It all boils down to trust, people and customers, says Sanjeev Bikhchandani, original pioneer of India’s internet tech ecosystem, at TechSparks 2021
From his investment playbook to importance of value creation for startups, the legend shares priceless nuggets from his three-decade-long iconic journey.
Entrepreneur and investor Sanjeev Bikhchandani can be called the original ‘Professor X’ of the Indian startup ecosystem. Since 1990, Sanjeev has believed in the power of entrepreneurship at a time when the concept was not even ripe for conversation. It was early stages still, but Sanjeev placed his bets in the passion of the new tech founders and startups, who for the most part, were considered misfits in the scheme of things then.
Sanjeev went on to create one of the oldest internet companies—Info Edge, which runs , JeevanSathi.com, , and Shiksha.com. A little over a decade later, in 2006, Info Edge was listed on the bourses, becoming one of the first internet companies to go public.
And once he turned an investor, he took early bets on startups like , which recently had a spectacular IPO, and other brands like .
“It's a daily grind” for Sanjeev, who never feels truly successful because tomorrow is one more day. In a conversation with Shradha Sharma at TechSparks 2021, the legend shares priceless nuggets from his three-decade-long iconic journey.
Playbook for investment
Sanjeev is known to have placed some of the most successful bets in Indian startups at their early stages.
Info Edge, one of the earliest and biggest backers of Zomato, invested Rs 4.7 crore in the company in 2010 for around 18.5 percent stake. With the blockbuster listing of the startup earlier this year, Sanjeev made 1050X return on his investment in 11 years. The company sold 2.32 percent stake or 4.93 crore shares through the IPO at Rs 76 and now holds around 15.23 percent in the company. This remaining stake of Info Edge is now valued at around Rs 15,000 crore.
Sanjeev’s faith in Zomato is the “ultimate evidence why India should invest more behind its startups and in early stage VC funds,” the investor wrote on Twitter.
What has been his strategy? What propelled him to park his money in those startups which were mere ideas with high ambitions.
“There is a filter,” says Sanjeev. “It all boils down to what the customers want and what you as a startup are trying to solve for them.”
Citing Zomato’s example, he says, “It was clear that the customer wanted it (food aggregation). I looked at their initial traffic data, it was growing with zero marketing. They had no money. So the traffic was growing without any marketing spend. There was something there.”
For that matter, even for Policybazaar, Sanjeev was looking for “the evidence” of its potential. At that time, there was no proof of how and what they were trying to solve in the market.
“The evidence was weaker because the site wasn't up yet. So there was no proof of them or the market they were targeting,” says Sanjeev. The story took an interesting turn when the startup’s Co-founder, Yashish Dahiya, visited Sanjeev’s office and sealed the deal.
He asked him about the price he is paying for his insurance, confidently betting it to be much higher than what it needs to be. Sanjeev brushed off the question, terming it to be “silly”, saying that he brought it from a public company which had standard rates.
In a bid to convince the investor about his proposition, Yash took down all the information about Sanjeev’s car, wrote some emails, sent out enquiries and came back with 10 quotations from different dealers.
“The lowest quotation was 40 percent lower than what I was paying. All these years I was being overcharged. The penny dropped. There was so much smoke and mirrors in the insurance sector that I used to buy the same assuming it had a company standard price. I didn't know. I said this thing (Policybazaar) has to work,” says Sanjeev, who decided to invest in the startup even though it was a pre-launch product but had evidence that it was solving the discrepancy in the market.
“So it's not as we saw everything. We got lucky,” he adds.
The team behind it all
In terms of overall assessment of a startup, Sanjeev has a core dedicated team of six to eight people who address simple questions like — Is the startup building an IP? Is there a network effect possible? What will differentiate the startup from the competition? Is there an already established incumbent? What will be the long term strategy?
The second most important thing for Sanjeev is the team that looks over the founders’ shoulders. What are their ideas on governance? Will they listen? Would they attract talent?
Having said that, sometimes it's just a leap of faith that a founder ought to take.
“We sometimes get it wrong, and sometimes we get it right. And you live with it,” says the investor.
For Sanjeev, who is sector-agnostic, it is all about good ideas with people. Info Edge has invested in an array of internet companies and new-age startups like , , , , and , and are among the 19 startups they have invested in.
“We see what's bubbling. Why should we be constrained by our imagination of companies or sectors?”
Sanjeev Bhikchandani in conversation with YourStory Founder & CEO, Shradha Sharma
Value creation over valuation
It is value creation and impact over a startup's valuations for Sanjeev, who takes immense pride in Zomato’s success. In this case, the startup has both!
“Zomato has a great valuation. But to me, more importantly, Zomato is providing a livelihood to 3,00,000 riders and giving business to 4,00,000 restaurants, each of which are employing five or 10, maybe 20 people. That is the impact Zomato has. So valuation is great and fantastic and we love it. But it's not valuation that gives satisfaction, it's the impact. Valuation is a producer,” he says.
What’s next for Sanjeev Bikhchandani?
What’s next for the man with the Midas touch?
“Will I start another company? I don't know. I don't think so. In the beginning, the company belongs to you, then you get colleagues, employees, co-founders, and investors. The company does not belong to just you. Then when you go public, you belong to the company so you can't just walk away,” says Sanjeev, who works seven days a week and makes certain that he meets young entrepreneurs to understand new businesses and happenings around.
“I get my energy from meeting entrepreneurs and listening to creative ideas,” he adds.
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Edited by Anju Narayanan