Sudhir Sethi, Founder & Chairman of Chiratae Ventures India Advisors
Recently, we had the chance to speak with Sudhir Sethi, the founder and chairman of Chiratae Ventures, who not only shared his entrepreneurial journey with us but also shared his insightful opinions on the best ways for investors to maximize their returns during a financial downturn and how India might emerge as a desirable investment location for Canadian businesses over the next five to ten years.
Sudhir is Founder & Chairman of Chiratae Ventures India Advisors. Chiratae Ventures is a leading VC firm advising AUM of $ 1B, invested in 100 plus companies, exited 39 plus, has taken 3 companies public, funded 8 Unicorns, and backed 11 market leaders. The firm is based out of Bangalore with offices in Mumbai and Delhi.
Since 1998, Sudhir and his team have advised on investments into 125+ firms across Deep Tech, Agri Tech, Digital Consumer, SAAS, Fintech and Healthcare Sectors. Key investments include Myntra, Flipkart, FirstCry, Lenskart, PolicyBazaar, Curefit, Agrostar, Emotix, Uniphore and PlaySimple amongst others.
Today Chiratae Ventures is a leading tech VC in India with Mr. Ratan Tata, Mr. Kris Gopalakrishnan, Mr. Bruno Raschle and Mr. Manish Choksi as well as Dr. Ferzaan Engineer on its Global Advisory Board and India Advisory Board.
How will you describe your journey as a Founder & Chairman of Chiratae Ventures India Advisors, recognized as one of the leading venture capitalists in the country, by Red Herring, named among the Top Ten IT Professionals by Dataquest, and recognized as “Visionary Venture Capitalist” by Bloomberg UTV?
Chiratae’s journey has been on the back of India’s growth and, within that, the growth of Digital India. We have invested in over 125 technology start-ups and today have an AUM of $1.1 billion, managing six funds with a 30-member team in Bangalore, Mumbai and Delhi. Our portfolio has a revenue of $2.6 billion and is valued at $20 billion today. We have given exits to our investors every year for a decade now.
India predominantly has international firms like Sequoia, and Accel, amongst others, who invest in the Venture Capital (VC) ecosystem in India. Chiratae is amongst the leading VC firms from India and the only Indian VC firm with significant scale. Our growth and returns are based on global and domestic investors’ belief in the Indian tech venture story at scale, the constant supply of outstanding entrepreneurs from India; stellar returns, predictable government policies, governance and world-class tech from India.
As Canada’s economic growth is anticipated to decelerate to roughly 1% by 2023, what are the most effective strategies for investors to maximise their returns amidst a financial downturn?
India is going through a “techade” of investment opportunities which Canadian investors can look at. The Indian tech start-up ecosystem has scaled massively. With over 15,000 tech start-ups funded since 2007 by Angels and VCs, the revenue of these start-ups is approx. $35 billion today. I expect the start-up ecosystem revenue to cross $200 billion revenue in the next 5 years. This scale is driven by the Indian economy, which is expected to grow between 5% to 7% GDP annually per annum and reach a $5 trillion GDP in next 5 years. In addition, Digital India is expected to be $1 trillion of the GDP consisting of startups, software services, India stack and manufacturing electronics.
The start-up ecosystem Chiratae invests in has differentiations in the form of new technology, new product, patents, new revenue and business model, with each company dominating India and growing globally in select cases. Companies like Uniphore, Lenskart, FirstCry, Emotix, Cropin, Agrostar, and GoMechanic are global players from the Indian start-up tech ecosystem with few parallels globally.
India is a shining star in the current global economy with a growth rate of close to 6.5%. In your opinion, how can India become an attractive investment destination for Canadian companies within the next 5 to 10 years?
India has the conditions in place for an economic boom fuelled by tech start-ups, offshoring, investments in manufacturing, the energy transition from fossil fuel to clean energy, use of tech in all sectors like Finance, Consumer, Health, Agriculture and a strong digital infrastructure now accessible to 800 million Indians. These drivers position India well to scale from the world’s 5th largest economy to the 3rd largest in 5 years from today at $ 5 trillion GDP. The Venture Capital investment opportunity riding on this growth is an attractive opportunity for Canadian investors as it has been for us and other global investors with increasing and consistent returns.
Indian startups through Venture and Private Equity funds over the last 6 years have absorbed approximately $150 billion and are expected to absorb $350 billion or more over the next 6 years. The VC/PE ecosystem has world-class entrepreneurs who have delivered over 100 Unicorns (company with valuation of $1 Billion or more). Now the Indian ecosystem is delivering $ 1billion or more revenue companies with a global presence. The investment opportunity is in Consumer Tech, SaaS, FinTech, Agritech, Health Tech, EdTech, amongst many other sectors. Experienced Venture Investors are consistently able to deliver exits for clients every year from India.
What do you think about inflation’s negative impact on the ecosystem of small businesses? What are the possible solutions for this issue?
Inflation and currency are definite risks. We, as VC’s, mitigate these risks by stellar portfolio revenue growth (typically above 50% per annum), controlling cash burn, enabling companies to go global, and investing in manufacturing, supply chain, and product design in our portfolio. Fiber is a scaled faceless lending firm using tech to lend and collect. Cropin provides a SaaS solution to the world’s largest global data of farmers and land using satellite tech. Emotix has a unique global consumer robotics solution for children not found globally. The growth of dominant market share and global revenue is a deterrent to such risks
What specific advice do you have for the Canadian exporters and investors which will assist them to take full advantage of the wealth of opportunities open to them?
Canadian exporters have, in India, a population scale tech-savvy market. A billion consumers who need health care, insurance, and lending; over 300 million students need education solutions, over 100 million SMEs base as a distribution network, 150 million farmers are hungry for aggrotech solutions, amongst many other opportunities. Indian consumers present over 800 million Indians marketplace, with digital payments now being used by almost 900 million people.
Manufacturing, insurance, aerospace, rail, transportation, energy, and marine, apart from tech and digital, are some of the other areas where enormous opportunity exists in India through JV’s (Joint Ventures) and direct access.
What are some of the best ways to participate in the India Growth story?
Indian private equity and venture ecosystem are one of the best ways to participate in the growth story of India. Well-governed, decades of experience, and deep knowledge of the opportunity are what venture and private equity professionals present to Canadian investors apart from direct opportunities.
