1Mby1M Virtual Accelerator Investor Forum: With Suresh Shanmugham of Saama Capital (Part 5)

Sramana Mitra: The story that needs to come together for the ecosystem to get the next level of boost is that there are a lot of acquisitions happening. Even here, the vast majority of exits are M&A exits. It’s not IPOs. IPOs happen but not that many. The strategic acquisition story just needs to come together for everything to flow. It’s good. It’s a massive journey for the last 10 years.

I started working on the Indian ecosystem and trying to shepherd or promote the Indian ecosystem back in 2005 through my blog. We started One Million by One Million in 2010. India has always been one of our biggest geographies. It has been a really interesting journey. Our roundtables are continuously full of Indian entrepreneurs. More and more, everybody is generating revenues. That’s the first step. If you can generate revenues, a lot of other things can be worked out.

Suresh Shanmugham: No doubt.

Sramana Mitra: How do you parse unicorn mania? India went crazy for a while. Silicon Valley, of course, went crazy. I had thought, at that point, that India was not going to go so crazy over this unicorn phenomenon, but it did. How do you parse that?

Suresh Shanmugham: You can see patterns across markets. What happens in the US does happen in India as well. I do believe it’s not a surprise. People put capital raising ahead of business building, because the money was available. People like big numbers, especially when there are monetary implications for them.

It became something that was a bit of an ego boost. It was a way to benchmark yourself versus others for the savvy entrepreneurs. Those are periods of time that are anomalous. In some ways, I’m glad we’re past that. It separates out the entrepreneurs that are in it to build a company versus those that are in it who are focused on the optics of big numbers.

Sramana Mitra: Were you in any other unicorn deal? You’ve very smartly used unicorn mania in your favor. You sold your position at Snapdeal at the right time. I suspect a lot of others have not sold their unicorn positions at the right time. They’re stuck. The entrepreneurs who have raised too much capital are stuck as zombies.

Suresh Shanmugham: We have two unicorns in the portfolio. Snapdeal which we’ve exited and Paytm which we’ve largely exited.

Sramana Mitra: What is the extent of the zombie phenomenon at the wake of unicorn mania?

Suresh Shanmugham: There are companies that are walking dead. They’ve got a lot of liquidation preferences. They raised a lot of money. In some ways, they have to ask themselves, “What’s in it for me? What am I working for?”

Sramana Mitra: Is there anything that you would like to say to the audience of entrepreneurs who may be interested in working with you as a parting comment?

Suresh Shanmugham: We have a fresh pool of capital. We are very committed to early-stage investing. We believe the best is yet to come in India. Ash and I bet our careers on this geography 13 years ago. I’ve never been more excited about the types of entrepreneurs that we’re meeting and the opportunities that they’re going after. To see repeat entrepreneurs and the whole cycle happen more frequently is something that thrills us. We’re excited to continue to be part of the ecosystem.

Sramana Mitra: Great. Excellent conversation. Thank you for your time.

This segment is part 5 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Suresh Shanmugham of Saama Capital
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