The surge in unicorns during COVID-19 is a testament to startups’ growth trend in India: Sajan Pillai of Season Two Ventures

The pandemic has created an accelerated push towards digitisation. Several companies, SMEs, and large corporations have been adopting newer models for growth. To further push these efforts, California-based Season Two Ventures, an early-stage venture capital firm, aims to further bring a catalyst to the B2B AI/SaaS-based tech space in India. 

Sajan Pillai, the Managing Partner of Season Two Ventures, has been a catalyst in bringing this change. Sajan strongly believes that India has the potential to be a major tech hub in the world, and his investment playbook exhorts the same. 

Last year, the B2B-focused $100 million fund, backed digital payments startup Uvik Technologies, air quality intelligence startup Ambee, data privacy company Ozone.ai, and two healthcare businesses -- Svast and Hilabs.

This year, the VC fund has invested in 4baseCare, an onco-genomics Indian startup. The fund is now in advanced stages of discussion to invest in 12 startups over the course of the year from the first $100 million fund, following which a second round of funding of about $350-$400 million would be initiated.

Prior to joining Season Two Ventures, Sajan, a tech entrepreneur-turned-investor, was the CEO of UST Global. Under his leadership, UST Global grew from 20 employees to more than 25,000 employees. He also led the company’s global business operations.

Sajan has held several senior management positions in the software industry. He architected and managed large software systems for MCI Telecommunications in the US. He also holds patents in Internet Computing and Data Systems. 

In a conversation with YourStory, Sajan talks about Season Two Ventures’ investment thesis, steps to be taken by Indian startups to overcome the COVID crisis, and its plans for India. 

Edited excerpts from the interview: 

YourStory (YS): What made you move from UST Global to the venture capital domain?   

Sajan Pillai (SP): I have been deeply involved with the industry in the Silicon Valley and Israel for the past few years. The deep ties between US Silicon Valley and the Indian tech scene have grown along my career journey in both countries.  

From 2012 to 2016, I saw the rise of startups in Israel, but understood there were gaps to scale, and also wondered why there were not enough startups from India at the time. The talent, focus, and business understanding of Indians are at par with Israelis, but the gap was still significant. 

I wanted to bridge that gap to create the next generation of successful startups. It was clear that the time has arrived for B2B startups from India to be showcased across the world, similar to what Israel had been able to achieve over the last decade.

The surge in unicorns and funding in the Indian ecosystem through and post-COVID is a testament to this and gives a clear indication that the growth trend will continue. 

We also launched Mclaren Strategic Ventures last year, an entity comprising a core team of former McKinsey, PwC, and EY consultants, and former CXOs to rev up investments in deeptech B2B startups in India and the US, and give them access to global markets.

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YS: What is the focus of Season Two Ventures and what is your thesis? What sectors are you keen on?  

SP: Season Two invests in early-stage B2B startups, building digital-first solutions focused on banking and financial services, healthcare, supply chain/logistics, deep tech, and other enterprise applications.  

We are keenly looking at Indian startups that are competitively priced, are at an early stage in their growth journey, show technological and business prowess, have exceptional founders, with a promise to scale in valuation and create an exit path for both the founders and investors. 

The journey from $1 million to $150 million is the toughest ride for startups - that is where we are trying to help.  

Our team consists of global advisors like Sunir Kapoor, operating partner at Atlantic Bridge Ventures; and Rollin Ford, former CAO at Walmart, among others. We are working closely with startup founders to establish a go-to-market product, leveraging our network and experience.

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YS: With the second wave of the pandemic hitting hard, what steps should startups take?  

SP: Some of the best startups in history were born or witnessed significant growth during times of adversity. The greatest beginning for startups happened during the 2000 crash. The second happened during the 2008 crash.

Companies like Microsoft, General Motors, and Hewlett Packard were founded during a recession. WhatsApp, Uber, Slack, Zomato, Policy Bazaar, were all formed during the 2008 – 2009 recession. Crises create new challenges that provide new opportunities and ways to solve problems. 

The pandemic in India, despite having a devastating impact, has already seen the startup ecosystem come together and provide novel/innovative solutions to combat the crisis, pivot their businesses, and accelerate their growth journeys.

A prolonged pandemic is tough for entrepreneurs. The future will be digital, with automation of legacy systems at its core – succinctly creating value. 

The current pandemic allows startup founders to double down on digital efforts and focus on business model innovations. This is the time when entrepreneurs spend the time and effort to look for patterns - past and present - to validate predictions. 

As a founder, it is important to build resilience into your business model, and to avoid succumbing to the challenges that exist, and instead pursuing opportunities for exploration and expansion via a differentiated strategy. 

YS: How has the pandemic, especially the second wave, impacted your investment thesis and decision making? 

SP: We are not seeing a slowdown in deal-making. We are getting a lot of deal flow in our areas of interest from early-stage startups, and we are looking to close three investments over the next two months. 

Through the lens of an investor, there are some basic elements that have not changed even with the onset of COVID-19, i.e., a great team, strong business ideas, and a strong understanding of the customer problem they are solving. In addition to this, we are now looking for startups that have maintained a sustainable growth trajectory even during the pandemic - from a revenue, product differentiation, and scale perspective. 

We are looking for resilience in these tough times, which could mean agility, being able to scale a product to meet the needs of remotely linked enterprises - acceleration of digital transformations at financial institutions, supply chains, healthcare providers, and faster turnaround of insurance processes. 

We are actively evaluating startups that we think can ride some of these trends to tide over the significant burden and upheaval of COVID-19 in India, and also build products for a post-COVID future - a future that has been significantly altered. 

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YS: What are the key trends you see in the Indian startup ecosystem?  

SP: There is a clear trend that most successful Indian startups are rooted in AI capabilities, a fact that makes a lot of sense when you consider the size, diversity, and depth of the datasets available to startups in India. 

I believe we will see an expansion and diversification of AI capabilities that are only strengthened by the heterogeneity of the data available. 

Concerning specific sectors within the ecosystem, I think that it is evident that we are in a time of transition and change. All the sectors that we look at within Season Two were already transforming. 

I think COVID-19 has accelerated a lot of the outcomes that had already been charted by investors, including us, in the ecosystem for some time. 

Specifically, in the BFSI segment, we are seeing changes in how transactions are being conducted, in terms of customer experience, digital innovation, and regulation. Fintech startups have and will continue to create tremendous change by disrupting many of these legacy systems, and that is doubly true for India. 

In healthcare, COVID has been a catapulting effect for digitisation and automation of processes, both with regard to payers and providers to improve patient experience and facilitate the provision of value-based care, by leveraging data for precision therapies, remote monitoring, and personalised treatment. 

Logistics/the back-end retail has become an essential service for most countries during the pandemic, with the requirements of remote working/operational lifestyle increasing the demand for a logistics/supply chain infrastructure. 

I think we will continue to see Indian startups in these spaces diversify and generate innovative solutions.

YS: What advice would you give entrepreneurs? 

SP: The time for India’s startup ecosystem has already come. The past few months of deal activity and increasing international interest in this market only confirm this. With digitisation driving core infrastructural changes, startups that leverage this shift to take on large problems and double down on the vast pool of tech talent in India are bound to see success. 

Additionally, founders should think about leveraging business domain expertise to design experiences. It is important to think critically about the capital structures you will utilise to build and grow your business. 

It is also important to be patient, stay in control of your business, develop resilience, and cultivate flexibility. The pandemic will come and go, but it is up to the founders to ride the tide and build something big for the post-COVID future.