‘We had long summer, let’s plan end of it’

BENGALURU: Deep Nishar, senior managing partner (Americas) at SoftBank Vision Fund, says investment sentiment is turning cautious across the globe. He says investors are advising portfolio companies that they are at the tail end of a very historic bull market and so must be prudent with cash. The IIT-Kharagpur alumnus, who has worked at Google and

LinkedIn

in senior roles, and sits on the board of online grocer

Grofers

, told TOI that he’s excited to see a new breed of entrepreneurs in the country who are focusing on the bottom and middle of the pyramid, people for whom value is more important than convenience. Excerpts:

Are you seeing some interesting startups in India?Would you like to invest in them?

I would absolutely love to invest in India. To be candid, I’m not seeing too many deeptech companies coming up. But I do see a bunch of interesting areas where this generation of Indian entrepreneurs are tackling. About 10 years ago, it was all about I want to build the next Amazon. Now, I’m seeing entrepreneurs who say they’ll start from the bottom of the pyramid. I may be able to book a movie ticket on BookMyShow. But cab drivers? Can they use Niki.ai, where they can ask what movies are playing. Conversational AI caters to the bottom and the middle of the pyramid.

Then there’s KhataBook, started by Ravish Naresh. I grew up in a trading community and would see everyone with ledgers, everything is based on trust, you don’t know how much float you have in the market, people don’t fully understand the interest costs. So Ravish said, how do I take this online, but in a way that is not intimidating, integrates seamlessly with what I’m used to. So, he put a bunch of components together and all of a sudden it’s taken a big leap because a whole bunch of small, medium entrepreneurs are using it.

Grofers has gone through changes in the past few years. Amazon is doubling down on a hyper-local model. What’s the right model for India?
A facetious answer would be Grofers (smiles). Grofers has gone through every such model. And they settled on their latest one (with focuss on private labels, and no express delivery) after learning a lot. Amazon will burn resources for two years learning the same lessons. Amazon may feel they are a global player, they have all this technology. I don’t know how they think, but chances are, they think like that. Now, Grofers has a tremendous model. Their customer does not care about things showing up in two hours because value is more important.

Going forward, in your investments, how important will it be for startups to have a clear path to profitability?
It has nothing to do with SoftBank. It has everything to do with the sustainability of a business. I’ve invested in 14 companies now on behalf of SoftBank, and we’re not the only investors in any of those. All board members say the same thing to their companies, which is, we are at the tail end of a very historic bull market, and let’s ensure that we are prudent with our cash, and that we can sustain ourselves as a business. And sustainability is always proportional to the probability of positive cash flows in the future. Some of those cash flows come in when you raise more capital, but the bulk of it must come from operating activities.

What are you exactly telling your portfolio companies, given there is a sense that ‘winter’ is coming sometime next year?
We have had an inordinately long summer (laughs). So, let’s plan for the end of the summer.

B2B tech companies are trying to serve the US market out of India, what do you make of them?
There’s a purchasing power parity gap of at least 20x between the US and India right now. So, if I can sell something for a million dollars in the US that only cost me $100,000 to build here, my gross margins are a lot higher than for someone building it there.

Would you look at funding them? Do you see promising ones?
Absolutely. There are several that are now starting to come of age. Remember, we are a late-stage fund. My rule of thumb for enterprise software companies is $30-50-million-plus annual recurring revenue (ARR).

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