'Founders know we are first investors who follow on, and lead subsequent rounds'

Anant Vidur Puri has seen the markets in China and Indonesia from close quarters, and worked in the US for a large part of his career. For the past three years, he has been in India as a Partner with venture capital firm Bessemer.

He sits on the boards of TravelTriangle, Cashify, and Remedinet, apart from being involved with Urban Company, Swiggy, and StayGlad.

In this interview with YourStory, Anant talks about Bessemer Venture Partners' latest $220 million India fund.

YourStory: How much has Bessemer invested in India, prior to the latest fund of $220 million?

Over the past 15 years, we have invested between $700 million and 800 million in approximately 60 ventures.

YS: What has been the Bessemer philosophy of investing in startups?

We follow what we call the ‘roadmap-driven’ approach to investing, which means that we are stage-agnostic. We can come in at the seed, series A, series B, series C across the range as long as the company fits our roadmap.

To give you an example, we invested in Pharmeasy at the seed stage and led their series A, series B, and also participated in their series C and D rounds. Similarly, for a company like Livspace, we led their series A, and participated in their series B and C.

On the other hand, in the case of Bigbasket, we came in at the series B stage and led their series C. In the case of Swiggy and Urban Company, we came in at the series B stage, and also participated in series C and D. So, it’s a fair kind of a range. We are fairly stage agnostic, and will continue to be.

YS: How hard is it for VC firms to hold their own, given the funding options for founders right now and players like Tiger Global being aggressive?

Our roadmap-driven approach tends to be our biggest differentiator when you think of competition.

Of course, we are competing with a bunch of other VC investors. But because of our approach, we stick to a few sectors because those are the sectors on our roadmap, where we have deep knowledge and a very strong point of view.

On those roadmaps, we never lose a deal.

"To give you context, out of the 35-odd deals we have done in the past five or six years, we would have probably had competition in five of them. Out of those five, we would have been the preferred partner for four — and we lost in one deal."

The reason is we are very deep in our roadmaps, and founders like to work with us for that reason. For the ecosystem, it’s obviously great that there are more funds and more capital because that means that more entrepreneurs can build more businesses — and it’s helpful for the ecosystem in general.

But yes, there is always going to be competition. But we focus on our roadmaps, and that’s what helps to differentiate. There are two or three other things that help us differentiate ourselves.

One is that we are stage-agnostic. So, we come in early and like to continue to invest in our companies. So, founders know that we are the first investors, and will continue to follow on, and lead their subsequent rounds. That’s a big differentiator for us.

"That’s because we do not just have this $220 million fund. We also have a $2.5-billion global fund, and $800 million growth fund. So, we have a lot of capital to invest."

Second, we have a very strong policy of continuing to be very selective about the companies that we invest in, and what that means is we will not be doing 30 deals a year.

We will do a handful of deals a year, but we go really deep into those deals. So when the founders get a term-sheet from us or we express interest, we let the founders know this is one of the four or five deals that we are going to do in a year, and that counts for something.

Also, we have lifecycle experience. We have taken seven companies public, and have several unicorns in the portfolio including Urban Company, Big Basket, PharmEasy, and the Good Glamm Group.

So when founders talk to us, they know we have this track record. We know what it means to raise a seed round like we did with PharmEasy, and also file for its IPO. So, we have seen the whole journey.

Lastly, we are a single global platform. We follow a global money fund philosophy. All our global teams come to evaluate all prospective investments, as well as to support all companies.

That means if you are a SaaS company in India wanting to get into the US, the entire global firm of Bessemer, our portfolio team, our HR team, our recruiting team, our marketing team — all of them come together to help founders as they look to scale beyond India, as they look to get other insights.

So, a lot of those things help us differentiate, and hence it’s great to have competition.

YS: Is there too much exuberance in the Indian markets — public and private?

It’s hard to say what is exuberance and what is not. The fact of the matter is there is a lot of capital going into the Indian private and public market. From an ecosystem perspective and a founder’s perspective, it’s great.

There is more money available, and more founders can raise capital. And that's always a positive thing. Apart from that, it's hard to tell because there are always cycles.

There are up-cycles and down-cycles. And it's always hard to tell when it's up or down. We are in the business of finding great companies and investing.

There have been times when people are exuberant, times when people are not exuberant. But for the ecosystem, I think it's always good to have more capital.

YS: But Bessemer Venture Partner’s new fund for India is focusing specifically on consumer internet and cloud software, digital health, social commerce, vertical and global SaaS. Why?

We spend a lot of time meeting all companies in a sector, sub-sector, talking to experts, talking to industry leaders, and then decide this is a space that we believe is ripe for disruption and value can be created.

It will be hard to walk you through the roadmap for each. But maybe, I can walk you through two slightly more recent ones.

For example, in the case of consumer internet, we built this roadmap. We actually started investing because we went to internet marketplaces in 2014. And the thesis at that time was that low internet penetration is going to rise. Offline retail is kind of broken, and the supply side in India is very fragmented. So, it is an opportunity for players who are aggregating the supply, and building a full-stack marketplace.

That's what led to investments like BigBasket, Urban Company, Swiggy and Livspace, all of which have gone on to become sector leaders.

Now, take the new generation of consumers, for instance. There's now a second generation of internet consumers in India.

"The first generation was largely male, English-speaking, and lived in tier-1 cities. The new generation of consumers in India comprises a lot of female consumers."

More than 300 million female users have come online in the past three or four years. There are a lot more vernacular consumers who don't speak English and live in Tier 2 and Tier 3 cities.

And, there are a lot more business consumers, who represent businesses that are now starting to come online. Going forward, the internet marketplaces of the future will be built for these consumers.

Similarly, another recent roadmap is global SaaS. India has a lot of technology and product talent in India. Companies like Zoho and Freshworks have created large talent pools, and the pandemic has made it easy for software to be sold globally remotely.

So, we believe all of these factors are going to lead to a much larger number of global software companies being built from India.

For these five roadmaps, what would the growth rates be in India?

On the software side, it is going to be a $100-billion global revenue market.

On the consumer internet side, we believe half a billion new internet users will come online in India, which will lead to $1 trillion of digital spends.

Those are two very large numbers, and that's why we are excited about these two categories.