It’s a great time to be an entrepreneur as well as investor in India: Tej Kapoor of China-based Fosun RZ Capital
Tej Kapoor is the Managing Director and Head of Fosun RZ Capital India, a Beijing-based venture capital fund. It is the technology-focused fund of Shanghai-based Fosun International, looking purely at tech investments in various stages, starting from early-stage and going all the way to IPO.
Tej has a BBA in Marketing and Economics from Bangalore University and an MBA in Marketing and Finance from Alan Shawn Feinstein Graduate School, Johnson & Wales University. Starting his career as a business analyst at Coca-Cola, he moved to AOL, which he calls a university-like learning.
Later, he moved to Naspers Group to work in Mergers and Acquisitions, where he witnessed investments in Flipkart, Gaadi.com, the MakeMyTrip-Ibibo acquisition. Tej has been involved in investing both in the US and India for the last decade, and is now on the board of advisors for ixigo.com and Kissht, and an observer for Delhivery.
Fosun RZ Capital’s portfolio has both seeded companies and large startups like Delhivery and MakeMyTrip. In China, Fosun RZ Capital has more than 60 portfolio companies, while the number is 10 in the US. The global VC fund has offices in the US, Israel, China, Southeast Asia, and India.
As for the ticket sizes, the fund invests a minimum cheque size of $500,000 to $1 million for seed, and jumps in at the Series-B stage, with investments ranging from $5 million to $10 million.
Siddhartha Ahluwalia, Head of Community at Prime Venture Partners, caught up with Tej Kapoor on this episode of 100x Entrepreneur podcast, a series featuring founders, venture capitalists, and angel investors.
"We do large-ticket transactions. We don’t typically come into Series D or E, because, in India, the valuation can end up being expensive. So, either we try to come in early or we try to come in late," Tej explains.
Tune in to listen to Tej in conversation with Siddhartha:
Parameters for investing
For the seed stage, Tej says it is very important that the startup has a disruptive business model and an aggressive founding team, since building companies in India is hard.
He adds, "You would need to back founders who have prior experience or are young and want to disrupt the models. We also look at co-founding team and don’t typically invest in a one-founder company because I think it takes a lot of effort to build the company."
Tej goes for large-sized sectors that have high potential for growth, and looks at the product-market fit of the startup. The fund helps the startups at hiring and to identify how they can grow by 10x than 1x, and also help them travel to China often to learn from the Chinese market. He believes India is following the Chinese market more closely than the US market when it comes to business models.
"We want to work with CEOs who can look beyond what you and I see and try to bring in immense value to the consumer," Tej says.
This year, RZ Capital will focus on sectors like fintech and logistics, which Tej calls their core strength areas. Besides these, travel, consumer internet, and product marketplaces too will be given attention, with ecommerce being an obvious bet.
The China investing culture
India and China are not very dissimilar in terms of cultures. Tej notes that while people think similar both countries are way apart in terms of scale. He says the entirety of China lives on the mobile phone throughout the day, whether it is ordering food or booking a cab.
"China is far ahead of us in GDP per capita, consumer internet speed, usage of data, and people’s understanding of products. So, China is a country that is on steroids when it comes to the internet, and the market is very deep. There are 400 million people who buy products in China, compared to maybe 80 million in India now. They don't talk in MAUs but in DAUs," he adds.
Tej explains that when he saw he could get 4G data in some rural areas of Madhya Pradesh, he understood that the future of internet in India will certainly be like that of China's, especially with the introduction of Jio. When data consumption on the content side grows along with internet penetration, content-based startups would have to convert into product orders, and Tej says this would be when India will see a massive growth.
"The next 10 years are going to be far, far better than the previous 10 years. This is a real time to invest here, and the market is getting deeper by the day. The entrepreneurs are getting smarter. Now, we also have a chain of companies that have been built and people are coming out of that. They already have learnings. So, they will not make the same mistakes again," he explains.
Tej speaks of the enthusiasm from Chinese investors to learn and understand the Indian market in order to invest in it.
"It’s a great time to be an entrepreneur as well as an investor in India," he adds.
(Edited by Evelyn Ratnakumar)