sooner and funnel becomes narrower, much sooner in series A than to say everybody raise series A in a bubble, everybody raise Series B everybody goes to unicorn then they all die, then your prototype money is like waste you don’t even know Right? So yes, I feel that (Inaudible) will be difficult. But if you have a 50% graduation rate, which is reasonably healthy, and you will tell you to probably in India, I feel it will dilute to 50-60% of original shareholding at the time of exit maybe less a founders don’t dilute a lot because you can do pull it up two- three rounds. And then you have to start forgetting-
Siddhartha Ahluwalia 13:55
Those 28 companies which are not current top three or four companies.
Anand Lunia 14:47
So we have about 12 companies with ours which are past series b Okay. Now I know that I won’t have 12 Winners right so I still very hesitant to say that maybe we’ll have five winners instead of three, four that we’d hoped for. So we have a Vyapar We have fleet x, we have these two SAS companies, we have Pagar book another SAS company Web Engage all of these are high ownership deals for us. In consumer, we have a company called Friend profitable doing very well. They both do like 12,15 million run rate revenue, pure digital revenue. We have Kukku FM again, phenomenal company. We have local hyperlocal news. Again, one of the kind, competitors are dead. And then we have some consumer companies like Grab House sorry. Jeeva. Yeah. And Rapid Box. I think I’m missing one or two companies. In b2b, we have trading, we have a company called Global Fair, which is doing very well. And we have a b2b company called Agrim. Wholesale. So this is a list of companies. Some of the younger companies like Clarity is another company, which is peer to peer mental health, but peer to peer. They’ve also done very well, although they are one of the last companies Fund Three So I think all in all, out of 28, probably half or more are in the mix right now. Most of them past Series B stage and bracing myself, because I know Toss it looks cozy, but something will still crack. If it doesn’t, we’ll probably have another real great outcome. But it’s a 60 million fund. And my modelling says I need only three or four winners because our our ownership is still decent
Siddhartha Ahluwalia 16:42
10% above in each company at large.
Anand Lunia 16:46
Yes, in a few we sadly had to dilute because ran out of money. But by and large, as I say, if it was even 10-12, I’d say we’re very happy. But in some way or at 15, somewhere at 6-7. So .Yeah.
Siddhartha Ahluwalia 16:59
So in fund one, right? It was a 6 million fund. Yes.
Siddhartha Ahluwalia 17:03
And you have returned, I believe 40 million net to the LPS.
Anand Lunia 17:08
Let’s say yeah, in Indian Rupees equivalent. Yes, we returned 6x, 5.9x. net to the LPS. And this is just sugar. No, somebody came from sugar, some came from Lending card, or some came from I am jobs. Some came from 91 mobiles. So I’d say however, sugar would be probably like five and a half X only one and a half x from everything else. Yes, that’s true. So there is a power law about who succeeds. But within that power law, there’s another power law, there’s another power law. So out of four winners, one winner will be outsized. And if you go to any big portfolio, so Sequoia when they invest in WhatsApp, that vintage WhatsApp outcome will overpower every other winner. So for example, fund two is multiple 6x, but lets take 10x. But six out of the 10 is sharechat. So the power law within a call also. So Lee, like five winners out of 20, about like about out of 24 or so. But out of those five, one is disproportionate that I think will will be true for this is a very power law, business. And power law can be like in-finite, right. And the power law again, which basically means siddharth to come back to your point about ownership, right? Just imagine there’s a power law within power law. And the company which meets the power law, you have the smallest holding-
Siddhartha Ahluwalia 18:34
Then you’re screwed.
Anand Lunia 18:35
There’s no point in discovering right here is a vanity logo, then. So you have 1% in that power law outlier, just actually doesn’t return money. It may help you maybe sell yourself to some first time fund investors. But for genuine LPS who actually scan through a portfolio it should shouldn’t matter much. And it wouldn’t make you wealthy. So same thing I think as VCs, will, you have to have a strategy. And I think our strategy doesn’t allow us to change logos. We need ownership. We are not using brands and you know many times very good quality teams and people will like you have to let go because of that. It’s always good to have like the best founders in our portfolio. Right? It makes up Yeah, shine a bright and shiny like a rockstar. Oh my god, how did you get into this round right now I think that you’ll be comfortable with that ignominy of missing out on all the good rounds, sitting in the middle of Indira Nagar when all this action taking right around you. If Cisco had to say no to that. We just said no to a very good founder. Because, you know, the expectation was and somebody else gave a bigger mistake. Maybe we could have joined with a smaller round but
Siddhartha Ahluwalia 19:58
It was not allowing the fund language.
Anand Lunia 20:00
And I think there is a slippery slope when you say, well, I will do the exception, there is no exception. I mean, then it becomes a norm. And A deal is a deal. It takes away the same attention. In unfortunately, an experimental checks also gives you satisfaction, you are done something, you stay away, it puts the pressure on it, Dude. You haven’t done anything. This 5% ownership or 3%, ownership doesn’t count for much. So let’s not do it. Just don’t fool your mind into this-
Siddhartha Ahluwalia 20:29
I think you are one of the first Funds to carve out an experimentation bucket called First cheque right out from the start, right?
Anand Lunia 20:37
We needed to do that. I think same reason. Experimentation is important for you to learn. So but we carved it out separately, we didn’t want it to, I still feared sometimes that some of these experimentation even at an institutional level carveout level can still be distraction, unless they’re fully independent. So yes, I think they work very well. It doesn’t clutter my fund portfolio. Fund portfolio the bar of ownership also does that. For us, the bar for ownership is driven from another dynamic. So we’re doing small deals, today’s age, 1 million is a small deal. But each partner EGP does only 3 deals a year, on an average. So the three of us, maybe some of the VPS will pull in a dealer too. So as a team, we can do 10-12 deals a year, at most, usually we do single digit deals in a year. And each, each GP, each partner will say Oh, I would have to do only three deals a year, what all do I optimize?optimize quality, market, everything pedigree of founder ownership and ownership, right, you can’t skip ownership. Because you know that you’re supposed to do only three, you can do four, nobody will complain you can do 10 for that matter. But you know, that effort only do this many deal. And for 11 years, we’ve known that three, four deals a year per person is the ideal number. To maintain discretion, the moment you start doing 10 deals a year, it sort of isn’t you can’t, can’t, can’t really maintain the same quality your brain is some people are wired like that. It’s easier to do 10 Series C deal Series B deals a lot more analytical gut feel, you know, you too. So so to that extent, that’s another reason that sometimes you’d have to collectively say, Oh, dude, we can always solve ownership. So in some companies, we accepted a single digit, high single digit, because you know, you can’t get stuck. Also, sometimes, some companies may be worth, you know, because of the pedigree of the founders and some of those factors. And maybe you hope like hell that you can do a little bit of superb, some times-
Siddhartha Ahluwalia 22:51
Right now, you say you took some bets in SAS other categories, right?
Siddhartha Ahluwalia 22:55
There, you’re not optimizing that I want to get into best companies there. You’re also optimizing for that. My ownership criteria should be met. That means you have to be a single fund on the cap table.
Anand Lunia 23:07
No. One we’re not single fund. There are other people also there. We don’t like splitting a deal between three people maximum two funds. Three way split is very rare for us. But I think we’re not optimizing. It’s all hindsight, right? How do you know that I’m missing the best companies. So my answer to that is being very selective. We will large team 10 people investing team doing only 10 deals a year, three partners to VPS, 4 partners now Kanika 2 VPS doing only 10 deals a year. So yes, we let go of many high pedigree founders that we do, or many expensive deals, but because we do very few per person will still maintain
Siddhartha Ahluwalia 23:59
The bar is high?
Anand Lunia 24:00
Bar is very high. We so many deals that we have left many other funds, pure funds have gone ahead and done. Now the bar is equally high. Yes, what you can say some of the like storied deals or fancy deals we let go of because we can’t afford. But I think you know, when we love returning founders, we have done so many of our own returning founders. But there’s no guarantee that it only returning founder is the secret of success, or top corporate executives returned right? You know, or your CFO of a big unicorn. Usually we-
Siddhartha Ahluwalia 24:35
You have seen so many of so many million 20 minute rounds-
Anand Lunia 24:38
Hence, hence. I don’t feel that pressure that I’m letting go of a popular deal. Hence whatever I’m doing is not a good deal never felt like that. On the contrary, I think popularity of a deal or credential driven deal is usually you will cloud all your other judgment So you to remove credential. And I think value can be created. And we sometimes you’ve taken a shot in the same space against a credential founder and a company that done well. So for example, if you look at founders of Vyapar example, not a credential founder, and had enough competition, and you know, the companies around Vyapar and All-right? very high amount of funding, also multiple companies competing with Vyapar, they all given up the market. And Vyapar is still standing. So sometimes, you know, some of these popular storied credentialed teams and credentialed ideas is
Siddhartha Ahluwalia 25:46
Not a guarantee for Product marketing or not for scale.
Anand Lunia 25:49
Absolutely yeah, sometimes that, you know, particularly when the business needs a three year four year discovery phase for PMF, then being to sought after by investor actually works against you. So, you know, I am happy to take a bet, say, Okay, this is a good space, this guy is going to open up the market, create awareness, but not have a good product. So can I build, invest in a builder poll, do the reverse, while the other person is educating the market, this guy will simply build a good product and find a better product to offer it can take a bit, right? We we’ve done that, and it works even on Sharechat itself. For example, it went through that and did very well. So it’s not I think, thankfully, India is a large enough country that we don’t have to worry that every space will have only one winner. You can have two or three, in particular, every space, every segment.
Siddhartha Ahluwalia 25:51
So what I think India Quotient stands out for today, after
Siddhartha Ahluwalia 26:50
let’s say 11 years, talking about external brand perception that you guys understand consumer really well. That’s the perception. Yes. And you are able to spot exceptional companies, by first time founders, right not celebrated by first time founders. very very early-
Anand Lunia 27:08
When I started, I didn’t have the money for storied founders. But now of course, half of my portfolio is returning founders, half of it. And like I said, many founders have simply actually sort of given us a India Quotient premium ownership. Also, because what I promised to them, so that is that I will only do three deals a year. And I know I’m taking giving you a smaller check than what you hope for. But you are very important to me. And also, I bring a lot of patients for years and years, which most of the funds don’t have. And for us being enough for in the market. We don’t have to prove anything to LPs. And thankfully right we’re at a good space. So we actually gave a lot of and we are a small partnership. So it’s not like, you know, I’m competing with my other partners to become a more senior MD competition also, right? So I’m happy to say okay, good. Here is the money Here is the patience. Let’s relax, let’s not do like quarterly reviews of where we are. And when the next round is happening. Let’s simply build and people love working with us for that. To come back to a consumer part. I think, particularly consumer needs a fresh perspective. Consumer businesses are not built by playbook. Maybe some businesses, for example, starting a credit card company, their person who’s done a credit card business has an advantage. complex business and but consumer businesses usually, thankfully don’t need domain expertise and but thinking of a different thing is people need to be bold, the younger people are much older. But there are some areas where we’ve gone adjacent to consumer, which look like b2b. For example, Vyapar-
Siddhartha Ahluwalia 29:04
That I was coming to another thesis right. So nobody had a thesis for b2b SaaS for SMEs in India. And you had this only funded had the case. (Inaudible)
Anand Lunia 29:15
Hopefully other companies are coming around. When I started the fund, I had only one major thesis, two major thesis sorry, one major thesis was content in Indian languages, and we’ll say we’ll do 10,20-30 companies over 10 years. And we played that we have the biggest portfolio of content companies share chat and Kukku FM and local and friend and you know, these are like some of the good out there.
Siddhartha Ahluwalia 29:37
And I think there is 36 other names that nobody knows about?
Anand Lunia 29:40
Nobody knows about. And we have many we are adding me hopefully if all goes well, we’ll do yet another company in this era. We’ll do another in the same space. Then we said we’ll do FinTech right and we tried a few things payments. We couldn’t do much. We did a few lending. We’ve got some success, but Then we start okay, what’s our next thesis? Right. And suddenly, our experience with consumer, our experience with lending, we realize that the SMB, SAS, and the decision makers for small businesses, medium businesses, particularly where the owners decide that the behavior also has changed there. Now, at a micro level, people were willing to buy software, they’re already buying prime TV, they’re buying Hotstar they fully leading fully digital life.
Siddhartha Ahluwalia 30:32
So b2c SAS is already in play? you’re saying?
Anand Lunia 30:34
Yes, for them, they personal life’s SAS has is there already. So they will, of course want the same convenience in their business also. The other good part is there’s a government push their governments shocks like GST, the shock, the demat is a shock COVID the shock? And I said, Okay, this guy’s already open. Plus, there’s shock, therapy of societally going on in that market. economic cycles are shocks there. So I said, every shock will lead to more and more adoption of software people already willing, already comfortable. And we said, can we extend this thesis into businesses? And that’s working out very well. We said, Okay, now, now look at a macro perspective, this micro behavior level, at a macro level, if India has to be the third largest economy in the world.
Anand Lunia 31:22
America, is the developed country, you know why? Because everybody wants to build software for America. Yeah, the whole world. People in Israel, Eastern Europe, you know, China sells sends cheap goods. So we are all trying to working hard to make America efficient, American companies should have a lot of software should be very productive. And the whole world is helping America become productive. Hence, they are a developed country, because every all of us are working to make them productive. If we have to reach anywhere, we need to invest in making ourselves productive also. Now Indian companies thought originally 20 years ago or 10 years ago, that they will become productive by consuming American software. It won’t work too expensive, Salesforce $150 A month is too expensive, you know, the numbers are Siddharth. We just can’t afford ours, our income levels are so low. So even when businesses want to adopt software, the biggest challenge is costly. American Free Software, you can’t reduce price Facebook can come to India because of free software. Microsoft can’t really say oh, I’ll reduce my cost by 10x to be affordable to Indian they have to say international pricing that leaves a room for Indian companies. And I’m saying at a macro level forget India and my thesis and I started I was looking at India, we quickly realized with some of the company like Web Engage, and even Pagar Book went to Bangladesh Bhetan book will will go back again there we think that is a good market there, the rest of the world, Southeast Asia, similar income levels, Vietnam, Bangladesh, Philippines, Africa, even lower income levels, right? Latin America similar income levels. All of these countries can’t afford the expensive Silicon Valley prices right? Maybe Japan can maybe Europe can South Korea can other countries can’t afford. So, everybody in the world as a digital, digitize needs cheaper software, now look the talent pool, where is the talent pool for for building this cheeper software. India is the Only country thankfully, we also have a large domestic base. So I feel the next 20 years, the whole rest of the world, the world which is not in the developed countries will be digitized by India, the developed countries will digitize by America granted, the next wave is ours because we are the only talent pool and I see that then now you define like this. Now we have 20 years of work, we have to be healthy now so(Chuckles) long, long job to do. So that’s the way I’m thinking of Thesis and and this realization for us actually opened up our minds. We should not see that. Oh, will Indian companies do 100 million revenue? Why should I not do India to US because it’s easier to do 100 million revenue there. I agree with you. But the companies I built here in India will be category leaders. Even a 50 million 100 million revenue company will be number one Vyapar will be number two company probably maybe number one we might pick telly some point, Pagar Book can become number one Free test can become each number one, automation software in India, web engage can become like a top two software companies in India, you will have category leaders. Plus after 10 years, they will be in a growing and large market globally as against making software for the American economy which we don’t know where it’s going in the next five years or so. I feel that yes today for an entrepreneur, maybe the American Opportunity, you know, immediately sounds in the near term revenue Problem Solvers easier. But if I take a 20 year view, I think India may not be a very big consumer of software today, but when we’ll exit these companies 10 years, India might actually be a very large consumer and the timing will for exit will be fantastic. And timing for entry is great because nobody is focusing on focusing on I’m loving it. I can’t have enough yeah.
Siddhartha Ahluwalia 30:34
You have I think 10 b2b SaaS for SMEs and-
Anand Lunia 33:04
can’t have enough(Chuckles).
Siddhartha Ahluwalia 35:27
What are the other thesis like sugar and Give are your large DTC portfolio now-
Anand Lunia 35:32
Good question. Oh, DTC brands, we have always said that in India, we need large categories. And usually category creators. The sugar created the category of color cosmetics color cosmetics, you know, in India, lipstick used to be only an evening party thing. But because we’re interested in social media, we had a company called Roposo. So if you remember, Instagram sort of came in into India in the 2011,12,13-14 kind of era, right? So Instagram suddenly changed the need of a lipstick, lipstick was not for going out in the evening. Lipstick was like a throughout the day, and you to change the shades. And you could end up putting a picture anywhere. And that change the way lipstick perceives you would wear a bold color in the office, it sort of became an expression of, you know, your identity, or your being a woman. And suddenly, and then there was a similar culture we saw in Korea and Singapore and all equal all sorts of colors, it was no longer like the, which shade of pink are you using? And that is okay, Sugar was the first company to capture that whole wave and ride it to create a whole category. Of course, there are a few others. But we connected the best with the audience. Jeeva, for example, is creating a silver jewelry category. So what happens Siddharth that were we like precious jewelry, the country, and we see it both as a store of value, and ornament to show our prosperity, wealth and all other. Between 2000 I think I’d say 2015-16 to 2019. Gold prices sort of doubled. Yeah, okay. Gold was already expensive. We’ve already spoken about white collar salaries are not increasing high tech salaries are flat for last 20 years. So suddenly, the affordability of gold goes out of the whack. Incomes are not at the rate of gold in recent years, and a lot of underlying money. Precious very was moving to silver. And that was a big macro thesis. And suddenly, when you go and see oh my god, the country doesn’t have a single silver jewelry brand at all. We don’t have it. And phenomenal. I mean, we were able to go that figure, one of the fastest company in DTC brands, they like almost some 25 or 30 crores of revenue, monthly, monthly net revenue, right. offline or online of online. There’s a problem and we’ll talk about that also. Why, you know, monopoly or Google and Facebook is growing the b2c brand space in India. But, but offline, we could go slightly expensive to go. But we went and we’ve captured that silver jewelry can become a 10,000 crore rupee brand we were not. So, we feel that we will probably have brands which can do like a few 1000 Crore revenue, at least 1000 Crore revenue. And hence we have done fewer-
Siddhartha Ahluwalia 38:32
You have done mostly these two are notable, I don’t know about other-
Anand Lunia 38:35
We have done a company called Rapid Box, which is bringing the flavor of sneakers, but under 1000 rupees, so sneakers are expensive and the younger generation wants to wear sneakers. Rapid was a great sneakers. This guy couldn’t solve for importing. So he actually started building his own sneakers and about under 1000 rupees. It’s a big market again, market can be like 1000s of crore rupees. So we set the bar for outcome and we spoke about it right. For a b2c brand to sit in the portfolio has to compete with a sugar free compete with a lending card or compete with a share chatting outcome. Hence, the revenue required 1000 crores has to be. And there are few. I feel that I was last for five years, I was skeptical about the size of outcomes of many of these premium brands. But we just spoke about the raja beta Rani Bitiya phenomenon. And I say that now I feel increasingly that maybe we should stop worrying about the per capita income. I think the purchasing power of these kids is much higher than the income. So maybe there is no because iPhone is the fastest growing phone in the country. It keeps getting so expensive. We pay double whammy dollar rate problem plus, plus iPhone use can become expensive, but it’s still the fastest growing. So I feel maybe if you take a 10 year view maybe There is room for some premium brands or –
Siddhartha Ahluwalia 39:19
Luxury brands, it looks like of India like out of essential, for example,
Anand Lunia 40:06
yes, you know, and some of these bands are stuck for a little bit. But suddenly, as people stopped buying houses, everything they own is disposable. And suddenly, the disposable income like doubled or tripled last three, four years, people just don’t buy an apartment. And that’s like all people don’t marry. So no obligation, we were married in the 30s. Now, suddenly, the disposable income is large, at least in the short run. So I think we have an opportunity of creating premium brand herself and give an example of a company called Mokobara. They just have they have a showroom below our office is so popular. And you’ll see Mokobara everywhere no and Ash Lilani. Some are great friend of mine, he invested. I was skeptical three years ago about Mokobara. And today like okay, well it looks like a
Siddhartha Ahluwalia 40:48
there again, touching right 30 crores?
Anand Lunia 40:51
Yes, but it looks like a great pick. Because suddenly, you know, Indian kids want to own a to me, and this is the closest they can get to you know, to that. So these are aspirational value. And I think kids will go outside their budgets to buy some of these things which can show so vanity and luxury. I think in India, it’s less of luxury, more of vanity. So.
Siddhartha Ahluwalia 41:18
So we have covered four thesis of yours, right? The first was content-
Siddhartha Ahluwalia 41:22
Where you went Let’s say back as many as possible content startups, creating local content from India’s content or social behavior, content of social behavior from you, because India has a very large population 1.4 –
Anand Lunia 41:33
Complex population, yes, and it has enough variations. And it will most cases, it will not be possible for global giants to-
Siddhartha Ahluwalia 41:45
and Facebook will not be able-
Anand Lunia 41:47
They’re also corporate companies now. And I think innovation will keep keep happening. Just imagine 1.4 billion consumers. We don’t know we haven’t seen it looks like you’ve seen the last of the social ideas. But we might have a new idea on social media, keep coming. We spoke about b2b-
Siddhartha Ahluwalia 42:05
b2b SaaS SMEs, we talk about FinTech, the lending portfolio. And the last spoke about DTC any other thesis that we have, Mr. Where you are big believers in b2b,
Anand Lunia 42:16
B2b I believe in platforms also, besides software, right? Same behavior, right? People are willing to transact.
Siddhartha Ahluwalia 42:22
Small businesses, more large number of small business are willing to-
Anand Lunia 42:24
You if you can bring a large number of businesses under one platform, and the same behavior they show in terms of buying software will be in buying other things online, or selling online. FinTech I believe is a bigger bucket than lending, we are successes of commonly lending. But I feel that a lot more has to be done. There’s enough happening. There’s a lot of creative energy in traditional businesses like Bajaj or in entrepreneurs in the consumer side of secret cars and, you know, variety of ways of lending or payments, very creative ways of solving those problems. I’m now focusing on the b2b part of FinTech, you know, we’ve had a few like razorpay but I think the b2b rails are yet to be built in many areas now. And for example, there is this very little known company called IEX, Indian Energy Exchange, right, the phenomenal company and focuses on a very niche segment of trading of power, monopoly, profitable and very highly valued. So I think they will be niches like those. We are hoping to capture some of those niches right. For example, trading for for mass market is one piece, Zerodha etc. But there will be other use cases in those segments which are b2b and enterprise. And we can be looking forward to those. You it’s the some of these are not as easily describable because they are complex domain cases. But mentally you will be open saying that India is going to be large economy. For example, in FinTech infra the revenues look low right now. But FinTech can fry them pretty much like a good space for multiple companies to be created. And earlier, we have to think they own only only US or West will have these companies. We can have many in India also.
Siddhartha Ahluwalia 44:22
And how what’s your research process like for-
Siddhartha Ahluwalia 44:25
Understanding the 1.4 billion population? Because this has been ongoing for the last 11 year, right? Where do you draw your insights from?
Anand Lunia 44:33
From my existing portfolio companies? You know, very grateful to the founders, talking to people like you, this is insight for me because everybody every time I am forced to answer something, to think the questions are very insightful. I always love when you face a question. We have set up ourselves for a perpetual Research Machine. So we and we’re not really worried about putting a precise number to something it’s Irrelevant large country. And we can only do what India can achieve. Right? So Indian economy scabbed outcomes are scabbed so be it, I’ll raise a smaller fund. So we are not worrying about size of the market, we are focusing on the insights of the market, what’s the angle, right? And hence you keep talking, we sit, you’ve come to our office visit and then spaced like this around the table. It’s like a treasury bench. Everybody talks to everybody. People want to do some personal work, you then go you go in a corner. It’s not a people sit into their cabins and we sit in the open, we go to cabins to talk. So what you’re arguing or debating all day about what is a good market, bad market, you know, what is working? Let’s look at some underlying behaviors relatable. For example, I spoke about, you know, what’s happening with the raja beta phenomenon, the moment to get that concept there, then all the market about luxury brands, and you know, you know, the family CTO, then becoming the business CTO, because running the business also, all once you have that fundamental level clear, we have to align our insights and our ideas and businesses to such underlying cultural way. I’ll give another example of another insight. And you know, so we just discussed problems here. What’s going on? Like, you know, everybody has a maid problem. Everybody’s a driver problem. Why is it happening? Kids are going to schools, they don’t want to come back and work as a maid and driver. It’s good for them. But what is it doing, the rest of the economy is becoming increasingly expensive to hire a maid. So what are people doing cooks are expensive, they order from Zomato, we’re seeing that drivers are expensive. So most people are now doing carpooling, Uber and all. Because it’s extremely now we’re like America, only the rich can afford a full time nanny, full time cook and a driver, they’ll be like real privileged thing to already today, right? 10 years later, it will be unaffordable, unless you’re super rich, you will not have any such thing. So that suddenly changes, what’s happening on one end, what’s happening to the household. So suddenly, for example, we’ll need more consumer durables. Now, as a VC, I don’t know if I can capture, but one thing is for sure, every house will need a dishwasher. Everybody will need a good quality machine and-
Siddhartha Ahluwalia 47:13
Machine and a dryer like west!
Anand Lunia 47:14
Dryer like west, right! Because you are doing it yourself. Suddenly, houses will have to be designed differently. And so you can see like, if a public market, this thesis will play out very well for next 20 years. The beauty of this, again, if you discuss government reforms, this problem of labor for household work is even more acute in smaller towns and smaller cities. So those small towns or cities, also, we’ll do a lot of consumer durables. So how a washing machine should actually be in a village also, because the village can barely find labor for farm work. So, So for laundry, of course, you villagers also will find. Now it was not feasible so far. So what’s also happening in India, villages also are getting good quality power supply power has changed the dynamic. So that’s one reason people used to say the Indians don’t adopt software don’t adopt hardware. If there is no power i the house then (Speaks in Hindi).(Chuckles) How can you do digital payments when your phone is not charged? Right? I think power situation is, I would say the most underrated we don’t celebrate enough, because all of this digital economy, you know, tick tock and share chat will be irrelevant, because the poor fellow doesn’t have charging his phone. Right? All the broadband in the world is useless without power. And we’ve got it only recently, and which is why we’re seeing the effects of that. So if there is enough power in a village home, they’re all do consumer durables, they’ll be able to use software accounting software can then be on cloud, cloud software is synonymous with power, right? When goes hand in hand. So all of these things that say that, Oh, you keep discussing about these things, right? I mean, of course, I wish I was sharing a lot of very happy to share. But the idea is that this is what you discuss. You don’t discuss Oh, who’s investing where and who’s got a unicorn all that is you to trust the process. If you spend 10-11 years, you got a few winners, you know that you will to trust only the input rest is frankly always value add and always also like secondary, you have to just go behind the right trend right team. Business model also will discover distribution will discover with these two things, the insight about a tailwind of the market and what is the founder market fit right. So who’s the right founder for this market? If the founder is somebody like vyapar, who really appreciates, understands who the buyer of the software is, has empathy is happy to devote his life. So for example, in lending card they are giving five lakh rupee loans to a small businessman. This is the only product three year five lakh rupee loan is the only product they have done for last nine years. They have done nothing else they’ve done, they’ve not thought of BNPL never thought of a personal loan, and never thought of a bigger loan. No working double financing nothing. You have to love your segment, to dedicate the rest of your life to solving the need of only one segment, right? There is so much of money, so much distraction for most of these companies, right? For sharechat to say, yeah, maybe there is English language content. There is OTT. But I want to serve the people who are non English. And I connect with them. And that is what I will solve. Even if there’s a tick tock opposite in English or for the tier one audience. They didn’t do it unless it till they got the opportunity, right. They dedicated their life, and which is why founder market fit is very important, right? You get founders who sort of are coming because there’s an opportunity and say, I want to capitalize my talent. And I’m happy to capitalize it very well. It’s possible. Those founders can’t dedicated long enough to solving one problem and saying, Okay, this is what I stand for. So founder market fit. And market insight, we discuss both. And I think they insight in the founder. And you know, what kind of founders are appropriate and what went goes wrong, which is why we sort of discuss, we usually our guests sit behind a behind a double glazed glass, because they can’t listen to what it is real, non political stuff, politically incorrect stuff going on discussion about founders and teams. And in fact, I’d say the the investor market fit also. So it’s also important if the company is doing well. Who’s the next investor? So first, for example, some of the company like lending cards now did not have a traditional tier one, VC, because they didn’t really understand the market, but may feel in some how, understood that market. The phenomenal early investors for us. Share chat again, elevation and lightspeed web, with phenomenal early vision, because they understand the market partners, great insights to the market. So I think investor market fit also is another thing which you have to research and find out. If you’re lucky. Of course, it’s not like always I can’t choose. But given, given a choice, at least I’ll have parity Okay, who’s the right guy for the series A or Series B.
Siddhartha Ahluwalia 52:20
And coming from one more insight is right.
Siddhartha Ahluwalia 52:24
How you’re able to discover these companies so early like Kuku FM you’re the first cheque of 2 crore and 10 crores valuation.
Anand Lunia 52:30
Valuation of course, you know, I like I said, some of the founders have been very good to us. Kuku FM from founders were close friends of Gagan. Okay. And they allowed us a very good price for the trout, because they wanted to work with us. really grateful to them. But yeah, I mean, I think the-
Siddhartha Ahluwalia 52:49
Just forget the prices just go to discovering these very, very early.
Anand Lunia 52:54
Same, if I’m not early, I’m not relevant. The cooler other way. For me, being early is an existential problem, right? I mean, after the space is discovered, so now everybody knows Neo banks, right? People have been investing in Neo banks even till today, right now, we got still getting cross border Neo banks and what not, right? Credit cards, maybe there’s room for two, three more, all we know, I have no role to play, the markets are discovered already. I mean, like, you know, my half a million is like, 1 million is like a knife to a gunfight, right. So I have to be very early. I can’t be three years early, because my companies will die. But I do at least two to three years early before the market is otherwise I have no reason to exist, right? I probably then should should work for a series B fund or series A fund larger fund. Hopefully somebody give me a job, we, we can survive only if we find out these new waves new things a year or two years ahead of the market. And that’s why when you asked me earlier that, you know, are you dropping your quality? No, I am simply taking more risk on the market. I’m able to get the best of the founders. And also this natural selection, positive selection. When a founder is comfortable in his skin to think three years I have the market, or this market will become large. Today. It isn’t large. But I’m happy to take a risk. That itself tells you a lot about the founder, right? In today’s market, somebody comes and says, Oh, by the way, I want to build a social network. Just imagine who’s ready to do it. Everybody was ready to build a social network in May 2020. And now all of them have gone their own way, right? But today, if somebody comes over, I still find one problem, which is not sort, it’ll be good to see. And there is no funding available for those kinds of things. So being a little bit ahead of time little bit contrarian also gives you the automatically access to better quality founders. Whereas if I want to find the next credit card company, I mean like you know, the founders will be today founders would be mercenaries because they see an opportunity, and they’ll be good quality. But the investors will be like, you know, 20 million 30 million table stakes there, I have no role to play there. So we are solved, we have solved. It wasn’t like this earlier, earlier with Thesis, where we had a thesis and I will Madhukar and I were both investors earlier. But we we initially had some hypothesis, but we realized that perpetually staying ahead in terms of thesis, which is why I what I spoke about in the rest of the world, I have to be able to take a bolder look at how the world will be, for example, AI right now, the AI wave, how the world is saying is that AI wave is there, we have to build a picks and shovels for adopting chargeup it is a final product, maybe there will be some Indian version and all that. But build the picks and shovels How to Adopt AI and how to implement the LLMs and how to integrate and how to produce a specific output. specific sector vertical, right? That’s how people are playing AI, I am seeing the AI as a different way. India, rest of the world still has a very serious software adoption problem better in consumer software just imagine, Microsoft Word is so complex, I can bet you that 80% of the country or world cannot use even the basic features of Word, Excel PowerPoint, right. So just know how to type in it. They know how to type in index, all right, that’s all nothing more. But I am saying now that AI is here. Can AI read removed the adoption gap or usability gap? were developed country people who learn these software’s from childhood they are adept. But people who are not from developed countries, people who are suddenly exposed to internet wave all over the world, they now need to adopt software. The problem, for example, we have in software like Pagar Book and Vyapar and all right, I mean, like configuring your software to change the payroll logic every month is going to be complex, right? When you don’t have a tech support and IT support and desert first time users they use basic consumer apps. Can AI remove that right? Can we remove the button driven? Memory driven interface? complex interface in a software? Right? Can we remove it with AI? Right when? Why do we need to have drop down buttons? Because that I believe, drop down buttons or for example, logical search strings were you given Google to somebody? Like you know, writing a good Google search is actually something you acquire were great. I mean, just it’s natural for you and I owe you want to know what time is this train. You have to type the train number, train time stations, and then you’ll be able to smart enough to serve the results also. Hopefully AI can solve the problem better, because AI should then know what ticket you bought recently, what timing is coming and solve the problem for you. The context can be given and the voice commands can become smarter. And I think some of these things that we’ve been taking granted for, for consumer knowledge behavior, simple thing that we take, so everybody should have an email, no, people don’t have an email, right. So I think AI, I would rather say the adoption of AI to remove the barrier of software adoption. And I think it will, again, open up a market because 80% of the world is not using business software, I mean, even b2b sales platforms, you know, the fact that the guy has to go punch in a few numbers, select, he’ll be scared. Hopefully AI has a layer will eliminate all of the adoption risk and, you know, variety of risks that this guy is going through. So I would rather play AI that way, you know-
Siddhartha Ahluwalia 58:38
teach software to the rest of the world?
Anand Lunia 58:40
Adoption of software. Adoption of software. Because I don’t think sitting in India I have an edge in playing the globally AI global AI boom. Yeah, I don’t think so. I would love to I wish I wasn’t here. I was there. But I am where I am. Yeah. And I still want to be ahead of you know, the adoption curve. So I’m still hoping to use that. In in the areas where we are already presented in the markets we are present in. I wouldn’t chase the same old suddenly I start doing Silicon Valley, quasi Indian NRI Indian, or Indian kids going abroad. I don’t want to find them. That’s I may fund one or two because I know them so well. But now it won’t be in that my portfolio won’t be full of that. You can’t pick a theme of the month and and say okay, oh, this is working. So let’s build a portfolio of that. Some funds have the muscle and the money to do it, not us.
Siddhartha Ahluwalia 59:43
Another interesting fact is that you know, you have kept your ownership-
Siddhartha Ahluwalia 59:49
Requirements very high, which required for fun modeling. Can you explain that? Why is required for fun modeling that kind of ownerships.
Anand Lunia 59:57
So let’s say If I don’t know which company will do well, yes, let’s say, okay. But we all know that if I do 20 companies in a fund-
Siddhartha Ahluwalia 1:00:08
And what is the current font size?
Anand Lunia 1:00:10
current font size is 100 million. So I plan to do around 40 companies in that. 30 to 40 companies, three to four companies will do well, all of these three to four companies will largely drive the total outcome. Yeah. And the rest of them will be (Inaudible). Maybe I’ll make some money. But to return 100 million fund by four times just conservative target, at Target five times gross return four times net to the investors i would have to return $500 million. These three four deals have to amongst themselves, return $500 million. So let’s say each deal has to give about 150-200-250 million each year. Now, if I start with a 15% ownership, which I normally do right now, we put some more money, but by towards the end, we’ll dilute maybe at the time of exit alone, somewhere between five to 10%. That means to get 100 million dollars. Back from this one company, the company has to be worth 2 billion, 3 billion, 4 billion, which is like a big winner. I mean, even companies like Nike, Paytm, Zomato, they have still remained in even by a large amount of single digit billion outcomes and these are horizontals. They’re not a lot of them. Most other unicorns also are in the one or 2 billion range. Very rare outcome like a Flipkart. So my winner, great winner has to give me 100 million dollars. Which is why if I don’t have ownership, I have 3% of ownership and which I sort of have in one of my companies share chat, because they are we couldn’t do enough pro rata and the company diluted a lot. In the later stages. We left with 3% ownership.
Siddhartha Ahluwalia 1:02:06
And you took an exit, partial exit.
Anand Lunia 1:02:08
We did yeah, we did. But 3% ownership worked for a 20 million fund, which came from you know, we kept diluting. But for 100 million fund if I don’t have, you know, 5%, 10% ownership, yeah, so I have to start with the higher ownership. There is no other model, you have to basically think of a fund returner, your expectation from each and every company has to be it will return one of the funds 1x of the fund. So you for example, if you’re running a smaller fund, you can afford to take less equity, which actually is a good advantage for you, you know, I lose deals simply because they can’t give it they can’t. They can’t give because you know there are other people who are committing, competing for the deal. You know, but you can squeeze into a company and fund and say, Okay, I’ll take 5% work for you. That’s the curse of running a slightly larger fund. And, but to solve for that curse, right? You start buying logos. And many times you say oh, somebody else is leading the round. Can I put like, you know, I mean, if I have big enough people like when I’ll in their seed round or Jupiter Jitendra Gupta, so many good founders who are raising 15,20-25 in their seed rounds, I go with my 1 million I’ll get 3%. It’s a good logo collection. But even when these companies are successful, it will be irrelevant for me.
Siddhartha Ahluwalia 1:03:32
So you’ll have 1% debt lets say a large outcome
Anand Lunia 1:03:34
1% large outcome, which will mean that, you know, let’s say the large outcome is $5 billion, I still get 50 million only and
Siddhartha Ahluwalia 1:03:42
there’ll be so many people competing for that one person because you’re not the only one who wants to exit.
Anand Lunia 1:03:46
I agree. And let’s say exit a separate solution. I have four companies which are 1% ownership. 2% ownership, yeah, I get 20,30,50 million from each four winners. So I have four good winners, all of them are big unicorns, but all I collect is $200 million on a base of 100. It just won’t, won’t move the needle right? So you have to have high ownership. And I agree it’s a tricky situation. Yes. But I don’t see any, which is why the only discipline is to say no, and not worry about collecting logos. We’ve said no to very good companies. They reluctantly for example, one of the companies that I really missed was MPL. Okay. sigh we had funded his previous company. Which one was that? This clue the hardware phone smartphone right. And he came back and he raise a 5 million round. Now of course there was the next year Sequoia, Sequoia was leading the round. And we had very little allocation in that I had I still love Sai what he’s been able to do, but ownership was so low that We did the math and realize that it just wants all the fun returning problem. And we stayed away from it-
Siddhartha Ahluwalia 1:05:06
And like Fareed and Bhanu was starting another company. So I believe they will get equally high valuation of 20 million.
Anand Lunia 1:05:15
Yes. Occasionally, some founders like Fareed and Bhanu are very generous as returning founders to small funds like us. And we are hoping to do some of these deals Fareed has been exceptionally generous Fareed and Bhanu. Now of Pep Dot live has been exceptionally generous to give us good ownership. Maasai. Pratik has been exceptionally generous with us. And some of these founders, you know, we really blessed that they’ve actually given back to us. And we have decent ownership. And we are no disproportionate compared to the size of our Funds.
Siddhartha Ahluwalia 1:06:01
So, how do you balance between the founder expectation that hey, diluting-
Siddhartha Ahluwalia 1:06:07
More for me is causing the company harm in the long run? Because large VCs might say your company’s already diluted 40% By the time we hit a Series A
Anand Lunia 1:06:15
No, we don’t we you’re right, Siddharth, I we haven’t done a single deal. Where we have taken more than 20 We’d never take, we’ll restrict our ownership to teens.
Siddhartha Ahluwalia 1:06:29
But do you feel good? Because it’s very highly unlikely by the time the company hits a series, they would have risk couple or even three rounds? Because very-
Anand Lunia 1:06:37
That’s the current phenomenon. You’re right. Right, we bridge upon bridge(Chuckles).(Inaudible) Just like, Yeah, so basically the number of rounds. I think to some extent, it’s also that founders don’t know one of the things that you know, I like to work with honesty. Okay, what do you have to prove, right? And what your proof for next round has to depend on the market environment, right? Yeah. What founders are used to spending money on CAC and showing growth in lieu of PMF or anything else? What investors today want is great margins, large market, some early signs of PMF, early signs of leadership. And they don’t care about growth. So I think, this iterative process of what do I need to prove? That becomes very long to take four or five years and you double dilute in rounds? It’s a sad story. I think, after the first seed round, everybody around the board has to first say that let’s buy three years of time, burning a seed round 12 More itself is a mistake, right? It’s taking that long, and then not chase growth immediately. Geez, proof of a large market, you know, chase for some kind of a pull from the customer. slower process. And founders have to value their equity. I would blame not the VCs here. I blame the founders because they have sought a lot of validation and street cred from peers by raising round upon drowning. It’s not about how much you own your company, how much you raise. The founders, particularly the tech bro founders, they don’t have a wealth creation mindset. You know, they are not saying I have to I have to increase my wealth. So it’s not a wealth optimization problem. How much am I diluting versus how much I own? You know, if I don’t raise money, what am I letting go of versus ownership? They’re simply saying, Oh, I don’t care about dilution. I’ll keep raising because you know, everybody else around me is raising that race amongst a techgroup is a reason-
Siddhartha Ahluwalia 1:08:51
And forget 1x liquidation preference at the time of exit.
Anand Lunia 1:08:54
I think you’re right I mean, liquidation stack and fact that every large round puts so much of undue pressure. Founder has to know in his heart and usually know that they don’t have PMF investors are simply speculating. Investors are hoping, desperate to invest that PMF arrived. So founder if after every round has to spend money, because he’s already promised everybody keep I have PMF already. Right. But three, four rounds of money was spent without having PMF. And then if you’ve seen so many of the unicorns, they are finding PMF after(Chuckles)-
Siddhartha Ahluwalia 1:09:33
After becoming Unicorn, then monetization is coming after PMF.
Anand Lunia 1:09:39
After PMF. Right? So And sadly, many of the companies I’m seeing now who actually were able to discover PMF but have no money to grow, because they are a unicorn, expensive for anyone to invest in. Too expensive or people just lost interest. And but the founder finally found PMF right so though so I think founders to some extent, have to be greedy. And there, I feel that this culture we used to have around, you know, this business class, family business, where people want to create wealth and not just name and fame, right? It’s nobody cares about like, you know, how much PR you have and what people think it’s what your wealth is that counts. Thing. Some of these young tech bro founders are very qualified, very sharp people. They need to they need to aspire more creating wealth, right? I would say that we index unnecessary saying we want to change the world. Founders basically say changing the word means raising a lot of money. But I think of founder is greedy and ambitious, hang on, I want to make a note of wealth for myself.
Siddhartha Ahluwalia 1:10:49
Wealth, for top 100 employees in my company, and first is myself and-
Anand Lunia 1:10:54
Optimizing wealth is what you have to solve for. But I think the society in general or cultures, despise-
Siddhartha Ahluwalia 1:11:02
Despises wealth. They have seen too much of young angry Amitabh Bachchan.
Anand Lunia 1:11:05
Yes. So, so true. So so and you also don’t want to be like the traditional businessman who is accumulating wealth, right? You feel that what I’m spending with my high burn, you feel you’re giving away back, you’re not giving away you frittering away the wealth of your employees also, for that matter, right. And of course, shareholders and your own. So many unicorn founders, all they have achieved is maybe a 2 million, 5 million 10 million secondary exit, and they have nothing else to show for it. Now, that is nothing. I mean, most people good qualified people make more than that in an ESOP of a,of a-
Siddhartha Ahluwalia 1:11:45
Of a large, let’s say, of indiamart. Kind of –
Anand Lunia 1:11:48
Or a Fang also, they make more money than that, right? So that’s a lost opportunity. I think that I think I blame it on founders. And founders are like that, because of the culture. I think media, for example, media should be publishing the top 100 richest founders of India, who have created wealth for themselves real wealth. Instead, we make a list of unicorn founders. There’s such a big gap between the two, right?
Siddhartha Ahluwalia 1:12:18
Media selling whatever get gets them the clickbait and Indian media has been designed, even if you see our stuff on any news channel.
Anand Lunia 1:12:24
Siddharth we’ll get a clickbait in richest founders of India also, I feel because, frankly, if we let start deciding top 10 founders of India tech founders were richest. It’s a complex mathematics, like you said, ownership into preference(Chuckles). No, I think we’ll, it’ll be very interesting exercise. And then suddenly, wealth creation will be in spotlight. You mentioned India Mart. That’s wealth creation. 50% ownership of a company. Yeah. You know, and probably India, Mart founders looks like they are richer than Paytm founder. Both are great founders. But then, you know, wealth creation, one trumps the other. And both of these founders are better than Zomato founder, which is probably the largest out of the three companies. So I think it’d be interesting to make a list of those. Even look at Flipkart founders at Flipkart is much, much, much bigger company. And you will find a Map my India or India market kind of listed company-
Siddhartha Ahluwalia 1:13:25
Map my India today and founder would be I think, as equal as Rich as Binny Bansal because he knows the company 100%.
Anand Lunia 1:13:31
That’s the point! I think it’s not 100%, but sizable majority ownership. And that’s the point, right? And I think we need to celebrate those lists. And the advantages that these are the kind of continuity the sad part is, if you dilute too much, you can’t really ride the whole, most of the unicorn founders then sort of get off, very few have gone to IPO. They lose control of the company, M&A, or they will external CEO. So you know that after you become a unicorn, let’s say, and let’s say we’re in a high growth market, you multiply for 20 years for 20%. That’s what 38 times of growth 20 years 20%. So you can multiply your wealth and your shareholder wealth by about 40 times in the next 20 years. But only if you’re in control. Yeah, as a founder. Most founders, when they dilute too much, they become irrelevant and get kicked out of the companies in 10 years, which happened to some of the names that we mentioned. And then they don’t get the remaining 40x. Because, you know, the real juice is when you become profitable. When you list you already are established as a monopoly. That is when you need to capitalize to create real generational companies. So what we have created unicorns, but we haven’t created institutions like, like Microsoft, or-
Anand Lunia 1:14:54
Google, or Netflix or Amazon, who after IPO have moved He paid for 20 more years that we haven’t seen. And the sad part is key. Maybe some of the companies will do well, or mostly will not be driven by the founders. And that’s where founders are missing out. Too much of short term focus, I’d say.
Siddhartha Ahluwalia 1:15:15
I think what happened is because the wealth was coming from the west, and large growth rounds are happening from the West, right? Our, our models were dictated by how West thought. And
Anand Lunia 1:15:29
yes, we was borrowed from fever, we were sort of doing another round of outsourcing, we’re basically doing a custom solution to what the growth capital wanted. The founders became service providers, instead of the, the investors becoming service providers, right? Founders became service providers. Oh, you want a unicorn? Okay.
Siddhartha Ahluwalia 1:15:54
That’s how you engineer, Engineers are the best problem solvers for the country.
Anand Lunia 1:15:57
So true! They are intelligent people, right? They’re smart people. They sort of saying here, okay, I can either become a wealth creator, or an sad to use this word, I can become a mercenary, or you want a unicorn, I got a unicorn. Okay, what do I have to show? I have to show 3x growth. next quarter, let me burn some money, I raise some more money, right. So this is what they were doing. That’s I would say that’s not entrepreneurship. We talk about it. They simply saw an opportunity and provided a custom solution. I hope that many of these founders, and your founders now realize the folly. The only thing is that we don’t have a lot of successful role models.
Siddhartha Ahluwalia 1:16:40
I agree to that part. Even today, I was debating that, for example. I deal only in SAAS, in India, India doesn’t have a rich culture of producing 40-50 million as SAAS companies, role models, role models and culture also, right? Absolutely we don’t talk about 40-50 million-
Anand Lunia 1:16:55
Very few, right? And even the few who are there, like BrowserStack, we don’t celebrate them enough. They are also the people don’t relate to these companies in India, they are not funded. I am a funded company. So unfunded companies are not my role model. It’s unfair. And I think it’s much, much easier. For example, consumer brands, you know Siddharth I saw a fashion brand called Snitch. Some 200 Sorry, 20 crores of monthly revenue, apparently fully bootstrapped. The company can probably go to IPO in three years, okay. And may raise one maximum two rounds, this guy will own majority of his company at IPO. And it’s in men’s fashion, fast fashion, doing very well. The only thing is, again, people will not relate to this. I think choosing role, role models only from the tech bro culture, where you say, Oh, who is different? Zerodha is different. Even Nika is different. I will select with people, you know, selectively. There are hardly any role models left think we have few people if they create wealth, I think matter of time, when we see first five companies with 50 million era, where founders will majority of their company, I think this thinking will change. We need some real wealth creation. Role models.
Siddhartha Ahluwalia 1:18:22
You’re right. And it again raises the question of right a lot of funds have laid raise so much large amount of money when they go to US or other developed countries. You know, talking to LPS say how will they return for a fund who has raised $2 billion, they need to return $10 billion.
Anand Lunia 1:18:39
The math let’s do a math for 500 million fund some median fund. Now, some of my peers are sort of inching towards that number 500 million. Let’s see, we’ll start with 20% ownership. Let’s say you don’t dilute a lot, right. So let’s say you’re at 15% at time of exit, right, which is a very generous number. 15 is a lot 15% A time of exit. To do a fun returner, your winner has to be worth three $4 billion. That’s like a lot of muscle power and a winner will take a-
Siddhartha Ahluwalia 1:19:10
Lot of pressure also looks like you could take money off sugar at 500 million, just because you had a luxury for smaller fund. So true. So larger equity offerings.
Anand Lunia 1:19:19
So the problem is that because a $1 billion outcome is not enough for you, you are forcing every company to become 5 billion 10 billion 20 billion, right? Whether the company or the market is ready for it or not. You because that’s the only thing works for you 1 billion 2 billion outcome doesn’t work for you. And that pressure sort of also leads you to wrong selection mean, for example, founders who are adept at selling themselves, right. I mean, there’s a term for it. We like storytelling, of course. Yeah. But now let’s focus on building also. So I think then your selection because you have a pressure of building a 10 billion company, you select founders who can raise the way to 10 billion. You want people who can attract good people, you want to grow fast. So you hire certain set of mercenaries, you’ve seen some people circulating across startups, right? Because there’s a pressure. So a lot of fundamentals, you know, companies become a 10 billion, because they’ve done well, it’s a great outcome. But you have to force everyone through some of these measures, and through your selection. That’s the problem, I think. And hence, many of these funds may not even do like 2x 3x. I do believe India is a great market. So I will not say that it’s impossible to return a 2 billion fund. Even that will work, but returns will not be as great. I feel that in current phase. If expectations are reasonable, you can service a 500 million fund also. It just won’t be early stage returns. We have a nomenclature problem here. Where very large funds are calling this early stage funds, that may not necessarily work out.
Siddhartha Ahluwalia 1:21:11
And because what the truth of the market is, whatever VC funds return the real money today back to the LPS. That’s the global representation of India in the stock market. That’s the truth. That is what I found out Yes, last three months, like one month in Dubai in two months in the US.
Anand Lunia 1:21:29
It should be that way. Right? I mean, people should be accountable for returns. And I think we haven’t done a great job of returning money. We have sporadic incidents. Flipkart was a phenomenal outcome. A lot of secondary now is gone in Lenskart and a few companies. But I feel that next two, three years, we’ll see some good IPOs well priced IPOs.
Anand Lunia 1:21:53
They may not return money as per your expectations. But it will set the expectation of what a good outcome is, right? So MamaEarth pricing, digit pricing-
Siddhartha Ahluwalia 1:21:50
MamaEarth’s back to a good pricing. Right now.
Anand Lunia 1:22:06
A fair pricing will give a reverse feedback to everybody as to what is the real fair expectation of exit size. Founders should use that anchoring to decide how much they want to dilute and how much wealth they will want for themselves? And how much capital in our lifetime. Maybe in India, you probably don’t want to raise more than 50 million capital ever. Yeah, maybe that’s the magic number. Maybe only in very big category like Flipkart or Zomato, you raise more than that. That’s about it right? Even for sugar 40-50, maximum 100, maybe 100 is too much for sugar to raise. All of this will probably become clear, some of it is already becoming clear if for example, Paytm and Zomato knew that all they will achieve is what the current market cap is, then maybe they would have paid it differently. All the investors, the late stage investors would have treated differently. I mean, that correction will happen. It hopefully will reflect on fund sizes also. Because the question then will reflect and fund sizes. And I think, but having said that, I would say that everybody who’s raising a 600 million fund or 500 million fund is not aligned. I think the LPs are should be aligned to the expectations, right? I think there is no such in India, you don’t have a 500 million early stage return. That’s a growth return and you will get growth return. You can still do 20-25% IRR in India, I think we’re doing very well as an economy. Many of these funds have very good people a lot of institutional memory. And and because you’ve done one or two cycles of mega funds, they will learn that also very well. So people have sort of not done very, very well with large funds. Good people with one or two rounds of learning will will improve for sure.
Siddhartha Ahluwalia 1:23:50
And India has seen in our 10 years horizon of time, right? New VC funds emerged in 2000 to 2003 there was ICICI ventures and a bunch of others in 2012 13 started Prime Ventures and all of us have that pedigree an Era in India, right and 2022 to 23 folks like us are starting in niche categories like-
Anand Lunia 1:24:14
I think after every I’d say Boston bubble cycle. After every bust, you will see a new crop of investors and it’s good creative I like this process of Kaal chakra. So while newer funds are coming, some of the previous funds are going out also both ways in enough funds are either changing permanently or going out of existence. It’s good call chakra is important for you know this journey but overall the momentum is positive. Right. I think every Kaal chakra we are creating we are adding more things and that’s a big positive, I ,There was a time when I used to worry, three, four years ago that or do we have too many funds? We have too many funds, if all of them will be permanent, but to your question, they won’t be permanent. It’s okay. You will see. And you know, sometimes as fund managers, we’re like, Oh, my God, this guy’s already raised so much money without doing much. But that’s okay. There’s just a draw of luck in a bubble cycle. But they do so enough do go out. Sometimes a (Inaudible) wonder, Oh, this company doesn’t deserve to be a unicorn. And it takes three, four years extra. But after one bust cycle, they’ll go out of business. I think similarly, we see strategies, or we see teams combinations have had the same thing. They look successful for a while. Whereas insiders wonder, but then, eventually, you know, they have to go through a churn, and they do go through a churn. So it’s a good, good creative problem to have. Because if, if we were like a monopoly market, it would be no fun. Yeah. And I think it’d be difficult to find innovation, then it’s good for founder, startup ecosystem that we have good level of churn, good level of, even within firms, there’s good level of churn, right, which is very positive, that we would say funds are also enjoy agile, they are reinventing themselves quite smartly. Excel, for example, if you see, there’s a full new generation, which is taken over right and very, very nice. High quality transition happening there. Yeah. So some funds are rediscovered themselves.
Siddhartha Ahluwalia 1:26:29
And it’s amazing rate, how the cycle is playing out. Right now, as we are sitting right now in a bust.
Anand Lunia 1:26:36
Right now? Yes. Yes, it is the cycle right now. But, you know, I feel that by and large, yes, there were some corporate governance issues that happened. Which I’m sure all the phones will take course correction for valuation entry problem was not of Indian firms. So Indian firms a beneficiary of high valuations. They were not a victim of it. Yeah, the churn is happening in global money coming into it. That’s a bigger churn. So the hedge funds and our usual suspects, I think they will see a lot of churn that actually, you know, which is not bad. I don’t want people to raise a 50 million 100 million growth round. I would rather they go to IPO directly, right. So not having a lot of 100 million cheques into India. net net will be positive for everybody. Everybody, I think I wouldn’t regret. On the contrary, if they come, then I would wonder what like, you know, maybe, maybe we need to simply as a policy starting exits, in some of these growth rounds. But lack of growth capital 200 million plus actually gonna be a big positive for India. As an economy, I think one to 5 billion is a good range for IPO. And even half a billion or IPO founders should be solving for half a billion to 5 billion or to IPO without growth capital.
Siddhartha Ahluwalia 1:26:55
Which are the three to four companies that are lined up for IPO in the next 12 months or 16 months in your portfolio?
Anand Lunia 1:28:06
So hopefully, we’ll see lending cart and sugar first. There’s a company called Octar. So home automation, they build these Paytm sound boxes, the profitable company electronics outsourcing, maybe in 18 months, they’ll go a little bit later, and maybe 36 months, we are hoping for share chat. There are other considerations around schedule the IPO, but they’ll be ready to know they have already like 100 million plus revenue run rate will break even in 12 months. So we’ll be ready. But we probably might take a little longer, you know, more stable revenues. These are companies that I envisage right now. But already, because we have a few, we have sort of tasted blood already, as to how good IPOs can be. First of all-
Siddhartha Ahluwalia 1:29:00
Which ones have you tasted blood for example?
Anand Lunia 1:29:02
We tasted blood in the sense of where our series B companies need to go right so because I know sugar, lending card are so close. I’m already prepping Giva Ishendra, for example, he’s like, very aligned, he say, no, no, do I understood the formula now, not going to raise a lot of capital, I will not burn a lot. I don’t want to grow beyond natural, profitable growth. And this is a company which is already like, you know, sizable revenue. And they’re like, no, no, we’ll go for IPO. And maybe again, three years, the founder is aiming for an IPO instead of raising successful growth capital rounds. Many other companies like fleet X, for example, is saying, Okay, I don’t want to go abroad to justify high valuation. I’d rather be the number one fleet automation software in India and go IPO that way. Hence, suddenly, the way you spend your money becomes very different, right? Because you don’t want to raise a lot of capital for Indian market. So I think it will get a lot more sooner than our portfolio will get feedback from some of the companies lined up for swiggy will be the digit is there. Some of those Mamaearth-
Siddhartha Ahluwalia 1:30:15
First October. Exactly.
Anand Lunia 1:30:16
So those are like even better. Mercia, I am looking very keenly looking forward to that. We will just give feedback to everybody back up, they’ve done very good job there not a lot of capital. So be good to see good wealth creation for the founders also this
Siddhartha Ahluwalia 1:30:32
time, each IPO from India, the next time, you know, you and I go to countries like us or Middle East or even Singapore to raise money. Oh, yes. It’s so beneficial, right, every IPO-
Anand Lunia 1:30:42
Even more important that these IPOs are happening in India. Yeah, domestic market, very well traded, sought after. And most of these IPOs, including even even companies didn’t do very well have come back now in public markets. They’ve done quite well. So the reception from domestic whales see, we have about $2 billion of retail money coming into stock markets every month, right? That is the exit target. That is how we should get exit, right. So much of money is coming in looking for high growth stocks. So that should be the natural exit. So Indian markets theoretically, can give 30-40 billion of exit just from retail money. Yeah. And coupled with institutional money. 50 billion exits we can do from public markets, right? And that’s the big pool of exits. All of us VCs and founders have to solve for that exit route,
Siddhartha Ahluwalia 1:31:22
I think, a solution, which because we batten up best problem solvers, right? From IIT, from all the things that could be helping founders solve the one problem of 50 million arr. Yes,
Anand Lunia 1:31:34
50 million ARR, acceptable capital raise, yeah, if you do that 50-50 combination, you will not dilute a lot. And you will reach 50 million ARR, you will hopefully be profitable by that time. And then you can list whenever you want to. In SAS, particularly, I feel increasingly, it’s happening in many businesses, there will be enough m&a opportunities also. Because like I said, in 10 years, rest of the world becomes a more important m&a market than just pure America. So I think we’ll get good opportunities there. Good wealth creation. We haven’t seen people becoming really like, you know, FU level of money, right? If you want a million dollars, we haven’t seen a lot of those, we need to see some of those models, where people say, Okay, this is real wealth. And this is how it works.
Siddhartha Ahluwalia 1:32:26
So if you see, right, I studied these markets, we’ve been there very closely. US has 300 million of population.
Siddhartha Ahluwalia 1:32:45
40 million millionaires dollar proper millionaires, yes. The US it all got created in the last 40-50 years of wealth creation, yes.
Anand Lunia 1:32:39
Wealth creation through IPO listed companies, by and large,
Siddhartha Ahluwalia 1:32:43
They were part of companies, some companies, let’s say, even on ground like Walmart, or somebody like Facebook, bought the mechanism. What happened in other geographies? For example, in Middle East, there are across all countries, there are 100 families that control the entire group. It’s all distributed, it hadn’t happened. In those areas,
Anand Lunia 1:33:02
In India also it was concentrated till now, this is the first time that Indians can actually distribute wealth and some company like Flipkart have indeed, distributed a lot of wealth PTM, Zomato, etc, also, but I think you can do much wider distribution now. You’re right. And I think for now, forget employees and worried about founders not building enough wealth for themselves. You know, I think getting a platform and getting out with a 2 million secondary exit. That’s a shame.
Anand Lunia 1:33:03
That’s a shame, secondary IPO is possible at 50 million ARR,
Anand Lunia 1:33:37
It is possible, I think, there is serious demand, I mean, we are seeing, for example, India Mart, the revenues and 300 crore rupees at a time of listing, now they’re done 3x From there, and the companies, probably 10x from IPO. So, the revenue multiple went from 6x to, I think, some 20x. It’s a phenomenal rewriting of the company. public markets probably will I in India, public markets are giving more premium valuation to many of these companies and private markets, which is another reason for it to be lucrative. And then once you list, you have another 20 year run with 20%. Multiple, so you can do a 40x After listing, if you control the company, and I think that way, we’ll have a lot more creation after listing also, not what was creation after listening. So my thing to sugar founders was the same, we had a conversation that okay, you own maybe 20% of the company, it’s fine, not too high, unfortunately. But how about we list today at 500 mil, for example, 5 million, for example,
Siddhartha Ahluwalia 1:34:46
At 100 million ARR net run rate?
Anand Lunia 1:34:48
Let’s say we listed 100 million net run rate, and we multiply the company 20 times sorry, 20% For 20 years, that’s 40 times right. And we can do if we don’t have to raise You don’t have to justify external capital 20% We think we can do organically without adding additional capital. Good no dilution 40x, multiple and 20 years. And they’re still young. Yeah, they’ll still be enjoying the fruits of their labor for next 20 years. And they can actually create if you can figure out the right formula for multiplying for 20 more years, then it’ll be $20 billion company now at a company which would have stayed in the market for 20 years. That was something we haven’t produced the equivalent of a Hindustan Lever or, you know, Asian paints or Bajaj finance or Titan we haven’t produced those kinds of companies out of startups right now. We need to see some of those then then I think real magic will happen when they become the role models and inspirations.
Siddhartha Ahluwalia 1:35:48
Thank you so much. It’s been a wonderful conversation you absolutely learned a lot and
Anand Lunia 1:35:53
Always a pleasure!
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