Investment Thesis: Sumir Chadha
Check other articles in the series...I interviewed Sumir Chadha, as a follow-up to the Investment Thesis series. I met Sumir 7 years back when I was doing Uuma, and Sumir was still at Goldman Sachs. Since then, he moved to Silicon Valley, and started one of the early efforts in venture investing in India, with Westbridge Capital. Westbridge was recently acquired by Sequoia, providing a significant validation, as well as a somewhat changed focus. Whereas Westbridge primarily invested in services firms, now they’re doing mostly consumer internet & mobile, clearly two good growth markets for India at the moment.
SM: Please describe your background, to help entrepreneurs understand your point-of-view. SC: I have spent the past decade between Sequoia Capital india and Goldman Sachs investing in early to mid-stage Indian companies spanning a number of industries including consumer internet, wireless, outsourced services and software. Prior to that, I was at Mckinsey working on internet and technology strategies. I have an MBA and was a Computer Science major at Princeton.
SM: What stage are you looking to invest in over the next 6-12 months? SC: We are actively investing in seed and early stage ventures.
SM: What segment(s)? SC: Our core focus areas currently are consumer internet and wireless.
SM: What market dynamics do you look for? SC: We look for large potential markets that are early in their evolution.
SM: What size of investment are you looking to make? SC: We have invested anywhere between $0.5 - 7 mm in early stage ventures.
SM: What are your key investments and the rationale behind making those investments. This will help entrepreneurs understand how you process deals. SC: Some recent consumer internet investments of ours include Indiatimes, Shaadi, Travelguru, Tutorvista and Guruji. They all share the characteristics of targeting large potential markets and strong management teams.
SM: What kinds of deals are you interested in seeing? * Describe, in some detail, the last deal you funded, and your rationale behind funding it. * Do you fund capital-intensive deals? * Do you fund built-to-flip deals? * Do you fund “hits” businesses?
SC: We recently funded Shaadi, which is the leading matrimonial site for Indians globally. We feel that the company has a large market opportunity and a strong management team, and has built a business model that can be highly profitable.
We only fund companies that have the potential to be large - we don’t think about companies in terms of flips or hits.
SM: Describe your ideal entrepreneur. SC: Hungry, motivated, very driven to succeed. Wants to prove something. Has a deep understanding of the customer problem he or she is trying to address.
SM: Which VCs do you like to work with as part of a syndicate? SC: We work with a broad range of firms, depending on what is best for the entrepreneur in terms of providing complimentary networks and knowledge.
SM: What is your thesis on entrepreneurial / investment opportunities given the state of the market? What markets are likely to crash? What markets are likely to open up? SC: We prefer not to comment publicly on markets where we haven’t invested yet.
For entrepreneurs working on consumer internet and mobile businesses in India, clearly, Sumir is one of the most important people to call. Mostly, however, don’t expect powerpoint financing. You’re going to have to make some pre-seed investment before you approach Sequoia. Mark Kvamme told me a few months back, that the ONLY successful investment they have ever made where the company did not already have traction was Paypal. I am pretty sure, Sumir and his team will follow the exact same tenet in India.
However, if you have managed to get things off the ground, and believe you have a business plan hypothesis that scales, Sequoia has tremendous reach, and Sumir can help you access that.
This segment is part 3 in a 16 part series Alessandro Biral →
Jump to part: Alex Osadzinski, George Zachary, Sumir Chadha, Alessandro Biral, Peter Redford, 1, 2, 1, 2, 3, 4, Warren Packard, 1, 2, Paul Asel (IFC), Thesis?
Personally, I found the whole vc encounter to be painful. We pitched our application, Repliqa, to several vcs and just couldn’t seem to get traction. This was despite my good background, a defensible technology, and a great team. We were told ‘too early’ which seems to translate to no risk taking.
Frankly, I’m not sure how someone not connected with the valley (like us in Pitt) can even get in these places. I found it very frustrating.
Ultimately, myself and another angel chucked in 300K to get rolling. Now software is flowing and we lined up another $2 million locally based on our results. I have the feeling if we went to vcs now they’d still say ‘too early’. When they want in we won’t need them.
So Sumir - we’d love to have Sequoia as an investor over ten more angels!! If you check my blog at www.markseremet.com you can see a short video on what we’re doing.
Mark, Sumir’s entirely focused on India. I suggest you speak with Alex. And if you ping me offline, I will advise you further. I like what you are doing. Sramana
[…] George Zachary, Charles River Ventures - Does seed investments, mostly in consumer plays, and open to any entrepreneur - proven or not. Alessandro Biral, Dali Hook Ventures - Does seed only if they already know you. Sumir Chadha, Sequoia Capital - Does seed, especially because his focus is India, and there are hardly any seed funds in India. Looking aggressively for deals, and competing in a very hot market. Alex Osadzinski, Trinity Ventures - Does seed only if they already know you. […]
[…] Sumir Chadha from Sequoia Capital, who is actively investing in seed and early stage ventures in India Sumir: I have spent the past decade between Sequoia Capital india and Goldman Sachs investing in early to mid-stage Indian companies spanning a number of industries including consumer internet, wireless, outsourced services and software. Prior to that, I was at Mckinsey working on internet and technology strategies. I have an MBA and was a Computer Science major at Princeton. More… […]
From what I have heard and seen, VC’s are generally not interested in deals < $ 2 mil. This is not due to their massive egos(although some may come off as so) but more due to the fact that they can only advise 6-7 companies in a year. I think it becomes harder to do that across 20-30 companies
Right, nothing to do with egoes, but everything to do with economics. VC Fund sizes have become so large these days, that investments below $2M are difficult to manage. Nonetheless, those who do seeds, do them with the full intention of following through with larger rounds, and hence the economics work out just fine.
On the other hand, it is a lot less heavy-lifting if they skip seed and go to Series A directly. Besides, it takes a far more intuitive, hands on investor to be able to effectively do seed. This skill is not as abundantly available.
[…] And for India, it doesn’t seem to be an option quite yet, as Sumir Chadha of Sequoia India says: “We are not planning to do anything similar at Sequoia Capital India… hard to say whether its a good idea or not since this is US market focused. In India, we only back an entrepreneur fully - i.e. either we back him and give him the full resources of the firm or we don’t - no middle stage.” […]
For smaller deals in India you may want to consider the Indian Angel Network.