A year’s Musings, Learnings, and a Call to Arms for 2017

Wow, and another year has flown by !

We’re all hopefully a bit wiser and grayer after the ebbs and flows of 2016, and further hardened after witnessing the year’s notable events globally and at home.  So, some musings and personal learnings as we close out 2016 [The Year of The Monkey], and enter an interestingly-named 2017, The year of the [Red Fire] Rooster.

First, a picture of perhaps what most first-time entrepreneurs sometimes think their journey will be like…


Versus – what the entrepreneurial journey turns out to be!  


Pictures are indeed a thousand words (or cardboard boxes, or tons of G-force twists and turns!)


Brexit, Trump, Demonetization – and Startups? 

These three stood out amongst developments with significant impact

  • Incumbents will always have challengers (the status quo is always temporary!).  In the Brexit case, despite the general malaise that had crept into the Anglo-Euro bureaucracy and fabric, the British referendum holders would never have guessed the time for the status quo was up.  Moving west to the US – regardless of one’s allegiances, it is fair to say Secretary Clinton could be seen perhaps as bordering on overconfidence – especially given her proximity to the White House establishment.  Most surprising was Trump’s sudden and unexpected victory blindsided the entire world; most of all, even himself!

Why should startups care?  In a sense even the most innovative of tech startups – Facebook, Apple and Google are no longer startups per se, but have become today’s incumbents!  They have to constantly look in the rear view mirror and avoid falling into the same trap.  The words “startup” and “constant reinvention & innovation” are tightly coupled and co exist.

(Chief Digital Officer @Salesforce, @ValaAfshar has some very relevant references showing companies started in the 90s/2000s that no longer exist, and vice versa – some of the fastest growing giants today were born in only the past 10 years!)

Demonetization – our own PM Modi’s surprise announcement trumped even the US President-Elect’s surprise win in some global circles.  Of course, the devil lies in the details (and jury is mixed whether the execution so far has been stellar).  But clearly, demonetization overall throws up a plethora of opportunities, ripe for disrupting the world of fintech!  One advantage is its ability to build on the excellent foundation already laid out by the UPI, Adhaar, and other similar pillars of the Government’s ambitious financial inclusion plan.

Similarly, the advent of NSDC (National Skills & Development Corporation) for Recruiting / HR-Tech companies, and #MakeinIndia for manufacturing (covering robotics, shop floor efficiency solutions, embedded hardware etc) are similar developments positively impacting and enabling disruption.

Moving to the micro – personal learnings 

Investing, especially venture, is about backing disruptive startups who are ahead of the game and hence don’t play into any “macro” themes and trends.  As one peer has put it, the venture business is unlike the fashion business where hemlines change from season to season.  While AI, VR, Machine learning may be the next new thing, overarching, long- term first principles that guide investing, scaling, growth, and value realization are what matter.

  • Are we getting better at picking entrepreneurs?

If you had to really ask, here’s a gut answer! 


We think some of the better entrepreneurs (and this applies equally to us, as entrepreneur-VCs, navigating the shifting dynamics of early stage investing in India) : 

  • spot large-marketsize spaces but also adjust/pivot around shifting dynamics
  • never lose their love for product innovation (at Blume, we don’t generally back pure business founders, as we believe tech can’t be “outsourced”)
  • when they are about to hit a wall, quickly decide whether the biz is better scaled up OR scaled down, or find a home where the entrepreneur can paint on a larger canvas
  • are able and willing to hire A+ players to build kick ass teams around them. @Freshdesk (which is not a Blume portfolio company, incidentally) is an example I like, where Girish, founder and ceo has been able to recruit top flight talent from companies like LinkedIn amongst others. In addition, two of Blume’s companies have also been aqui-hired and are seemingly very well integrated. Our own @Nowfloats, while in early days, is also a similar example
  • know what their core metric is and have systems in place to measure how close/far the deviance is at almost any point

On SaaS (caveat – as the B2C consumer story has been chronicled fairly extensively)

  • Sales cycles are incredibly long.  Biggest reasons for failure is the “tired CEO”
  • Its quite common for the first 10-15 key enterprise accounts are usually founder/CEO led. However, the failure to scale thereon usually stems from an inability OR unwillingness to hire an experienced sales head – who in addition to closing key accounts manages the salesforce and sales processes, incentives, and targets
  • Needs a strong ‘internal champion’ buyer, often multiple internal champions, where independent threads can help re enforce the final sale
  • The ‘no man’s land’ is being stuck is the $1-3M ARR, despite attractive growth rates.  We’ve seen its not difficult for a good team with a differentiated product/platform to get to $1M ARR. However, crossing the chasm beyond $4M is the real kicker (largely due to the “long tail” / fragmented dynamic of the SaaS providers market)
  • Given SaaS companies are not as capital-intensive as their B2C counterparts, and enterprise customers have much higher switching costs than the typical “free or fremium” B2C user, B2B companies find it easier to raise from larger investors as early as Series A/A+ rounds (relative to consumer, which attracts large infusions at Series B or C)

There are two, actually three, “Indias”

1) “The China model” i.e. the B2C India consumer story.  However, here, the horizontals and verticals game has been played out already. The next big things are the enablers (or the ‘picks and shovels’) fueling the consumer story e.g. payments, logistics

2) the SMB model” i.e. products, platforms and services focused on the Small & Medium Business segment. This also includes the important hybrid Offline @ Online (O2O) sub segment

3) the “Israel model” i.e. Made-in-India enterprise tech-for-global markets. SaaS (eg Freshdesk), automation (eg Grey Orange), clothing & apparel DIY platforms (our very own Source Easy and Threadsol) are the “other India” segment

In the end, the scoresheet matters

“Winning is a habit. Unfortunately, so is losing” – famed Notre Dame college football coach, Vince Lombardi 

So while we have a long way to go, a recap of some of the year’s notable highlights :

  • closed our first fully institutionally raised fund, Blume Fund II
  • one of the first VCs to be a recipient from the Government-sponsored AIF (via SIDBI)
  • consistently ranked in the top five most-active VCs
  • Karthik & Blume featured in the ‘top 40 who matter in the ecosystem’ @Livemint
  • A number of our stellar portfolio companies including Grey Orange, Instamojo, Locus, Healthifyme, Nowfloats and others emerging as category leader contenders
  • Our portfolio companies today span >100, across Fund I, top-up pools and Fund II, making our scale, diversity and network-effects a key differentiator
  • Blume was one of the first (and few) VCs to back core-tech, non traditional enterprise startups, away from the popular B2C plays.  Automated warehousing (Grey Orange), apparel and fashion DIY and supply chain platforms (Threadsol, Source easy), carbon capture (CCS) are just three examples showing that India a) is more than just business model/process innovation and b) deep-tech innovation “made in India” does exist
  • made significant steps in building out a full-stack platform (with preferred partners to help our portfolio on Hiring & Talent management, Business Development, Investor Relations, Marketing and others)

There’s still a long way to go….. 

Looking to 2017 – All hands on deck

While we enter 2017 with firm and rooted conviction in India’s fundamentals, explosion of mobile penetration, young workforce, and attractive growth rates – one of the painful reactions from LPs when asked about investing into India goes something like this

“We think India is very interesting but we’re still studying it. We’re almost there – but not there as yet.  Can you share some data of the number of exits and their associated sizes?”

Its heartening here to see here, that both the frequency and size of exits have been increasing year on year. However, its very clear the game changer for India-tech will be a full cycle of value creation and realization playing out.

So, here’s a call to arms to us as an investor community broadly – to collectively roll up our sleeves and ensure India-tech delivers, showing the world India delivers and makes money – so we can continue backing India’s most innovative, brightest and best.

Finally, as we transition into the New Year, its worthwhile asking ourselves @ValaAfshar:

  • What will I leave behind? 
  • What (and who) will I bring with me? 
  • What can I create thats new (and who will help me)?  
  • Which global standards do I benchmark against and aspire to?

The next few days are a wonderful, opportune time for each of us as stakeholders in the community – investors, founders, early employees, portfolio mentors, advisors, board members, to self-reflect and make these simple yet core decisions as we step into 2017.

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