Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Shalini Prakash was recorded in March 2019.
Shalini Prakash, Venture Partner at 500 Startups India, talks about the opportunities in the Indian market.
Sramana Mitra: Let’s start by giving our audience a bit of an orientation of what’s happening at 500 Startups India. How are you positioning the activities of the organization?
Shalini Prakash: We’re Valley-based and are investing in early-stage tech companies across the globe. We have over 2,000 portfolio companies across 60 countries and several micro-funds focused on different geographies.
In India, we’ve been active since 2012. We have about 60 plus companies here. We have been investing in the region’s most promising founders who are working on all technologies and sectors. We’re sector and technology agnostic. So we pretty much look at everything.
Sramana Mitra: What do you like to invest in? Is it both B2B and B2C, or do you have a preference for one or the other?
Shalini Prakash: As a fund, we’re sector and technology agnostic. We pretty much look at everything. We’ve invested in companies with drones, biotech, marketplace, and SaaS. We look at complete technology literacy. We invest in those areas.
Sramana Mitra: The other question is about stage. What’s comfortable? Right now, we have a very segmented seed ecosystem with some people doing pre-seed, seed, post-seed, pre-series A, small series A, and large Series A. Where in that continuum do you like to play?
Shalini Prakash: It depends from sector to sector. We have pretty much been a seed investor. We like to come in very early – either the first check or the second check.
Having said that, we’ve also do companies in India in series A stage if it’s a space that we really like, there aren’t too many companies that we can find and acquire, and we really love the founder. We have taken those bets as well. But typically if it’s the seed stage, we’d like to be the first people writing the check.
Sramana Mitra: What size check do you like to write?
Shalini Prakash: In India, we’ve been doing checks anywhere between $50,000 to $250,000. It depends on the stage of the company and how far along they have been with product and traction.
Sramana Mitra: You syndicate with other people as well?
Shalini Prakash: Rarely. We take the whole round ourselves. Especially in India, we’ve mostly done co-investing either with angels or other institutional funds.
Sramana Mitra: Let’s talk about some of the companies that you’ve invested in. You said about 60 companies since 2012 to 2013. What are some interesting success stories that have come out? What can we learn from those?
Shalini Prakash: The investments in India have been very interesting because the initial wave of companies that came out feel like the all out in the flip cards. That’s in the 2009 to 2010 timeframe. Most of the companies that we invested in after 2013 to 2014 have mostly been around the marketplaces. They’re really focused on B2C offerings.
Of course, we have seen a few exits as well around 2015 to 2016. We’ve seen about five or six exits. But actually, the kind of investment that we’re doing now is very different from the kind of investment that we did. The initial wave of companies were only catering to the tier-1 cities of India to the urban market from Bangalore or Delhi.
But that’s not the kind of investment that we’re looking at. It’s really about what 80% of India, which is the non-urban market, needs today. It could be vernacular content. It could be healthcare or education. So our investment focus has shifted from what it used to be five years ago.
Also there’s been so much of development in India. Every person has a smartphone and internet. We’re already at about 650 million smartphone users who have access to Internet today. That number is only going to be bigger and bigger.
Since there’s access to services and information, the shift for most of these early stage companies has mostly been towards a new set of market for the next 300 million people. So the kind of investment that they’re making is very different from what it used to be before.