We Are In The Business Of Spotting Talent: Sudhir Sethi, Chiratae Ventures
Meeting nearly 300 entrepreneurs in a year, the firm believes to be in the business of trust, not money.
Giving credence to KPMG’s Private Enterprise’s Venture Pulse report, Venture capital (VC) investments in India doubled from their previous quarterly high of $6.7 billion in Q2 of calendar 2021 to $14.4 billion in Q3. India also got the four largest deals in the Asia-Pacific in its kitty during the July-September period. This was backed by a very strong IPO activity in Q3, which is expected to be stronger in the current quarter. This dynamic is only going to strengthen investor confidence even further.
Batting some of the most relevant and recent topics of the hour, Sudhir Sethi, Founder & Chairman, Chiratae Ventures India Advisors spoke with us at the BW Young Entrepreneur Summit & Awards 2021. Excerpts:
Q. PolicyBazaar went on for a successful IPO launch. It has also had an incredible journey so far. As an investor, what did you see in it?
We were not the first investor for Policybazaar (PB). I believe that the founder thought of digital distribution of insurance far early. Apart from a stellar entrepreneur, we generally look at company's innovation in tech, market, business model, product etc. However, in PB's case, everything about the company was new. They were the pioneers. This is exactly what appeals to risk investors. A company needs capital to grow that comes from its customers. Until enough customers are generated, risk investors take the charge.
As an investor, one doesn't know if a startup will do well or not. We are in the business of spotting talent. We also learn from the entrepreneurs as they are solving a challenge in the market that is not solved before. We then decide whether we should back him or not.
In a year, my firm and I have met about 300 investors and ended up investing in 15-20. In my first year, I met 278 entrepreneurs personally. Today, the amount of traction is so much more. For me, investing is part science and part art, but it is fun.
Q. There is enough capital in your industry which also lets entrepreneurs make a pick. What makes Chiratae different here?
Our motto is simple- we are there on the board because we have capital. Since day 1, we have proved that our job is beyond the capital. Capital is important but value addition is even more important. Our goal is to be a trusted partner for the entrepreneur.
We are not in any race; we are learning too. We do it the way we think is right. First, realising that what’s good for a company is good for us. We must be fair as investors and be there for the long term. We must align with what the entrepreneur is thinking and must not cross the line. There is a network effect here which VCs form. Second, we are not in the business of money but trust.
40% of our companies have a global footprint. If we have to support them, we have to go global. That's our mission.
Q. There may have been times when you were tempted to invest in a deal. How do you handle such situations?
We took this decision when we started in 2006, to follow some governing rules. We decided to only use the company funds and not deal separately. There is complete disclosure in this sense, no cherry-picking.
Q. What is your advice to young founders who are raising capital and scaling up?
Follow your dreams. Believe in your idea. Along the way, you will meet a lot of investors and advisors. If they say no to you, try to find out why. But do not forget to follow your dreams.
Q. In a surprising turn of events, Paytm failed to live up to the expected IPO launch. A similar case was with Amazon decades back but look at its journey today. How do you look at the valuation part?
A valuation is just a number at a given time. However, companies go through a journey of their own, especially in a listed market. This value must be discovered. The more people discover it, the bigger the value.
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