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1Mby1M Virtual Accelerator Investor Forum: With Ashish Jain of 3Lines Ventures (Part 3)

Posted on Friday, Mar 20th 2020

Sramana Mitra: Do you want to do another example?

Ashish Jain: Let’s take one from India. I would not even call it emerging anymore. India is going through Innovation 3.0. 1.0 was around business process outsourcing. 2.0 was around IT services companies.

These founders are looking beyond replicating. They are looking into supply chain, platforms for IoT, automation. Arzooo is one of them. They are ex-Flipkart employees. They saw an opportunity to digitalize the supply chain for B2B retail. They are executing it perfectly.

India, as many would know, has gone through some macro changes around tax structure. They have a SaaS platform. They started with three or four cities and expanded literally on a weekly basis. This is another example for us. Great founders. Very passionate. Great experience. 

Sramana Mitra: You’re comfortable doing ventures that are Indian-facing?

Ashish Jain: Yes. That’s part of our portfolio construction. We are certainly going to look for India-for-India. We are also going to look for global companies as well because we can add a lot more value to those portfolio companies. We are certainly looking at deals where the entrepreneurs are replacing a lot of legacy systems using IoT and mobile-first platforms.

Sramana Mitra: I have a slightly different question. It’s a question that I ask people who are running small funds. The micro-VC trend is very hot right now. There’s a lot of innovation happening in the small venture capital fund category.

There is a class of VCs that are purely chasing unicorns. They want to go from zero to $100 million in five to seven years.

But there is another class that are looking at small, capital-efficient ventures and potentially seek early exit. Where do you sit in that spectrum?

Ashish Jain: Our investment thesis is not for early exits. We want to be true to our investment hypothesis and want to be true to our LPs. We are currently not investing in those companies.

Sramana Mitra: I’m going to push back. I don’t think that the people who are doing small, capital-efficient ventures and seeking early exits are not being true to their limited partners. That is an allusion I have to push back on. 

Ashish Jain: It all depends on your portfolio construction hypothesis and what you have told your LPs in terms of timeline.

Sramana Mitra: That’s right. They have told their LPs that that’s what they are going to do.

Ashish Jain: I’m not saying that they’re being untruthful. I’m saying that we don’t want to be untruthful to our LPs. Small, early exits are not part of our investment thesis.

Sramana Mitra: That was my question. You are a traditional fund that is looking for the traditional venture dynamics.

Ashish Jain: Absolutely. One of the things I would add is, we believe in early stage, early exit funds. We certainly expect to have a fund that is going to focus on early exits. 

Sramana Mitra: I think we understand the fund. One of the reasons why I do these things of inviting investors is so that we can start working together.

Ashish Jain: Yes, I think you’re doing a great service. A lot of LPs family offices don’t quite value what goes into a portfolio construction hypothesis for example.

Sramana Mitra: You have to have an investment thesis. You just can’t spray and pray.

Ashish Jain: There are two places GPs earn their keep. One is getting ahead of the deal flow. Number two is to have a sophisticated portfolio construction hypothesis. 

Sramana Mitra: Great, thank you for your time.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Ashish Jain of 3Lines Ventures
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