Many know Ashneer Grover as the founder and CEO of BharatPe, a lending and payments startup that is now valued at over $900 million, earning itself the epithet of a Soonicorn – businesses that had the potential to turn unicorns by 2020 – which they have.
But, when he's not building BharatPe, Grover is an active investor, whose portfolio includes at least 23 startups and two venture capital (VC) funds.
Interestingly – but not surprisingly - one of the funds he has invested in is also an investor in Bharat Pe.
In an interaction with Moneycontrol, he talks about his motivation to invest in startups, the decision to pump in money in Ribbit and why it is rare to see more individuals as limited partners (LPs) in venture capital funds.
Edited excerpts:
How did you end up investing in Ribbit Capital, which is one of BharatPe's investors?
A lot of the funds in the US, known to be very founder-friendly, invite their creators to come and participate in the fund. So I got this opportunity to participate in two funds. Both of them are my investors. One is Ribbit and then there is a new fund. They invited me saying that even if I come in for a small cheque, they would be very happy to have me participate because they are very focused on working closely with founders. So Ribbit is one. The other one is actually Vinny Pujji's fund. He has been born and brought up in the US. He was working with Insight Partners, one of our major investors. Then he came out of Insight, started his fund and invited me to participate. So, those are the two funds in which I am an LP.
What is the corpus of these funds in which you have invested in?
Vinny's $400 million-plus; Ribbit is $700 million.
With investment in Ribbit, how do you recuse yourself from a potential conflict of interest? To what extent are you kept informed about the deals being signed by Ribbit?
There is no conflict of interest. My money changes nothing for them as I operate under the $250,000 annual LRS (Liberalised Remittance Scheme) limit. I am like any other LP. No special treatment or getting to know about any investments.
Also, Ribbit invested in BharatPe through a very different fund so none of the exposure (of this reserve) would be in India. They had invested in BharatPe through an old fund, but the one I have invested in is their latest pool.
How does it work? Such an arrangement isn't common in the Indian startup ecosystem.The trend is very simple. If you have a good relationship with the founder, then you actually want him to be invested in you. In some sense it works to strengthen the relationship. See, my money is not going to change their life. When they are raising funds, they have enough people to put in 100s of millions of dollars individually. They don't come to me as an LP for my money. They come to me for what value I can bring to them in terms of new deals. It is just an extension of the relationship, nothing more.
How much do you invest in funds?
I don't disclose any individual investment amount. Cumulatively between all these funds and startups, I have invested in about close to $1.5 million.
In India, there aren’t many domestic individual LPs in foreign funds. There are mostly family offices besides foreign investors. How is the situation for individual LPs?
Individual LPs are not that common in India. Even mine are international funds. Most of the funds raised are in Singapore, Mauritius or Cayman Islands. As an individual, it is not possible to contribute more than $250,000 until that money has been earned outside India. That is a big constraint. There is a Liberalised Remittance Scheme of the government and only $250,000 can be taken outside India. That is the major hindrance for Indians becoming meaningful LPs overseas. That's why most of them end up participating directly in companies rather than through funds.
You have also invested in two dozen startups. How is it different from being an LP?
Being an angel is a more active form of investment and the reason I do it is very simple. I like to know what's happening in the market. The more I speak to people, the more it opens up my mind for new things happening in my own business.
Before investing, about half-an-hour I spend trying to understand why he is doing what he is doing. Thereafter, I try to figure out whether or not there is a huge target market for whatever he is doing.
What's the average ticket size you invest in startups?
On the lower side it is Rs 25 lakh; on the higher side, Rs 75 lakh.
One of your portfolio companies, Nazara just had an IPO. That turned out to be a good investment. What are your plans for exiting from these companies?
There are multiple exit events that have happened, but I am not exiting. Nazara IPO closed yesterday. It got oversubscribed… It was a bumper IPO. It is a great success... but I am still invested in everyone.
I have a high risk appetite. I have put money behind people. Unless and until they themselves tell me that they have to get bigger investors and need to create space for them, I am happy to remain invested.
Apart from bringing money on the table, what else do you help a startup with?
As a founder, you need someone to talk with about ongoing issues. Ideally, angel investors like me do not have an agenda because we have already put in our money. I will only try to help or solve their problems. I can tell them what I had done in a similar situation while starting up. Most of the time in the industry, a startup founder never gets to talk to other founders. You just end up spending time around investors, regulators, market, PR and employees managing them. Sometimes, as a founder you need someone to speak with, who is not expecting anything from you in that conversation. I act as that person – help resolve problems that I have solved in my own business. If someone asks me (for help) among my investor companies, I am always there for them.
Apart from fin-tech or finance, what else can you help a founder with?
Scaling up a business is a skill, which cuts across segments. In fact, I seldom talk to fin-tech startups. Most of my conversations happen with non fin-tech founders. For example, I have invested in the beer company, Bira, even though I have never tasted the product since I am a teetotaler. Sometimes, Ankur (Ankur Jain is Founder and CEO, Bira Beer) tells me that some of the insights I gave him were the best because there's no bias. You have to understand the founder’s psyche and his insecurities, his feelings ... that is the value you add. I am not a subject market expert. That’s the founder himself.
How much money have you kept aside to invest in startups?
I am such a compulsive investor that even if I have Rs 15 lakh with me and a founder says that his idea has merit, I will give the Rs 15 lakh to him...
All this comes from your personal wealth?
Coming from my personal income… yet to make wealth. I have been investing since my American Express days. It is not that I have started recently. Whatever money I have at any point in time, I always feel more convinced putting it behind these founders and startups than the stock markets and real estate.
In India, people get their money stuck in real estate. I know so many people who have put more money in real estate than I have put in startups. To me that is a dead investment. If I have deployed $1.5 million now, at least I have 23 companies and two funds. So, I have varied exposure and I am also getting to learn a lot while my horizon is expanding. I am also keeping my fingers crossed that the money will also grow.
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