“We almost never do a press release after we close an investment because we believe that entrepreneurs and CEOs should control their own press.”
Vani Kola has broken the proverbial glass ceiling, if it ever existed in the entrepreneurial domain. After successful entrepreneurial stints which mean successful exits, she has turned to helping other entrepreneurs realize their dreams through IndoUS Venture Partners. Managing Director of the Fund since 2006, Vani Kola has been nurturing the entrepreneurial ecosystem in India on the women side by speaking out her experiences.
She touches upon the essentials of a venture, her outlook, and the companies IndoUS Venture Partners has invested in. With her heart at the right place and mind speaking opportunities, there is no refuting the fact the Vani is grounded in not stretching imaginations too far. What comes out clearly in the conversation is she is keen to be part of the Indian entrepreneurial space and gives entrepreneurs the freedom they need to pursue their ventures.
You are a serial entrepreneur turned investor. Take us back to your entrepreneurial journey. What led you to start your own venture?
The Valley has a very interesting ecosystem which I sometimes feel one has to be outside the Valley to appreciate; now that I moved away I realized how unique that ecosystem was to breed and fuel entrepreneurship. I think being there and having the resources around you that encourage you to try entrepreneurship was very important, because you can fail and there is no stigma associated with it, and you can be inexperienced and nobody holds that against you, and inexperience is considered essential in a way, and so many new ideas are all happening around, and people around are willing to come together to realize those ideas. And, first of all, I am an engineer by education, which means I like to create new things, and secondly, the Silicon Valley environment was extremely encouraging for me to become an entrepreneur.
What is your most important learning through your entrepreneurial journey?
For me it was almost a personal spiritual learning. Many a time, we limit ourselves by our own expectations for ourselves. As an entrepreneur, I had to push the boundaries on what I thought I was capable of doing. Then you find out that you are actually capable of more. So, I learnt that I was capable of more, and that was the most important thing that I have taken away from being an entrepreneur. As an entrepreneur one really learns to find the resources and time to break one’s own barriers.
Can you tell us how the idea of coming back to India after 23 years and starting a VC firm in India back then in 2005 occurred to you?
I had done two companies successfully. I was at that juncture thinking, “What next?” I travelled to India once in 2004 and I realized that there was a lot of exciting work to do in India, and decided to start IndoUS Venture Partners. I also wanted to create an impact in India not by starting my own firm, but by starting a fund to support entrepreneurial activities here in India. And, my firm collectively in the last 5 years has invested in over 30 firms or so, and that I think is a real impact. Our fund is completely focussed on local private companies and we partner with them at a very early stage.
How have you seen the startup ecosystem in India evolve over the last 6 years you have been here?
It has changed so much! At the funding level it has changed, from an excitement level it has changed, and the belief that one can create high impact companies that can create value for customers and shareholders while bring based here in India is now significant. The quality of entrepreneurs we see has significantly increased over time. And, we see that more and more people are now willing to work with startups. People in India are now more open to startup as well as joining startups. We also see that a lot of younger people are now more open to explore opportunities to work with startups vis-a-vis an established career with firms like Times, Reliance or Tata.
Why would you decide to even meet a company? What factors do you evaluate?
There are different reasons as to why we decide to meet a company versus why we would make an investment. Of course, they have to overlap somewhere. The reason to meet a company could be something that is very unique to the entrepreneur itself; he/she must have done something unique. Someone we respect must have referred to that entrepreneur. It could be a connect from one of my current portfolio entrepreneurs, or it could be from someone we know in the industry. It could also be the way the entrepreneur himself/herself reached out to us. Sometimes entrepreneurs reach out to us with long PowerPoint/story, which we necessarily don’t have time to go through, but we value entrepreneurs who write to us simply explaining here is what we do, and this is why we want to meet you.
Something has to stand out right. Are they capturing a large market? Are they doing something very interesting and have a great idea? Entrepreneurs most of the time only have the power of their idea, and the clarity and crispness with which they communicate their idea really matters. The market they target should be large enough. The power of the idea, the market size and the founders’ background are really important for us to meet the companies. Not that the companies should meet all the parameters for us to meet them, because for the first meeting the threshold is not that high, sometimes just one of the parameters is enough. The person’s background and how is that related to the idea that they are working on – these things matter a lot.
Are there any sectors that you are really excited about?
What is that we can do with technology as applied to a sector that makes it transformative excites us. For example, we have a travel portal called Via. Their business succeeded because they knew how to do travel, but the way they have applied technology to catalyze that market is what really excited us.
When we say we are interested in healthcare, it doesn’t mean we are really interested in investing in hospitals, because that is not our core expertise. There are PE firms that are interested in making that kind of investments in the next Narayana Hrudayalaya or whatever it is, but what is really of interest to us is the application of technology to various sectors.
Information Systems is what we are interested in, and today Information Systems can be applied to a broad set of sectors; the sectors are internet, telecom, mobile, enterprise software, product technology, education and to some extent healthcare - these are the kind of sectors where technology is rapidly impacting and changing practices and that is what we are interested in.
You have invested in several e-commerce companies. How do you see that ecosystem in India evolving?
We have invested in Via, Snapdeal, Zivame, seventymm, Myntra, hushbabies and IndiaPlaza. We have seven e-commerce investments so far. For me, the question has never been about will there be e-commerce in India, it has always been about when will there be e-commerce in India and how. By the way, e-commerce doesn’t mean that physical commerce vanishes. So the way ahead for e-commerce companies is that they either have to offer price advantage or it has to be about providing access, as the items are unique and are not easily available. So the valid reasons for somebody to shop on e-commerce are price, access and discovery. Today there are 100 million users accessing internet, but not all of them are transacting online, and it might take a period of 3–10 years for critical mass of users transacting online.
Getting the timing right is very important for a customer, and also understanding how to bring customers online, what their buying patterns are, and how you serve them is very important. Entrepreneurs should have a deep understanding of the customer they are going to serve. There is nothing great about creating websites. In the last two to three years everyone is creating websites, but understanding who the website is for and who will find the website attractive is very very important. Defining one’s customer segmentation is really important for companies to cater to that audience. There is a reason why we go to shops like Mom & Me. I believe that customer segmentation is especially important for e-commerce companies.
Do you think some of the e-commerce valuations are reasonable?
Some are reasonable, some are quite unreasonable. Facebook’s valuation is over $100 billion, but it doesn’t mean that every other player in that space has to be valued at so much. I guess the e-commerce valuations of one or two players are reasonable, because they consistently deliver, and they consistently know how to deliver, and that is very logical, but is it reasonable for everyone? No it isn’t.
IndoUS being one of the early promoters of mobile payments, do you see, now with Airtel Money coming up, that this space is evolving in India?
You know, that is a very tricky question. Frankly, we were very early into mobile payments and that has not worked in India yet, in terms of number of customers adapting to it, and also in terms of regulations. And, there are many reasons why mobile payments have not taken off in India. Sure, we all know that mobile payments have not taken off in India, but at least e-commerce is quite effective today. So getting back to that question of when mobile payments will take off, I believe that it would take a lot longer than what most other people are saying, because there are many challenges, there are infrastructure challenges, security challenges and that is why it has been quite slow.
Would you agree that most of the models we see in Information Systems in India today are copy-cat models of the US?
No, I don’t. None of the companies that have really taken off today are copy-cats. The idea might be similar, but the entire offering is quite localized to India. People in US use shampoo, we also use shampoo, but the kind of shampoo we use might be very different, and the way it is packaged is very different. So the companies that have really taken off in India have really understood the consumer requirements of India and consumer reach aspects of India.
In fact, the companies that have taken off have nothing like the US. Just because the idea is similar doesn’t make it a copy-cat, if that is true then everything in the world is a copy-cat. But, it works here differently and the companies that are trying to figure it out are doing well. The companies that have said let us do the exact same thing as the West have not worked here. It is true in Internet, it is true to FMCG and it is true in everything. If you look at any successful Indian company today, they may have understood the Indian consumer, they may have done things for the Indian consumer very differently than what their counterparts have done in the US.
Do you see interesting opportunities for entrepreneurs in local content creation and distribution?
Local content and local distribution will play a very big role. Maybe it is a question of critical mass reaching before that can come. It is like Dainik Bhaskar. It is a bigger newspaper than English dailies, but it took a little longer for it to get there. I think local content and local distribution is very important, and it will be important to figure out ways to go past your 100–200 million and reach out to the remaining 800 million, for which local content and distribution is the only way. It will surely happen, but we don’t know when it will happen.
What do you think are the opportunities in the Clean-Tech space?
India needs clean tech. But, the point is it is not a fully private endeavor. The Government policy will also shape and influence clean-tech. And, because of that this sector will also have the private public factors, and the private sector maybe more ready than the public policy. I think it is a very interesting segment, and I think it will happen, and I think it is an issue of commercial interest and policy getting aligned, and those are usually slower.
How many investments do you plan to make this year?
We don’t work with a rigid number like that. Either in 2008/2009, in the whole year we have made only one investment, and this year already we have made 5 investments. So, our investments really depend on what projects we get to access. And, my say is this year has already been a good year, and I would say that in general we do 8 deals or so in a year. But, sometimes it can be a lot less, and sometime it can be a lot more.
Can you tell us a bit about the investments done this year so far?
We almost never do a press release after we close an investment because we believe that entrepreneurs and CEOs should control their own press. You must have never seen us making a press release saying that we have made an investment unless it is from the company. So we don’t discuss it until the company itself is ready to discuss it. We respect entrepreneurs’ timeline, so the ones that are disclosed by the entrepreneurs we are happy to discuss those investments, but the ones that have not been disclosed by the entrepreneurs we don’t want to discuss that as it is not fair to them.
As one of the few women in VC industry in India today, do you see more women entering this space?
I think it is an easy question to ask, but the answer is rather more complicated. I think for women to be pursuing entrepreneurship, there needs to be a back-end funnel that needs to start working: career access, lifestyle support, so on and so forth. Today, if you go to any entrepreneurial events you may see at least 5 percent women, and that is better than zero. But it is not 50%, and this doesn’t work via a quota system. So clearly from a representation of number of entrepreneurs vs the representation in the population itself, or even if you take the demographic of the number of people educated and the number of people who are becoming entrepreneurs, it is a very small number. It is not zero and it is encouraging that there are at least a few, and I believe that by highlighting the women who have taken this path and succeeded, we pave the way for other women to follow, and that is usually the best way.
What according to you are some of the big opportunity areas that entrepreneurs can tap into?
Honestly speaking, the big bet areas are the ones that none of us know of today. Nobody knew words like social networking, crowdsourcing, user-generated content. These are all small themes that have become big. Large things that have become game-changers come from shifting paradigm of something today. Now however there are big areas, which in India have not yet been tapped. I think gaming has not been tapped yet, and the entire device revolution that has been happening elsewhere is not yet tapped in India in terms of how it will really effect the Indian citizens, how will it affect the enterprise, how will it affect schools and education is a big question, as devices are becoming more and more affordable and how this channel is going to utilized. I guess that question for India is not yet fully addressed.
Also, India is a perfect market that needs cloud computing. Also, asking questions like how will Indians get on internet, will local language help, or will bringing the price point down help, and how will technology make long tail media accessible, the whole long tail in SME is a huge segment that has been unaddressed in India. The whole opportunity in SME area is very exciting. So, I think there are several fairly big opportunities.
Any advice you would want to give to entrepreneurs?
I believe clarity of belief and passion that comes with such belief are very important. At the end of the day, you have to make people believe in your vision and in order to do that one has to work on something one believes in. Clarity of the idea and clarity of thought with the conviction to make it happen no matter what the hurdles are is of utmost importance. I think these are the most defining qualities of an entrepreneur.