'Commitment To A Cause Is What Gets A Startup Ahead'- Says Shubhankar Bhattacharya, Venture Partner, Kae Capital
EdTech and FinTech becoming the dynamic precedents in the long haul for funding, the startups are getting anxious about the flow of funding in 2017. Investments in the FoodTech section may experience certain changes. However, how products are differentiating and innovating in their industry, will have a major effect in receiving investments.
BW Disrupt, in an exclusive conversation with Shubhankar Bhattacharya, Venture Partner at Kae Capital, spoke about the different metrics which will build the pedestal for startups in 2017.
In the next one decade, can you foresee scalability and economics of digital banking eclipsing over traditional banking in India?
10 years ago no one might have predicted that digital wallets such as Paytm would emerge as legitimate alternatives to cash for the masses. Neither could we have foreseen UPI payments facilitators such as PhonePe bringing more bank accounts to mobile than any of the traditional banks. In fact, neither of these categories of businesses existed 10 years ago.
We have a precedent of upstarts displacing banking incumbents and so as audacious as this might sound, I do think digital banking might become the norm very soon.
Can India become a cashless economy ?
In my opinion, yes. At the very least, I believe that paper currency is very likely to be replaced by a less tangible asset.
However, I would be remiss in suggesting that this could be attainable in the near future because a cashless society cannot and should not be looked at as a standalone goal.
It requires incorporation and acceptance at the grassroots level with Telecom and Banking industries and providing sufficient incentives for the millions of Indians (that are today nowhere near accepting digital currency).
According to you, what are the best ways to analyse a company before investing in it?
There are broadly three things we look for in every investment opportunity. Firstly, a great team that demonstrates determination and personal commitment towards the problem being solved. Second, a large addressable market that is underserved. Finally, a business proposition that solves for the pain points with existing alternatives in a way that allows for unlocking the large market potential.
What has been the best investment of Kae Capital in 2016?
All 7 of them :)
What advice would you give to an early stage startup as an investor?
Every entrepreneur must start not because being starting-up is cool (It is not!) or because VC funding is available (VC funding can never be the purpose for a business to exist or be created), but because they feel strongly committed to the business and what it represents.
One question which I think every entrepreneur can use to validate his/her own commitment is, "Would I enjoy working on this problem 10 years if now if I raised no funding at all ?"
How necessary do you think is innovation while ideating a business model? Would you say impact is more important than innovation?
Innovation, especially when it comes to technology, can help create new business models and be the key to solving existing pain points. However, innovation without impact becomes little more than a novelty or a research project. Impact, in some ways, is also a proxy for the addressable market size and I would therefore value it more than innovation.
Out of the 105 foodtech startups that started and raised funding in 2016, only 58 remained active. Do you think foodtech startups have reached the satiation in the Indian market and that VCs may lose their funds by investing in FoodTech?
It is unfortunate that "Foodtech" is being interpreted as restaurant cataloging and delivery services. Several businesses that were funded were too similar to each other, were competing for the same target customer, and lacked a killer differentiation. At this time at least, it doesn't seem like the Indian restaurant delivery market has the size and depth to support more than 1 or 2 large players.
I see a great deal more action and innovation happening in other segments of the food market in India.
If we look beyond restaurant delivery services at a wider spectrum of companies that are innovating in the food space, we will find a few interesting companies such as Hector Beverages (makers of the Paperboat brand of drinks) and Bira 91 (Makers of the Bira craft beer brand) that have revitalized consumer interest in age-old categories. While Patanjali is now a full-fledged FMCG and modern trade firm, we mustn't forget that its commercial success began as a result of proprietary food products.
In fact, we at Kae have also recently invested in Popicorn which makes packaged popcorn accessible as an anytime snack in retail channels. There are several other firms that are re imagining different aspects of food in terms of delivery, consumption, or its branding and the opportunity remains unquestionably large.
