Harsh Pokharna

Thanks Bismah and Inc42 Media for the insightful coverage and deep dive into the vital role of operator VCs! Bismah's thoughtful analysis underscores the growing need for operator VCs in today's startup landscape. As an operator VC , I've witnessed firsthand how founders increasingly value more than just capital. They seek partners who bring operational expertise, strategic guidance, and an extensive network to the table. These elements are crucial for driving sustainable growth and navigating the complexities of scaling a business. At GrowthCap Ventures , we understand the unique challenges faced by early-stage startups, which is why we prioritize offering not just funding, but also hands-on support and access to our extensive network. Together, we're empowering founders to realize their vision and build transformative businesses. #OperatorVC #StartupEcosystem #Gratitude

42

2 Comments

Here's one more theme that has played out over the past decade in India SaaS: SaaS companies that sell into India/Asia (non-China/Japan). There's been a reasonably large set of investors in India who have been default no in this category, based on perception of limited TAM and GTM challenges. However, there is reason to be optimistic for this theme (we are!). A reasonable set of companies in the ecosystem have scaled, such as MoEngage, Darwinbox, Capillary Technologies, Yellow.ai, Unicommerce , Gupshup, CRMNEXT, LeadSquared. Companies like Salesforce, SAP etc have reached multi-hundred million ARR in India. As a result, the potential scale from sales in India has grown from the $15-20mm that people used to talk about 5 years back to perhaps $50mm in India, overall $100mm-150mm in Asia. I think we'll see more companies continue to get funded here as IT demand in India/SEA deepens and local requirements (mobile, India Stack, regulations, languages) get addressed. Founders and investors will need to tune into this being a solid path to go but will take longer to get to impact than US/EU-focused companies. Some characteristics we see at India/SEA-facing software companies: * Many start out in SMB but then find scale & success selling into enterprises. India market has a ton of SMBs (10mm+), a relatively light mid-market and a significant set of large enterprises. * Products tend to have feature sprawl and design-deficit but this can be fixed. * Some large sectors that are pulling at enterprise level e.g. BFSI, multi-sector conglomerates. Early traction from digital native companies (but naturally capped market). * Natural to go to SEA & Gulf countries. Product could remain fairly similar but sales & marketing motion can be quite different. To get really large, feels like will have to end up going to US/EU markets eventually. * ~10 years to $100mm ARR, with market leadership in Asia * Gross margins start out perhaps 10-15 points lower than corresponding companies in the US/EU but trend up over time. * Most India-facing SaaS companies are starting as India Pvt. Ltd. today, compared to 5 years ago (versus US C-corp), with a view to going public in India at $50-100mm revenue level.

274

14 Comments

At the age of Retirement, he built a 2000 Cr+ worth company. Expecting to touch 5000 Cr+ by 2029. For more inspiring stories, check out my Instagram (Link in Comments) #startup #founder #storytelling

85

32 Comments

To be honest, most VCs in India have not found product market fit (PMF) yet. I believe, you have hit PMF as a VC when you have – 1. Top 1% founders are coming to pitch to you, 2. The founder is willing to take your money at a lower price than the market might give him/her. 3. You have built capabilities to pick the founder and market you want to invest in and the confidence to pass on deals that don’t align with your vision. Best example of this is YC , ~4.5% of the startups that have gone through Y Combinator since 2010 have become billion-dollar companies.  Founders don’t just take their money—they choose YC’s standard terms even after raising at a higher price from other VCs. That’s true PMF for a VC. #VC #PMF #funding

395

23 Comments

This was one of my most relaxed and enjoyable interviews, thanks Shrishti Sahu for making it so. We dive into multiple topics that have shaped my career and helped create value for many others too along the way. If you do have time to spare, do watch! #indiaopportunitypodcast

125

4 Comments

Who would invest in founders who have wasted $50M? Koo, an Indian microblogging platform, recently shut shop after raising $50M in capital. Everyone has their views on why Koo failed. IMO, the biggest reason behind its failure was a lack of PMF (Product Market Fit). Koo spent much money on marketing and didn’t build a product people wanted. It kept harping on nationalism, a Twitter for Indians, made in #India. This approach failed. However, this doesn’t mean Koo’s founders aren’t smart or intelligent. I wrote in an earlier post that we shouldn’t be surprised if Koo’s founders raise fresh capital for a new startup. To many of us, this might seem grossly unfair. Millions of smart, hardworking founders are struggling to raise capital while investors are backing failed founders who have wasted millions of dollars. How is that fair? It confirms the widely held belief that the #venturecapital industry is broken and corrupt where a few people with the right connections get all the capital while others don’t see a dime. It shows that the VC industry is a closed group, a cabal where who you know matters more than anything. While these are just complaints, most people who criticise VCs don’t understand how startup investing works. VCs welcome failures. They embrace them because they know failures are inevitable. When VCs invest in 20 #startups, they know 15 will fail. The goal is to invest in startups that can give them a 100x return. Failures are part of the game. They are unavoidable. The aim is to back founders who can build such 100x return companies. Hence, failures are not looked down upon in the VC industry. It’s similar to the American culture where society appreciates the people who take risks, and it easily accepts personal bankruptcies that result from this risk-taking approach. There’s no taboo in failing in the USA and the VC industry. I’m sure Koo’s founders have learnt from their mistakes. It’s an expensive mistake and not everyone is so lucky to have this luxury to spend $50M on their education. ;) However, most VCs will back Koo’s #founders because these founders know how to raise capital and they know how to not build and scale tech companies. Their past failures have improved their chances of future success. In the VC industry, Failure is Good.

249

42 Comments

🚨Zepto Raises $665 Mn From Avenir, Lightspeed, and avra (Anu Hariharan new fund) at $3.6 Bn Valuation While startups are struggling to raise funding at a higher valuation, Zepto's valuation jumps ~ 2.5X -> 2024: Zepto bags the biggest fund raise in 2024 -> 2023: Becomes the first Indian startup to turn unicorn in 2023 #Zepto #Funding #Indianstartups #Quickcommerce #Valuation Inc42 Media (To read more, click the article link in the comment section 👇🏽)

308

2 Comments

Years of learning from investors and WHAT TRULY MATTERS Raising external capital is always stressful and becomes overwhelming real quick. After raising capital myself and now investing small tickets into other startups, I believe I understand both sides of the story. Key metrics that matter - 1. CAC - I used to believe that organic growth was more important than paid acquisition until an investor explained its importance to me. From an investor perspective, CAC is crucial in determining one complete side of the business and is deeper than just "how many customers will you have if you spend £X?". 2. Churn - Once I understood the value of CAC,  churn was a no-brainer. Helps determine customer stickiness. 3. MAU - Monthly Active Users and trends around MAU are hugely beneficial in communicating the growth and demand of the business. There are other metrics such as market size and stuff but a lot of times these are assumptions or cherry-picked data from various sources. It’s better to focus on the depth of the problem and actual metrics.

2

1 Comment

Important announcement for our INDIA operations: ADDA.io becomes the ONLY Community App in this market that is: ZERO SPAM ZERO ADs  100% Mgmt & Acctg SaaS We are fully devoted to the Management Committees of Multi-Crore Apartment Communities, who have understood the need of a Serious Software. We want these Management Committee members to sleep well.. ...Sleep well without the niggling fears of putting at risk the Data Privacy of Hundreds and Thousands of Residents. ...Sleep well without any concern of life-destroying Cyber-Crime cases waiting to happen.. Cyber-Crime? Today MCs choosing Free Apps / Ad-Supported Apps as their OFFICIAL App are doing this: selling not just their individual private data but their Owners/Tenants private data for monetisation! This data is used to sell anything from Real Estate to Insurance to Gambling. Residents trust information on their Association's Official App. And MCs believe they did great by saving few thousand INR on paid software subscription. With the ever increasing Cyber Fraud in India, upon any crime traced to this data monetisation, the President, Secretary etc. find it hard to avoid legal liability. Regardless of water tight vendor agreements. So, we want to scream from the Rooftops - that YOU - the discerning Treasurer, the Chairman, the Secretary have a choice! Please help us spread this word, and stop Lives of Management Committees from being destroyed! ========== Note: We are making this effective from July-1-2024. Why July-1, why not right now? While we never served Spam or Advertisements, we were listing third-party home service vendors - the 'Discover' platform. This too we are stopping by July-1-2024. As for the robust Tech Platform we have built for interfacing third party vendors, we are Open Sourcing its functionality! The technology - banners, service marketplace etc. will remain available for large Communities who wish to bring their own trusted vendors, event sponsors etc., by their own choice, and within their own by-laws. #HappyCommunityLiving #RiseHigh #FocusOnTheCore

207

43 Comments

Zepto announces its $ 665M Series F financing at a $3.6bn valuation yesterday. They started as KiranaKart (part of YC's W21 program) & re-branded to Zepto; the firm has defied all funding winters with crazy momentum ⤵️ June '20: $50K Contrary Capital fellowship Nov '20: $125K YC W21 program  Jan '21: $700K Seed round Oct '21: $60M Series A/B round Dec'21: $100M Series C round May '22: $200M Series D round Aug '23: $200M Series E round Zepto's investors include Y Combinator, Nexus Venture Partners, StepStone Group and even Glade Brook Capital (former investor in Zomato). 📈 And, their metrics in the last few months have been astounding: (1) ~4.5M (i.e. 45 Lakh) Zepto Pass subscribers in 3 months - Initially this was free, then they began charging > ₹99 per month (2) 75% of ~350 dark stores are EBITDA positive - Time to EBITDA breakeven per store is down from 23 months to 6 months (3) ~28% market share in Quick Comm - Impressive given they are an independent company (versus Instamart or Blinkit) ✅ And, Zepto is just getting started:  (a) Entry in non-metro cities next (b) Entry into private label (Zepto Cafe & Meats) (c) Going to x2 the number of dark stores ➡ What I've seen lately in the key metro cities: There is a shift from e-comm to QC. I think it is only going to accelerate as QC co's bring in more categories & tap into long tail SKUs via larger warehouses.. Product searches first moved from Google to Amazon, now they may move from Amazon to Zepto et al. incredible to see how the Power Law plays out - these folks are going to change Commerce in India. Congratulations Aadit, Kaivalya + team Zepto! #startups #india #venturecapital

76

3 Comments

As usual, Friday funnies. 1. The one thing more sought after by Brand founders, even more than VC money, is an intro to someone at Blinkit, Zepto or Swiggy (Instamart) 2. Recent raise attempts: - $3 million pre-seed for a multi-country Web3 somethingortheother. - Car washing service (2), Laundry service (8), EV 2-3-4 wheeler (6), EV based logistics, delivery+ride-hailing (3), liquor brands (3), something-AI (17) 3. Had a founder, at seed stage, push back on vesting, claiming "15 years of corporate experience", insisting on 100% upfront vesting, also claiming they're an angel investor and 'very experienced'. Laughed. Passed. 4. Watched LPs finally waking up and taking 1% of the steps needed to improve the India/SEA market. #venturecapital #vc #startups #funding #funny

105

39 Comments

🚨 Mega investor sales in Swiggy's IPO 💰 Swiggy’s investors seized the moment in the private market, cashing in on high demand for shares ahead of the IPO. Before the IPO, Chinese internet giant Meituan Dianping and DST Global sold $250 million in shares, EACH, in the private market. DST and Meituan, besides other investors, also sold additional shares in the IPO. The pre-IPO cashouts doubled the secondary exits for Swiggy’s investors as part of the IPO buildup — from $800 million to $1.6 billion. We have the breakdown of numbers and what they mean for all the investors involved - https://lnkd.in/gBJxUHpB #swiggy #swiggyipo #IPO #quickcommerce #fooddelivery #zomato #zepto

31

When a startup founder raises capital, these 3 things typically occur - 1.⁠ ⁠They hire excessively 2.⁠ ⁠They spend excessively 3.⁠ ⁠Their ego inflates excessively Often in many situations, none of the above is necessary 🙌

32

5 Comments

Naarica has been smashing it 💯 So proud of how far Shruti Chand has come. When we first met, she didn’t even have a website, just some traction from some offline events. And now, she’s doing Rs. 10L+ MRR with a double digit EBITDA margin. And she’s just touched the surface - the real mission is 1000x larger than this. In India 🇮🇳, there are still 12-15 crore women who use sub-par products (or none at all) during periods. Making women feel more confident, lesser anxious - I feel that’s Naarica’s true mission. A truly women centric brand. I hope there are more and more folks like Shruti who take up such bold challenges. I hope more and more folks get inspired by her and choose entrepreneurship. And truly solve India-specific problems 🙌🏽

122

5 Comments

Founders like D2C. It’s just not a VC favourite. While D2C continues to be wildly popular among consumers, as is also clear from the number of D2C IPOs in India, there are mainly two friction points for VCs when investing in them. First, it’s tough to scale brands beyond INR 100 Cr ARR, especially given the poor brand loyalty and fierce competition in the space. These challenges eventually dilute the ROI and prolong exits for VCs. Second, the more the brands raise initially, the more they’re forced to grow later at any cost. This can result in distraction from the main business, severe cash burn, and funding issues. All in all, it is a good business for founders who don’t raise too much money and for folks with self-employment ambitions. Expecting a lot more consolidation in the space going forward - brands that do it well will scale.

63

4 Comments

Key takeaways for startup ecosystem from Budget: - LTCG tax for unlisted investments has been reduced to 12.5% (without indexation) from 20% (with indexation) - At par with listed - Abolishment of Angel Tax - INR 1000 cr VC fund for space technology - Custom duty cuts will further enhance EV adoption Big boost to startup ecosystem, we will see more startups registering in India and more domestic capital participation in Private Markets🚀 #Budget #PrivateMarkets #India #Startup

20

I completely agree with Sabeer Bhatia about the PE Mindset of VCs in India. I think as Founders we should focus on convincing the customers. If your product is great and you need funds to scale, you will find many lenders. https://lnkd.in/dDw-a9_i

9

4 Comments

New business model !! With zepto raising a billion dollars in just 2 months to swiggy’s blockbuster IPO listing to Zomato’s back to back profitable quarters once thing is for sure : qCom is gaining land by length & breadth !! There seems to be a huge opportunity for 3rd party hyperlocal delivery companies to flourish. Just came to know from Arjun Vaidya that Zippee is leading the move. This is great opportunity to start one in your locality looking at the expansion plans for all the hyperlocal app companies. Delivery fleet + Optimised ops with tech = get ready

124

10 Comments