Hello everyone and thank you for joining us for the Capital Insider series here today. Today we're speaking with Mr. Sandeep Singhal, he is the managing director of Nexus Ventures and I think most of us know him as the most veteran investor, one of the most veteran investors in India who's doing probably today at Nexus, you know, while I was reading about his portfolio and I felt, Mr. Sandeep, you had the most enviable portfolio that I looked at in an investor recently, you know, with so many unicorns in your portfolio and then of course, you know, I think it's the way you find or qualify founders today before you make an investment and also how you plan your exits has sort of brought this moment on and today we are there with him to really know more about how he thinks as an investor. Now what, we all know him as an investor but probably very few people know that he's actually a serial entrepreneur himself. He started and exited out of his own company so that is one of the reasons why he understands and knows how to balance between startups and investments and try to make the best of the world. So thank you very much for joining us today Sandeep and you know, we're looking forward to this wonderful conversation with you. Thank you for having me. So you know, I think the pandemic is the talk of the town so to say and you know, we've been trying to sort of find ways, trying to find our best resilient moments out of it. But you know, I mean, on the micro level, what changes do you think the pandemic has brought in the tech world? What kind of tech trends do you see coming up now? I mean, in 2020, in the rest of 2020 and going forward in 21, emerging out of this pandemic and you know, what is it that you're looking at? I've been seeing in the last one year there's been a big sort of shift towards quantum tech which is machine learning artificial intelligence. So do you see enterprise tech sort of becoming big in terms of both funding as well as tech play overall? So I think first, thank you again for having me as part of the series. If I look back, if you see the trends that are happening, I would sort of think of them in four or five major buckets, right? So I think the first trend that I see to your question, in terms of technology and what are we seeing with the pace of adoption? I think this has been spoken about by a lot of people, but digital adoption has obviously gone at a much faster pace than anybody had anticipated. Satya Nadella's sort of comment that what would have taken 10 years is happening in 10 weeks is a sort of interesting observation because they are seeing this across all aspects whether it's consumer, whether it's enterprise and so on. And in our portfolio also we are seeing a very significant shift towards companies that are allowing whether it is a consumer or whether it is an enterprise to transact and operate digitally. So I think that is broadly the first trend that we will see and this will have a significant impact on India because so far as an economy, we have been a much more offline economy. We have always tried to bring our overall economy onto a digital platform, but with all the efforts that the government is doing, whether it was bringing in GST, whether it was Adha, whether it is UPI, there is a strong friction, there's inertia in the market and what this pandemic has done is it's caused the inertia to go down significantly. People have had to change behavior fundamentally and again there are sort of these rules that if somebody does something for 21 days it becomes an ingrained behavior. So in our case now with the pandemic that's way past 100 days, we are seeing a significant change in behavior and in consumer behavior as well as enterprise behavior. I think the second trend that I'm seeing that is tied to this is that digitization is now going more and more towards the masses. So you're seeing rural markets will have a significant impact in terms of our next phase of growth. So whether it is payments, whether it is commerce, whether it is education, whether it's healthcare, so all these sort of industries which have so far founded very hard to penetrate non-metro markets will see an opportunity at this time. So entrepreneurs that are thinking along those lines and are able to build models which can be monetized where again outcome led opportunities. So education and healthcare are very outcome led. So if you can show value to the end user, the end user is willing to pay and one of the challenges again we have seen in the Indian sort of environment when we have been investing is outside of the large metros the ability to pay has always been questioned and I would argue that that ability to pay isn't necessarily about the individual's ability to pay but it's an it's an ability for a business model to convince that individual to pay and so with the change, with the shift towards digitization I think there will be an opportunity for entrepreneurs to build brands, to build that value proposition, to build that trust with a wider group of people using a digital platform and therefore get those people to pay. So you know interesting with trends we are seeing you know with agricultural technology right so all of a sudden in the last year I would say agritech is this was a hot space you know we started investing in this a decade ago we were too early from a nexus perspective but we are seeing that there is a significant adoption of technology by the farmer now you know how do you get that farmer to pay so those are the things that people are working through right now but I think there will be opportunities there. The third area is going back to this motion that you know you have to build a brand and create a value proposition that gets people to pay is there is going to be increasing consolidation so you have to think about if you are a startup and you're building a business at this point you have to start thinking about who your competition will be you know I would say five years ago nobody would have thought that I'm going to see reliance as a competitor in education I'm going to see reliance as a competitor in healthcare I'm going to see reliance as a competitor in you know various spaces right which even retail you know retail they've been there longer but at GeoMart nobody could have imagined right that this would come but in some ways what is happening is if I'm sitting in a small town in Punjab or I'm sitting in a small town in West Bengal who will I believe when somebody says okay pay money out of your pocket to buy something will I believe a large brand or will I believe a small startup and so again there is a there is consolidation happening because of brand's ability to have wider reach and so you are seeing some of that consolidation play out in education technology you know both Biju's and Anacademy have been acquiring businesses to build their capabilities because they have been brands I think the the so those sort of three areas right fourth I think you brought up this question of quantum tech and you know AI machine learning all of that now interestingly there are there are people who are using that in reaching out to consumers reaching out to enterprises and so on in India but there isn't that much core technology development that's happening I think the core technology development is still much more in the in the western markets but adoption is happening in the Indian market as well right we are the country has been typically data poor we don't we didn't have as much data and to really do machine learning or to really do artificial intelligence on top of the machine learning you need the underlying data you need to be have you need to have the ability to train the the you know the machine learning algorithm and you need data for that so again in the last four five years we have seen a lot more digital data being created so today the the the next generation entrepreneurs that are coming in are thinking from day one on how they would build their products based on the data that they're collecting from the market so so you're absolutely right that there is going to be a lot more adoption of AI and machine learning in the Indian context as more and more of the adoption happens in the use cases you will also start seeing entrepreneurs building the underlying technologies right so if I'm using it for retail or I'm using it for financial services or I'm using it for education now somebody has to provide those that that technology so companies are going to emerge so you know for example we have recently funded a company called interolabs and interolabs is building a computer vision based quality control platform for fresh produce right so basically the think of it you know we don't even have digitized supply chains yet and they are going one step further to say okay I'm going to take computer vision to allow quality to be improved across the supply chain so the question is what comes first right will the digital supply chain come first or will the quality tool come first that will allow it to digitize so a little bit of this in India is happening real time we are seeing a very you know people are sort of working on both sides you know you're digitizing at the same time you're creating the tools to do it so I think that's the sort of that's what I would say the fourth you know to your to your question and I would say the last point I would say I would bring up is we are in a global world so even though there is you know we are seeing some questions you know arising because of the way the US and China have you know had the trade war people are asking this question that are we you know are we sort of deglobalizing in some ways will supply chains go local and so on my belief is that globalization is here to stay you know there is it's just too embedded at this point to be you know taken away and so in that scenario again you know India has to think about its position in the in the market globally and entrepreneurs have to think about it and say okay how will I as an entrepreneur play in global in a global market you can't say okay I'm just doing something for India and I'm happy you know those days pre 91 days I don't think are coming back so as a as a founder there are you know there are opportunities that you have right now because of the flux in which you see the the global sort of framework right now you know we keep talking about the fact that supply chains are going to become China plus one what role can India play I think there are opportunities there how we capture those opportunities is very important there is obviously China showed that there is a way to capture that opportunity through scale they just built huge scale today for us to go and create that same level of scale will require a lot of capital will you know and capital will come to India but in the interim how do you compete right so I think we have been very very good at value engineering right so I don't want to use the word I think you got is a negative word because it takes off takes away the quality element of it but I think we are very good at value engineering we have shown that value engineering in pharmaceuticals we have done a phenomenal job on the whole generic side so I think there is an opportunity to look at ourselves and say okay where else can we do value in a value engineering in global supply chains where can we bring IP could we process IP it doesn't need to be that we are building the next technology but we are just improving the way the technology is being delivered so in that context you know we will see a shift in the way IT companies will serve global markets you know we are already seeing a shift in the BPO part of the business so you know there is this whole area of remote process automation that's coming in argument being made is you know with remote process automation we won't need these BPO's I don't think that's going to happen I think it's going to remain a mixture of technology plus people and so how Indian the Indian BPO industry adapts to that you know it will bring new technologies it will bring new capabilities you know again there we have a company called Observe AI which is using voice analytics to improve the quality control as well as the ability to you know serve global markets from India and I think that ties back to I haven't talked about sort of this work from home trend independently as a as a as a trend because I think what what what I'm seeing when I say globalization is you know globalization was thought about between countries I think now globalization will be between individuals so you know you could be sitting in in Delhi Bombay wherever else and you could be working for a company in you know Scandinavia or in the US or you know in Latin America and they'll find you see today a programmer has been found in India through the large companies right so so the value that Infosys the value that Wipro the value that HCL you know TCS what they provided was they created a brand for the Indian programmer that you can hire idea programmer they'll do a good job now that you have a million of those in the country you know a guy sitting in in say Rio de Janeiro can say oh you know I need a person to do this programming for me I you know I've heard that India has good programmers and they'll be able to find people in India so the nature of globalization is shifting it will become much more not just about country to country or company to company it'll become individual to individual so we are seeing that overall shift in how talent will be sort of looked at going forward so those are some of the key highlights no I totally agree with you but you know you mentioned that the the globalization will be individual but do you see this only for programmers or do you see this for a cross board for different job yearners that exist today whether it's teaching or whether it's medicine doctors so do you see a broader base also impacted by it you're bringing up a very important point interesting point right I think we have talked about medical tourism for a long time you have seen companies in the education space also try and build cross-border place Tuta Vista was an interesting example over there um you're you're right we will see some level of you know this globalization happening across professions so the reason why I brought up programming and the reason why I gave those sort of company examples is those companies gave a veneer to the individual programmer right it said okay if today a person has a TCS on their resume then a person hiring them in say a foreign land will say okay if he has worked at TCS he understands project project management he understands he's been sort of you know that some screening has happened in the education space or in the you know healthcare space I think there's still a lot of there's work to be done there right we don't have global brands that have met global requirements right we don't have healthcare companies which are serving global clients right so our healthcare is a very sort of domestic solution right now but to your point you know a person who is a doctor at Apollo or a person who's a doctor at Medanta you know they have brands right so if if Medanta has been serving clients say in Saudi Arabia or in the Middle East then tomorrow Medanta doctor can serve a person directly in the Middle East right so it's just a question of how do you build that credibility and in a global market and I see the way it works is you know countries build credibility around institutions that's you know provide high quality of service right so we have seen that high quality of service in the IT industry we've obviously seen the high quality of that service maybe potentially in private hospitals in India but the private hospitals haven't delivered that in global markets so we'll take some time sure and I think that would be the day when you know talent would really be able to without moving be serving in different countries I think I think education would happen next to be fair I think education is the next sphere where you will see individual individuals being tapped globally and particularly I think for English speaking countries because it's so much easier you know let me also come down to your portfolio I sort of just touched upon it when I introduced you but today you know you have unicorn companies like postman's, Rova, Zomato delivery and you pick them up at a very early stage I mean you know and so you know we would like to know what are the qualities that you see in a founder I mean what are the early days what do you see about or look in a founder and also you know any thumb rules that you have developed on exits from such companies when you know when do you think you exit or what are the what are some of the variables you see that it's now time to exit or now time to invest love to know more about that so I think you know I think the starting point is a founder who has an ambition to conquer the world but the ability to focus on the next problem at hand and and there's a reason why I say that right so you know as a investor I want to invest behind founders that are targeting large markets that are targeting huge problems right and because if you think about you know to get to a billion dollar company you need to be in a market that's actually at least 10 to 100 times that size right otherwise people will say okay you know how do you become a billion dollar business so so fundamentally these entrepreneurs have to target very large markets but if you think about it large markets have many requirements and you can get lost in trying to meet all the requirements right so what the founder has to also do is figure out which of those requirements is going to give him or her a unique advantage so it comes down to Sandeep I'm going to go and change the way social networking is done yes I know Facebook is there but here's one thing that Facebook doesn't do well and I'm going to go and solve the problem there right so nobody could have thought that TikTok could become as large as it did right but they were there you know Facebook wasn't video first TikTok became video first right so I think those are the those are the type of entrepreneurs that ultimately create large companies right they're basically saying I know it's a large market but there is one thing that I will do really well before I go expand into and become a you know and try and capture that market so that's the first part the second part is that person has to have an ability to motivate uh and and sort of sell and I don't you I don't want to use the word sell in a negative connotation you're not trying to sort of you know be a used car salesman but you have to be able to sell your idea to not just me as an investor you have to sell that idea to your employee that you're trying to hire you to sell that idea to a partner business partner you have to sell that idea to your first customer so there is a there is a need for that person to be so passionate about it that they can sell so passion flows into selling right so but you have to be you know able to motivate or sell a person and create a sense of trust so you know people ultimately work with other people it's not the idea see I'm sure we'll all have ideas right I could have also built a magazine but you are the one who built it right so everybody has ideas but the question that comes down to is what is it about about you that will cause someone to trust you with the idea rather than me right so if I come today and I say okay I'm going to build a magazine the person will say yeah but you've never actually done anything in this space yet why should I believe you right so so trust is a very important factor so it's it's selling but it's it's creating trust so I think that's very important and I think the third thing that really matters is an ability to listen and that ability to listen again comes back to you know across various areas so as you come into a market you have a hypothesis you come in with a hypothesis that this is the pain point that I'm going to solve right nobody has built a video first social network I'm going to go to it but you have to listen your market tells you something your competition tells you something right your your the first engineer that you hire will tell you something that I will say no you know you can't build a video that way you have to do this or whatever else right so so an entrepreneur has to have a conviction in the idea but also has to have the ability to listen to adapt so what we do you know there's no secret sauce to this is in the we are bottoms up investors so we don't go in with a hypothesis that you know education is the next hot area we need to invest in or you know API APIs are not going to be the next big thing and we should go invest in postman right so that's not how we look at the market right the way we think about the market is the entrepreneurs are the ones who know best they are the ones who are seeing the problems on the ground you know I'm one step removed I don't see I'm not there in the market trying to sort of you know solve a problem right the entrepreneurs so the entrepreneur is the one that will really come up with the best idea so our job is to sort of ask intelligent questions to be able to get to answers on these three or four characteristics right that you have the ability to think of the big picture but so you know focus on this immediate problem you have the ability to listen you have the ability to motivate so those are the things that we are you know through questioning we are trying to address one thing that we are also very very mindful of is is time that you know we are we will take decisions quickly because we believe that if you don't get a view on an entrepreneur and there you know the two or three characteristics that I mentioned early on it's very very hard to sort of you know change your mind later you know sometimes sometimes it does happen sometimes you have had situations where an entrepreneur may have had a tough day before they came and met with us you know they may have had some problem in their family or whatever else so they don't have a good meeting and so we'll try and sort of not just make an answer based on one meeting we'll maybe you know sometimes you know two or three meetings but we'll never sort of string people along because one thing that we are very very careful about is that entrepreneurs time is the most precious thing and so we want to make sure that we use their time wisely so if you are doing another meeting we actually believe that we there is there is a question we want answered and we would like you know maybe somebody else to ask that question then you know what I asked you in the last meeting that's that that's that's how we work with entrepreneurs and how we screen them and how do you plan your exits I mean do you have some some some sort of some rules that you've developed over the course of time in it so uh you know one of the uh again you know we since we are we work closely with entrepreneurs exits are also determined by entrepreneurs to a great degree you know you can as a as an investor you can give guidelines you know obviously we have a fixed fund life so we tell entrepreneurs have this type of investment that you know we have a five to seven year holding period and you know so the entrepreneurs are aware of that but uh ultimately uh entrepreneurs have to think of the exits in the context of their own journey right so we are only one part of that journey so entrepreneurs can come and tell us you know I don't want to exit this business yet I think there is still a lot of upside but I understand that your fund life has some you know limitation so I'll help you find an exit so you know there could be a secondary exit where we sell and the entrepreneur continues there are other times when the entrepreneur says you know I think that what I have built has reached its natural sort of level as an independent business but if I were to be a part of a larger platform I think this can be much bigger right so they will approach the board and they'll say hey you know we would like to engage into a dialogue with some of the larger platforms and see if we can be a part of a larger platform uh sometimes larger platforms approach you right and say okay we'll we'll do it and now I think we're seeing more and more opportunities in the Indian context of public listings so up to now most of the exits that you have seen in India have been secondaries uh you know so very few public companies that have sort of really scaled up so InfoEdge make my trip you know literally you can count them on your hand right there are five four or five companies they're really sort of gone public and scale from the Indian context but I see that changing uh it's changing because you're seeing companies scale faster so you know delivery has scaled amazingly well in the last four five years uh you're seeing throughout so you're seeing you know you mentioned these companies that have become unicorns they have all scaled uh so it's not just just sort of a valuation hanging there right these are these are all backed by actual businesses with you know hundreds of millions of revenue profitability you know clear you know large customer bases and so on so uh so these can all think about going public and uh the investor base is also changing right so today Indian Mart has done a great job right nobody would have thought that India Mart would have scaled and would public and as a public company they're doing very well right so I think there are there are you know InfoEdge was obviously has expanded and they've also done very well but I think there are going to be more and more uh of these companies that there will be acceptance that these companies can go public and be profitable and sustain their growth um totally agree with you and you know we would want to see particularly with the prime minister's vision of vocal for local more such companies from India becoming more scalable but you know you mentioned about founders quality to be able to think with times you know for example Facebook was not a video platform and then it became so because the founder had the vision but today in one sense you know startups are in a very catch-22 situation because investors on one side are telling them to be a little more uh you know look at their burns not go overboard with their expansion plans because this is the time more for holding on rather than big growth planning and yet there are opportunities which are today only in pandemic times which opens new doors and new windows of opportunities for you so how do you balance this situation so how is it that you're telling your portfolio companies to maximize the opportunities and yet not be too extravagant with your investments and so I mean largely how are startups supposed to go yeah so I think the key thing that over here is so I know that the decision that's always been made is you know growth versus unit economics right you have to be you have to take an objective view on what your unit economics really are and the way I tell my portfolio and you know how we work with our companies is that think of your business as two parts to a business there is a steady state business that you are you know if if today I said I'm going to grow this business at a 10 percent year on year or 20 percent year on year 30 percent year on year what would that business look like and show me what the unit economics will be if you were running a business that was growing 20 percent year on year or 30 percent year on year and the reason why we do that is that's what the public market wants right so the public market is looking for a business that's growing 20 percent 30 percent year on year and they're happy with that now that's actually a very good business if somebody you know HGFC bank has been growing 20 percent year on year and look at where it's gotten to right so people are not you know public markets aren't looking for businesses that are 100 percent growth rate those are very few businesses that can continue to scale at that level so if I look at that eventually this company will go public what would it look like right that's a steady state business and then I say okay on a steady state basis what would your unit economics look like if you come back and you tell me that suddenly I have to give away this product so my gross margins are zero or negative in a steady state that can't work so in steady state there is you know so you have to sort of go back and say where am I what am I investing for growth and would I be able to potentially today what I'm giving for free could I be able to charge for it now what is how will you prove that to me you know how will you prove that to yourself forget about to me right forget about the investor as an entrepreneur how will you prove it to yourself that tomorrow if you were to not give it away for free you will actually you know be okay so do A B testing you know do run run tests where you can show that there is you know there are there is some segment that is willing to pay for this and that segment is right now very small so for you to grow that segment has to be grown so what you are doing is you are investing for that growth by giving it a lower price so how you test that it becomes very important right so I think the the key thing that we are telling our our sort of founders is it's very important to be honest with yourself and saying what is my steady state business and what is my growth investment and once you do that the steady state business is all about getting the right product market fit right because the the reason why somebody pays is because you have delivered a solution a product or a service which is providing them convenience right and that convenience is what you are showing that they're paying for so now I have parked that right now I need to just invest to have more and more people get the same convenience so that is where I think the entrepreneur and the board and the investors and all have to think very carefully and have I reached a product market fit have I been able to show a value proposition for which a set of customers is willing to pay for and if that set of customers were to become 10 times that or 100 times that I would continue to get paid and I would build a very successful and very profitable business sure you're totally right but then we've also seen startups doing some kind of pivots during this time I mean one of the prime examples is a matter who jumped into food and grocery because you know they had a fleet which could be used for that now such decisions you know while while at that point of time and during the lockdown it's very lucrative but in the long run do you think it would actually work better for the business it would be something as a line they would want to go to and not just the matter I mean it could be anybody lot of businesses sort of changed their strategy so how do you sort of suggest startups to make such pivots and then be able to maximize them I mean you know because sometimes the core business can get impacted by it some of this is the ab testing that I mentioned right that you basically try this out see how your customer base is accepting the the the change right so if I were you know so harsha or or depending on you know sugi and and and so matter have both done that to your your absolutely right so there is a there is a delivery service element to their core business right so they are saying okay I was delivering prepared food now for whatever reason that that business is being impacted either because of lockdown constraints you know so people are you know you can't do you can't people don't want to buy or people don't want to buy sort of prepared food right they're concerned how will that cause you know infection or so on but people are have to cook they have to eat right so can I get into the other part so I'm thinking about this from a standpoint of I am here to meet the need for somebody who's hungry right so now I work backwards and it's okay hunger can be met by restaurant food hunger can be met by ingredients that are required right so that's how the thinking starts so the pivoting so is driven by that now when you go and test that there are two parts to it one is is your consumer willing to accept your broader value proposition the customer may have already chosen big basket or somebody else and so they don't need you right so the first question is that are you providing something to the customer that the customer doesn't have a solution for already or your solution is much better that's the first part the second part is how feasible is it for you to build that solution in a in a time frame that is given to you right so if I am I'm zoomato and it's going to take me you know five million dollars and you know two you know two years or you know even three months to go build this should I be doing it but if it is about just adding a bunch of suppliers to my delivery platform and you know start providing this and my consumers are willing to sort of you know take that as a additional service it's it's it's effectively you know from a from a delivery company standpoint so if I think of them purely as a delivery company it improves your you know utilization capacity utilization right and that's what drives economics in this business sure um you know on another friend today how are you telling your portfolio startups particularly younger startups to be you know to have more revops going for them how they can probably be aligning their sales marketing finance customer focus teams to come together and you know I know startups have always been sort of you know fault finding is done in them to say that they don't they only focus on business and not on revenues and today revenues are going to be tough and probably you know now that we are in a complete stage of unlock it's it's going to be tough the market is going to be much tighter so how are they going to streamline their revenues their teams and make sure that the focus and you know there is less leakage of revenues happening in the system and everybody is aligned to one board so what what could be good ideas for them so I think the that's a very important point and I think this there's been this discussion around resilience of businesses right how do how do you make businesses resilient and interestingly you know there is there's been a sort of a decade where I would say resilience has come from capital raising right people have continued to burn money and raise capital and you know how good you were at capital raising ultimately sort of you know allowed you to to scale and exit that resilience is shifting more and more towards you know revenue and internal sort of accruals right so one of the things that we have seen and we have been telling our entrepreneurs that this is a good time to go back and refocus on product and really go back and look at what the market is telling you you know and so number one obviously you have to collect data to be able to figure out what the market is telling you right so from a product perspective put enough hooks into your product that you can start tracking what the market is telling you if you haven't done that you do it right if you've done that that's great if you already have that then look at what the market is telling you in terms of what they see value in your product so this goes back to the product market fit right and use this time to actually improve your product market fit so you know because it's a it's a time when everybody is careful about spends so nobody is so you can if you are not spending on marketing right now right you are not falling behind somebody who's spending on your marketing right so the advantage is that you are you are playing in a level field right now but nobody's spending on marketing now if you're not spending on marketing and your competitor is not spending on marketing how do you differentiate yourself and the differentiation will come from the product of the service or the solution that you're providing so use this time to you know whether it's your technology team whether it is your you know delivery team look at all the pieces of how you are providing your your you know solution to the customer and see how you can improve those and it's a you know it's an interesting time because at this at the same time every team is working remotely right so you're trying to make changes in your in your product you know development and delivery with a remote team so in that scenario it is very very important that it is very data driven number one right so when what happens is when you're when it's data driven then the likelihood of opinions sort of going over the place also come down right number one so you're everybody's making opinions on the basis of the data that's in front of them the second is that communication becomes more and more important this time you know we are on a zoom call right now you know we are all over zoomed but it's very very important that that communication doesn't need to necessarily be face-to-face communication but how you define the goals of the company as the CEO how do you define the goals of the company how do you define the path to achieving those goals becomes even more important because you're not seeing that person on a day-to-day basis you're not able to you know use the softer mechanisms of defining a path for the company you know there's a lot of people don't realize it a CEO walking the walking the floor or the CEO being on a town hall or whatever has a huge impact in the way a company moves ahead now in a remote environment you you have less of those opportunities so you have to figure out how you replace them and what communication mechanisms you create to be able to do that I think absolutely now cultures have to be built over the screen rather than in the offices so it's as much harder for particularly for the founders and CEOs you know one sector I've sort of seen made a big comeback during the pandemic is the e-commerce sector you know there was huge funding going behind e-commerce till about 2012-13 and then we saw a big slowdown with other sectors becoming more important and now but it's sort of come in various branches and you know different streams of its own there's social commerce hyper local and Flipkart is talking about dark grocery stores now so do you I mean as an investor are you going to be evaluating this opportunity once again in a different avatar now so you know we have a couple of players in the grocery space no I would say more than a couple in the sense so we have jumbo tail for example right they are providing the e-Kirana platform and effectively upgrading the Kirana store to the next level of database sort of you know merchandising and customer service so and then similarly we have a company called Goodbox that is sitting on the front end of the customer to the Kirana interface right so we are we're sort of seeing this play out you know so to your point obviously grocery is one area where going back to my original point about digitization and behavioral change where we are seeing one of the biggest ships right so the big baskets and the grovers of the world came in at one point I think they probably spent a lot of money educating the market on how to buy grocery online you know and and be open to next day delivery you know we were all used to calling our neighborhood store and saying hey we'll just you know do that now and this you know we are sort of getting back to this hyperlocal model to your point partly because in the initial days of the pandemic we had supply chain breakdowns right and people suddenly realized that these long supply chains weren't necessarily you know conducive for their grocery business right so you're starting to see groceries sort of return back to a hyperlocal model and in that context the the consumer is expecting the convenience of online right so they are expecting the convenience of online yet the you know advantages of proximity right so so your your local store has to behave like a big basket without having the resources of the big basket right so how do you make that happen so so you're seeing value chains are now getting disaggregated and people are saying okay if I need to supply the same experience how what parts of the experience and how can I break it and create one part of it so so that's the one big shift that's happening in e-commerce so I think there is the grocery trend is a big shift the second trend is around social commerce again I would say it's not necessarily the pandemic that has driven it except for the fact that you know it's it's partly entertainment you know so social commerce is as much entertainment as as it is commerce and people have time at this point to do new things right so people are trying out these new things social commerce has been obviously reasonably penetrated in other markets so India you know as such is is you know there's a lot of influencer that commerce in our you know in our overall psyche right our film stars our sports stars are all icons which drive a lot of our branding right so if you think about it the Indian consumer is quite influenced by by by these sort of celebrities and so celebrity led marketing I think will will grow and you're seeing some of that play out at this time when you know people are sitting at home I mean do you see the the physical distribution model which was there you know with large FMCG companies and manufacturing electronic companies having distributors in the field do you feel that these distributors are likely to come online now and become like social distributors to help reach out to their community and sell yes yes that I think is is is already happening we're seeing that and we are seeing it across industries by the way so we are seeing it in grocery we are seeing it in farmer we're seeing it in you know I can so you know the even in staples and so on you know the this new agriculture reforms that just came in right where there's ability to buy outside of the Mondays I think that's going to have a phenomenal impact on on our supply chains you're starting to see corporates reach out to say okay you know we will build parallel supply chains farm to fork so now when when you start seeing corporate interest in these spaces you are already starting to see you know digitization in in those in those chains which will force the existing supply chains to also adapt right so that's one I think the other interesting thing that's happening is you know there is why did we have the segregated supply chains it was driven by two things number one is it was driven by the need for credit in the supply chain so I would have my 10 retailers or 40 retailers or whatever the number was who I would supply goods to on a credit basis and that guy in turn would give credit to the consumers and it was a total credit economy right you were literally getting somebody would say you know send me my my rice I'll pay you at the end of the month the rice would show up and you know the guy would keep a hattabook you know thing and at the end of the month you would pay him and that guy would then pay his distributor who would then pay his sub you know there were sub distributors and distributors and you know and so on now one thing that has happened is credit is getting separated so there are companies that are coming in that are just doing supply chain credit right so now supply chains can be you know there could be credit disintermediation that's happening the second issue was bulk breaking right it was logistics how do you break the logistics down to the to the level and if you look at what is happening in logistics again there is a big shift that's you know so you have logistics companies like delivery and so on that can work with brands all the way from their factory all the way to last time distribution so a brand now has a lot more capability of determining where do they want a distributor and where not without thinking about logistics so both I think credit and logistics changes are going to have a big impact on our distribution systems and the third thing that is driving that is the need for data so more or more brands are asking for data at the at the consumer level and the more disaggregated that supply chain is the harder it is to get accurate data right so in the pharma industry for example you've seen that you know the the pharma companies have their medical representatives go to the field and actually try and get data from the chemists you know how much it of this of this particular thing that you sell or whatever right and there's all sorts of gaming gaming happening in that model and so on now if there was a way for them to get that data immediately they would love it so if pharmacies gets that data immediately right so both for the pharma company and for the consumer if pharmacies are providing a great benefit so over time you will see more and more of that shift happening now if if pharmacies are there then the existing supply chain the chemist and the distributor has to align their model so that they can provide the same convenience as i'm getting from say uh you know one ng or a pharmacy so that shift will happen so in one sense maybe the the distribution and retail will converge yes the online space yeah so we're getting some questions uh Sandeep you know maybe you can take a few of them uh just to answer our audience so Arnab has asked on facebook live what is the scope of getting fund for a nascent health and education startup in rural area mainly best bangol so uh you know i think the way you should think about fundraising is uh depending on what is the nature of your business again you know where you are at scale and where do you want to go to i see most of these businesses start with angel investments so this is somebody who would you know again understand the West Bengal market understands the gaps that are there and is willing to fund you to address those gaps and uh so i would start with angel investment investors that understand the market that you're in so if you're in West Bengal you know Calcutta has a group of angel investors so i would reach out to them uh you know Tai i think has a chapter in Calcutta so they can help you and so on so i that would be my recommendation there is avinash mohanti here on our chat who's asking uh do you think the pandemic has caused a serious dent in the tech mobility space particularly self-driven vehicle rentals for the first mile and last mile travel solutions by when do you think the recovery could happen do you think investors will be looking to invest in this sector at all again you know i don't have a i don't have a sort of forecasting sort of thing but what i would say avinash is that if you think about where the world will head post this you know pandemic and things opening up is public transport will will reduce and people will want to do more private transport so in in one way to your specific question on personal mobility i would expect personal mobility to increase and this has been proven out in in china after SARS so after SARS they actually saw increase in personal vehicle sales and so you know one would expect that they would also you know we will see some level of increase in maybe two wheeler sales or car sales post this pandemic ending obviously the flip side is that you know if people's purchasing power goes down what does that do but for people that have to travel there is going to be a desire to be safer and that may drive personal mobility so because you mentioned agritech so satya here is asking that do you fund do you see that there's a good scope of funding for hydroponic agribusinesses in hydroponic so yeah i think there is a yes hydroponics as a category i think does have a huge opportunity in India and in fact there are many players that are coming into the space from various walks of life you know i have now met everybody from a McKinsey consultant to you know team from delivery to you know very large sort of private equity fund that is doing work in hydroponics so the the whole area of controlled agriculture in my view is is there is a there is a large opportunity there the key thing that you have to think through is controlled agriculture and hydroponics is fundamentally industrial in nature right you are you are converting what used to be a seasonal you know risky approach and trying to make it into an industrial model and you know industrial models have advantages and disadvantages one advantage that they have obviously is you have the ability to control process so process engineering becomes very important when you think about controlled agriculture and hydroponics so if i was an investor the first thing i would look for and i would and i've met many people in this space is what are you doing that's so differentiated that tomorrow if somebody comes in you know say soft bank come soft bank has this investment company called plenty if plenty sets up a plant a facility in Bangalore how would you compete with that so you know that for people who understand the space i think you know you so understand what i'm saying here the second point that this this that's in some case can be a negative is industrial systems work best with fixed pricing right so you know exactly what your raw material costs are and you know exactly what your final sort of pricing is right so you know how to manage your your pricing and your margins and everything accordingly in the agriculture space you know in the absence of everybody doing hydroponics the challenge is that pricing keeps varying but your industrial inputs are the same right you're spending the same money on seed they're spending the same money on chemicals and so on so how do you manage your pricing algorithms to be able to run a business that in the peak season may actually have no prices but in the uh non peak season may give you very high prices right so today if i sell tomatoes i may be getting a very low price because tomatoes are available in the market everybody's growing tomatoes but in the non so tomato peak season you can sell tomatoes at three times the price right so you have to be able to run pricing models that allow you to take losses in the peak season but make huge amounts of money in the non peak season so if you can think through that i think there is a there is value in that business so we getting like totally filled with questions here but i think just four minutes more maybe and we can take a couple of them so there is somebody who's got a grocery startup which is like a local online kirana store so he's asking what are the chances of customers shifting from big basket like players to local store ordering online so the answer to him or her is how well do you know your customer the the way that a local player can beat the online players is by showing a better understanding of the customer and i think that's what i would ask you to focus on is figure out how how you know your customer better and what will what can you show to that customer that will get them to work with you instead of big bastard there is obviously one big advantage that you continue to have which is you can supply in a much faster time than a big basket right so big basket tried to do the 19 minute delivery they haven't really succeeded at that so they're they're still more of a next day scheduled delivery player right so as a as a local supplier you can you can provide much faster turnaround but you have to understand how many of your customers need that and you know can you can you build a business around that so rahul naitha is asking that what are what are your thoughts on opportunities in the rural supply chain and logistics and non agree products i think the opportunities there uh you know people are people are working on it already um it's uh the key thing is to figure out how to build a scalable business here because rural markets are notoriously uh different across geographies right so what you do in orisa rural market may not apply to west bengal you know which is right next to next door state so i think the key thing is figuring out how you will be able to scale the business but the opportunity is there today if you want to do something all the large brands all the large uh you know amazon and everybody is looking for rural penetration so deepak kadham's asking what are the things startups should be focused on to increase the valuations of their companies before going for first round of investment when everybody wants the answer to that so i i sort of answered this question early on but uh i think to the specific point people that you bring up number one i would not focus on valuation i need to get to a certain valuation i think your focus should be on am i building a product or a service or a solution that my customers love and are are you know will will support me come hell or high water right so i think the starting point for our invest for a entrepreneur should always be am i solving a pain point and is the market telling me that i'm solving the pain point right because ultimately when i come to you as an investor that is my question to you right is are you solving a pain point that is large enough and is the market telling me that you are solving that pain point and you know and every every business is different so i have the i have an investment in a company called Pratilipi so Pratilipi is building a solution for authors to connect to readers okay so that business when it when when you know Ranjit came and met with us the first time there wasn't any clarity where the revenue will come from right so the first question that everybody asked is is there anybody that is making money in this business and the answer is no right but what he was able to show was that there were enough people who were reading and there were enough people who were writing and the numbers were only growing right so on a month on month basis there were more writers and there were more readers and more people were and all the readers were reading more than they had read the previous month so your your time spent on the app your time spent on the website was increasing so for us what really mattered was that there was a clear need that we could see and there was a clear way that he was solving the problem which we could see scale right and that company has grown you know four to five x year on year right so every year they they go five x from where they were the year before right so in that situation it has been very we don't we don't have to go and raise money people come to us said oh we heard that Pratilipe is growing at this number right and Ranjit is phenomenal he actually publishes his numbers publicly so you can see how Pratilipe is doing by just going to their you know to their sort of portal and so people write to us and say oh we we saw the Pratilipe numbers they are so good you know how can we invest so I think that is what you want to get to you want to get to people calling you because they have heard that your customers are so happy with you totally agree with you have we have some more questions but we've totally run out of time Sandeep but thank you so much you know your questions and I would request if your team can maybe take a few minutes to answer the rest of the questions this talk is actually live on Facebook so we can send the link and maybe some of these questions can be taken there but thank you again very much for joining us here today and I think some really important points that you made here today about what sectors to look at and you know how do you sort of measure yourself up as a founder and be able to raise investments and really to sort of now conduct business in an environment which is tough that could be very rewarding if you do it right so thank you again for joining us and to all my attendees thank you for being here both on Facebook live as well as on Zoom if you have more questions please keep them coming we try to get them answered from Sandeep or his team in the coming days just for you to be able to find your answers and questions you have any parting any final words from you Sandeep as we I want to I want to thank all the entrepreneurs that are on the call and listening for your time and all the best as you keep building your businesses don't lose heart if the pandemic has hurt you negatively I think this will pass you will have an opportunity to keep building the businesses and for people who are sort of thinking big and are building businesses you know all the best thank you thank you thank you Sandeep and thank you to everybody who's been part of this talk we look forward to more such talks in the coming times thank you