Sramana Mitra: Let’s talk a little bit about geography as it pertains to IT and IT-enabled services. That includes healthcare IT. Our audiences are focused on IT-enabled services. One core algorithm that we have picked up from the way Indian investors are operating by working with them is that they like all the SaaS, cloud, AI, and all of these companies to be facing the US market or the global market.
When it comes to those kinds of ventures, they prefer that these companies do not sell into the Indian B2B market. They want the B2B SaaS to be sold to the global market. Of course, there is the consumer B2C products that are India-facing that people are still interested in.
There have been some kinks in that market as well in that some of the companies are very over funded and have not had the fundamentals to the extent that they were expecting to have. Can you reflect on these dynamics a bit? How are you and your investor pool parsing al this in the early stage investment work?
Padmaja Ruparel: That’s a very good point and a very interesting point. What is happening here from the angel investors’ perspective is that the B2B companies are getting faster investments now. Let me take you back one step. Angels here are part-time angels whereas angels in the US are full-time.
Sramana Mitra: We have both.
Padmaja Ruparel: Most of our angels are part-time. They are either sitting as CEOs or CFOs. What this is bringing is that startups are directly connected to people who are decision makers in their companies. As they’re building B2B propositions, these investors who are sitting as CEOs simply pick up these companies, introduce them to different corporates, and help the company to grow. There is a huge sector here where these companies here can grow.
We have several examples where they have done well and exited in about three to four years. There are companies like Druva that started here. They had the advantage of talent. They had the advantage of cost. They had the advantage of piloting and bringing their products a robust stage and building revenues. Then they went to the global market. Druva is now a big company. What is happening is these young B2B companies are piloting here, building domestic revenues, proving the model, and proving the product. Then they partner with global companies. That is one path that is happening.
There is another path which is there are young B2B companies in India which are not necessarily focused on the global market. They are just focused on the domestic Indian market and they’re building very rapidly because they’re focused on the Indian product. They don’t even have the imagination or time to go overseas. There’s so much business here. That’s another class of B2B product company that has mushroomed.
On the B2C side, the whole startup ecosystem has been heavily invested. With these e-commerce companies, India infrastructure is not at its best. It’s creating a lot of other new companies which are complementing these large companies. For example, logistics companies. You think of something like FarEye. The e-commerce players are aggregators of products and customers, but they must be delivered. Who’s delivering them? It’s a whole host of young companies which are delivering them.
They are riding on the growth of B2C state of the e-commerce here. The last piece is B2C has grown up from a different perspective. In India, you have the whole spectrum. You have the telecom growth. A lot of companies are leveraging these platforms and catering to the B2C play.There is the B2C play and there is the B2B2C play. There is an agri company that has built its revenue model on B2B but its delivery is B2C. It’s very interesting to see what’s happening.
Sramana Mitra: Why don’t we talk about some of your companies that align with these trends that you just, very nicely, outlined? What are some of the highlights in your portfolio that cater to some of these trends?
Padmaja Ruparel: I was trying to list them as I was responding to your earlier question. Let me focus on them a bit. Let’s pick up the company called Sapience. It’s a product company on performance and productivity.