1Mby1M Virtual Accelerator Investor Forum: With Brij Bhasin of Rebright Partners (Part 3)

Sramana Mitra: There is one point that I want to double-click down on and listen to what you’re seeing in your deal flow. Most of the VCs operating in India have come to the conclusion that if it’s to do with deep tech, they have to go after the global market. The Indian B2B market is very slow-moving. Is that reflected in your deal flow?

Brij Bhasin: Absolutely. While our portfolio companies are selling into Indian customers, our realization is that the sales cycles in India are much longer. There is a fair bit of customer education that you have to do to explain the concept and bring the product in.

The second challenge is that the paying capacity for customers in India is still limited. You’re putting almost the same amount of effort for a customer that you would sell to in India versus one you sell to in Singapore or Japan. You’re getting significantly less dollars for the same amount of effort and technology capability. Companies are naturally inclined towards diversifying their geographical focus.

For our own portfolio, we’re helping our companies scale in Singapore and Japan. That doesn’t mean that we want to let go of the Indian market. It’s just that perhaps the Indian market makes more sense when companies have already built a ceratin level of scale.

Sramana Mitra: What about exits? How do you view the exit situation in India?

Brij Bhasin: That is one thing that continues to remain a challenge. We have not had a big influx of corporate and strategics coming in. The silver lining is that there have been very large investments in later-stage Indian startups. You obviously heard of the Flipkarts and the Olas. This has brought in some liquidity to early stage investors and angels which was then fuelled the early stage funding ecosystem.

On the other hand, you have American funds like Sequoia who continue to work to bring various different types of strategics to do buyouts. There have been a few of them over the last year or two but there is a lot of work for us to get meaningful returns to our LPs across various portfolios.

Sramana Mitra: How much money do you estimate is sloshing around in India right now?

Brij Bhasin: If you just think of the top five or six big funds, you’re talking about a significant amount of money. This is not even counting the likes of SoftBank. There is at least a couple of billion of VC money that is still committed towards India.

Sramana Mitra: The SaaS and the deep tech SaaS that is pursuing the global market, the trajectory is that most people are going to set up shop in Silicon Valley or at least in the US and seek exits in the US market. The India-facing B2C doesn’t have that option. India-facing B2C will need to find exit in India. That one is a bit complicated and tricky.

How do you view the early-stage ecosystem? In the US, there have been 50,000 to 70,000 seed investments and we have now, in the last five years, come to 500 to 600 micro-VCs who are investing in that stage. By that stage, I mean pre-Series A which could include pre-seed, seed, post-seed, pre-Series A.

The VC funding still remains very steady. It’s only about 1,200 to 1,500. There is a very large Series A gap. What are the numbers? Has anybody done any study on the numbers in India?

Brij Bhasin: In terms of the broader trend, India is probably a microcosm of how the US market has evolved in terms of micro VCs entering and there being a lot of money available pre-Series A, both from angel syndicates to domestic and foreign microVC funds in India.

The government of India now has started a fund which is investing into India-based domestic funds. That has also led to a whole wave of India-based AIFs that have come out over the last year or two. For good teambuilding and executing well, there is enough money available at the seed and angel stage to at least try to prove out their concept.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Brij Bhasin of Rebright Partners
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