Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Sasha Mirchandani was recorded in February 2016.
Sasha Mirchandani, Managing Partner of Kae Capital, an early stage venture fund, is also a co-founder of Mumbai Angels. Sasha re-emphasized that Indian VCs only invest in India-facing B-to-C ventures and global B-to-B startups. India-facing B-to-B is not a sector that gets any investment, with few exceptions. We discussed the lack of exits in India, as well as the missing late-stage funding for B-to-C ventures facing the Indian market. Those of you who are working out of India would do well to keep these key points in mind.
Sramana Mitra: If you could tell us a bit about our fund and your investment in recent years and how that dovetails with the trends in the Indian industry.
Sasha Mirchandani: I run Kae Capital. We are an early stage seed and venture capital fund. We raised our first fund in February 2012, which is approximately $25 million. We invest $50,000 to $2.5 million really early in the life of a company. We are currently in the process of raising fund two which is going to be below $40 million. We raised most of it and we hope to close the fund in the next month or two.
We do two kinds of investments, primarily India consumption and cross-border technology. India consumption, of course, is for Indian companies in India. Cross-border are companies that are born in India but primarily sell to a global audience. Most of them move to either California or New York.
Sramana Mitra: Most of them eventually move out of India, is that what you’re saying?
Sasha Mirchandani: Our cross-border companies are the ones that move out of India very quickly after being born. They have proof of concept in Indian companies, but they quickly move out. They generally have two or three co-founders. One founder moves to the US and one founder then lives in India to run the backend of the company.
Sramana Mitra: Does that also indicate that most of these companies are looking to raise their series A in the US?
Sasha Mirchandani: That would be ideal. What currently happens is they raise seed capital in India. They also raise Series A from Indian cross-border firms. There are a lot of very successful Indian cross-border firms like Nexus and Inventus. By the time they get to Series B, there’s a better probability for them to raise capital outside.
Sramana Mitra: How do you characterize the key trends in the last five years in the Indian startup ecosystem?
Sasha Mirchandani: Any trend is like a wave. In a single year, you’d have multiple opportunities with multiple sectors. Just in the last year, there were so many opportunities in India, whether it be hyperlocal, SaaS, healthcare, or home services. The idea is, as a firm, do you have a thesis on a particular sector or are you being opportunistic?
We try our best to have a thesis and go bottoms-up. If you don’t have a clear thesis on a particular sector or are not convinced on something, we will just keep that opportunity and wait for the next batch of opportunities to come by. In the last five years, there have been a lot of opportunities. E-commerce has been the biggest because of the size of the opportunity. There are four or five companies that raised to unicorn status, all of which are in e-commerce.
Sramana Mitra: Have you invested in e-commerce in India?
Sasha Mirchandani: Yes, I invested in a company called Myntra. I also have a company called Healthkart. We have a new company called Find, which is a hyperlocal e-commerce company.