1Mby1M Virtual Accelerator Investor Forum: With Anirudh Damani, Managing Partner at Artha Venture Fund (Part 3)

Anirudh Damani: I used to be on the road for probably 25 days a month. I’ve lived in a lot of Motel 6’s across the US. I understand the value and effort it took to standardize that experience across the board. When I was looking at the deal, I could understand what he was doing. Much of my staff was having tough experiences, especially females. We would get them a business hotel, but it would be right next to a shady area. A similar hotel in Bangalore with a similar price point would be a fantastic hotel.

It’s very difficult for an administrative team to assure that you’re going to get a standardized experience across India. OYO did that. It took off globally. It went on to become big in China and Japan. We saw almost a 300x multiple in less than four years simply because he solved a huge market need. Our experience with OYO has been that it’s the top-performing investment until now.

Sramana Mitra: The concept and the idea resonated with you because of your experience. Was there something in the founder that spoke to you?

Anirudh Damani: One of the things that we found with Ritesh is that he’s tough as nails. He’s very driven and focused. He has so much confidence sitting in front of 15 angel investors who are all seasoned professionals. The way he carried himself and the way he was willing to negotiate was impressive. His focus wasn’t valuation. His focus was to get money because he needed to get from point A to point B. That showed a lot of maturity.

If you look at the kind of rounds he raised and the kind of investors he stitched together, he had Lightspeed, Sequoia, and Softbank. He was able to keep stitching these rounds together and also keep all his investors happy, convinced, and backing him all the way through. For somebody who has not been to college and has little experience, he has been able to manage a number of transactions and investors.

What has changed today is, we no longer invest in concept-stage companies. The ecosystem has matured. There are now second-time and third-time founders coming up. The average age of the Indian founder has also increased. People with higher roles are willing to quit because they are bit by the entrepreneurial bug. That didn’t happen 10 years ago. That’s where you’re seeing a much different approach towards investment.

Sramana Mitra: Let me lay out a little bit of the evolution of the Indian industry which is not very different although it’s coming later in the cycle than what we have seen in the US. There’s a stratification of the different stages of investment. From the beginning, 2010 to 2014 was one small set of investors who were doing everything.

Today, there are angel investors doing pre-seed, seed, and micro-VCs doing post-seed, pre-Series A. The more traditional VCs are doing Series A onwards. There is a whole class of both angel investors as well as small VC funds that have evolved and have chosen what stage they want to play in and how much risk they want to take.

None of that existed until maybe a few years ago. Now it’s fairly mature. You do see more positioned funds on specific types of investments. Today, you’re positioning Artha in a much later stage.

Anirudh Damani: Absolutely.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Anirudh Damani, Managing Partner at Artha Venture Fund
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