My first AMA session !
October 2017 — Mumbai
Adith, to begin with, please tell us about Gemba Capital, your recent venture
Gemba Capital will invest in early stage startups mainly in angel rounds. We started a couple of months back. We are sector agnostic. More details on www.gembacapital.in
Interesting. What factors do you look for when investing in a company Adith
We look for founder, product and the market… not necessarily in the same order
Do you have targets regarding a business that’s B2B or B2C?
We don’t have any preference for b2b or b2c — the revenue model should be in place and protected by moat
Are you already invested anywhere? Do you have a fund or a pool of investors?
As of now it is pooled funds… but we plan to make it an AIF fund next year
Any investments yet?
We have already invested in two companies — one is Resicare (home healthcare) and the other is MyHQ — which creates co-working friendly spaces
Ok and is your valuation process complex ? Or any simple
Valuation process in early stage investing is not like PE.. its quite simple.. if u are referring to the due diligence process — then yes we do take our time and go in details
Adith, in 2015 when the start up ecosystem saw a bubble burst, despite that you setup a VC. What was your thought process behind that?
I have been an entrepreneur from 2007 to 2011 in the QSR space.. and last 6 years I have been on the investing side.. I feel the combination is critical to add value to startups and also take better investing decision
Also I feel the angel investing space in India needs the investing discipline which PE investing has.. and I do bring that on the table
Are you planning a sector agnostic fund?
Yes Abhishek… we are also open to consumer product companies in nontech
Adith, wanted to know a bit more about Crepeteria. What was the idea behind that?
Crepeteria was started when I visited Japan and saw crepes being very popular. We started in Mumbai. The hero product was crepes and then we added a lot more to the menu.. plan was to scale it up through franchising and create a large brand in the QSR space
Adith, I need to know how VCs judge the potential of a startup.
Secondly, are these metrics good enough to predict a market disruptor like Patanjali in Indian Market?
Metrics is just a measure to track performance and give direction.. there is a lot more which goes into judging a potential..A detailed competitive landscape is what helps in identifying any potential disruptors…
What is more critical is that do you have something which a customer values and is much better than the disruptor..
What were the unique methodologies and strategy that you implemented at Motilal Oswal PE Fund during deal sourcing?
Deal sourcing was an ongoing process.. meeting people, conferences, seminars, expos and also maintaining strong relationships with investment bankers were some of the ways we used to source deals
Not many brands in India are able to achieve customer loyalty. What’s your views around that?
Because it takes painfully lot of efforts to focus on customer service and delivery.. companies dilute their brand identity or service standards to grow exponentially and hence customer loyalty is difficult to achieve.. customers are loyal to the brand and a brand stands for trust.. it takes time and efforts to get trust
Interesting question. I would like to add that starts-ups poured in huge discounts and offers but it still failed majorly to get customer loyalty. What are your views on that ?
Discounts and offers DO NOT work to get loyalty… loyalty comes when the customer feels special.. understanding your TG is the most important and first step to build loyalty..
Habits also create loyalty.. as a founder u should ask that “Do I have a habit creating product or service? “
I agree with this, but do you think there are cultural issues as well in Indian market?
Indian market has far fewer brands than developed nations — yet you see loyalty high in other nations and not so high in India… culture has nothing to do with it.. yes people are price sensitive in India but loyalty cannot be attained by offering better prices… apple users are loyal whether its India or US, same is true for a royal Enfield user or a Harley user.. cultural issues are excuses brands will make who are not able to create loyalty
Uber doesn’t have a customer support but Ola has. Still Ola is unable to get loyalty as such. What’s your take on that?
Loyalty in this case will only come from better than expected experiences.. If Uber is able to deliver good experience to the customer far more regularly than Ola — it is simple why Uber users will be loyal. And Uber probably is able to do that by doing some things better than Ola — it could be recruitment, policies, training
Top 3 qualities in a startup that makes you eager to invest in it?
Founder: ability, passion and vision
Product: need, differentiation and value
Market: size, competition and growth
Adith, what made you switch from Motilal Oswal PE to start off something of your own?
This segment is still like playing amateur tennis — u don’t need winning shots to win against your opponent- u just need to make less unforced errors..
Early stage ecosystem is more exciting and I feel I can add more value to a startup rather than a 1000 cr enterprise and hence I started Gemba Capital
Adith, when do you think India would be able to see its own Google or Facebook or AirBnB?
I hope its very soon since technology is not a black box anymore.. its the mindset to create something from 0 to 1 which is required. And one of the reason this mindset is not there is because that ecosystem support in terms of guidance and funding is not present.. it also has to do with our education system and many more factors.. but hopefully we will soon see such companies come out from eccentric, free-spirited entrepreneurs in India
How significant is a pitch deck for an investor? What are the key things you look for in a pitch deck?
Very important… I look for honesty in the pitch deck, clarity of thought, ability to convey in terms of numbers amongst other standard things
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