As I kick off this pet project, My Two n Half Cents, I would like to post one of the first serious interviews I did (when I was) part of “$treet”, The Finance forum of NITIE. Part of Street’s quarterly magazine In-Fin-NITIE, we regularly interview prominent personalities from the industry.
For one of its editions, we had Mr Sasha Mirchandani and (I should say) what a time we had with him in his Nariman Point Kae Capital office. Mr Sasha, Founder and MD, Kae Capital (majority investor in some really successful IT start ups such as myntra.com, InMobi, eFarm etc) can probably be called a serial entrepreneur. A quick glance at his LinkedIn profile shows us he has been part of the founding team of various ventures; Mumbai Angels and Kae Capital to name a few.
You could ask me why is he “probably” a serial entrepreneur? That’s because ladies and gentlemen, Sasha is a classic case of someone having shaped by a mix of entrepreneurial and rich corporate experience.
I give you, Sasha Mirchandani! Read on, folks.
Q Hello Sasha, please tell us something about K capital.
K capital is India’s First seed funds. We have 25 Billion US $ (about 150 crore) under management. We do early stage investments from 50 000 to 500000 US $ million dollars. We can invest up to 2 .5 Million dollars in a single company.
Q There are entrepreneurs flourishing in diverse areas; there are diverse set of sectors out there where they are doing really good. Is Kae Capital focusing its research and investment in any particular sector? What sectors do u target?
We invest mostly in early stage technological company that are capital efficient. We have funded multiple sectors which includes one e-commerce Company, couple of internet Companies, three payment companies, two cloud based companies. By and large we have been very opportunistic about the investment. This year we have had far more thesis focused approach but generally we focus where there is an opportunity and the team is world class.
Q How big is the threat that current economic possess for Kae capital
Well, obviously we are not happy about current investment scenario. There is tremendous amount of gloom but good news for us is that the space where we operate is in really early stage. Generally the companies are not that badly affected. Obviously with issues like people buying less, Dollar at 60, Inflation in a mess and so on so forth, it does not help but we focus on early stage companies where issues are more about product, adoption. But yes as these companies grow they will get into tailwinds and headwinds of economic conditions. More clarity would come after the general election. The key number one reason for me to hope something good is only if there is a clear majority by a political party. I really do not care which party wins but it should be in clear majority as then only they would be able to make key economic decision, hopefully some sensible decision to drive the Indian economy.
Q What are key differences dealing with providing seed capital to a new entrepreneur and a company already established.
We generally invest in new entrepreneurs. Our model is to bet on youngsters with a visionary idea. Facebook, Google, Yahoo were all once a new idea. Our investments in the past as well are generally fresh start-ups.
Q There are so many ventures in your name like Mumbai Angels, BRB advisors the list goes on. Have not you felt that you should have struck to one place and make it big.
They are all very different. I started with my family business which is Onida which is still going and run by professional. BRB was a job, it was not owned by me, I worked there for four and half years. It was great learning for me where in I worked as head of India with reputed venture capitalist around the world. Mumbai angels was co-founded by me and is still going very strong and is independently run. Kae capital is an institutional fund, so they are all very different and any two cannot be compared. Mumbai angels are still growing and we are now aiming Bangalore angels, so that’s growing constantly. The idea is to put professionals in the forefront so that they can scale faster without founders being in the way.
Q Moving from Mumbai angels to k capital, does it really change the way you evaluate entrepreneurs.
One clarification that I have not moved, Mumbai angels is still very much under me but it is now professionally run. Coming to your question, it is a very good question. Sometimes there is an individual investor that has different premise, thesis and risk appetite verses being institutional early stage investor. The mind-set, return expectation are different. In a fund you want to follow on invest, seed investor generally do not follow on invest. So there is definitely a situation where I would have funded as an individual but as a fund it becomes difficult and probably would not have done that.
Q Exit strategy is very important. At what stage do you decide to exit your investment in a company?
I think what we do as VC is if we can make back half of our fund, for example if fund is 25 Billion $ then 10-12 billion $ is a reasonable return. So that point we consider an exit if there is an opportunity. If I am investing in my private capacity I could look at the X i.e. 2X, 3X or 5X and do I see this company constantly growing over next couple of years. If I am getting good returns but I feel risk is very high I would get out. The reason I may stay if I really think it would be a big company. If you really want to make big returns in this business you have to be there for long. For example still the largest individual shareholder is Inmobile which is probably the most successful start-up in India. The reason I stayed back is that I truly believed that Naveen, Amit and Abhay would built a global business of scale. If you know it can become this big it would be unlucky not to have continued as shareholder of that company.
Q What are the annual targets, Milestones or five year plan which K capital has?
We do not have 1 year or five year goals because our fund is generally a 8 year fund. So it is very different from traditional business. Ours big goal is to maintain returns and to fund entrepreneurs who are most determined. We did extensive research on what makes entrepreneurs successful -some said intelligence, some said assistance, but we found fundamental trait that makes best entrepreneurs is determinations. We want to build a firm where entrepreneurs would come and enjoy working with us.
Q You have been in this industry for long time. What kind of transformations has entrepreneur style gone through?
Entrepreneurs are now thinking bigger. I have seen Indian entrepreneurs thinking small while when I go to Stanford they come out with a billion dollar plan. Now it is not about millions or billions but about thinking big and having vision to build a global business here. There are many other traits and trends that I have seen but I feel this this as best.
Q Intuition plays a big role in investing. How much decision is actually given by this intuition?
Valuation at this stage is a combination of art and science.
Q what advice you give to a B school graduate who aspires to get into a VC industry?
I would strongly urge people to get operating experience. You cannot generalize as to one can or cannot do it but the best VC are people who have operating experience because they can empathize with entrepreneurs as to what entrepreneurs goes through as they have worked with operating sense . They can also add value by giving sensible input. So one is empathy and second is strategy. Hence I strongly urge people with operating experience.
Q The moment we got here in this room we were electrified by the quotes present all over. Does k capital follow these types of virtues and values?
The main thing is K capital vision and mission as that is what we have put . The rest are people we respect .It just a study.
Q You mentioned about Jim Collins. Even your vision and mission are inspired by one of his book.
I have read his books many a times. The best pun: we want to outperform. He said let’s give a number to it. Quantify target. So if we get 10 X results that means we have worked well.
Q What kind of personal milestone set by you in your life?
I want Kae capital very successful. In the perfect world professionalize it. So one day it will be run by people other than me and I’ll be doing something completely different. Youngsters like you would be running it. I don’t see myself running K capital 30 years from now.
I need to determine who will run this company and run it as independent.
My guru Ashish Dhawan who retired at 42 to give it to philanthropy. I want to work for social causes.
Ashish was no 1 guy in industry for him to retire is not only commendable but beyond commendable. We should be in a position to draw the line that enough is enough and the amount that I have earned is sufficient for me and my family and next generation and now it is time to do some help.