Sramana Mitra: If you were to assess, how many enterprise software companies that fit your thesis are operating in the market currently? What would be that number? Is it like thousands of companies? Tens of thousands of companies? What are we talking about?
Arihant Patni: We definitely have thousands of companies. This is in the enterprise tech space, so to speak. It also depends on what stage we’re looking at.
If you’re looking at a universe of companies that are at least somewhat on their way to making something successful, we’re probably looking at a good chunk. It’s a large number, and more and more are coming up.
Sramana Mitra: Interesting. We’ve come a long way. The Indian ecosystem has really come a long way. When I started first covering the Indian ecosystem, I’m really pushing for these product companies and not just the services companies. That was probably in 2005. You really made a great move into the product ecosystem.
Arihant Patni: Absolutely. This is a relatively newer phenomenon because in early days, focus was all around consumer and mobile. There was so much activity within e-commerce, logistics, and transportation, on Ola and Uber for example.
There was very little emphasis on the enterprise product side. That’s changed over the past few years. The quality of our founders has gone up. The realization from the investor side that this is something that could be beautiful has come around. So, there’s more capital available for these folks, and therefore that further sparks more activity in this area.
With the majority of our ecosystem, we’ve finally realized that it’s not just about doing stuff cheaper, but it’s about really investing yourself in building something at a global scale or global level of quality. I’m seeing founders where they just don’t want to solve a problem quicker, cheaper, and faster, but they really want to make a difference.
Sramana Mitra: Also the other thing that’s just starting to happen is a bit of exit. A very important piece that needs to fall in place is exits.
Arihant Patni: That’s right. It also takes time. The exits have started coming in the consumer space. I’d like to say that exits will come sooner for some of these enterprise companies because we’re not going to wait for every company to become a unicorn. We’d be able to harness value through strategic M&A a lot quicker in the enterprise space.
Sramana Mitra: It started happening with one of our companies. Adya just got acquired by Qualys, which is a cyber security company. There are a few others. Minjar got acquired by Nutanix. So some of that is happening.
My last question to you is, are you chasing unicorns? Or are you also looking at these early exit opportunities where you build something in a capital efficient way and then sell to a corporate strategic buyer relatively early?
I know that your investment in Hive is very much focused on the second strategy, which is to invest a small amount of capital and sell the company relatively early. But in general, for Ideaspring, what is the thought process?
Arihant Patni: I would say the second as well. For sure, we would be very lucky and very happy if we have a unicorn. But that’s a little bit unrealistic at this stage of the fund given that it’s our first fund.
Given where the industry is, if we can help founders build successful companies and get them absorbed by strategic companies and find them a good home, we’ve done really well for ourselves.
Sramana Mitra: Very good. Thank you for sharing. Thank you for coming.