Chiratae (formerly IDG India) is one of India’s most successful investment institutions in the e-commerce sector.
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Prior to last year’s change of name, Chiratae Ventures’ name was known as IDG India.
This VC, established in 2006, is an Indian qualification.One of the oldest international VCs. Its current name, Chiratae, means “leopard” in the Indian Kannada, and Chiratae is indeed a good star company “catcher”. Among the more than 70 companies it invests in, there are many unicorns and the current hot quasi-unicorns: India’s head e-commerce platform Flipkart, Softbank investment optician Lenskart, India’s largest insurance platform Policybazaar, India’s largest maternal and child e-commerce Firstcry, Softbank’s health management platform CureFit, etc…
Chiratae’s partner Karan Mohla entered IDC India in 2010. After seeing the ups and downs of India’s venture capital industry in the past nine years, Karan told the sea that India has had a “Tourist Money” to raise the valuation, and a large number of companies have closed because the business model is not sustainable. Now, some people who have seen the scale and speed of big companies have started their own business, so the company is growing faster, it is the right Timing to invest in India. India currently has 25-30 unicorns, half of which crossed the $1 billion valuation mark in 2018 and 2019.
Pictures | Karan Mohla
As India’s most successful e-commerce investment institution, the emerging platform is one of Chiratae’s current concerns. Karan believes that Flipkart, Amazon, etc. are doing a good job of attracting the 100 millionth trading user, and the opportunity for the new platform exists in serving the next 200-300 million trading users. These new platforms should be mobile-first, socially-integrated platforms that allow users to discover products through different product presentations and have localized sales methods.
The following is an excerpt from an interview with Chiratae partner Karan Mohla (ID:wow36krchuhai).
Going to the sea: The world’s interest in the Indian market is growing, why is this timing now?
Karan: Some things have changed in India in the past 2-3 years. First of all, there have been many big companies in India. At the same time, the company has grown shorter and less money is needed. For example, CureFit was founded by Myntra’s founder and CEO, and he was also responsible for revenue at Flipkart. He left Flipkart 3 years ago to create Cure.Fit. Three years later, CureFit is already a 500 million valuation company.
In addition, Internet companies have more users. Starting in 2016, JIO offers an unlimited 7-month, free 4G network, reducing the price of mobile tariffs by 80%. Today, more than 600 million Indians have access to the Internet, and 400 million people have 4G networks. Two-thirds of India’s population is under 35 years old and very young, full of desire for consumption.
And, India has begun to create world-class technologies and products, which is very different from three years ago. What’s more interesting is that some Indian consumer companies have successfully entered foreign markets. OYO is probably the first company to do so, and it has entered China, Southeast Asia, Europe and the United States. Ola has entered Southeast Asia, Australia and the United Kingdom. Our company also has very successful cases, such as Keepify’s HealthifyMe, which also entered the Southeast Asian market. Lenskart, India’s largest optician, is also a unicorn. It opened its first store in Singapore earlier and they will expand in Southeast Asia.
For these three reasons, people think that it is the right time to enter. India currently has 25-30 unicorns, half of which crossed the $1 billion valuation mark in 2018 and 2019. And India is the only market that is comparable to China in terms of market size, and is an open and young market. At the same time, economic growth is fast, and people’s ability to consume will be stronger.
Going to the sea: Do you think this “Indian fever” will continue?
Karan: We are very confident, for several reasons. If from an evolutionary perspective, India’s first companies mainly copy the US model, followed by a copy of the Chinese model. Companies that specialize in small and micro businesses, suburban/rural consumers are starting to emerge, and they want to address these Indian-specific issues, which may be worth billions of dollars.
For example, sharing electric motorcycle company Bounce. Bounce is different from shared bicycles in China, and is different from Lime and Bird in the United States. I know that Mobike and Ofo are not very successful in China.Case. We know what happened in China and we talked to IDG China. So we started to look at Bounce with a very skeptical attitude. But Bounce works in India because India is the largest electric motorcycle market, with many well-known local brands and cheap prices. From the perspective of unit economic efficiency, electric motorcycles can make the company have both money and money, and the price can attract users compared to bicycles and motorcycles.
China’s shared bicycles do not work in India, and India does not have a bicycle culture. For Indian middle class, they don’t ride bicycles, and they don’t want to ride. Sharing a motorcycle is too expensive. At present, Bounce has a daily ride of 75,000 in Bangalore, a 30% increase per month, and no loss.
Going to the sea: In such a hot market, are entrepreneurs and investors starting to pay off in large numbers?
Karan: 4, 5 years ago, there were very few cases of India withdrawing. Most people, including ourselves, believe that India’s exit channel is being acquired by large US companies. But this did not happen, only a few examples appeared. There are also some mergers and acquisitions completed by Indian companies. For example, Flipkart acquired Myntra and Snapdeal acquired FreeCharge.
India has enough funds to focus on angels, seeds, and A and B rounds. However, there are very few funds that focus on the C and D rounds. Capital in every track often wants to enter a company.
In terms of exit method, we will sell old stocks. For example, we sold Flipkart, Lenskart’s old stock. Many funds have sold large portfolios of old stocks, such as SAIF selling Paytm’s old stocks, Sequoia selling Freecharge, Byju’s old stocks and so on.
On a large scale, most exits are sold to large PEs or strategic investors, which can already give investors a very healthy return. The proportion of IPOs in the exit is very low. We have two IPOs. One in India and one in the United States. Other VCs may have two company IPOs, and some even have no portfolio IPOs. The reason is that Indian companies need to earn 6-8 quarters if they want to have an IPO in India. And overseas listing is not easy, because as long as it is a company registered in India, it needs to be listed in India.
Going to the sea: What opportunities are you paying particular attention to this year, and why?
Karan:First, Emerging Platforms. Flipkart, Amazon, etc. are doing a good job of attracting the 100 millionth trading user. These users are users who have purchased goods online, not just online content. However, among the 600 million netizens, the actual transaction generated does not exceed 100 million. We are seeing many emerging platforms that are creating new models to serve the next 200-300 million trading users. Some use social elements to engage users. These platforms are mobile-first platforms that focus on letting users discover products in different ways, rather than through search. The goods offered are unbranded, long tailed, highly profitable, and have a very localized sales approach.
Flipkart, Amazon They have a local language service, but the way they sell it is the same. Users who don’t think in English logic can’t shop from these platforms. They are more likely to believe that the platform for some social elements is the same as the ones in their circles. In the future, if you buy a brand of mobile phones and clothes, people will go to Flipkart and Amazon. But other things will go to these emerging platforms to buy.
Second, consumer brands. India’s e-commerce and organized retail penetration is not high. For many users, they don’t particularly look for Western brands. New era brands and more personalized products are more attractive to them. This is true for food, health, beauty, and fashion.
We started to see very interesting companies in the consumer sector, producing good products. They also need to solve the brand’s problems and give the product the right positioning. There is also how to distribute the product. When they can solve brands and distribute, these companies are very attractive to our investors.
The third category is an aggregation platform for a segment, with services and product nature, whether it be education, healthcare or recruitment. These industries are very fragmented online. Oyo discovered this opportunity and quickly seized the opportunity.
Going to the sea: A friend who came back from India, tell me Most Indian entrepreneurs and investors are particularly optimistic about this market. Do you think you should not be too optimistic about what should be rational?
Karan: The Indian market will be overvalued and the company’s business cannot support the company’s valuation. We need to pay attention to how to maintain pragmatism to a certain extent in . As a capital, it does not provide financial support. When it is not available, it will increase. Give some time to India, and it will eventually reach the end. Some developments we can promote, many can’t.
Every big VCNeed to establish an exit engine. Whether it is through MA, IPO, or the sale of old stocks, there must be constant return on capital. Must constantly work for withdrawal. Because the exit does not happen casually. In China and the United States, many large companies can absorb startups or invest. There may be more than a dozen large companies in India with such capabilities, such as Flipkart, Ola, OYO, Paytm, Swiggy, and Zomato. We don’t have 50 or 100 such companies. India itself is still in the process of building a giant.
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