It does, when I say deep tech it’s predominantly B2B. I don’t see us selling something genomic or anything in software, robotics, AI which becomes consumer oriented. It’s just that even in B2B, I’m a little tired of playing marketing automation, or like, you know, vertical software, sales efficiency. Like, where is our edge, right? We’re competing with global players that are going to be 16 such guys in the US. So we navigating some of that early-stage founder’s risk to Arka Ventures, which we started with a couple of US funds. But when it comes to India’s and what deserves a million dollars, I’m saying, show me what’s going on and how somebody is truly tapping artificial intelligence to build better customer service-centric applications.
How has B2B played out as a story for you till now?
The rule of thumb just as for your listeners, in my book, is, if you can build a $75m to $125m ARR company, you can be a billion-dollar business; if you build it with healthy margins, which in most software oriented stuff you can build. In deep science, it’s much tougher. We have like a carbon capture company, it’s not easy to equate in that same fashion, because there’s far more value in the IP than necessarily in the revenue, right? So different yardsticks for software and everything, just non-software. But to believe that you can build $75-100m dollar business sitting out of India for the globe, has become far easier to digest. I mean, Mettl has passed the $10m mark, Exotel has passed the $10m mark. If you asked me three, four years ago, I would have said they’re all $3-5m. There’s my punch line – If you know how to get a company past $10 million mark, unless you’re doing something wrong, you fundamentally should be well primed to hit a reorg button or rethink button and just hit the accelerator to 10x from there. The challenge was to get a business of that nature, which is global in nature, from zero to one, one to five and five to ten. If you finish those three phases, I think you can put all the engines together to drive it from 10 to 100. And that’s what you’re seeing when Tiger is playing or a FalconEdge is playing or other guys are playing B2B. I think that’s what they are beginning to realize. Hard work’s all been done, now it’s about hitting that button. And so let’s zoom, right. And so I’m just saying that a whole set of companies are bunched up there. Even in our tiny portfolio, if they have grown to 10, then there are a lot more which are 20-30-40. And so then it’s just about growing 3X to 5X from there, and we will have billion dollar companies, I think, I think we’ll have a dozen of them by 2025.
As part of the Blume DNA, we would like to know, when you backed GreyOrange, there was no taker for that market in India.
We’re not going to take more credit than we deserve. It was about the diversity of our portfolio allowed us to carve out. We did 70 bets and out of that 8 or 9 bets were deeptech. And I could get away by the valuations are so cheap. I don’t know which era you’ve been tracking the market from but if you look at 2011-12-13, our portfolio – 90% of our investments were made between a million and a half and three post. That was where the market was, nobody was doing crazy valuations. And so as a result with 200K, we got a lot of the company, and we got to take this risk, and leverage the rest of it from a bunch of angels. So if you didn’t make those bets with that leverage and those odds, when will you make it, right? So partly it’s structure, the market allowed us to take a lot more risks. That said, we played GreyOrange in every round since all the way to the last round close to half a billion dollars, that shows that we are evolving and saying we have conviction. Now, I don’t care whether the rest of the Indian market thinks it’s worth it or not. Thank God, you know, the Flipkart guys referred them to Tiger. Tiger came in and rest of it hopefully will be history right? From there, we never looked back. So I think the failure of the Indian ecosystem is not to recognize or have that confidence in our own founders to go global. Today, more than half the revenue comes from the US. So if you asked me back then if you knew this for sure, I knew the founders’ vision for sure. I mean, they had remarkably one of those founders, who from year to if not year one has been saying I think there’s an IPO business and we’ll build beyond. We will have a campus someday they said and who talks like that in the second year of your business? That’s what’s allowed us to back them with five cheques into that company through five rounds. Right? So I think it boils down to conviction or your ability to look the founders in the eyes. And therefore you back this, what else is there to back? Right? And they have proven us right and proven everybody else wrong. And they were among the three biggest deals of last year, in all double digit million dollars and selling globally. So I think we took a bet that they’re crazy enough to believe that they can win the space, there’s a huge vacancy in the space after Amazon bought Kiva. So it’s a punt worth taking. That’s what I’m saying deep enough risk, otherwise there is not enough return. No risk, no return. And so we played a fairly hedged bet if you asked me – a crore out of two odd crores – it’s come a long way.
I think that bet is paying out very well. Tiger now has a focus on b2b with $10 million and $20 million cheques. You focused on B2B in 2012
Way too early, if you ask me, and it tires out people. I would say a Mettl born four years later would have been the same size and screaming to 5X from here. But born four years earlier gets tiring as a journey. Because nobody believed nobody gave the money. No one thought they’d go global. It’s very tiring boss!