JSW Ventures was born from the stables of the JSW Group, in 2016, as an early stage VC firm. Deependra Singh, who is a member of the investments team, takes us through his experience as an investor and what excites him about his role. We caught up with Singh on the sidelines of pitchfest at TiECON Chennai, 2016.
A management graduate from MDI, Gurgaon, Deependra Singh is an investor with experience in both listed securities and private investment. He invests in technology-enabled disruptive products and solutions at JSW Ventures. During his career that spans almost 12 years, Singh has advised large corporations on cross-border M&A and private equity funds. He is inspired by Benjamin Graham’s investment philosophy and keeps that as a guiding principle while investing in listed securities at Goldman Sachs Asset Management. That being said, he notes that he is more of an investor than an advisor, which became a rationale for Singh to move back to the buy side with JSW Ventures.
JSW Ventures is an early stage venture capital firm which is a part of the multi-billion dollar JSW Group, with interests in steel, power, cement and infrastructure. It invests in companies building innovative products, services or technology leveraging India’s demographic dividend, consumption drivers, manufacturing, and technological advancements. It also has interests in funding technology and technology-enabled businesses across consumer Internet, enterprise, SaaS, health technology, education technology, fintech and mobile. This fund’s key investments include Purplle (a beauty and grooming ecommerce platform) and Overcart (which provides alternative source of high quality unboxed and refurbished products to end-users).
In this interview, Singh takes us through his experience as an investor, and what really excites him about it. He also talks to us about the interesting encounters he has had with entrepreneurs and about the future of the PE/VC ecosystem in the country.
What makes you say yes to a deal? What makes you say no?
The passion of an entrepreneur and his/ her commitment and vision is a very important driver. Apart from this, we also look at how big a problem the entrepreneur is trying to solve and how uniquely he/she is trying to solve it. Why should a user use your product? Do they keep coming back to use your product or service? These are some questions for which we need convincing answers.
This apart, we try to identify whether the company is technology enabled, whether technology is changing the way business is done and the way consumers interact with each other. We focus on this because the future will be a lot more driven by technology than it is today.
We also look at the kind of surplus the entrepreneurs are creating for the stakeholders in the ecosystem. Stakeholders will not be limited to the employees and shareholders, but extend to suppliers, customers and so on.
At the same time, we say no for many reasons. But most of the time, we try to find out if their ideas are original or replicas of existing ideas. We believe that replicating everything does not help. We do not look at companies that do not innovate. Innovation is not necessarily in products or services, it can also be in the way it is delivered to the consumer, or in the way the company interacts with the customer and also in providing a good experience. Lack of innovation and vision is a clear no for us. If there is innovation, then one can validate other things.
Tell me about a time you got lucky as a VC/PE investor?
I personally believe that we got lucky with our timing; the time when we started investing; in early 2016. However, by this time, the whole investing ecosystem had witnessed a lot of exuberance and some pain too. This gave us the opportunity to evaluate, learn from their mistakes and invest in companies smartly.
What is it about your role that excites you?
The primary reason I moved to the buy side of the business was to meet and listen to ideas from the brilliant entrepreneurs in our ecosystem. Some of these could be ideas which will become successful and will define the way we actually do business. This role also gives me an opportunity to help entrepreneurs build companies which can have a lasting impact on the lives of consumers.
Where do you see the PE/VC ecosystem in India headed 10 years from now?
The PE ecosystem is older and more mature than the VC ecosystem and it has seen a lot of investment and exit phases. However, ten years from now, the venture capital ecosystem will achieve stability and maturity with more funds in the Indian market. What is also happening is that currently a large amount of capital in the VC ecosystem comes from the overseas market. I hope, going forward, this changes in such a way that a large amount of capital comes from Indian investors as well. Venture capital funds give an opportunity to many mid to large sized corporates to become a part of the India story much more than what they are doing currently.
According to you, what are the “yet-to-be-hot” sectors?
Currently, I think there is a lot of opportunity in the fintech space. Consumer internet enabler like payments and analytics are also here to stay.
There is a famous saying – In the gold rush, it is the shovel maker who makes the most the money. The gold rush was started by the Internet space, but it is shovel makers, the payment companies, packaging providers and others, who are here to make the money in the long term.
What is the key to build an “exitable” company? Because, people often say don’t built a business to exit but build one for the long-term.
Ideal situation is to build a business for the long term, not go after the valuation game and have an investor who is not in a hurry to get an exit. Getting an exit is a challenge if you are building an exitable business, because your focus is on valuations than on building a business.
Tell me about your latest investment and why you invested in the company.
We have not announced anything recently. However, a few months ago we invested in Overcart, which provides data management solutions for mobile or mostly electronics segment. The reason we invested in this company is because of the large market opportunity it has and the way the problem is being solved by the entrepreneurs. There is a lot of inventory stuck in the data channels of all ecommerce players. By using innovative technology, this value is being unlocked by Overcart.
As far as Purplle (an online cosmetic company) goes, what excited us is the way the company is being built by the promoters, their eye for detail and the understanding they have of the market, consumer, products and business.