The economic situation in India might have taken a downward dip and forecasts aren’t very pleasant but contrary to this, the startup scene is bustling. Numerous events and competitions are being conducted and the one thing that emerges is the diversity in the startups. Parag Dhol, Managing Director at Inventus Capital, has been witness to a lot of changes in the ecosystem and has also made his presence felt at some of these events. I got in touch with him to learn more about the investor sentiment and his views. Excerpts from the interview:
Every venture capital firm has a certain focus area in terms of sectors but one is bound to see companies from various sectors. How diverse is the scene in India according to you?
Yes, the diversity that one is seeing is just exemplary. I’ve witnessed some phenomenal ideas in the field of security, rural, diagnostics, security, to name a few. Just to cite an example, an idea improving the design of a Chulha which is still used by 70% of Indians has a wide scope and very much needed. These are the kind of innovations that help change grass-root India. And this diversity is very much needed to solve the multi-faceted problems that India faces.
What is one trend that stands out to you when you look at Indian companies and the way they’re perceived?
I can put it in one word, “Service”. India is known to have not so good service standards for a long time now. And the companies that are doing good and will continue to do so, are the ones which focus on this. This is a very important point when we look at a company to invest in. For example, pickup Redbus, the most successful company in our portfolio. Service is what differentiates them. Phanindra picked up a problem and solved it brilliantly backed with excellent support service. And this service is what I feel has differentiated them.
Staying on the same line, you’ve invested in Savaari and the cab rental space has all of a sudden seen a lot of funding activity. What reason do you attribute to this?
I would call it a natural progression. Travel was first picked up by MakeMyTrip and the existing 5-7 airlines at that time were integrated. Then I’d say Redbus solved the bus problem aggregating close to 1200 operators. And cab rental is the next area with many more players involved. Many investors made this move and to an extent it is also following the trend but we really liked the entrepreneur and the problem he was solving. He operated the business in India sitting out of his office in the US and that’s the kind of focus we’re looking at.
This gets me to the clichéd but necessary question, what makes you invest in a company?
(Laughs) Number one is without a doubt, the entrepreneur and the team. Then comes the market size and the associated numbers followed by a key differentiating factor.
When it comes to the entrepreneur, what are you looking for?
If you’re looking at a trait, then focus is the primary one. The entrepreneur and the team he has built should be highly focused. It’s of utmost importance for them to know the problem they’re solving inside out. And looking from the business perspective, it is very important in India for the idea not to be capital intensive. Leveraging technology to solve some really tough problems in a cost effective manner is a sure shot winner.
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