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1Mby1M Virtual Accelerator Investor Forum: With Shalini Prakash of 500 Startups India (Part 2)

Posted on Sunday, May 12th 2019

Sramana Mitra: Does that mean that you don’t invest in the major metro-oriented, the higher end consumer-oriented businesses, or the global enterprise?

Shalini Prakash: Of course, we do. We do everything. Nothing has changed. Most companies that we’re seeing today in the market are mostly focused towards the next 200 or 300 million people. Having said that, we’ve of course invested in the last 12 to 15 months in companies that are completely focused on deep technologies.

For example, there’s this company called Pandorum Technologies that is focused on tissue engineering and cellular regeneration. Of course, we have been looking at companies like that as well. But moving back 18 months, there’s this company called SpotDrop that focuses on legal tech. It’s a SaaS product that set out to build a global company.

Most of these SaaS companies don’t remain in India. They always look for US or Southeast Asia as a market. These are all global companies. So we look at everything and continue to do that. But if you look at the last 15 months, as a seed investor, you see waves of companies. There’s a trend and then you find 10 companies that are very similar. Three months later, you find a new wave.

The wave that we’ve been seeing last year has mostly been around vernacular commerce and then there was vernacular content. The end of last year was mostly on vernacular social commerce that is focused on vernacular content again. The whole of last year was in a different area.

Sramana Mitra: FinTech is big in India right now.

Shalini Prakash: Of course. FinTech’s big for the last two to three years, especially after demonetization. It came about in 2016. It’s only getting into bigger and bigger payments. It’s interesting because this shift is, again, not with urban market.

They’re looking at the next 200 or 300 million people and thanks to internet penetration across different markets in India, the number has been growing astronomically bigger and bigger. FinTech has been around for really long. It has taken off really well post-demonetization. Now, we’re also seeing this new wave around CPG.

Sramana Mitra: The brands are very interesting. The observation I have is how Africa really leapfrogged with mobile and went to mobile banking and mobile payments very successfully.

With Jio and this massive next 100 million penetration, that could happen in India because there’s a very flimsy penetration of financial services in that segment. There, it could be a massive wave and massive developments including credit infusion into that market. That’s a very interesting opportunity.

But on the other extreme, I’m also very interested on what’s happening in the high-end brand development. There are new Indian brands developing right now. This is a trend we are seeing as well, and we have it in our portfolio.

There will be some very interesting brands including some higher-end brands that are going to be catering to the mature Indian consumer that has been connected for over a decade. It is a sophisticated online consumer. Don’t you think?

Shalini Prakash: I agree. Some of these consumer brands may look at how to do that if the consumer-tried B2C model is going to work for India. But you’re right. I’ve seen all kinds of companies come out in the last two years. I also know funds that are focused only towards CPG.

With the growing middle class and the aspirations of the middle class, there’s more and more room for these products to come. I see a big shift with cosmetics. There are so many Indian companies coming out with a localized product. They’re Indianizing a lot of these products. They’re very competitively priced compared to any Western product.

About 15 to 20 years ago, it was a big thing to buy a foreign product. It’s not like that anymore. Everybody is happy to pay for a good product. It doesn’t matter if it’s Indian. No one’s allured as much as they used to be, which is very good.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Shalini Prakash of 500 Startups India
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