1Mby1M Virtual Accelerator Investor Forum: With Ben Mathias of Vertex Ventures (Part 2)

Sramana Mitra: Do you invest in B2B ventures that would be Indian B2B-facing?

Ben Mathias: We do. Most of our companies started with their initial customer base in India. At the end of the day, the Indian B2B market is limited. You could probably get to a $20 million ARR company if you focused on India, but if you want to get to the $100 million ARR, you need to be focused outside of India as well.

We fund two categories of companies. There are companies that have built solutions for emerging markets. They would typically expand out of India into Southeast Asia and the Middle East. There are companies that have built technology that are applicable in global markets. The quickest path to success there is to be able to start penetrating the US market. The first set of customers were Indian customers.

Sramana Mitra: If you look at the deal flow from the last 12 to 15 months, what are the highlights? What trends are you seeing?

Ben Mathias: The deal flow has changed in the last couple of years. Two years ago, we saw a lot of deal flow in consumer companies. We saw a lot of deal flow in the shared economy, for example, ride sharing. There are clear leaders that are emerging in those sectors. Those are now raising B and C rounds.

A lot of what we see now falls into two categories. One is fintech. We still see a lot of early-stage fintech companies. Then we see a lot of enterprise SaaS in the Series A. These are typically companies that have raised half a million in seed funding and have gotten to close to a million dollars in revenue. Then we’re starting to see a lot of pure play tech companies in AI, NLP, or IoT.

The challenge there is to sort through to sift out the companies who are doing genuine technology development. The good news is we’re starting to see a lot of pure play technology companies in the last year.

Sramana Mitra: Can you elaborate on some fintech concepts that are promising in the current Indian landscape?

Ben Mathias: We’re seeing a lot of different things in fintech. One is digital lending both for SMEs as well as for consumers. We’ve seen a number of companies there. We’ve also seen a lot of companies in personal finance in areas like wealth management and investing strategies for middle income people.

Typically, the higher income people get one-on-one help. People who are 25 to 30 years old who are in IT jobs don’t have any solution available. We’re seeing a lot of companies offering solutions. The other thing we’re seeing a lot of is supply chain financing. Businesses finance their receivables. This is across both India as well as Southeast Asia. The trends are fairly similar across the region. We’re able to learn from various companies in different geographies.

Sramana Mitra: What is your assessment of the regulatory situation around all this?

Ben Mathias: The regulatory situation has definitely come a long way in the last three years. It is a lot clearer in terms of regulation. One thing that we’re still waiting to evolve is B2B lending regulation. Beyond that, I think the regulations are quite clear.

Sramana Mitra: Peer-to-peer is not yet in swing?

Ben Mathias: Peer-to-peer is not yet very clear. The reason VCs have not jumped in is because the regulations are still not very clearly defined.

Sramana Mitra: But for all other firms of digital lending, there’s no real regulatory hurdle in building companies? It’s more execution.

Ben Mathias: No, there’re no regulatory hurdles.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Ben Mathias of Vertex Ventures
1 2 3 4 5