Sramana Mitra: So, it’s a $175 million fund. What stage? Is there a comfort zone in terms of investing?
Hemant Mohapatra: We come in early. We love series A and seed. Those are the two stages that are the most common. Last year, half of our investments were seed. Our check sizes range from $1 million to $3 million for a seed and all the way to $10 million for a very compelling team that has an idea.
So we would directly do a large series A. There’s a B2B commerce company that we invested in one and a half years ago and now publicly does above a billion dollars. Then we also have a growth fund required for larger rounds.
Sramana Mitra: Let’s take a couple of the examples that you gave. Oyo and BYJU’s maybe. When did they come to you? When did you get involved? What was the progression of your involvement in those companies?
These are obviously companies that have raised a lot of money. How does that evolution happen in those kinds of companies?
Hemant Mohapatra: I’ll take two examples. One is Oyo and then Udaan is another one that I really like talking about. This was before my time so most of it is not my contribution to the firm and the fund. Other people have done all the hard work.
Oyo was very interesting. A friend of mine – Maninder Gulati – was a principal at Lightspeed four years ago. Most of us are entrepreneurs and engineers. We like thinking about markets and opportunities. So he was looking at the hospitality market and he had done some work on it. There were some pretty big gaps in the market that were never addressed.
That market essentially targets unbranded 2 to 3 star hotels, which have no discoverability platform for them. They can’t really put themselves up on Airbnb, Booking.com, or Hotels.com. The kind of people who go there to book hotels don’t really look for 1 to 2 star hotels.
He thought that most of India had a bunch of hotels that had no way to capture demand online. They had no way to be discovered. This felt like a technology-based plane that could become a large company. So, he was looking for a founder. He came across Ritesh, a 19-year-old kid who had just got into the Thiel fellowship. He had got admission into one of the premier colleges in the country, but he also got the Thiel fellowship, so he quit college. Obviously, that’s one of the requirements to join the Thiel fellowship. It came up in the news where he gave an interview and talked about what he is doing.
It turned out that it was very similar to what Maninder thought about the gap in the market. So he hustled his way into discussing what Ritesh was up to and built up a relationship. We came in very early. They had just about 50 hotels at the time. They went all out based just on this early traction in the market. Now, they have 300,000 hotels.