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Jan 17, 2023
Topic
India Is Going To Create Global Category Leaders And Category Creators In Software"
  • Anant Vidur Puri, Partner, Bessemer Venture Partners.  

     

Q. What is your motivation to be in Venture Investing Business?

I joined BC Bank in 2014 and if you remember, 2014 was an interesting year for people in the startup ecosystem. It was the first year when we had the very first $100million investment rounds and some of these global funds like Softbank and Tiger Global came in and invested $100million of funds in companies like Snapdeal, Ola, Flipkart and it was basically the first year where these large funding deals were happening and it was also the year where there were multiple unicorns getting created, and the whole concept of unicorn was established and it was a really exuberant, enthusiastic time where everyone was very positive and I had just graduated from IIT with a degree in Engineering and everyone around me was either starting their own business or joining a fast growing start-up, so, at that time it seemed like the right thing to do to be in this ecosystem. I didn’t have any great ideas which I really wanted to pursue, so I thought that having no ideas to execute let me try to be close and coincidently or by luck an opportunity with the fund came along, and I joined Bessemer Bank in 2014 and since then I have really enjoyed working here. And the constant motivation is the fact that you can meet these smart, very driven, passionate founders and have the opportunity to be a small part of their journey and help build their vision out that really keeps you going every day.

Q. How would you describe a work day and a leisure day? What does it look like? What are your general activities?

The most important part of my work day is talking to founders. You are always meeting founders, talking to them, learning about their businesses and so on and so forth. That’s a big chunk. But the other big chunk which is very specific to us is that we follow what is known as a ‘Roadmap driven approach’ to investing.  What that means is that it is a very top-down approach to investing, where we form what we call roadmaps and these roadmaps have pieces but on steroids. In simpler terms, what it means is that we will do a lot of research about the space, try and find the right opportunities, what are the problems to solve, what are the opportunity areas, what are the gaps, how to solve them, talk to industry experts, talk to people who are already in that space, talk to traditional companies in that space, try and talk to new companies in that space and just form a point of view as to what would it take to build a successful, strong startup in that space and the output of that is basically an evaluation framework or a set of questions or a set of risk factors that you need to address before you make an investment. That's also an important part, where we are constantly talking to industry experts or doing research, learning and thus, leading to forming our roadmaps and then we take founders who are building companies on that roadmap. These are the two main parts of the day. My leisure days are reading, cooking, and traveling. 

Q. What are your views on the future of India as a market?

I obviously have a bias for investing in India. I have been investing for a while but thinking objectively, the last few years and coming several years are very exciting for India – it’s a very exciting time to be in India. There are many reasons for that; firstly, if you look that fundamentals of the economy, today the whole world seems to be worried about economic slowdown, across the world, people are worried about the stock markets not doing well, the inflation is very high, interest rates are high, and the fuel prices are high, that’s what is happening all around the world, but if you come and see what’s happening in India, our markets are actually up – if you look at Sensex or Nifty they are going up, inflation isn’t a huge problem and it’s not like we are running out of fuel. All of those things happening abroad are not happening in India.  We have a young population; we are still seeing a 6-9% growth depending on which economist you believe. India is first of all this oasis in the world where things are looking positive. Second is that in the last 10 years, we have seen so much growth – our economy grew from $2.5-$3 trillion showing a steady growth and so many great startups have emerged. It is hard to imagine that companies like BigBasket, Urban Company, and Swiggy didn’t exist till 2010-12. But today if you are living in Bangalore, you are using at least one of these three companies on a weekly basis if not more. You can see so much good has happened in the last 7-10 years. 700 million people have come online, $100 billion worth of e-commerce spend has happened and $20 billion of SaaS revenue, etc. But now when you look at the next 10 years, you realize that all of those 700 million people who are online are still online, in fact they are only growing. The GDP per capita is also growing. The same people now have more money to spend. SaaS companies are now growing and they are selling not just in India, they are also selling globally. Everything that happened in the last 10 years is still there, plus it’s going to get better and obviously it is quite evident that it is a good time. The macro is great and everything that happened in the last 10 years is great and it is all going to continue because we can see that continuance. 

Q. What is your investment thesis? Are there any present sectors or ideas that you would like to back?

We follow a roadmap driven approach to investing. A top-down way of identifying potential places that are going to get disrupted opportunities and then find companies which align to that. We currently are investing in 4 key roadmaps and I personally am a lot more involved in two of them; firstly, Internet marketplaces roadmap which could be B2C marketplaces or B2B marketplaces. Funds have already invested in companies such as Swiggy, Bigbasket, Urban Company and going forward we believe to see more B2B and B2C or D2C brands – basically internet companies getting created. The internet marketplace is a big thing and I feel like not just for consumers but also for business would become even more exciting in the coming years. Second key roadmap is around SaaS – SaaS could be of two types; SaaS being sold to customers in India, SaaS being built for the Indian market and then simultaneously we can have SaaS being built for global markets, both of them are exciting areas for us. We have invested in both areas of companies, like CTERA that sell to India and they are doing really well. We feel that both India SaaS and global SaaS are both great places to invest in. Those are the two key roadmaps – Internet Marketplace and SaaS – where I spend most of my time. As a firm we have two other key roadmaps i.e., Fintech and Digital Health. My partner Vishal spends a lot more time on those areas. Those are broadly the four themes we invest in. 

Q. What are your 5 key learnings from your experience as a venture investor?

I was thinking of this question and I realized that I don’t have five, I just have one learning. The thing that I have learned, the thing which I really think is very important for founders especially or even investors – those who are in this ecosystem to understand is that there are things that we can control and things we cannot control. What we can control is are we building a great product, are we finding customers to sell that product to, are we making sure those customers are happy and are we making revenue from them – that is enough control I feel and we should just focus on that, focus on getting to product market fit, figuring out our go-to-market strategy, getting revenue from our customers and that should be the goal of the company. Priority of the company should be to get to a certain number for revenue - $1million, $10million etc. In our minds, having a goal of $100million of revenue is great, that’s what we call as a sector, a great place to be because if you have a $100million of revenue then there are customers that love you, and your product, who are paying you, which means that now you have built a business that will probably sustain for several years. Then there are things that are not in our control – such as valuation. A company with the same model, same revenue, same customer set overnight can be valued more or less depending on what somebody in the public markets decides to do. That’s not in your control. You can’t do anything about it so benchmarking yourself to it doesn’t make much sense like saying “I am a billion-dollar valuation” or “I am not a billion-dollar valuation” has no value, because someone’s opinion can literally change overnight. That would be the biggest learning that I have ever had. Focus on things that you can control, which is your revenue & customer, try to build a $100million revenue business anything else would solve for itself, don’t focus on valuation, don’t focus on any of the other things.  

Q. What are your top trends in India and Globally, be it Consumer Trends, Industry Trends, Technology Trends? What are top trends that you would like to follow?

There are many trends but these are just five trends that I am very excited about. The first trend which I am really excited about is India is going to create global category leaders and category creators in software – what that means is that – global leading software companies, No.1 players in their category will be made from India, not No.2, not No.3, not the third best players or the second best players, not the cheaper version, the best company in software is going to be from India because we have fundamental advantages of having more efficient and building more efficient businesses and we have higher retention because of better customer service. This is the strength that Indian companies have and over the next 10 years it will manifest itself as leaders being created from India and not just a number of players. Even category creators. For example, we have invested in a company known as Leena AI – which has created the category of HR services. I feel that is the biggest strength. The second thing which I see is what I like to call -fintech for all. In India and this is a more India focus, right, with Aadhar, UPI and the whole Indian financial services tag that has been created over the last five, six, seven years. Every bank is now connected at the back end. You can transfer money from any account to any account without needing any details. You can do customer verification, KYC using a single software over video at any time of the day in any part of the country. Using the AA framework, you can get anybody's financial data, like any institution can request for somebody’s financial data from any other institution. This is creating an interoperable network of financial services, which means that in the next ten years again, the trend that I see is a lot more software is going to get built, which on top of this interoperable network, like things that you are today seeing happening, in person,  inside a bank branch or even over the phone, all of that is one of the software, all of that is gonna happen through software in the coming years. That's the number two trend. 

The third is what I call enabling ecommerce. The last ten years have been great for e-commerce in India. Flipkart, BigBasket, Swiggy, Amazon, or any large e-commerce company, have all done very well. Now the next step in e-commerce, keeping these growing companies aside, the next step is in my mind is that everybody will want to sell online and the only way they can do that is if they get the same tools and the same technology that all of these big companies have. For example, be it like the logistics technology that Amazon, Flipkart or BigBasket has, that needs to be made available to all companies. Whatever is the marketing technology that they have, to provide customers, that has to be made available to everyone. Whatever is the payment, literally every single thing. I feel that this is going to happen in the next ten years where software will be built to make sure that every business, even your local kirana business can sell and market and collect payments like Amazon does with that same efficiency, speed, smooth experience and that’s number three, enabling e-commerce.

Number four is what I call productization of services. India has 1.4 billion people. If we have to become a $5-$6 trillion economy, then, we can't do it with our services because we have all these people, they need to be employed, they need to make money, they need to have a good income. Do you guys do that without having services in a country like India? Now, what has been the problem with services in India is that they have not always been their standard. There is no SOP for doing that. We don’t know how much a service provider will charge, whether it is a media agency, carpenter, lawyer, or a CA. Like you don't know why your CA charges a certain price, you don't know why your lawyer is charging you a certain amount, your marketing agency etc. But all of these are fundamental services that you need. We believe that software will be built, but technology will also be built to productize these services. The service provider will still be there, the same service provider will actually provide the service, but software will make it transparent. Pricing will be transparent, workflow will be transparent, finding the service provider will be transparent. All of that will happen to technology because you can't take services out of India and you can't scale services if they are otherwise, you need smooth, transparent experiences and that will happen through products, productization of services be it, financial services, legal services, marketing services, content services, any other services that you can think of will get productized. That’s number four, again this is very India specific. 

The fifth also an India specific thing, which is thatdigital healthcare networks will emerge. Today the largest hospitals in India or the largest healthcare providers in India are very unreachable things. The largest hospital chain would have like approx. 100 hospitals spread across a nation with a population of 130 crores approximately. There is no network or a large scale, and for the majority of the people you don't have a hospital that you can say, hey, I just want to go to the hospital, like you have a brand for soap, have a brand for clothes, you know, that everybody can buy from and associate with but that doesn’t happen with hospitals. Digitization will help in getting nationalized networks, but that doesn't mean that hospitals will get paid, what that means is that the individual care providers which already exists in these small cities all of them will get aggregated or all of them will be on the same technology layer to be able to serve their customers much better. That's what I call the digitization of health care. Irrespective of where you are placed in the country, you can access the same kind of healthcare through the same platform or through the same set of platforms in the same manner. These are the five points which I'm really excited about.

Q. What is your advice for start-up founders?

The same thing that I had mentioned earlier, which was my learning. Focus on things you can control. Don't focus on things you can't control - that is valuation. Founders should try and build a $100 million revenue business. And when you do that, you are at product market fit, your business would have survived for many, many years and that's more important and so that's that the advice No.1. The second advice is to build a business that will serve multiple decades of multiple generations. Try and build up the business, which should be sustainable in a lot of periods of time; don't build a business for the next two years or three years because that's not what they want. Whatever high level decisions - investment decisions, fundraising decisions, product making decisions, essentially, all the decisions that the founders have to take apply a long-term layer to it, think of how that will affect in a 10-year, 20-year or a 30-year horizon, don't look at it from a six-month, twelve-month horizon.

Q. How do you support your portfolio companies?

We support our companies in two ways. First, we like to call ourselves as invited guests to the company. Not as much as leaders can do, but what we can do for them is you know, we are a 100+ year old venture fund which started back in the early 1900s, we have seen cycles and we've been in those cycles too. Now, we've also been in India for approximately 20 years and we've seen several cycles. We've seen the 2008 cycle, 2014 cycle, 2017 cycle, 2022 cycle and we've taken seven companies public and simultaneously sold 4-5 different companies, we've had several other technological opportunities. We've done Seed deals, Series A deals, Series B deals, Series C deals & Series D etc. All kinds of multi stage deals and what I think that we as a firm bring to the table, the most useful thing is the fact that as a firm, we have seen several cycles and have seen what it takes to go from seed to IPO and when founders are building their business, they can focus on building their business and can you know can rely on us to help them think long term and think across cycles. That's the first way that any strategic decision thinking that they can count on us to have a long-term perspective which is not colored by what happened in the last two years, but what happened in the last 10-15 years, that's one way that taking some strategic advice. 

The second way, in which we are very useful is probably more useful than the first, that is through a set of initiatives that we have as a firm. Founders are best at building the business. For example: if you're a software founder, you are best at building the software, selling the software, you don't want to be worried about who I want to hire from Philadelphia. Like how does the company pay them? What is the taxation rule zero, or how should I get a license to operate in a certain XYZ country or I just launched a new product and how do I make sure to get public visibility. Those are not things that we want you to do. You should be focused on building the business for all of this. For all of this we have what we call our functional support areas. For example, there is Deepa who leads a team who provides all kinds of marketing related assistance. She's there for founders when they need to make such decisions. She has a similar team globally in case you want to do the same thing in the US or in China, wherever, we have similar global teams for the marketing, PR and so on. Similarly, we have somebody else who leads talent, so if you want to hire someone who lives in India there is an Indian team who assists you and if you want to hire someone from the global markets, there is a global team assisting you. Similarly, such functional areas exist. 

A lot of times founders need advice on fundamentals of a business like, how do I deal with the actual core business, you know, for example, how do I deal with sales and sector planning? how do I deal with the fact that you know one of my top sales reps is doing very well, how do I make sure that that culture gets you know imbibed with everybody else. These are issues that go into the business. For that, we think the best people to give those answers are not us, but operators who have done that in the past years. We have an almost hundred-member operating advisor network. It is a global network, which has people from the companies like, BigBasket, Swiggy, PharmEasy on the India side and also companies like Amazon, Shopify, Google, Facebook, Instagram on the global side and if you are trying to find how to design the sales incentive plan, you can talk to the head of somebody who was the head of sales operations in any of these companies and get their opinion on it because they have done it in the past. This network is fully accessible to our founders. They can write an email, or send a message. They will reply and answer your query and you know you will get your answer like they won't do it for you, but they'll give you the advice. And the last thing which we have is what we call the portfolio forums. Every CXO of every company that Bessemer has invested in any part of the world is on the same communication platform. All the CMOs or the head of marketing are on one platform, same with CFOs, HRs. There are separate forums for all of them and etc., when they have a question, they can go on the forum and ask the question, because there are 300 other people in the same industry and chances are that they would have come across the same problem. You don't even need to like to go to an advisor. I think it's just a literal message. It’s ideally like a Whatsapp group with heads of marketing and then together you can solve the problem and this is all global, you can actually get global perspectives.

To summarize, we are available, we have an experience of our cycles, but also, we have functional people like Deepa and we have operating advisors like from Instagram, Shopify and etc, well. We also have the portfolio founders also available, there are multiple avenues in which we can support correctly.

Q. Which of your portfolio companies are you most excited about?

It’s a little bit like choosing your favorite child, we’re actually very excited about them. We have a very concentrated portfolio. Our investment strategy is that we make three to four investments a year and that has been consistently over the last ten to twelve years. That doesn’t mean we have to do three every year, we may do one in a year, we may have done five in a year and over but on an average it is a clean three to four. We don't have a hundred companies. We have like forty companies that we have in our portfolio and we are very concentrated like we keep investing in every round, for us, each one of them is actually very exciting because that's our strategy. We don't want to spray and pray, we want to take calculated bets which we know are going to make, which we have a very high connection on and then support them throughout. Literally, all of our companies are doing well. Every company is also struggling, every company is also doing well because that's the start-up life. I wouldn't say one or the other is better or worse. I think all of them are great.

Q. Which of your portfolio companies are you most excited about?

It's a little bit like, you know, choosing your favorite child, we’re actually very excited about them. We have a very concentrated portfolio. Our investment strategy is that we make three to four investments a year and that has been consistently over the last ten to twelve years. That doesn’t mean we have to do three every year, like. we may do one in a year or five in a year but on an average it is a clean three to four. We don't have a hundred companies. We have like forty companies that we have in our portfolio and we are very concentrated and we keep investing in every round, for us, each one of them is actually very exciting because that's our strategy. We don't want to spray and pray, we want to take calculated bets which we know are going to make, which we have a very high connection on and then support them throughout. Literally, all of our companies are doing well. Every company is also struggling, every company is also doing well because that's the start-up life. I wouldn't say one or the other is better or worse. I think all of them are great.

Q. When you started your career, what were your ambitions and how has that shaped it out.

Yes, like I said, the ambition was always to try to be a small part of the journey of enough founders, who are kind of flourishing ahead. To build revolutions of their own, to build their own vision to build out their passion and be a small part of the journey, help them whatever way I can. That was always the ambition, to find these really smart, driven, passionate people and that still remains that it's the good thing about that ambition is that you don't have to reach anywhere, it's a continuous process, it's the journey that is the exciting thing and constantly to get to work with really smart people. That's the best part about this job, right, because everyone you're working with is an entrepreneur who is building a business and is fundamentally smart, driven, passionate and hard-working. It's a great thing for us.

Q. What we want to inspire you in life and on a positive note is something that keeps you up at night. 

Founders inspire, founders are always an inspiration in my own space. They have this vision. They have this passion that they are building for, they are giving their entire life to this. You know, they are probably taking salary cuts, they're taking hard calls. They're, you know, they're working supremely hard. They're trying to find the best people. Just their passion, their life is what inspires us and you know that's like I don't know what keeps me up at night but the great thing about VC profession is like is that you to get to work with all these fun people that you don't think you have to be awake at night because, you know they are driven, passionate and motivated, right. You don't have to really stay awake at night.

Q. Are there any books or blogs that you would recommend to start-up founders, entrepreneurs?

I think founders should read our ‘Road Map Atlas’. We publish a lot of content with the website where we publish all of our roadmaps, evaluation framework, our learnings from how companies have earned from one million of revenue, ten million of revenue, twenty million, thirty million like we write everything we learn with eyes, like there's probably an article every day and that's very high quality position, not just isolating, it's also like our portfolio founders were contributed to that is very helpful and useful from business perspective because you get to get action level. You know, we try to keep a very high bar of actual actionable content over there. Now we will give you the seven metrics that you need to drag the five questions you need to ask the salesperson. This is all that we will publish. On the books side, I only read fiction and am very happy to suggest. I find a lot of good fiction which combines Indian history, Indian mythology and then contemporary science which are really very good.

Q. If you have interacted with 100X.VC before, or if you have something to say about us.

This is the first interaction, but I have read a couple of things that you post such as interviews that you had posted. I think it is a good initiative that you're doing at least you're trying to get more information out of different VCs or different investors because, if you ask them enough questions, they will give you hopefully useful information which will be useful for everyone to write transferred

About Anant

Anant Vidur Puri is a partner in the Bangalore office of Bessemer where he focuses on high potential opportunities in internet marketplaces and India SaaS. Prior to joining Bessemer, Anant was at Boston Consulting Group where he worked with clients in financial and IT services across India and North America. 


 

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