Sasha Mirchandani has been part of the venture capital space in India for several years now. Founder of sector fund Kae Capital, a sector agnostic venture capital fund and co-founder of Mumbai Angles, Mirchandani has mentored and nurtured some of India’s best-known start-ups like online fashion retailer myntra.com, mobile advertising technology provider InMobi and Fractal Analytics. Although an enthusiast, Mirchandani tells FE that start-up funding in India could taper off in not so distant future. Excerpts:
There is a growing chorus that it’s a bubble in the making in the start up space in India…
I wouldn’t say that there is a bubble yet but there is definitely a lot of froth, which will start settling down in the near future. A lot of VC money has already come into funding start-ups in India in the last few years. Going forward I feel that investors will begin looking closely to pick the winners from losers.
So do you feel that the volume of VC investments will slow down this year?
I feel that this year onwards many VCs will focus more on working with the founders to put a sustainable business model in place. The total number of deals could decline this year but in the long it augurs well for everyone.
Many companies in the e-commerce space have seen their valuations skyrocket in the past one-year or so. Are such high valuations realistic?
Yes, without taking names I feel some companies could be overvalued. But given the market potential in India, investors are not really bothered. The strategy now is to create scale and revenues will come later. Honestly, this could work both ways. For instance when Facebook was going public, critics argued that it did not have a robust revenue model. But today no one talks about it. It could happen with the large e-commerce companies in India too.
Talking about valuations, do you regret exiting myntra.com before it merged with Flipkart?
There are regrets and we could have stayed invested in the company and we would have probably made a lot more money. But at that time we wanted to exit myntra and focus on raising a new fund, which we did. It’s about the path you choose in life and business.
You have already raised a $25 million fund. Are you looking to raise more?
Yes we are in the midst of raising a $40 million fund. It will be a sector agnostic fund but will invest in tech-based companies with a scalable business model.