With Reliance Industries buying 87.6% stake in fashion-commerce platform Fynd for Rs 295 crore, angel investor Anand Chandrasekaran makes his second successful exit this year. His first profitable exit in 2019 came from Innov8, which was acquired by Oyo last month for Rs 220 crore.

With Fynd, the former Snapdeal CPO and Facebook director has made over 5x returns in three years, while Innov8 investment generated a sub-5x returns for him.

“I have invested in 35-40 startups in India over the last five to six years. Both these companies were of 2016 vintage, when I was still in India. Both are exciting exit multiples,” Chandrasekaran tells ET Prime.

Exit strategy

An active angel investor since 2015 in India, Chandrasekaran’s recent seed portfolio includes Yulu Bikes, Rupeek, MoEngage, NoBroker, ToneTag, Lucideus, Gamezop, Sheroes, LetsVenture, FreightTiger, among others. NoBroker recently raised $51 million in Series C from General Atlantic, fintech startups ToneTag raised significant round from Amazon and Mastercard last year, while Rupeek raised $7 million from Sequoia and Accel in early 2018. SaaS startup MoEngage raised $9 million from Matrix Partners in December 2018. And, some are in talks to raise significant rounds.

With most of these companies in their growth stages, is it time for him to focus on exits now?
“So, a lot of them are in growth stage, but my strategy has always been to make long-term bet on founders. And, as a result, I’ve sort of stayed in the company pretty much until there is a 100% natural exit,” Chandrasekaran says.

But, isn’t there pressure sometimes for seed investors to exit when founders make room for bigger venture-capital funds?
“There is some pressure but it’s not like you are forced to exit, it’s ultimately your call whether you want to exit or not. The second point, is largely the founders wanted to bring operating folks on the cap table to help them as they scale because they deal with building a team and culture, going from one product to a second product, expanding into new markets. So, there are multiple areas where investors like us can be a value-added individual,” he adds.

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Chandrasekaran claims that there have been a lot of opportunities to do partial and secondary exits, but if the company is doing good, he would rather see it as a buying opportunity than a selling opportunity.

Bullish on AI, experienced founders

Chandrasekaran believes that a bunch of these investments have tailwinds to grow to $1 billion-plus valuation on their own. “None of them are dependent on funding for growth, and they are raising money purely for competitive reasons or for expansion reasons.”

He says he is excited about two trends that he is seeing in India currently.

First, lot of the companies are developing AI-based (artificial intelligence) models that is helping them to see great conversion rates. As the company grows and gets more customers and acquire more data, they are able to also use machine learning for their core product even better. “And, I’m really excited to see some of these companies are able to do that at scale,” he quips.

“Second trend is something that I’ve seen first-hand in Silicon Valley. People who build successful companies, leave and go to help build the next-generation companies,” Chandrasekaran says, adding, when you look at people from LinkedIn, they all came from Yahoo; people in Facebook came from Google; people in Uber came from Facebook. So, the next generation of Silicon Valley is always powered by experienced people from previous generations. “My belief was this would also play out in India as well where people from the first generation would start second-generation companies, that would be much more successful.”

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Some of the recent examples are Yulu Bikes, which got co-founded by inMobi’s Amit Gupta. “He understands hiring, culture, fund raising, strategic partnerships, and operations, etc. That way, once you have a product market-fit, you have the DNA to build a pretty large company. Similarly, I invested in another startup EkAnek, which is co-founded by Kartik Sheth – who worked with me in Airtel and Wynk,” Chandrasekaran says. EkAnek raised $10 million this year from Lightspeed, Matrix, and Sequoia.

Earlier this year, Chandrasekaran also made an investment in fintech startup Khatabook. Sequoia’s Surge-backed company is reportedly in talks to raise a bigger round.

Talking about his new investment, Chandrasekaran says, “Khatabook is growing like crazy and its founders come from not just success, but also failure in their last company. Housing.com’s Ravish Naresh, from his experience, had learnt how not to grow too big until you have proven your product and business model.”

“The growth of Reliance Jio created a lot of consumer growth in India. People who have never used the Internet are consuming data for the first time. And, as a result of growth of data, we are seeing trends where video is taking over text and vernacular taking over English. This kind of growth will also happen in the SME space, and companies like Khatabook is ahead of that trend,” he adds.

To sum up his investment strategy, the angel investor says, “In India, the quality of people leaving their jobs and starting up is going up year by year. And, this trend really benefits seed investors.”

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