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1Mby1M Virtual Accelerator Investor Forum: With Shalini Prakash of 500 Startups India (Part 3)

Posted on Monday, May 13th 2019

Sramana Mitra: People are learning to market better. The packaging in India used to be really shabby. People understand that if you’re trying to position a sophisticated product, it needs to have sophisticated packaging.

Frankly, India has such a great tradition of artisans and craftsmanship. There’s no reason why you can’t do phenomenally beautiful packaging to market some of these products. The opportunity is actually really fantastic on that side.

Shalini Prakash: I totally agree. With more and more exposure for everyone in the last 15 to 20 years, finally we’re known for the art of marketing.

Sramana Mitra: What about exits? You said you’ve already had a few exits. Can you talk about the exits that you had. What is your impression on exits in general? What is your analysis of the exits in India?

Shalini Prakash: We had some exits around 2014 to 2015. We had Cucumbertown, and then Mygola. These are companies that were acquired. We’ve done pretty well. The startup ecosystem itself went through changes right around 2015 to 2016. There was not much money in the market and valuations were questioned. There’s been a little bit of correction around that.

Sramana Mitra: That correction was necessary.

Shalini Prakash: It came at the right time. Generally, many activities within the ecosystem itself have risen which is really good because for most investors – especially for non-Indian investors who are investing in India – the question was always about where the exits are happening.

Especially if you’re a foreign investor, it’s a question of investing in China, Southeast Asia, Indonesia, or in India. So it’s always about justifying why India. Where are the exits? Talk about IPO and large acquisitions. Fortunately, the Flipkart exit was a big story and a big win for us but we need more and more of those to come out to build the trust for any foreign investor.

Everybody believes in India and how strong this ecosystem is going to be. It’s a very important market for 500 Startups. Like I said, Flipkart is a good thing for the foreign investors.

Sramana Mitra: On the topic of exits, I’m equally excited as I am about Flipkart, which is an outlier. I’m more excited about the smaller exits. Nutanix bought a company called Ninjar.

Nutanix is a representative of global technology company that we have a lot of in the US, in particular, right now. There are lots of SaaS companies and lots of these mid-sized tech companies. There’s ServiceNow and many more. These are mid-sized, but they’re also quite large. Then there’s a whole lot of them that are smaller. Box, Dropbox, and so on.

There’s a phenomenal opportunity for these companies to acquire smaller companies like Ninjar. Qualys acquired one of our companies Adya. There are thousands of small companies out there and some of them are finding smaller exits. It is actually making the market more robust.

Shalini Prakash: When we invest in these companies, we’re always investing in the wolf pack. The intention is for each of these to be a success in its own right. If you’re even doing a $10 million or $15 million exit for a $50,000 check that you’ve written into a company, that’s a great outcome.

Sramana Mitra: That’s a great outcome. The thing that is important to keep track of is that there is one Facebook. There is one Twitter. There is one Google. But there are 200 SaaS companies or global technology companies.

In the history of a company, in one year, how many do they make? They don’t make that many exits. So you need more companies out there making steady continuous exits or continuous acquisitions so that there is a much bigger flow going. That’s what we need to be driving towards.

If all these companies start acquiring companies out of India, that liquidity in the market is going to start to flow really well.

Shalini Prakash: I totally agree. About five years ago, there were about 35 or 40 non-US unicorns that came out. Today, it’s about 260. That’s a really good number. In five years, if we all made that leap frog, probably 500 unicorns will come out of non-US markets.

Sramana Mitra: The non-US market is developing very well. Frankly, the non-US market as well as outside of Silicon Valley including the major hubs like Boston and New York are developing very well. We have great pockets now in Utah. Utah has produced several unicorns.

So in this kind of development, more dispersed distributed development is happening very solidly and that’s a great trend. In 10 years, that is going to really become the norm and that will be a massive improvement. It’s been a pleasure.

Shalini Prakash: It was lovely chatting with you today. Thank you for having me

Sramana Mitra: Thank you for your time.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Shalini Prakash of 500 Startups India
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