Fresh after returning from a valley trip, that centered around the annual Draper Venture Network (DVN) Summit and also spanned an Investor conference and meetings in SE Asia/Far East, here’s a blog post chronicling some of the thoughts, learnings, and takeaways that emerged.
1. A resurgent interest in India VC and the massive consumer opportunity.
Day 1 of the trip saw us at the Asian Venture Capital Journal (AVCJ)’s flagship PE + VC Summit held in Hong Kong mid this November. Proud that Blume was one of only a few home-grown Asian VCs, being part of a diverse panel including one SE Asia counterpart, one Chinese and one Aus/NZ VC, moderated by a global law firm’s managing partner.
- In contrast to the last few years, it was interesting to see the LP community with a far lesser “China overhang”, viewing India as a distinct market
- New role models from well known unicorn / category leaders (Oyo, Swiggy, Zomato etc) that are putting India-tech more firmly on the world map
- Delete this entire point “While numbers were always well known within India (>250M mobile subscribers, massive impact of 4G…”
- Chinese interest from beyond the BAT trio – from the next new set of players – Internet rising stars like Meituan, Xiaomi and investors such as Shunwei, CDH, Morningside, M31 and more
- Initial success in penetrating the SE Asian market from startups like Capillary and our own Healthifyme, Locus, Belong, and Tricog
2. B2B evolving beyond Enterprise/SaaS
In a sense, our Grey Orange [Robotics] and Carbon Clean Solutions were two early plays that could be considered ahead of their time, in an era where most B2B teams were looking to solve hard but not entirely “core tech” enterprise problems
Fast forward to 2018 – where Blume and our newly christened Arka Venture Labs (set up in partnership with our two valley VC friends, BGV and Emergent) – are seeing high-quality teams solving Tech/Enterprise problems in the areas of:
- AI for Cybersecurity & fraud detection
- AI/ML for global large-scale use cases like Customer Service/Call Centers
- Leading-edge 3D manufacturing
- EV & battery technology innovation
- Micro-satellite / Drone technology for crop imagery and related agri-tech
- And of course, Robotics and IOT more broadly
“Returning” talent especially for deeper-tech domain areas is also a growing factor that will make India’s B2B startups more “tech-defensible” and contribute to more robust IP defensibility/value
3. Insight into China, Silicon Valley, and AI
At the DVN Summit, a personal highlight was attending a talk up-close with Kai Fu-Lee of Sinovation Ventures, who shared a candid, insightful and thought-provoking fireside chat focused on “Silicon Valley, China and the future of AI”
- In China, entrepreneurship is akin to a gladiator fighting in an arena. Only one winner emerges, it’s a winner-take-all market dynamic. You have to build an execution model that can’t be replicated. No consolation prizes!
- Culturally, there should be a worry about China’s 9-9-6 work ethic. Entrepreneurs often work 100 hour weeks and the risk of burn out is very real. The “Gladiator” analogy can be taken too far
Insight into product centrism of valley vs China :
- Winning a market is more important than changing the world via a brand new product or idea”. Because of the desire to win –execution is the most important factor of success
- Chinese entrepreneurs are thus more open and NOT wedded to product or technology pe
- Consumer: winners will be led by those who can create value for in-app data (find out why your end customers/users will share, while protecting privacy) and grow users the fastest
- Enterprise: the key is how can you show value and get data from your end corporate customers e.g. fintech data for fraud detection & prevention; once you get it, how do you massage and analyze/create insights from it
4. Valley Subcultures (and successful M&A integrations)
Insight from Arka Venture Labs event: where we had a tripartite series of fireside chats with serial entrepreneurs (Raju Reddy – Sierra Atlantic, acquired by Hitachi; Gaurav Kumar – Redlock, acquired by Palo Alto Networks and Piyush Gupta (Exero, acquired by IBM)
- Few corporates land up successfully “absorbing” the teams they acquire. Culturally, large corporates and startups are poles apart and when founders join post M&A, often, “a lot of glass will be broken!”
- There are seemingly two valley VC cultures (caveat: this IS a generalization, hence an upfront disclaimer)
- Where the idea matters most. If the idea doesn’t work, back another team that can execute the same idea better
- People (teams) matter: especially in early-stage, it’s the founders you’re backing. Ideas will change, and you’re backing a team that will adapt to, pivot if necessary and adjust to changing market winds
5. India tech – recognized, on the world stage
While the promise/potential of India-tech has always been strong, actual results re: the size and frequency of exits have traditionally lagged behind. Statistics and results today show – not anymore. Flipkart’s just short of $20B transaction with Walmart was not only a regional but one of the world’s largest e-commerce M&As ever! (Jet.com was acquired by Walmart for ~ $3B).
- “We’re losing count of the number of our Indian founders with Tokyo, Beijing, Singapore and Jakarta stamps on their passports!” [quote within Blume team!]
- “We looked at a handful of India’s emerging deeper-tech AI / related platforms, Grey Orange being one … and noticed a number of these had been backed by Blume!” [overseas hedge fund]
At the recent DVN Summit Awards, it was an honor to see our Tricog win “Top Innovator Award of the year”!
Kudos to Dr. Charit, Dr. Zainul and team for building out Tricog into a leading health AI platform that uses technology to solve a hard problem – diagnosis of heart disease
- Serving over 1.3 million patients
- Saving the lives of over 50,000 patients with heart attacks across 12 countries
- With GE and other stellar peers as strategic partners
High-quality founders abound, with a stronger ambition to boot
One emerging difference we’re seeing – the degree of ambition. Flipkart’s massive majority acquisition by Walmart could be one of many contributing factors. Today, founders are dreaming, thinking, and executing BIG. Oyo and Ola are paving the way on the consumer front.
- Grey Orange has today evolved into a truly globally distributed model (with R&D in Boston and Germany; Asia HQ in Singapore and the US; core engineering, assembly, manufacturing & testing in Gurgaon)
- Unacademy aspires to be not just India’s, but someday, the world’s leading learning platform
“To back these global ambitions, Indian founders today have much a wider funnel of options before them. The universe of financial and strategic options has dramatically expanded.
With these developments, we’ve never been more excited about what India-tech holds in store, as we embark on Blume III ! “