Amid a funding winter for startups with no end in sight, Info Edge chief Sanjeev Bikhchandani said on May 26 that it was a good time to invest in young companies if they are cost-efficient and offer the right valuations.
“It is difficult to predict (when the funding scenario will improve)... But, there is still enough entrepreneurial activity going on. It is a good time to invest in startups if you have 8-10 year horizon... because two of our best investments — Policybazaar and Zomato — happened just before the crisis in 2008 or during it,” Bikchandani said during a post-earnings call.
“We want to be particular about the valuations, the entrepreneurs and cost-efficiency,” he added when an analyst asked about the investment roadmap for Info Edge Ventures, a VC fund backed by the company.
Meanwhile, Info Edge wrote off its entire investment of Rs 76.6 crore in B2B marketplace Bijnis in the March quarter. The company’s management clarified on the earnings call that it wasn’t on account of any failings on the startup’s part, but a conservative accounting practice based on IndAS rules and the current funding climate.
In the previous quarter, Info Edge wrote off Rs 276 crore of its investment in Rahul Yadav-backed realty tech startup 4B Networks in the previous quarter.
During the call, Bikchandani told analysts that the company was already seeing and may have already backed startups in the artificial intelligence/machine learning (AI/ML) domain.
When asked if Info Edge was interested in start-ups brewing in the ONDC (Open Network for Digital Commerce) space, Bikchandani said that it wasn’t a specific area of interest for the company, but would not like to rule it out completely.
Lessons from the past
Info Edge is reeling under a slowdown in the Information Technology (IT) sector as its flagship job search portal Naukri contributes to around 50 percent of its billings. As the company still has around Rs 3,400 crore of cash sitting on its balance sheet, an analyst asked about the purpose of such a large stash.
“Look, we have a large amount of customer advances which is not our money. So, Rs 1,100 crore of billings is customer money that we might have to give back if customers ask for it. That would leave us with around Rs 2,300 crore,” said Bikhchandani.
“This seemingly large amount (of cash reserves) helped us a lot when Covid struck and all Naukri billings dropped by 144 percent. I asked Chintan (chief financial officer) how long we could run if all the sales went down to zero, advertising cost went down to zero. He said 3 years. That’s why we did not have to sack anyone… Even when Lehman went down (in 2008), we had the cash balance to not sack anybody,” he added.
