We invest in teams that understand, respect, and fear lending, says Ganesh Rengaswamy of Quona Capital

Ganesh Rengaswamy, Co-founder and Managing Partner, Quona Capital, began his career working in Strategy and Acquisition at Infosys Foundationin the San Francisco Bay area.

An engineering graduate from Indian Institute of Technology (IIT), BHU, Varanasi, Ganesh did his PGDM from IIM Calcutta. While pursuing his MBA from Harvard Bụsiness School in 2004, he took his entrepreneurial plunge and started Travelguru. 

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In 2006, Ganesh began his VC career with Greylock Partners. In 2014, he co-founded growth-stage fintech-focussed VC firm, Quona Capital.

Quona makes investments across Asia, Latin America, and Sub-Saharan Africa. Some of its portfolio companies include ZestMoney, Fisdom, and NeoGrowth Credit. Quona has also made a couple of exits, including IndiaMart. 

In the latest episode of the 100x Entrepreneur Podcast, a series featuring founders, venture capitalists, and angel investors, Ganesh spoke to Siddharth Ahluwalia on the growth of digital lending and neo-banking in India. 

The story so far 

Looking back, Ganesh says his career has been a “combination of technology, entrepreneurship,venture capital , and financials, working on financial services solutions.” 

Back in Infosys, he worked with retail, commercial, consumer internet, and financial services clients. One of the largest programmes he managed was that of re-architecting the authorisation clearing and settlement system at Visa International. 

“That is what got me into financial services -- the blend of financial services and technology,” he says.

Later, he went to the Harvard Business School and started Travelguru, which got acquired by Travelocity. 

Since then, Ganesh has been an investor in the Silicon Valley and then came back to Asia and has been in India for more than a decade now.

He attributes his personal passion and focus to start a venture capital firm to two things -- one, to combine his experience in technology entrepreneurship and financial services to back impactful entrepreneurs; and second, to create investors to back entrepreneurs. 

Quona’s investment thesis

Quona Capital believes in the digital landscape, the future of financial inclusion, and how the context of the digital landscape will rapidly change, given the newer distribution mechanisms, SaaS solutions, Cloud, and efficient ways to develop solutions.

“The idea was that a large part of the target segment whom we wanted to back were entrepreneurs, creating solutions in emerging markets that are essentially underserved or unbanked,” Ganesh says. 

Quona operates in India, Southeast Asia, Latin America, sub-Saharan Africa, and South Africa, and now it is starting to get more active in the Middle-East and North Africa (MENA) region and Gulf Cooperation Council (GCC). 

It has constant investment themes across markets. Quona backs entrepreneurs who are creating financial innovations or solutions for figuring out how to make the life of consumers or SMEs better.

“It could be about better education, better healthcare, how do you progress or build your business or scale your business,” Ganesh says. 

With that perspective, as much as Quona invests in digital, consumer-lending or SME-lending payments, insurance, and wealthtech, it also invests in a number of adjacencies like agriculture and finance, health and finance, education and finance, commerce and finance, mobility and finance, among others. 

Ganesh says that Quona typically invests in pre-Series A to Series B rounds. Its ticket size ranges from $1 million to $10 million, “but usually in the sweet spot of $3 million to $5 million,” he says. 

Quona invests in teams that understands, respects, and fears lending. This means, it invests in companies and teams that understand the different dimensions to underwriting, and deeply understands its customers. Ganesh says, this is because not many lending companies understand this, and post COVID-19, a lot of fintech companies are going to find it challenging to survive. 

“Some of it might be because of COVID-19, but a fair bit of it would also be because they were on the weak footing and on fragile principles to even start with,” he explains.

Exit plans

Quona Capital’s portfolio company IndiaMartmade IPO last year. Along with Amadeus Capital Partners, Quona had invested in the company in its Series B round in 2016. 

“India Mart had a very strong connection with the SMEs supplier and buyer universe. It had worked hard over the years to educate SMEs and on-boarded them on digital platforms. This helped them discover more meaningful solutions, help them with price discovery, and provided them a set of affiliated solutions,” Ganesh says. 

This, in turn, made things a lot smooth for buyers and suppliers. 

Ganesh says, IndiaMart is probably one of the most successful digital IPOs the country saw in the last decade “in terms of how the stock has sustained and performed.” The VC firm continues to remain extremely bullish on IndiaMart and plans to continue to remain an investor in the company. 

Similarly, Quona had invested in Series A round of coins.ph, one of the largest digital payment solutions provider in Philippines, which later exited to Gojek. 

Going ahead, Ganesh feels that with the effects of Covid-19, people are starting to get more comfortable with digitisation across various use cases in their lives. Quona’s investment themes will evolve rapidly as a result of customer adoption and education.

“If anything, it is only going to provide us more exciting opportunities that we can believe in,” Ganesh says.