1Mby1M Virtual Accelerator Investor Forum: With Sarbvir Singh of WaterBridge Ventures (Part 5)

Sarbvir Singh: We believe that just focusing on size and hungry businesses is not always the right solution. We want to rightsize our fund. There is also the reality of running a fund and there is a cost to it. You have to get both sides right.

There are different solutions that people can arrive at depending on their perspective. We believe in s right-sized fund that is focused on early-stage. Focus on what you know. The other thing is unlike some other early-stage funds, we don’t follow a spray-and-pray kind of approach.

In our first fund, we made 16 investments. We’ll probably make one or two more. We believe in the model where you focus on things that you have some knowledge about where you back your entrepreneurs over multiple rounds, and where you have a reasonable exit scenario.

That’s a very feasible alternative. That’s the kind of fund we are building. We are on our way to proving that thesis out.

Sramana Mitra: What about other companies that you’ve invested in? Maybe talk about another one or two highlights of your portfolio.

Sarbvir Singh: One of the companies that we were the first institutional investors of is Ziploan. They’re in the lending business. They give loans of about five lakh rupees ($7,000) to SMEs. This could be small manufacturers or any small services business. This is a space that has not been served in India because the cost-to-serve is very high.

Mostly, these people borrow from informal sources where they pay high rates of interest. The team that came together was interesting. One of them had banking experience and the other had a technology background. We believed in their approach.

Their approach was very sound in terms of the financial and technology perspective. They had some interesting ideas on how they can evaluate credit. They had a proposition to give loans in three days. The business had scaled tremendously.

Matrix Partners did their Series A. Recently, they did their Series B. More importantly, they have been efficient in terms of lending. The NPS is sub-3%, which is very good for their segment. They are on their way to building a really large business. 

Sramana Mitra: What kind of interest rates do they charge? 

Sarbvir Singh: They charge in the 20’s. 

Sramana Mitra: The lending business is a big trend globally. In the US, there are lots of lending businesses – lending to SMB, lending to consumers. What datasets are they using to evaluate loans?

Sarbvir Singh: First I’d like to just differentiate from some of the kinds of businesses that you spoke of. In the US, there is a lot of lending to subprime customers. After the financial crisis in 2008, a lot of people vacated that space. There is a lot of lending to subprime. There is this payday lending. We are not doing that.

This segment is part 5 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Sarbvir Singh of WaterBridge Ventures
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