‘Pune’s role as a startup hub will only get bigger in coming years’

What is the percentage of startups in your overall investment portfolio?

Startups are currently a very small part of my portfolio. However, I can increase my participation given the good performance of my portfolio. About half of my portfolio companies are in various stages of fundraising in their next round.

Any Shark Tank India Season 1 Success Stories?

My solo investment in Rare Planet is the biggest season 1 success story. When they launched in season 1, they were in four stores with $70 lakh sales per month. Since then, its scale has grown 8 times in the number of stores (to 32 stores now) and its sales have grown 6 times, in $4 crores per month. This business demonstrates that social impact and profitability can coexist.

For the rest of your portfolio, how do you allocate money among assets: equity, debt, etc.?

A significant portion of my allocation is towards equities and debt represents approximately 10% of my overall portfolio. I am a value investor with a long-term perspective on my equity investments.

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How do you monitor your portfolio companies? How often do you interact with them?

I wouldn’t call it monitoring as I believe in empowering founders and letting them know that I am there for them when they need me. Having said that, I try to schedule meetings with the founders if I travel to the city where they are located or if the founders come to Pune and I am there too. I have a team that regularly connects with the founders, receives quarterly updates, and helps them with marketing, finance, distribution networking, recruiting, and fundraising.

What is the time frame for a typical departure for you? How long do you stay in an investee company?

I’m one for the long term once I’ve invested. It takes several years for an entrepreneur to grow and take the path of profitability. I believe in staying with my founders for the long term and helping them succeed.

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Are you trying to diversify into industries or choose companies that are closer to your own business domain?

I follow a 4F investment framework: founder, foundation, finance, and fit. I have developed these concepts in my book ‘The Dolphin and the Shark’. As long as a company fits into this framework, I invest in it regardless of the sector to which it belongs. However, I get especially excited when I see pitches in healthcare and pitches by women entrepreneurs.

How much time do you have to evaluate a pitch before it is presented to you on the show?

None. We don’t get to know anything about the companies beforehand. Once the founders walk through the door, we make our decision in an hour on average. This is, of course, followed by a structured due diligence process.

Once you’ve made an offer, have there been times when you backed out?

Most of the offers pass. The only ones that don’t are the ones where the team discovers something during due diligence, bringing to light facets of the business that weren’t made clear in the original pitch. Also, many times, founders want to look for deals that come to them after the show has aired, where their business gets a significantly higher valuation than our offer on the show.

What is your IRR (internal rate of return) on your initial investments in the last 5 to 10 years? How does this compare to your other investments?

Too early to calculate the IRR. So, I can’t comment.

How do you see the role of Pune as a startup hub?

Pune is already home to several unicorns, three of them, FirstCry, XpressBees and GlobalBees, founded by my friend Supam Maheshwari, whom I interviewed in my book ‘The Dolphin and the Shark’. This momentum for startups will only grow in Pune due to easy access to good talent, presence of high-quality R&D infrastructure, and availability of a good ecosystem of mentors and incubators.

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