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‘Unlike Investing, Exit Not In Your Hands’
One of the key learnings is you have to be very capital efficient in whatever business model you look at and it’s also a matter of timing and when newer technologies come into play in your business model itself, making it more efficient VIKRAM GUPTA, Founder & Managing Partner, IvyCap Ventures, in an exclusive interaction with BW Businessworld, talks about his company’s journey, its core values and how it was successfully able to exit (partial) from the online beauty startup Purplle
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When you look back on the IvyCap Ventures’ journey, what do you think you achieved as a leader of the fund?
I think we stuck to our whole focus — the principles and vision we started with. I think that is what India needs. My experience prior to that came from fundraising in a very tough environment. I realised that there was a substantial gap in early-stage investing. This whole investment world works through relationship and trust. It is basically the whole connect in the ecosystem that has kept us going.
How you choose companies, founders to back up? Tell us about some you have passed but should not have.
When we started IvyCap, we had the philosophy that these are institutional investors that don’t want to see investing at the seed stage, that they want to see investing slightly at a growth — Series A/B — stage. So, part of the reason we kind of overlooked or turned down seed-stage investment opportunities was purely because of the investment ecosystem that we had. And, of course, there will be those kinds of misses, and especially, if you’re operating in the IIT alumni ecosystem, you would have seen many such opportunities which went on to become unicorns later on, which happened and we learned.
Give us a sense of sectors and companies IvyCap has invested in.
In our Fund-I, we invested in ten companies and Fund-II, we invested in another 20 companies. So in total we have about 30 companies in the portfolio.
Out of ten companies in Fund -I, one company in the agri-tech space actually didn’t do well despite our best efforts, which I think was ahead of its time (in the year 2012). They were solving a problem which we thought was massive — basically helping farmers get information on their mobile phones through SMS.
One of the key learnings is you have to be very capital efficient in whatever business model you look at and it’s also a matter of timing and when newer technologies come into play in your business model itself, making it more efficient. Most of the companies have been extremely capital efficient. Purplle is a great example.
You invested Rs 15 crore in Purplle and you’ve been able to get an exit at over Rs 300 crore. Tell us what happened.
Investment may be in your hands when you’re investing but exit is not. You can try to time it the way you want but it’s extremely hard. Until January, we had no idea that we would have sold this company before the end of March. It all started with somebody walking into my office and asking what’s your plan with Purplle?
The company was not going to the market to raise their next round, so that gave an idea that in any case, our Fund -I was reaching its maturity stage, and from a timing perspective, it makes a lot of sense to really give that confidence to our investors, and once they see these kinds of returns they would use this as an example to then justify internally that this asset class makes a lot of sense. That’s the whole thought process.