SAIF Partners, the leading venture capital firm with over $2 billion assets under management and investments in companies such as MakeMyTrip, Paytm, BookMyShow and UrbanLadder, is betting on segments such as SaaS, education and fintech companies to power its future growth. Alok Goel, managing director, SAIF Partners, who is on the board of start-ups like Little, Toppr and Walnut, speaks to FE’s Prabhu Mallikarjunan about the slowdown in funding and the opportunities in the start-up space. Excerpts:
How has the funding slowdown impacted the investor ecosystem?
With the slowdown, now people (investors) are taking more time to evaluate business models. Earlier, anybody and everybody was putting in a small amount of money and opening a competing model by looking at some of the successful businesses. This slowdown is discouraging people from funding blind competition, because of which marketing spend for some of the start-ups is going down drastically, which is very good in a way.
Which sectors look promising for SAIF?
If you look at India as a broader market, every single sector is extremely inefficient right now. So, in our view, while every single sector is up for disruption, some like education, fintech, healthcare & SaaS are rapidly emerging and ready for disruption. India is taking forward steps in the fintech space. With payment banks and unified payment interface, it will further help fintech companies to disrupt the market in newer ways. While some payment gateway companies will come out with new disruptive models, a few may actually become obsolete. The education segment is divided into two buckets – people who want to learn and people who want to get enough marks in the exams. Technology will play a role in the first bucket in the coming days.
What is the differentiated investment strategy of SAIF?
We have a different framework unlike others. We do not blindly go for profitability or growth. We basically go for creating a valuable business. We do not want to create hyper-growth companies and less profitable companies. In the early stage, start-ups should focus more on figuring out right business model, right unit economics, right consumer adoption and build viable product. We do not allocate a specific sum for a certain sector. Our investments are purely based on merit. Also, given that we operate from the seed stage onwards, we are active on mentorship, help to raise funds, build strategy and a great team. As a fund, we are quite keen to partner at seed stage, Series A and Series B. Typically the SAIF’s cheque size would be between $0.5 million and $15 million.
How are your investments in the hotel booking and travel space faring?
Though I am not on the Board of Treebo, I believe it has a sound business model that is going to sustain and scale up fast. Unlike in Oyo Rooms model, where the quality standards in the hotel are largely maintained for their customers, in Treebo, we improve the overall hotel quality and then they sell the entire property online. It is more consistent and long term. Hotel owners do not prefer to differentiate the customers with the quality of service. For us, Treebo and Makemytrip work closely with each other and both the investments are faring better.
Has the investment in UrbanLadder and Toppr paid-off?
Furniture is actually a hard market to crack and we are here for long term. The focus is more on creating lot of content, helping people pick the right furniture, rethinking the way interior designs have been thought through. While with Toppr, they are currently helping students prepare for IIT JEE. There are many exam categories where Toppr can get into, like those of CA, Bank exams, UPSC and get into early years of education and the company is testing new products.