Mumbai, November 20
Flipkart’s billionaire founders Sachin Bansal and Binny Bansal are among the most active investors in startups. They have invested in more than 20 early-stage ventures, many of them with audacious goals. For the first time, they speak about what’s driving this passion.
Why are you investing in other startups?
Binny: For me, investing in startups is a way of giving back. I believe startups are going to be engines of change and job growth in India. My goal is to put more than 50% of my wealth into startups. Already, 30% of my liquid portfolio (wealth that is not in the form of Flipkart shares) is in startups. When we are involved, the startup gets better leverage.
Sachin: The objective is to help other companies with the knowledge we have gained as well as keep ourselves updated. Flipkart is not the whole world, there are things happening in healthcare and education that one can learn a lot from and help Flipkart.
What do you think of the current system of angel venture capital private equity?
Binny: The current system looks at how much money will be made and the probability of doing that. For me, the questions are: will it be game changing, can it have an impact on the economy and society , who are the entrepreneurs, why are they doing this?
The Team Indus investment that Sachin led and Pandorum Technologies, which I led, are in those kind of domains. Ather too.
How do you plan and manage your investments?
Binny: We have Sailesh (Sailesh Tulshan, founder at Tsai Shen Capital) working full time with us now. Earlier, in Pandorum’s case for instance, Sailesh saw an article in the newspaper, met the founders and brought them to me. I found it interesting and decided to go for it. Now we are creating a system. Sailesh is building a team. He is now well set to scale up the operations. We want to make it a bit more official, to help us build scale and look at more companies. Sachin: Sailesh comes with his ideas and opportunities, but there are lots of direct connects with me via friends, colleagues who are looking to raise funds. For me so far, the bigger proportion has been of people who have directly reached out to me. Like Tarun Mehta of Ather. He called and said they are in IIT-Madras, that they need ideas for scaling. I asked him to meet me, and I provided all info. As he was leaving and was near the lift lobby , I instinctively called him back and said I would like to invest. I was very impressed by the founders’ level of maturity and understanding of their business.
What have you learnt from the startups you invested in?
Sachin: When we were building a bunch of apps, for Flipkart, Myntra, and doing e-books, we learnt much from several of our ventures. One was news app Inshorts (earlier called News in Shorts). We learnt news app dynamics, we learnt about the metrics they were tracking. For example, in the web world, the key metrics used to be number of visitors, unique users, page views, and conversion rate, which is the number of orders divided by visits.In our apps, we were initially looking at the same metrics. But what we learnt through our investee companies that web metrics are not the right metrics, and you have to track metrics such as DAU (daily active users), MAUs (monthly active users), the time spent on the app – this is more important than the visit. We learnt that conversion should be calculated on user basis, not on visit basis. These things might look minor but have a profound effect on the product.
What is the next big thing?
Sachin: Healthcare and education are the two next big opportunities. SigTu ple is promising because they are disrupting diagnosis using artificial intelligence. Similarly, Unacademy, the free learning platform. Team Indus is doing something unique; they are in a space bigger than all the other companies put together.
Binny: Internet of things, auto, education; things that are going to change.
What advice do startups ask for?
Sachin: Startups normally have questions about hiring, partnerships, and raising the next round of funds. Binny: Many ask me how to hire key people, and how much to dilute. Founders have certain capabilities, so they should get a few people who will complement them. My advice is hire them like co-founders and don’t be stingy with equity – you give 0.5% to 3% of equity – but be stingy with cash.
How much do you invest?
Sachin: The maximum I have invested is half a million dollars, and the minimum would be $20,000. It’s driven by what founders are looking for, how much they need.
We are careful about ensuring we don’t have any investment in the same space as Flipkart. Binny: I’ve invested between $100,000 and half a million dollars. I exited three companies when they pivoted and we felt there
was a conflict. That includes Roposo, which pivoted from gifting to fashion, and Zopper, which moved from reviews to e-commerce.
Mumbai, November 20