Startup Fridays S5 Ep12: Vishal Gupta’s optimism for unicorns turning wealth creators for India

The 90s were the rise of Infosys HTFC, Asian paints, a lot of other paintings that you mentioned and now that's what the sense exists and now you will see a different sense I would say in 1015 years it's just started right so I would say that that's gonna happen but and some will fall by way side which has happened in the past as well not all companies which show the glimmer of hope will succeed but I'm hoping a lot of these will succeed and build really large categories and be part of Sensex eventually at some point of time because the nature of the world is changing the consumption is changing enterprise behavior is changing it's more software dominated than it used to be and you will see the rise of these companies eventually at some point of time but I think we'll have to be patient Hi, wherever you're joining us I hope you're doing well welcome to start of Friday's conversations with accomplished entrepreneurs and VC investors I'm Harry Erkley and in this episode Vishal Gupta a partner and Bessemer venture partners one of the world's oldest and storied VC firms talks about his career as a venture capital investor in India and gives us an overview of the opportunities is excited about in this country on the basis of what Bessemer calls road maps of the firm develops for various sectors in this conversation which was recorded on November 26th Gupta also talks about how from among today's privately valued internet unicorns and those that have recently gone public in India will arise the next generation of blue cheap companies and large scale wealth creators in the country okay Vishal thank you for doing this no thank you very low profile high impact VC in this region and through this conversation we're kind of hoping to remedy that also a little bit I hope it remains high impact so yeah so from a general audience's perspective maybe you can just start with that a little bit give us the story of how you came to be at Bessemer and we'll go from there yeah maybe again start all the way I started my career almost 22 years back I passed out of business school at a really hard time just around the dot com Bostera and I was lucky to find a job went to HCL technologies and by serendipity I ended up as an executive assistant to the CEO of a large subsidiary of HCL which was in banking and financial services area and I still remember my first conversation with the CEO I walked in and when he learned my background that I was like like a fresh MBA grad he looked at me and said oh you wasted two years and a lot of money let me teach you how to build a real business it turned out to be a great ride that subsidiary grew from almost 20 million to 200 million in revenue in like 80 months flat and I was really hooked and I did everything under the sun sort of from building HCL sheets for large RFPs to board decks to board conversations to M&A conversations to finding new facilities to hiring to vetting people so it was a good overview of how businesses are built and how businesses are run from an operator perspective and that operator was phenomenal he was a gentleman called Sanjay Calra Sanjay then went on to become the tech Mahindra CEO when he left I left and I went to really large conglomerate again called Alliance Industries Sanjay was the one who hired you is it at HCL? No the way HCL hiring process works is they hire about a large 40-50 people from campuses and they put them across different subsidiaries and different roles and you have to pitch for those roles and I pitch for that role and that's how I ended up being Sanjay C.A. Please Kalyam, you joined Reliance? Yeah this was sort of early years of our lines starting diversifying away from its core oil and gas business and I was part of what you would call the Treasury team they were two Treasurers at that point of time Amitabh Chunjanwal and Alok Kukrawal Alok was also the CFO and Amitabh also used to run a bunch of other financial services businesses for lines at that point of time and this was a small team which was doing I would say again sort of new business initiatives for lines there was a project around credit cards there was a business to be built around primary dealership which is around bond trading they were the two life in Chunjanwal in Chunjanwal businesses there was the whole ad labs acquisition that happened at that point of time and Reliance was starting to build out large infrastructure projects themselves and one of the things that essentially happened was they thought that as they do that there will be a lot of ancillary ecosystem that will benefit from that and they did a JV with Tamasek what was called a Reliance Tamasek power fund and again by serendipity I would say I got involved in some of the deals that fund was doing because this was the same team which would help doing that and that's how I came to know what private equity was I know what private equity or venture capital meant and that's when I met the Bessamer team in middle of 2005 I would say and I was sort of quite intrigued by and also quite impressed by their own history of many decades having built lots of businesses on top of technologies and founders and building really large global scale businesses and that's what really drew me to Bessamer and that's how I came on board Bessamer early 2006 I would say and do you recall how you ran into Bessamer was there a particular deal that you all were looking at together what no Bessamer hadn't set up the end of this they were still early in their process and actually it was a posting at one of the IAM ecosystems of my business school that's how I came to know about Bessamer and that's how I met the Bessamer team actually the room that we are sitting in is named after one of my partners called Felder Hardiman Felder was one of the pioneers of Bessamer you know started in 78 was here till 22 23 till he retired and he also in the middle taught at Harvard Business School for almost 15 years as private equity and venture capital so along with him and Rob Chandra who was an Indian origin partner at Bessamer we're looking to build out the India team early on and they had hired one person already Anand Shridhar Anand used to be is at Nalandana and then they hired two folks alongside that there were three of us effectively Siddharth Nautial and myself and so Siddharth and I joined literally next date with each other this is I think the day was 30th May 2006 I still remember the day and we had an office in the Trident Hotel in Bombay like two rooms joined together one was a conference room and the other was three of us and we had our assistant Mahath Chenoy she a sprightly parcel lady still sprightly still at 17 now she's 17 now and that that was how Bessamer kick started in India at Indian Institute of Management do you recall what that posting said which no it I don't know what that posting said it said that it had the history of Bessamer which was the most intriguing part I would say and and the story is it's really inspirational if you if you think about it like Andrew Carnegie and Henry Fibs we have partners at Carnegie Steel in late 1800s it merged with Morgan Steel to become US Steel in 1904 became the first billion dollar corporation on New York Stock Exchange and Luke Carnegie became the richest guy in the world Henry Fibs also became very wealthy and he put up 67 and a half million dollars in a trust and named it after the technology process of Bessamerization of Steel that they used and named put the name Bessamer on the door and he wrote two paragraphs of which are still edged on the wall in Bessamer which talks about building large businesses on top of technologies new technologies that came around and Bessamerization of Steel was a new way of making steel which allowed them to become the lowest cost steel producer in the world and in a commodity when you are the lowest cost producer you also are the largest and that's what benefited them and so that's the history and origin and sort of the inspiration to stay true to that character over the last I would say almost 100 years plus now but of course it was very different era different ecosystems of Bessamer early was doing pre-World War II era companies like WR Grace, International Paper, Ringer, Solder and that sort of stuff in this 50 and 60s a lot of suburbanization and banking community banks that came up in the U.S. Bank of New York which eventually became City Bank was an early investment from Bessamer but I think things really changed in 76 when we opened our Silicon Valley office and sort of we started investing predominantly in technology, healthcare, networking, communications of the 80s, 90s the internet and then we were predominantly U.S. form I would say till that period of time Boston, New York and Valley three offices and a bunch of my partners made investments outside U.S. one was they backed the gentleman called Moe Brime which fell not dead and Moe Brime was actually building a telecom network primarily in African countries as United Nations went from one African country to another it spawned into Seltel which became the largest pan-African national carrier and one of my other partners Rob Stevens invested in another communication technology at that point of time which were two kids out of Estonia who were building Skype that became very large eventually and sort of that meant that you could have venture size return outside of the U.S. and then we started looking at what are the places outside of the U.S. that's what my partners tell me and that's how India came into being I would say in the 2005-2006 time frame. What is VC like for you at that time in India and we can also illustrate that with the first company that you invested in there was no VC I would say it was all private equity VC did not exist in the classics there were VCs I wouldn't say that so because I think a lot of people had done in the dot com era of 99,000 a bunch of VCs but the very nascenting there was no internet there was no smartphone ecosystem right so it was all private equity style investing there was happening at that point of time just true for the basamer. One of the first companies that I got associated with but one that I had not invested with two companies actually Mothila Loswal and the other was Sri Ram EPC of the Sri Ram group that's how I kick started my career spending time on those two companies those companies were just getting closed as I walked into basamer at that point of time. So those are the two earliest memories of the two companies that I got involved very closely with from basamer. In the industry it must be quite well known the investments for more general audience can you say a little bit about how and why you decided on them how much money you put in them. I think Mothila Loswal the whole thesis was that as equity culture in India grows they were the dominant domestic franchise if you think about 2005-2006 there were a lot of global firms there was James as an individual it was James Morgan Stanley there was Kotak with Goldman Sachs there was Merrill Lynch before it became DSP Merrill Lynch and then there were Bank of America or actually a Merrill Lynch was their Bank of America did not exist it was Merrill Lynch and Bank of America merger happened much later. So it was a dominant dominated by US global investment banks either individually or in partnership with local founders and entrepreneurs and they were building a very domestic breaking franchise predominantly it was a broken platform at that point of time and very research oriented and the whole thesis was as equities and domestic capital becomes larger and larger they would benefit disproportionately from that ecosystem versus the global folks and that's how we invested in Mothila Loswal it was a very small check alongside with new one on a hedge fund that used to we run by Arshad Zakaryas at that point of time and that's how we invested in in Mothila Loswal it went actually public fairly quickly within like two or a half one and a half years of our investing or something like that just before the 2008 crash and it was a very successful IPO just given both Ramdev Ji and Mothila Ji's background and we stayed invested for a while before we sold all our ownership I would say in 2010-2011 I don't want to I think the dollars may be public in nature but I don't necessarily want to talk about either the dollars or the amount that we took off from the table just given the dynamics of you know sort of we are SEC regulated I don't want to make sure I don't want to make any forpa by talking about specific numbers but in DC language would you say it was a multi bag or a really good investment for us okay all right if you if you sort of fast forward to today can you talk about what's different in terms of the founders that you encounter pitched to you the startups that they're starting and I know that you've looked at the India big picture itself very deeply but also within that FinTech is something that you're an authority on maybe just talk about the general evolution of Indian entrepreneurs today that you're seeing and then we can get into the FinTech aspect as well yeah I think of course the ecosystem has changed dramatically I would say over the next 20 years I would say the entrepreneurs of today also whether you're selling to the consumer world or enterprise world several of them actually have are coming not of having built or scaled companies where they were either the first employees or early part of the CXO teams have seen the journey of 0 to 1 1 to 10 in some cases 100 to 1000 as well as a lot of these companies have scaled I would say the 2010 2020 era and a lot of founders are now coming out of that ecosystem where essentially they understand the chops of building teams hiring great people early on building large businesses though we have done it for somebody else inside an ecosystem and now want to do it for themselves and so it's a far more seasoned experienced executive teams as founders that you meet today versus I would say the 2010 11 era when a lot of them did not have that same advantage because they were there was no large startup ecosystem in India which had grown and seen a success and therefore they had the experience of doing it but they had the opportunity because India was doing rapidly internet adoption was happening rapidly software was getting adopted rapidly and they had that advantage not necessarily having the executive experience of 10 years 15 years having built large companies so now it's the other way around where you have the experience you still have the market but it's no longer you have it's more competitive than it was 15 years back and in terms of the ideas that they're bringing you what is anything that is not what the in terms of how things have changed for example are they now capable of going very deep in niche areas and was that different earlier on how have things changed in that way so how we see it is different than a lot of other people we are what we call as road map investors so and road mapping think of road map as literally a map to find great companies in a specific area and this road mapping process is unique to Bessener has been around for 34 years and the way we do it is we look for discontinuities in the ecosystem changing of revenue pools shifting of profit pools regulatory changes may be driving something new platforms emerging a new consumer behavior changing so there are lots of discontinuities that happen in an ecosystem and we find these discontinuities and try and code deeper and see what the future would look like over the next 10 15 years in an ecosystem and therefore because we want to be ahead of the curve and so we are we build these road maps early on so I can I can use that as an illustration to give an example for example we built a consumer internet road map in 2011 time frame I would say these were very early days of internet you know sort of I would say 2G 3G connections of course some smartphone penetration had happened in 2011 your first fund was already up and running was we we've always invested out of our global funds so till very recently we raised an India specific fund but we would be invested of our global fund so this was I would say again 2011 was an early internet era tens of millions of internet connection probably and few million smartphones at past but we could potentially see what was going to happen and sort of relating back to my own experiences like the whole when I was inside lines the whole reliance telecom journey the first while reliance telecom which when India was at 16 rupees a call went from that to almost nothing and tens of hundreds of millions of people got a mobile connection not a smartphone at that point of time but lots it got access and I would say democratized distribution in some way to a large extent right and then of course the internet on top of that and the smartphone just accelerated it and when geocame in 2016 with 4G connection it changed the game but I would say in that 2011 era we thought that India would similarly leap from the offline retail ecosystem because offline retail ecosystem in India was it shopping in India was a chore at that point of time and if you lived in a large city like I used to in Bombay it definitely meant like big weekend trips to do anything getting anything done traffic was still bad it was still bad but it was still bad even at that point of time and the epiphany was that a lot of these what you would call door to door economy will happen where essentially flip card was there amazon had just entered snap deal was there and a lot of these horizontal were getting built at that point of time and and we thought there would be few verticals that would emerge because in India supply is very fragmented for every vertical and if you could stitch together the entire supply side of the framework the demand always existed it was ability to serve that demand in the most the best possible customer experience at that point of time and that did not happen because usually the supply chain broke down at the back end either on the fill rate or either on availability or on on cost or something else so people who were sort of building a full stack supply chain that's what we would call taking on the owners of the experience essentially for the customer end to end versus just relying on who I will pick stuff and deliver to your door that's when we sort of got a bunch of companies that we sort of trapped and invested in starting with you know grocery vertical we did big basket in 2015 we did sweet gain 2016 we did urban company in 2015 we did farm easy in 2016 we did live space in 2015 and and the common theme if you think across all of them was they were all focused on full stack where they said we will own the customer experience not necessarily relying on the existing supply chain and whether we own it or we stitch it because each one has a different way of doing it or one company had a different way of doing it because it was doing services live space was different they didn't have to put up manufacturing of furniture but they could stitch it together at the back end and deliver a customer experience grocery was different and Swiggy was different in the sense that they were the first one to say we'll own the delivery ecosystem as well it doesn't necessarily mean they would be on my roles but sort of you know they are gig workers but essentially dedicated to the platform and some form or the other right and that essentially meant that that delivery of a customer experience is how these companies really scale really well relative to others who may be doing sort of like marketplace model at that point of time I think that was the early epiphany but as you see what evolved from being full stack market places to now there are not many large categories left if you think about from a scale perspective and now there are lots of these full stack platforms that exist so the next wave that we are seeing is the changing of consumer behavior to direct to consumer brands now there are lots of shelves which are empty on on the quick commerce guys on this and the zenji ecosystem doesn't necessarily want to buy what their mother's brand or their father's brand was like growing up I remember I the one thing that I never wanted to buy was a maruti car because or a bajaj scooter because that's what my dad would insist on or a bata chapel right those three things that you would never want to buy because it's just like normal rebellious behavior that you would have as a kid right and that sort of is now for this genji which also you didn't have money then but today's ecosystem is slightly different it's a much more affluent India than 20 years back or 25 years back access to consumption is easier access to sort of spend is easier and therefore a lot of these new brands are emerging in the ecosystem which basically appeal to those specific I would say target groups and this could be premium and this could be sort of mass premium both both the segments the Indian customer still remains value conscious so if you go for brands which are then the market size becomes tiny which are very premium but as you go towards mass premium the market size can be very large enough to build several hundreds of millions of dollars of companies so we just invest in a company which is doing the same on the sports equipment fitness and clothing all three combined effectively to effectively what I can sort of say build an online decathlon in some form or the other and that so we think this this roadmap shift because consumers change behavior changes and therefore newer opportunities arise and some some opportunities die because they are no longer present because either either it's become very competitive or they're very large ecosystems that have emerged so it's very hard for newer companies to build large scales for example it's very hard to build a horizontally commerce ecosystem in India today right you have you have the three four big quick commerce players and you have the two large incumbents Flipkart Amazon so it's going to be very hard and crazily capital intensive to build anything so you know that that essentially so some road maps have to evolve over a period of time is there a precedent would you say I mean people gently like to compare with China or with the US I mean to to give a give us a sense of where you see India is today and how you look at it in terms of where it could go is it simplistic to say India is where China was X number of years ago or is there a better way of how would you look at that yeah I don't like that comparison I think I think the easiest way to justify anything for last 30 years in an Indian context has been per capita or we drink 30 ml of cola the US is at whatever five liters I don't know what number it is like it's per capita we have a lot of people so everything per capita is going to be very small that's the easiest way to do it I also think this comparison to China and US is different US is a 25 26 trillion dollar economy China is a 21 22 trillion dollar economy we are a four trillion dollar economy we have to remember that and yes we are going from four trillion to whatever seven eight nine ten whatever you can believe over the next decade depending on who you are whether you pick a six percent compounded growth rate or eight percent compounded growth as I'm no macro economist to tell you what's going to happen but if that's the trajectory it's still not a 20 trillion trajectory over the next decade right it will happen but it's probably another 20 30 years out hopefully so the comparisons fail and therefore what you have to look at is a uniquely Indian lens and let me give you a great example on frinteg we were talking about if a lot of our investing in the US one of our two largest success as Shopify and Toast which are tens of billions of dollars of market cap they built one built platform for SMBs to do their own build their own smaller shops and sell directly to consumers but people rarely realize that 70 percent almost of their revenue actually comes from payment if you look at Toast which basically build the entire post ecosystem for restaurants in the US by replacing older outdated software again sixty sixty five percent of revenue actually comes from payment but in Indian context if you applied the same it wouldn't happen because UPI is free to a large extent right the dollars that you can make on our minimal there's no two and a half percent interchange that you can make where UPI is the dominant form of payment so these comparisons and the nuances are very specific again the largest I would say after an Amazon what's the largest single platform that's been built is Instacard and DoorDash if you think about Instacard Instacard is a pure marketplace it actually picks from different grocery chains and delivers and have a convenience beyond up essentially that's their model if you did that in 2014-15 any day that's not going to work so I think the nuances are so different or if you take a Chinese construct of of I would say Pindado or somebody like that group buying ecosystems there are a bunch of companies that have started but they're still very small so that's why I don't like these comparisons I think India is unique our problems are unique consumers think about it differently and therefore what you need to solve the consumers is also a different similarly for enterprises in India the needs and the ability to pay for Indian enterprises is very different and therefore all the software that you build for Indian enterprises is going to be very different in the Indian ecosystem and the value at which you can deliver what you can really get in India scale but it has to be scale at at low dollars essentially if you think about all the large telecom companies in India pricing is RPO is literally worth 300 bucks something like that at best but they have scale and that's why they're huge and then they've built layered businesses on top of that like to the access to the consumer that they have through the device so I think Indian businesses have to think differently they will get the scale part you have to deliver value both to the consumer as well as the enterprise I want to ask you about the next big roadmap that you're excited about but just to follow up on what you explained right now at the point about India being unique maybe we are now just beginning to see a handful of unicorns which have gone public or will soon go public and are also on the path to profitability as a VC investor how do you look at it because the sort of lay person's understanding of the VC model is it's predicated on higher and higher valuations at each funding round so what is important here to focus on yeah I know that's how sometimes a layman thinks but if you think about especially on the consumer side and I can give you a couple of examples and the price as also your behavior is changed tell me that how many T1 households can survive without a swiggy zomato big basket amazon flip-cut world they can't to a large extent a lot of your and my behavior 10 years back and you can just open up your buying behavior history for 12 months which I do routinely and see how much my spend is what it was in 2014 what is it in 2024 you will see a dramatic shift and that consumer behavior in changing and it's only means that you're spending more and more I a bunch of these companies have taken a lot of money because when the price is large competition sets in and when competition sets in then it's a race to who wins this because these markets tend to be oligopolistic in some form or the other so if you think about the two largest right-sharing platforms in India it's Ola and Uber if you think about two large horizontal platforms it flip-cut an amazon if you think about food delivery it's swiggy and zomato if you think about quick commerce it's four other people if you think about services platform it's only a one company if you think about farmer delivery it's farm easy and one MG so markets are large because the retail value is large and the winners are two three probably four in each ecosystems and therefore when the price is large you you basically it becomes a capital race early on in some ecosystems and you have to be able to get consumers on and your supply on early on in a marketplace model also I think we forget the 2014 to 2020 era before COVID there was massive supply side and demand side subsidy because that's how you re-end of consumer from their offline behavior to online behavior and similarly supply to work with you without having to go and serve their normally offline ecosystems so there was a bunch of what I would call debt that was paid by some of these companies to basically change the consumer behavior you came to them because of discounts first but now you come for convenience and the fact that's what your consumer behavior is I would have loved if these companies became profitable much earlier and that would be true for everyone but that's not how it's played out even on the enterprise side if you think about it how many banks can now do without doing an online KYC that's the product how many of them can run of like without making an instant decision making using an API from Perfee or somewhere how many of them can run without a Salesforce ecosystem so the behavior even in the enterprise world has changed because what you would call consumerization has happened effectively so you see that there as well so I think this is a behavior change and behavior change early on requires a lot more money then some of these then what you anticipate sometimes and therefore they would have raised a ton of capital I think there would have been accesses as well absolutely lots of accesses have happened and people have paid for that by either companies sort of not performing well going fast going down there are several examples of that so in any natural business cycle you would assume that would happen when new opportunities increase lots of people come in there will be few who build successful and a bunch of people will die and there will be accesses along the way but the market has a self-correcting mechanism so if 21 was crazy 23 meant everybody or 22 late everybody came back to their original ecosystem saying that 18 month or 20 month was an aberration it was not an at-new normal behavior either from the consumer or either from an investment perspective where you could raise money at the drop of it had a value that you wanted that's change dramatically so I would say that this business models take time to get to profitability but when they do they own the consumer and they can continue to multiply this over many many years and build really large profitable companies and now as you say some of them are public that's the true test eventually of any company in your public now you're accountable to large set of shareholders yeah it's public money at stake and you have to perform and if you don't perform markets will punish you because it's it's it's it's basically a very you know anybody can shot you anybody can long you it's all dependent by the numbers that you deliver so you have to deliver quarter on quarter numbers effectively over a bit of time so I'm glad all these companies are going public I'm really glad they're all going towards profitability in the long run because finally you have to be profitable and generate cash eventually at some point of time and that's true for any company it's not an Indian ecosystem that's true for any company in the world Alibaba makes ton of cash so does Tencent, so does Amazon, so does Apple, so does Google, everybody makes gobs of cash essentially that's the ultimate goal your pat to it may take a ton of capital hopefully low capital and be very capital efficient businesses but those are fewer and far and I would love to be in more in capital efficient businesses than capital customer businesses but sometimes hindsight is 20-20 but would you say you're optimistic that this generation and and of course one was taken to account that this pretty much happened for the very first time in India on the back of the internet companies like whether it's you know Flipkart or Swiggy coming up it's happened twice this is the third time I would say the ninety ninety ninety ninety-nine two thousand if if I if you looked at the infosys market cap of two thousand and infosys market cap of two thousand fifteen it was the same if you in the mark in the Indian public markets between two thousand four to two thousand seven and an expedient sum of this being inside basamer you could throw a stone and you would have made a three accent Indian public markets and it all corrected two thousand eight march onwards two thousand September Lehman crisis global financial crisis it all just rendered so I would say that this is not new history repeat itself in some form or the other so newer excesses will happen at some point of time I don't know when and how if we could foresee all the bubbles then it would be very easy as an investor but I would say that excesses will happen and then down corrections will happen dramatically as well and and you know it's it's it's hard to do easy to say that sell high by low it's very hard to do it in practice but hopefully you can ride through these economic cycles and build really large companies because we are not public market investors who are investing in late stage companies we are really investors in early stage companies who are trying to build categories or category defining companies over a period of time or changing consumer behavior or building a new enterprise ecosystem and that's very different I would say from public market investors but excesses will happen everywhere excesses happen in bond markets excesses happen in real estate market excesses happen in equity market excesses happen in venture capital market so I would say and there's enough history if you go all the way back from I would say the crash of 1931 to it till today the big depression so there will be bunch of these that will continue to happen I don't that's that's just the nature of market forces No just as you mentioned infuses that is what I was meant to ask you but would you say that your optimistic that including this generation of startups and unicorns which have gone public and are now going public are you optimistic that they will also become wealth creators in that in that broad sense I mean even today or even apart from institutional investors sort of the man on the street you know still would would know an infuses or a TCS or HDFC as a blue chip investment do you think today's Sugizmato some of the other companies will get to that status at some point I'm very optimistic they will so if I again take back to you to history and see what was the there was no nifty them because NEC did not exist but if you looked at the BSE Sensex what were the companies in BSE Sensex at that point of time what are the companies in BSE Sensex today they have changed it's they used to be some other large manufacturing or trading organizations in the 70s in the 80s the 90s was the rise of infuses HDFC Asian paints a lot of other companies that you mentioned and now that's what the Sensex is and now you will see a different Sensex I would say in 10 15 years it's just started right however the companies will have to perform deliver great high quality numbers and that's the only way they will what he would call become blue chip as it's called or large cap companies be part of the Sensex eventually which means there's so much automatic flow of money that happens just given the rise of that ecosystem index investing ecosystem so I would say that that's going to happen but and some will fall big by way side which has happened in the past as well not all companies which show the glimmer of hope will succeed but I'm hoping a lot of these will succeed and build really large categories and be part of Sensex eventually at some point of time because the nature of the world is changing the consumption is changing enterprise behavior is changing it's more software dominated than it used to be and you will see the rise of these companies eventually at some point of time but I think we'll have to be patient okay fantastic picture context Vishal so now let's talk about Besimal's next big road maps what you excited about I think I would say two road maps that we probably are most excited about today is one is around direct to consumer that I spoke to you about and second I would say cyber security India is now a far more connected digital ecosystem than even it was five years back and and as you get more digital in nature frauds rise as you can know cyber frauds rise our data which is all important to us and there's a lot of you know the new act and everything else that is on the anvil will will mean that people will find ways to use that data to drive economic benefit for themselves by using different means to either impersonate you cheat you swipe money of your whether it's your demat account whether it's your bank account whether it's something else or something else so that world will change dramatically it's changing already you probably read every day newspaper about different ways in which scamsters are able to sort of fraud people in that variety of different ways of course and the regulator is quite concerned as you can imagine because this is hard on money for a lot of people essentially and therefore enterprises are also up on the curve they are adopting different technologies and I think there'll be some global but there'll be a lot of Indian unique cyber ecosystem that will come up that are specific to us also given the regulatory constraints around data protection especially around financial data and healthcare data which is all individual by critical and also by critical from a nation's perspective you will see a lot more homegrown ecosystems that are going to come around this so excited about that we spoke a little bit briefly about the D2C world the fact that there will be this new ecosystem of I would say 18 some things who basically were born with a smartphone you know 4G connection in their hand that window to the world is is that device both discovery and consumption and they would love to buy product services discover product services all through that and therefore this gives rise to a bunch of newer brands which are which appeal to that target segment who has its own identity in some form or the other and sort of relates to different world are not necessarily driven by what I thought in the 90s or the 80s as a as a kid growing up and what would be because choices where far more limited economics were limited than than the today's ecosystem so I think that's one big area that we are super interested we continue to be very keen on the front tech ecosystem in India because we think that will continue to be very large and when I say front tech I mean software to a large extent and I mean software again just when we build road maps they think of them almost as like the tip of the spear so we are very pointed in some way software building for banks in chance companies AMCs brokerages this whole financial world is all software driven to a large extent now and lots of different plays in that and as more software gets built it managing software so to give you context we think of UPI as a simple P2P transaction I can transfer money to her instantaneously but basically before it gets transferred basically there are different eight different notes that it needs to touch before it actually gets credited and there can be a failure at any one node how are you going to observe that how are you going to manage that how do you how my how does how do I do KYC how do I do video KYC how do I do instantaneously how do I do that AI is not spoofing your KYC how do I basically underwrite you how do I prevent fraud because more digitally nature people can people are building bank statements which will show that they have great credit but it's basically a fraud statement I'm going to build more on that so there are lots of layers that are emerging there are all the you know banks are as they've become very large and as they've built different software for different ecosystems they've become siloed in some nature and therefore where's the interoperability between these ecosystems if hurry is a credit card customer his credit card limit is is let's say 10 lakhs why does he get a small personal loan ticket SMS for 50,000 rupees there and make any sense because the credit card ecosystem is not talking to your banking to your core banking solution ecosystem they are different software ecosystems there's no one customer view that happens for hurry across the world they're similarly insurance you know health insurance I'm very excited about the health insurance ecosystem in India and where it is going it's a secular several decade build if you think about it and we have what 10 12 billion dollars of premium today that will be 40 50 billion whatever time frame it takes 10 years 15 years and again similar issues how do I settle the claim what are different mechanisms that are going to happen oh is there going to be a copay or what are the frauds that are embedded in that ecosystem can we do a package ecosystem how can I basically look at all the data on a longitudinal way for hurry effectively over the next 10 years can I prevent some of the challenges that he's going to have or wish all is going to have over the next 10 years early on by looking at longitudinal data all that is possible today so I believe this software platforms in all this whole ecosystem is an area that I'm very excited about and I'm looking for several companies and founders who are looking to build in this ecosystem in some form or the other at this one the cyber security and D2C I would say are some of the biggest pieces that we are most excited about like today is it time to raise the second fund at basamer for that's India focused or in this region focused no we so sort of we we capital is not a constraint for us of basamer manages more than 80 billion dollars 18 billion dollars globally so we whenever we think that we are invested from our fund one and we need to raise our fund two we will do so there's I don't have any specific timeline or any specific that in ecosystem as I said we are here to find great founders who are building great companies in areas that we are super interested in which I describe to you and capital is a non-issue we can write from a million dollars to 50 million dollar check sizes so we can support companies from very early in this stage to also scale as they scale which is very useful for a lot of founders and companies because they have a partner who can scale as they scale their businesses also it's long-term patient capital we have been we can remain invested for several several years as we can see in a lot of the companies where we have been invested for more than a decade in some cases so we tend to be long-term patient capital which can scale as the founder scales and also scale with them globally because we are a global partnership with 7 offices today so I spoke to you about the story of how we started in the office but we have also an Israel office we have a London office and now we have an Hong Kong office so we are across all the geographies and especially for some of the businesses as they scale from India to other geographies that can be super helpful because we can bring in all those networks and connections and including larger capital base as if your need be as you grow into those other geographies so that's that's how we think about capital capital is not a constraint for bathroom okay so getting back to the roadmap question so AI has applied to specific opportunities within software for FinTech or software for cyber security as reading about follow-alters increasing platforms approach and on the other end a company like Halsey and it's as raise money to so very sort of focus you know very specifically focus just on the ransom where tackling opportunity is that how you think startups in India will also start coming up on the one hand really broad opportunities like you know building a platform for something and on the other hand an opportunity to go very deep in some particular area do you see that already happening we see actually already see that in some of our companies so if you talk about one of the companies that we invested early on in 2017 which was building software primarily for banks on underwriting instantaneously a company called Profios they today now operate in 15 countries including Southeast Asia Middle East Europe Latin America so they are very deep in a specific area a lot of their work is about and the backend is data machine learning I think of AI as like a horizontal layer that can be applied in a variety of different use cases they are using it for financial decision making on big for for banks and large on large FinTechs who have to make underwriting decisions who have to make fraud decisions who have to make new your customer decisions who have to make collection software decisions so all of those essentially is what Profios can power for them and that nature remains true whether you operate in India or whether you operate in other geographies there may be different nuances but just India actually has leadership in this ecosystem globally in some form or the other just given our digital nature of payments and digital nature of banking sort of surpasses most geographies globally in some form or the other so we think all of these are applicable globally and some of these companies they are still early in their career of building out large global franchises and platforms that you mentioned and they will eventually become some of these platforms in the long run. So today would you say in many ways if you look at the Indians as sector there are of course some outstanding names but on the whole would you agree that it's still at a nascent stage and on the other hand entrepreneurs are beginning to crack how products are to be built if they are to scale then those products into actual companies that are global scale you think that playbook is now happening. I mean not just necessarily about SaaS companies but in general product companies from India. I think Indians are great product builders. I think where we are not that great as GTM go to market sales. So as you said there are very there are some very successful names in this ecosystem now like Zoho and fresh desk and there are the emerging ones that are coming out which are a few hundred million dollars of revenue now and as you see over the next 10 years I would say several more will emerge. I've always thought that a lot of Indian products are deeper in certain sense have are more cost effectively but I think we are still in the learning phase of the GTM of a product and how to deliver that and some of these companies have been very successful as I was saying to you earlier people who are coming out of these ecosystems know how people how they have cracked the code inside in a different ecosystem and now doing it for themselves and I think that starting to emerge now. One thing I would say is that for companies to become really large if you want to compare ourselves to some of the very large global platforms for that you will have to be a global company by far. For example a large percentage of revenues for some of the large platforms is outside of the US as well so you have to be global in nature on day one. So I would say the US is the largest software market globally so you have to be able to get there and build a company in the long run to be able to scale to build a dollar plus revenue eventually and being able to do that is not going to happen overnight. It's going to take few at least a decade for some of these companies to get there because that's a very large number to get to eventually. If you have got there if you will get there hopefully over the next few years and more are in the offing but I would say that for some of these companies it's still early days the ecosystem is still early days relatively and you will see a lot more success I would say over the next 10-15 years. Specific to FinTech and if we were to ask you to pick one thing that you see as the next really big opportunity in India or the biggest FinTech opportunity in India how would you look at it? I hope I knew it. My job would be easier but I said to like I was describing to you there are two or three sort of areas which are super interesting in the ecosystem I would say one is that the banks are undergoing a sea change on their software ecosystem even the core banking solutions were built in early 2000s there are basically three that operate and run in India flex cube, finacle and TCS banks that's 100% market share between three of them but they were all built in a different era where and they're on monolithic architecture they are not modular software which can integrate and work with several other pieces of the software so I think that can be a very large but a very difficult opportunity very large but very difficult and I think several banks globally are also going through that phase now because most of the people on core banking solution are in that ecosystem I don't know how much emerges out of that because selling to banks can you know sort of you can get older and lose all their hurt before you get for sale down for a core banking solution but that's one area I would say similarly on the insurance ecosystem there's this massive change that's happening on policy admin accounting all of that at the back end which has changed because all this were again built in a different era and now so these are what you would call core insurance solutions at the back end on which they run their platforms that's one other interesting area and then the wrappers around it are something interesting a lot of people are trying to hollow out the core if I can say that which means that you don't need to change your core but the core effectively becomes like a record keeping and all transactional ecosystems happens around the wrapper and I can own a bunch of these wrappers both on the insurance and on the on the banking side I think those I would say both are super interesting account insurance in the frantic ecosystem it's not only banks and there again as I said specifically in insurance the most interesting piece is health because that's where that's the largest growth largest spend and there'll be lots of newer ways in which how your insurance there's no OPD insurance for example in India right I'll give you a funny story we were buying insurance about four or five years back OPD insurance for PASMR ecosystem in India and there was an insurer I would name him they said we can give you 25,000 to peace OPD sort of for your glasses and for your GP visits and diagnostics it will charge you 23,000 to peace premium for that because there's no integrity of the network that exists right so I think that ecosystem is going to be very large if you think about what's happened globally because that's also where the largest spend is so I think these are the three four areas in and around frantic I would say and some sort of quasi health tech I would say but those are the two or three areas which I think will be very large we have I don't know which companies and which entrepreneurs I hope we can find some of those and invest and and be partners with some of these founders to build some of these companies but those are some of the areas that are very I'm very excited about person you didn't mention crypto and I'm wondering if that might come back to India as an opportunity will there be a knock on effect with Trump pushing it in the US I don't understand crypto so I don't invest in it very simple answer okay I mean coming from you that in itself is great commentary on how one should look at it in India I guess fair enough and just to ask you of all on on my Trump curiosity I mean again from a general audience is perspective this entire conversation shown our audience your mastery of the big picture in India so in that context can you give us a sense of how you look at it I mean will there be anything that will change for India because Trump is faster is going to be present in the US I know I wouldn't say so I it's a very I think India is probably the least to fear in any sense but I would also say you know the India US partnership doesn't matter who's in power either in the US or in Indian context I think that's changed dramatically over the last 20 years it's it's shared values of democratic ecosystem shared values on building and growing and make doing the best for your own people while taking care of your own national interest national interest paramount everything else but I I don't see any change in that irrespective of who's in power or who's not in power because none of four years or five years in Indian doesn't change anything it's a multi decade piece that has already happened and will remain I would say over the next several several decades and I think that's and it's it's actually our interest in them is nationally driven interest because access to technology access to access to capital and vice versa this India is the largest fastest growing market for US companies to come and invest and and take advantage of that market so it's if you think about it it's all about economics and mutually beneficial interest for both countries as long as that remains same it I think that interest will continue yeah to so to ask you a bit more about on the thread of India as an attractive market on the one hand there's a certain kind of quote unquote deglobalization if you will certainly in high tech areas all the rich come countries are looking to bring back manufacturing they're looking to prevent China from getting some of the technologies so if more of the high tech's going to happen closer to the home countries whether it's in Europe or in the US would you still say that your LPs and investors who look at markets like in India like India in general would still find India as an attractive market from access to VC money perspective or a startup that's going to start in India that's looking for money in India I would actually say this is probably a great opportunity for India I think of it completely reversely that the fact that if you think people are kind of I would call it friend-shoring versus necessarily move everything back to their respective home countries because that's not possible of course global supply chains will remain to a large extent you may pick pieces of it which you can do but majority large percentage will remain global in some form or the other but you would be you would not put all your eggs in one basket which you had done previously and now you would want to spread it and spread it in more friendly baskets more in those baskets where you think there's shared values democratic nature rule of law and that that puts very well for India I would say in that context where a lot of manufacturers would want to be here also remember they would also want to be closer to where the market is this is a very very large market for all manufacturers in some form or the other for consumption and therefore why wouldn't you want to be here if consumption is here because that's the lowest cost being closest to the consumption right and also in a friendly country in some form or the other so I would say it's a massive several decade opportunity also remember these global supply chains are not going to disappear overnight even for India to get into we are already in some of that we have made a ton of progress I would say over the last decade or so but it's slow moving if you're going to build semiconductors it's not going to happen overnight it's a decade of peace and lots of keepets before any of these show up and also you you will start at a base level and then slowly climb up to the highest category level and it's it doesn't none of this has happened overnight in any country it's opened over 30 40 years and you have to be at it and you will see a similar journey over the next hopefully 20 30 years that you are able to do it in India and and I would believe so that it would happen because this is the probably now one of the largest global consumption centers