Passionate Investor Sasha Mirchandani Bets on E-commerce and Mobile Internet in the Next Decade through Kae Capital


Sasha Mirchandani is an ace investor. After being a founder angel investor with Mumbai Angels, he has now taken over Kae Capital in India, which is likely to have five investments in a short while from now. Already three investments have been made and two are in the pipeline.Quick facts

Fund Size of Kae Capital

$25 million over an investment cycle of 8–10 years. Sequoia Capital, Omidyar Network, SAIF Partners and another undisclosed VC fund contributed to one-fifth of the fund.

Typical Invesment Size

$200,000–$500,000 (approximately Rs. 1 to 2.5 crore)

Investments so far from Kae Capital in 2012

Three –Mojo, HealthKart and one undisclosed

Two companies at term-sheet stage

So 2–5 weeks from now, 5 companies in Kae’s portfolio this year.

Sasha Mirchandani co-founded the first angel investment company Mumbai Angels in India. And the Inmobi investment is a testament to Mumbai Angels’s success story. This investment shows how angels can really help a company scale if it has potential. It comes as no surprise that with Sasha at the helm of affairs such decisions are possible. His clarity of thought and his ability to differentiate between what works or what might not work are a gift to portfolio companies. An angel not only invests but also stays on as a mentor in some cases. He talks to in this conversation on his taking up Kae Capital, an early-stage seed fund. We could expect some ace companies to fire through Kae Capital as well. Read on . . .

Having co-founded Mumbai Angels in 2006, and helping set up Mumbai Angels, which is undoubtedly one of the best angel funds in India today, what triggered the launch of Kae Capital?

Honestly speaking what I realised was that angel funding and early stage seed funding was such a passion to me. I got the opportunity when I a large fund of funds approached me and asked me why don’t you consider a seed fund. Initially I was very reluctant. I was happy with my job as far as Mumbai Angels on the weekends was concerned. I remember when my dad and I had a chat over the weekend, and my dad said why not, you should do it. So I basically translated my enjoyment and passion for angel investing into a full-time career, and also I realized that there was a big need for seed funds as well. When Prashant and I started Mumbai Angels we realized that there was a massive need for angel clubs. It was an asset class that was so underdeveloped and so we started Mumbai Angels. And, we realized as the ecosystem started maturing that there would some entrepreneurs who would like to deal with seed funds, as they move quicker, faster etc. and this opportunity made sense to me. And, they kind of co-exist you know, they don’t have to compete with each other, there is a big synergy between what Mumbai Angels does and what Kae Capital does. So, it made a tremendous sense to launch a seed fund as well.

How many companies do you meet every year?

On an average we meet 700–1000 companies a year.

After meeting so many entrepreneurs at such an early stage, what according to you are the major challenges that these entrepreneurs are facing?

There are several different kinds of challenges. Every company is different in its own way. Certain people have something covered, but others do not have that covered. At least in the US, the ecosystem is so well put together, but think of an e-commerce company here in India. The back-end is such a mess, but in the US you don’t have to think about these things. It is all done. You just focus on your own business, but here in India you are almost running two businesses sometimes. You are not only running your business in the front-end and convincing someone to buy your product, but you are also running the logistics business, which is the back-end. That is exactly Flipkart is doing, right. They are an outstanding bunch of people. They are doing it right and will do it really well, but why do they have to run the back-end business as well - because there is no choice. If you don’t do it, there is no choice in delivery and customers are unhappy then. These are the challenges that you don’t face in the developing markets. We need to appreciate that here. We need to support the entrepreneurs.Are there are any sectors that you are really excited about from Kae Capital’s perspective?

We will continue to be interested in e-commerce. Our bar is much higher as far as the entrepreneur we want to bet on is concerned. The e-commerce market at present I would say is a little bit shaky, but we still believe in the long term value of e-commerce. The next 10 years is the long-haul opportunity of e-commerce. We like the mobile Internet. I think that is a huge opportunity, which is going to be the next big thing in our view. We like a certain parts of healthcare and a certain parts of education business. It is basically a broad spectrum of IT. We are looking at product tech companies. We like SaaS-based businesses as well, which is something that we understand very well and we would like to look at some of those companies. Payments is a big opportunity.

How many investments do you plan to make in 2012?

May be about 7–8 investments.

Big opportunity areas for entrepreneurs today?

Big data. I think it is a huge opportunity for entrepreneurs in India. I think entrepreneurs need to know how to scale businesses, and they need to look at opportunities where pain points are very large versus looking at very niche opportunities. As long as you can execute, there is no limit to how big one can become in this country.

With Airtel entering mobile payments now, do you see that as big opportunity?

I think it is a huge opportunity if you get the business model right. The challenge so far is that the business models never worked. It has worked really well in African countries, and if it works in India it can become really big. Airtel Money is now trying to do it. A lot of startups are trying to do it. Let us see if it works out.

Advice to early stage entrepreneurs . . .

Entrepreneurship is a long haul journey. You need to build for the long term. Think of working only with the smartest and most hard working people you know and who can align with the vision and passion that you have. And, truly do it for the fun of it, because there will be a lot of pain points in the journey, but the long-term value of building an enterprise of your own can’t be replaced with anything else. As long as you have the long-term passion and the dedication that you will get it done, you have to believe that you can get it done, not the arrogance. There is a big difference! If you believe that you can do it, you will be able to do it. Some of your models may fail, your company may shut down, you may start again, but if you have the belief long-term you will make it work.



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