Some of the best returns will come from early-stage startups in the next 10 years, says entrepreneur Ashvin Chadha
Ashvin Chadha, Co-founder of Anicut Capital, says that some of the best companies are going to come up in India in the next 10 years.
Ashvin believes that it is the golden age of early-stage investing in India. He explains that the country is now at a stage where the US was in the 90s or early 2000s. He predicts that some of the big companies are going to be built in India over the next 10 to 15 years that will serve globally.
“I would definitely suggest you put in early-stage startups because you are going to see some of the best companies and then parallelly some of the best returns coming from early-stage startups in the next 10 years,” he says.
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Speaking about his own journey, Ashvin reveals that after completing his undergraduate degree from the US, he worked with Morgan Stanley in investment banking in New York, and then moved to private equity with General Atlantic. Post this, he moved to India and worked with India Equity Partners.
In late 2010, he returned to Delhi where he grew up and opened a family office and started doing private equity transactions in the consumer and financial services space.
“So that is a space we have been investing in for the last 10 years and private credit from our balance sheet. We started in 2011, that rolled into Anicut, which was a credit fund. More recently, we started the angel AIF, where we are a syndicate, we are not a blind pool but the only difference is that we actually put 10 to 20 percent of our own capital in every team. So, it is somewhere between a fund and pure syndicate,” he adds.
Active in both credit and debt investments
Ashwin reveals that his journey with Anicut began as a mezzanine credit fund and has been doing private credit in India for the last five years. It claims to be managing about Rs 1,000 crore of capital across two credit funds.
Anicut also launched its first angel AIF about one and a half years ago, and claims to have done about 30 transactions there and it is the entity using which it does early-stage investing.
The co-founder explains that Anicut was not planning to enter into the debt business, but did by chance.
“There was a common friend whose company needed short-term capital. So, this was a sub of a US tech company and for some reason, their US company was not able to send money to India due to some issue. So, they needed money for six months just to pay salaries, etc., and all the billing was done in the US. So, it was a very small, short-term opportunity and we were managing our own capital at the time. So, it looked good and I went ahead and did it,” Ashvin says.
Realising the opportunity, the team began doing cash flow lending, and the first 30 deals were done from the partners’ own balance sheet.
Speaking about the angel and equity funding deals, Anicut claims to have done a total of 70 to 80 transactions.
In this episode of 100X Entrepreneur Podcast, Ashvin Chadha, Co-founder of Anicut Capital, talks about the golden age in India for early-stage investment and his journey in startup investments.
To know more, listen to the entire podcast here
01:56 – Setting up Anicut Capital
03:24 – Initial equity and debt investments
04:51 – Structuring debt investments by setting up an AIF in 2015
06:04 – Investing in ShareChat during an internal bridge round
09:19 – Exits and thesis with debt investments
10:52 – “In my view, it takes 10-15 years to build brands in India and if you don’t stay the course, your compounding doesn’t happen.”
13:55 – Parameters and mental models while making equity investments
15:56 – Learnings from portfolio companies hitting a roadblock
24:12 – “We are in the golden age of early-stage investing.”
26:56 – “A good company will last even in a bad market.”
27:07 – Backstory & thesis of investing in Bira 91
30:51 – Backstory & thesis of investing in Wingreen Farms
42:02 – Backstory & thesis of investing in Neemans