1Mby1M Virtual Accelerator Investor Forum: With Sasha Mirchandani of Kae Capital (Part 4)

Sramana Mitra: Which companies would you call out as some of the best companies in the Indian tech industry today and the most likely ones to have successful exits?

Sasha Mirchandani: Let me break that into two answers. I’ll talk about companies that I like in no particular order. I can think of Tracto. We have a company called One MG in our portfolio, which we think is going to do very well. There’s a company called Zomato.

Sramana Mitra: Zomato’s business model is a big problem. That business model is not doing well globally.

Sasha Mirchandani: I agree, but I think the team is outstanding. They will figure it out.

Sramana Mitra: This is where I’m going to disagree with you. I don’t think good teams can figure out bad business models. It just doesn’t work that way.

Sasha Mirchandani: I agree with you to that point, but let’s talk in a few years. I think they’re doing a good job in a tough space.

Sramana Mitra: It’s a very big problem. Yelp and Angie’s List are good comparables for that company, and they’re all struggling in the public market. They have to dramatically change their business model. To what, I’m not sure because all of these companies have also tried to change their business models and do something to make the monetization and profitability work better. They’re really terrible business models.

Sasha Mirchandani: I think it’s a work in progress. I’m not an investor, so I can’t comment more than that. What I’ve heard from people is that this is a high-quality team. I also like companies like ShopTools which I think is very capital efficient. Companies like GreyOrange are under the radar, but are going to be very interesting companies.

Sramana Mitra: What does GreyOrange do?

Sasha Mirchandani: It’s literally saving millions of dollars in warehouse processing. It’s a robotics company. We have a smaller company called CultureAlley in our portfolio, which is early. It teaches languages – Hindi to English. I can go through a long list. I’m just randomly naming companies. I like OYO. It’s still early, but they’re doing a wonderful job. Ola is also doing very well.

Sramana Mitra: One of my favorite e-commerce companies is CaratLane. Have you seen CaratLane?

Sasha Mirchandani: Yes, I have. They’ve done very well so far. I’m not sure if they can become a billion dollar company though.

Sramana Mitra: In terms of going forward, what trends are you seeing developing in terms of new investment opportunities?

Sasha Mirchandani: We are very closely tracking healthcare, ed tech, and financial tech. Mobile Internet is going to continue to rise. We are looking very closely at logistics as well. Things will change as the year progresses.

Sramana Mitra: I would like to double-click down on a couple of those. Are you talking about FinTech facing the Indian consumer?

Sasha Mirchandani: That’s right.

Sramana Mitra: Are there regulatory hurdles that you have to deal with?

Sasha Mirchandani: That’s right. We are very careful before we make an investment, because the last thing we want to do is get entangled in the law. We try our best to get diligence done. I would hope that there aren’t so many complications because there are companies that can be very disruptive and can be very useful to the Indian consumer. As we keep communicating with the government, more and more of these regulatory issues will get pushed on the sidelines. The answer is, there are some regulatory issues that we need to be looking at each time we make an investment.

Sramana Mitra: Can you talk a little bit about India-facing health tech? The global health tech is doing extremely well. It’s producing really solid companies. The question that perplexes me with India is the health insurance situation.

There’s only a small percentage of the population that has health insurance and can afford healthcare. What  is happening with the rest of the population? What is the size of the population that is insured and can participate in the India-facing health tech opportunity?

Sasha Mirchandani: That obviously is an issue. When is the right time to get into this? At some point, it has to take off. We’re closely monitoring that as well. We can’t just be a big opportunity, because it has to be realistic on the ground as you rightly said. A lot of times we pass opportunities because of too many regulatory issues. We are going to play here but within two or three years, we’ll have to do something else in healthcare. For example, we have a company called HealthKart in our portfolio. In our view, the time is right for them now.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Sasha Mirchandani of Kae Capital
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