Next wave of startup success stories in India could come from life science and molecular biology, says investor Dheeraj Jain

In this episode of 100X Entrepreneur Podcast, we feature investor Dheeraj Jain, who is also the Founder of Redcliffe Capital. Dheeraj shares his experience and thoughts around investing in biotech, healthcare and consumer startups in India.

Dheeraj Jain, investor and founder of Redcliffe Capital, started his career in Telenor in Norway, where he was into product development. After spending a year and experiencing the hard winter way back in 2001, he thought of returning to India and work for an IT company.

Subsequently, he joined Zensar Technologies in India, which was a joint venture partner of Fujitsu Services in London. And Fujitsu again sent him to Scandinavia to work for Nokia.

After an impressive stint of consulting for two years for Nokia, the Finnish multinational took him as a full-time employee. While working for Nokia, Dheeraj was sponsored for an MBA in London, after which he worked in various roles for Nokia.

Dheeraj Jain, founder, Redcliffe Capital

During his last stint at Nokia, he was part of financial planning, business analysis, and M&A. He says this helped him to foray into the finance sector.

Dheeraj says, “I was also lucky to meet the right people at that time. I started my own firm in London - Redcliffe Capital, which focusses on mid-market leveraged buyouts for Indian companies. We were bringing finances to these companies who were doing acquisitions of foreign assets in various jurisdictions”.

Meanwhile, Redcliffe started as an investment banking firm and gradually shifted to fund management. “I did that for six years and that’s the time we decided to move to India,” says Dheeraj.

The pull factor to India was also because of the entrepreneurial ecosystem that was building up around 2014-15. Dheeraj thought of building some capital to fund some of the startups in India, and that’s where his journey of investing in early-stage companies started.

So far, Dheeraj has invested in 32 companies, and some of his notable exits include Innov8, Burger Singh, and Supr Daily.

Siddhartha Ahluwalia, Founder of 100x Entrepreneur Podcast and Co-founder of SHEROES, caught up with Dheeraj in this episode of the podcast, a series that features venture capitalists and angel investors.

100X Entrepreneur Podcast is an endeavour to know their habits, mindsets, and viewpoints that can help entrepreneurs scale 100x.

Tune in to listen to Dheeraj Jain in conversation with Siddhartha:

The journey begins

Student housing startup Coho was Dheeraj’s first investment in India, and after that, he started investing in a few more startups.

“Now, we are almost four years into early-stage investments, and we are quite happy with what we have done so far,” says Dheeraj.

Some of the successful companies where Dheeraj initially invested are PeeSafe, Lifcare, The Man Company, Drivezy, Coho, Coutloot, Qdesq, and others. According to him, investing in these firms, they have raised a significant amount of funding.

Betting on the healthcare sector

Speaking about investing in the healthcare sector, he says, “Lifecare is a very good investment for us. It's more on the distribution side and it delivers chronic disease medicine, both online and offline”.

But Dheeraj’s real healthcare stint started back in London when he was discussing with some large funds on how pharma companies were taking a lot of time developing drugs, doing clinical trials and marketing.

“They (funds) were very excited about biotech companies, which they believed is a boon, and can stay on for the next 10 years. On top of that, you see deep learning, artificial intelligence, machine learning, and other technologies are changing how pathology and diagnostic are working. And that’s what made me excited about healthcare, not from hospital and pharma perspective, but from biotech perspective,” he says.

“We decided to take a bet on biotech and molecular biology (some of whom are relatively early in India, but they are more mature in other parts of the world). So, understanding those practices and technologies, and building that for Indian population made me excited about the sector. We also backed a life science venture, which is into clinical molecular testing for end users. They also collect a lot of genome data and we can do a lot more with the data, and give feedback to pharma companies. So, our thesis was very well thought on what kind of bets we wanted to take in healthcare,” he adds.

Dheeraj has also invested in Crysta, which is into pre-natal diagnostic for pregnant women to find out down syndrome for babies as early as the ninth week of pregnancy.

As these kind of tests are very expensive in India, Dheeraj says he is proud to bring such technologies to India. “There is a lot of exciting work happening in India. It’s creating enormous value for patients and the whole ecosystem”.

When asked about his views on investing in a life science startup, he says, “We have a large population, diversified culture, and are one of the largest bases for cancer, neurological disorder, cardiac diseases, NT, Nephro, and even lifestyle is diversified. We could bring some of these technologies to India. For example, oncologist companies don’t launch all of their drugs in India – only seven to eight percent are launched in India. AI and ML open up opportunities for predicting loss at different stages – especially the predictions at pathology stage itself”.

“In the US, I have seen not just one of these ventures, but many of them becoming unicorns. This is the next wave that is coming to emerging markets. Even in China, there are a couple of companies in the sector that have gone for listing. In India, we are seeing some of the companies which have successfully raised money, and the rest are building their products. So I think it’s a combination of many things – the market is big, diagnostics is a Rs 55,000 crore industry - molecular is fairly a small sector in India compared to the Western market, and so we believe the ventures we are backing could be large success stories,” he says.

Riding on Drivezy’s success

Delving about the secret behind the 100x success of Drivezy, he said, “Drivezy was formerly known as JustRide. They have five founders and the combination of all these founders and how they work together, the timing, the car rental market, and their ability to continually raise funds for their business has led to its success. All the founders are synchronised with each other. They were not the first movers, but they were a sort of second movers, and that helped them garner a large market size for themselves. All these combinations turn out to be big. Their execution capacity, backed by a good amount of capital was one of their reason for success”.

Speaking about what role the markets play, especially when one startup aims for 100X, Dheeraj says, “It has to be a very large market. In these times, there is no monopoly. Recently, there was an article talking about how Lenskart was having a share of just 0.5 percent of the market, but that itself is huge when the market is more than a Rs 32,000 crore industry. India offers a massive market size for consumer products”.

Investments gone wrong

Sharing his experience about investing in US-based ventures that didn’t go well, Dheeraj says, they invested in three US-based ventures including one VR-based gaming startup. Unfortunately, none of the investments went well for him, but he realised that he needs to be closer to these investments. He decided that he will not make any further investments until they have a presence in the US.

“I am happy that my other portfolio companies are doing well, and these companies have both enough capital and plan B. Unfortunately, the companies in the US didn’t have enough capital to do anything different, and therefore they scaled down,” he adds.

Unlike US investments, his investment in Singapore-based Crypto is doing well. He says, “The founders are of a different pedigree, and they know what they are doing very well”.

The learnings

Speaking about learnings he received in four years of early-stage investing and the founders he backed, Dheeraj says, “You back founders who have concept but zero execution skills, but who have believed in that model, and they will do everything to make it happen”.

“Finding these kinds of founders and the kind of solutions they have for the market, and their ability to scale up – these are just basic things which we look at before investing. And because we are into early-stage investments, we enter before any institutional fund comes in, and sometimes we lead the investments along with friends and family members. So, it’s extremely risky in that way,” says Dheeraj.

Finally, he also speaks about his investment in Deyor Camp, and why he believes experience travelling is the next wave of travel, a market that is gradually increasing in India.

(Edited by Megha Reddy)


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