Modern Warfare Market Opportunity:

India's defense modernization budgets have seen a substantial increase over the last four years, rising from ~0.9 lakh Cr a year in 2020 to an outlay of over ₹1.7 lakh Cr a year in 2024 on average representing a ~₹12.0 lakh crore ($145 billion) opportunity over the next seven years, to fortify deep tech technologies for defense purposes, aligning with the pursuit of 'Atmanirbharta' (self-sufficiency) within India's defense forces. Comparatively, larger economies like the US have allocated approximately $150 billion for defense modernization in 2024, highlighting the necessity for India to rely more on indigenous technologies to bolster its defense capabilities. This surge in spending aligns with a global shift in the geopolitical scenario, prompting governments, including India's Ministry of Defence (MoD), to accelerate military modernization efforts. The MoD's strategic focus on enhancing indigenous technological development, particularly in AI, has led to an enhanced need for innovations like swarming UAV systems. These systems, comprising drones communicating autonomously using advanced AI protocols, are poised to transform conventional warfare by executing various missions with minimal human intervention. This technology ensures mission continuity even if one drone fails, providing unprecedented strategic advantages.

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Why NRT Fits Our Thesis:

A Pioneer in Aerospace Innovation:

NRT, is a deep-tech, cyber-physical uncrewed systems aerospace company developing specialized AI-powered swarm drones. This platform enhances the combat potential of the armed forces, making the company a pioneer in aerospace innovation. These drones utilize distributed intelligence to operate in conjunction with ground forces during offensive and defensive operations. NRT's focus on fine-tuning software for different terrains and implementing self-destruction capabilities in its drones to prevent data breaches showcases its commitment to security and customization. By partnering with global defense players for key components while maintaining control over product design, NRT ensures performance and autonomy in its products.

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Full-Stack Platform:

NRT is building a full-stack proprietary platform with a robust pipeline of strategic Next Gen Mission and Tech Platforms:

·       Multi-Rotor Unmanned Systems (MUAS): Can be used as a communications bridge, providing a means for frontline troops on the ground to communicate with each other and with command centers

·       Air-Launched Flexible Assets (ALFA): Capable of carrying a much larger payload compared to other types of unmanned aerial systems, making them useful for missions like target acquisition and destruction, launching precision strikes with missiles or other munitions, and force protection

·       High Altitude Pseudo Satellites (HAPS): Utilized for surveillance, intelligence gathering, and communication purposes, providing a persistent, high-altitude view of an area of interest. These UAVs are significantly cheaper than geostationary satellites, typically used for such intelligence

Each platform is versatile and can be deployed by any of the verticals of the defense (Army/Navy/Airforce). NRT works closely with the armed forces to build a platform based on the Concept of Operations, specifications, and requirements of each unit of the Defense, for upcoming operations. Procurers can modify the platform as per their agile needs, independent of NRT.

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Transformed Defense Capabilities:

NRT's high-density swarming system represents a paradigm shift in defense capabilities, empowering the Indian Army with strategic advantages by seamlessly integrating AI-powered swarm drones into military operations. This innovative technology enables the Indian Army to execute missions with unparalleled precision, efficiency, and flexibility. The system's ability to adapt to changing battlefield conditions and continue operations even in the face of drone failures ensures mission success and enhances overall operational effectiveness. Furthermore, NRT's commitment to local manufacturing and technological excellence demonstrates its pivotal role in advancing India's defense capabilities and strengthening its position.

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A Visionary Team Driving Innovation:

NRT's leadership team comprises industry veterans with 75+ years of cumulative experience in aerospace, defense, and technology. CEO Sameer Joshi, a decorated retired Indian Air Force Fighter Pilot, brings over two decades of leadership experience. COO Julius Amrit's background in aerospace and start-up leadership, including co-founding Team Indus, reflects his commitment to disruptive innovation. CBO Dilip Chabria's experience in advertising and engineering projects, along with Commodore Jaideep Maolankar's distinguished career as a retired Naval veteran and Chief Test Pilot, add depth and expertise to NRT's leadership.

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Competitive Advantage:

Despite the growing interest in swarm drone technology globally, the competitive intensity in this space remains low. NRT's competitive advantage lies in its pioneering work in developing swarming algorithms with communication at the heart of this innovation. The company has also fostered strategic partnerships with global defense leaders like BAE Systems and Honeywell. NRT has been able to demonstrate missions exhibiting decentralized swarming algorithms, positioning itself as a frontrunner in this niche market. Additionally, NRT's focus on local manufacturing, customization, and performance ensures that it stays ahead of the competition in delivering innovative solutions for modern warfare.

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Conclusion:

NRT stands at the forefront of technological innovation in the aerospace and defense sectors, which is continuously evolving with a focus on delivering cutting-edge solutions for modern warfare. With a robust pipeline of strategic platforms and a visionary leadership team, NRT is well-positioned to capitalize on India's growing defense modernization efforts and expand its global footprint. We are excited to be part of NRT's journey and confident in its potential to revolutionize the aerospace and defense industries.

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The Global Tech IPO market

The year gone by had been a muted year for tech IPOs globally, especially the US, primarily due to the market volatility, geo-political instabilities and higher interest rates. An estimated ~150 tech companies that had planned / filed for IPO in 2023 have deferred their plans.

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Since then, the Nasdaq has recovered ~35% from its bottom, the US treasury rates have peaked at 5.5% (with a target of ~3-3.5% by end of 2024) and the geo-political crisis have been temporarily mitigated. With visible stability, controlled inflation and re-adjusted investor risk, the global equity market is poised to see a flurry of IPOs in 2024. As per a recent CB Insights report, there are nearly 250 VC funded companies preparing to IPO in the next 12 months. Of these ~30 companies are expected to IPO on Indian bourses, led by some marquee names like Ola Electric, Swiggy, etc.

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Below is the list of VC-funded companies expected to IPO in 2024:

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Indian IPO Outlook

There were ~50 mainboard IPOs and ~165 SME IPOs in India that cumulatively raised Rs 50,000+ Cr. Over 90% of these IPOs were successful, ie, fully subscribed and listed with positive gains. It was a record year for the Indian IPO market and we expect the trend to continue in 2024.

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Infact, as per industry estimates, there is roughly Rs 20,000 Cr worth of IPO pipeline already visible, of which ~Rs 4,000 Cr worth of IPOs have already been announced. We estimate this year’s IPO market will be led by technology companies (many of which held back their IPOs in 2022/23) with an estimated of ~50+ tech IPOs including marquee SME companies with a total  IPO size in the range of ~Rs 20000-25000 Cr !

Below is a list of ~30 companies as per CB Insights, that are looking to IPO in India: 

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In addition to these 30 companies, we are excited for some of the most promising enterprise tech companies that may look to IPO over the coming years, we are excited to look-out for the below: 

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This will be a defining year for tech IPOs in India, further paving the way for early growth investors to exit via public markets and inducing confidence in the depth of Indian markets.

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We have built a proprietary framework for investing in Pre-IPO stage companies using a balanced mix of financial stability, growth potential and meeting market expectations (at IPO)

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At a time when sustainability is not just a choice but a global necessity, corporate climate action demands a paradigm shift in how businesses approach their carbon footprint. Achieving Net. Zero targets has become a cornerstone of corporate responsibility, yet a significant hurdle persists - the accurate measurement and management of carbon emissions. It is in this critical arena that the integration of technology and artificial intelligence (AI) emerges as a transformative solution.

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As businesses worldwide commit to the ambitious goal of Net Zero, a stark reality prevails: 91% of organizations grapple with the accurate measurement of their emissions. The primary challenge lies in the laborious process of data collection, particularly for complex organizations. Herein lies the immense potential of technology and AI to streamline and revolutionize the carbon accounting process and enable much needed progress toward climate mitigation goals.

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The complexities surrounding data collection, especially indirect and supply chain emissions, often lead to underestimated corporate carbon footprints. Leveraging technology, businesses can finally overcome these challenges by implementing sophisticated data collection methods and AI algorithms to analyze extensive datasets.

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The specific challenges in traditional greenhouse gas (GHG) assessment – from incomplete data to the sheer volume of information generated – find their solutions in technology-driven platforms like ZERO, the automated carbon management and accounting platform developed by Olive Gaea. This platform not only streamlines data collection but also facilitates accurate accounting, enabling businesses to identify and prioritize areas for emission reduction, helping them achieve Net Zero emissions and ESG leadership seamlessly.

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As businesses grapple with the urgency of decarbonizing, the role of technology in addressing carbon footprint accounting challenges cannot be overstated. By embracing innovative solutions powered by AI, organizations can bridge the gap between commitment and execution, ensuring that their sustainability goals are not just aspirations but measurable, achievable milestones.

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In a world where every fraction of a degree matters, the integration of technology becomes the linchpin for a sustainable and Net Zero future. Addressing the corporate climate action and reporting challenge, Olive Gaea's ZERO is a testament to the power of technology in navigating the complexities of carbon accounting and decarbonization strategies.

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• The year 2023 in the VC world was the year of caution. With sluggish VC deals, fundraising, and IPO figures. The year saw half of the deal activity, in comparison to 2022, both in terms of deal value and number, and 30% in comparison to record highs of 2021
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• While this new year doesn’t suggest a return to the record-breaking days of 2021, there are positive signs that venture capital activity is modestly picking up. Notable quarter-over-quarter improvements in fundraising, deal volume, and valuations appear to be ahead, indicating a shift in venture capital trends specially in India

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Here are some of the top VC investment trends to keep an eye on in 2024, that will fetch investing dollars on the back of innovation with sustainable business models around them

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1. AI and GenAI use-cases become more real

• The venture capital world is buzzing with excitement as AI startups take center stage. We opened 2023 with an enormous OpenAI deal clocking in at $10bn
• This buzz shows no sign of stopping in 2024, and startups are establishing use cases to harness data, automation, and machine learning to solve complex problems. Infact, while we have seen GenAI use-cases for ChatGPT, year 2024 will see an emergence of use-cases particularly for enterprises, whether it’s healthcare, finance, autonomous vehicles, or customer service.
• Some of the enterprises pioneering in integrating GenAI based use-cases are the likes of –

a) Volkwagen integrating ChatGPT into its cars will be able to have actual back-and-forth dialogue conversations by the middle of the yearb) Meta – is launching GenAI tools to allow companies to automate the creation of multiple versions of adverts featuring different text and images aimed at different audiences. This may eventually feed into additional advertising revenues for Meta.c) Since announcing a partnership with ChatGPT creator OpenAI earlier this year, Microsoft has been deploying the Copilot generative AI (GenAI) assistant across its suite of Microsoft 365 business productivity and collaboration apps

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• McKinsey in their report on ‘The economic potential of generative AI’, few illustrative sectors and their use-cases along with their value accretion through GenAI deployment

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We expect India to innovate and bring more AI and GenAI use-cases that supercharge enterprises

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2. Web 3.0 starts getting closer

• Our world today stands at the threshold of a technological revolution that is taking the ‘real world’ we inhabit far beyond the limitations of physics and time. By 2030, we could be spending more time in the metaverse than in the real world. As the wide horizontal reach of the metaverse reshapes almost every type of experience in our lives, businesses should be exploring their role in this new frontier.
• CES 2024 had new consumer tools including the cool Portalgraph the VR projector technology that doesn’t blocking the view, or the 3D AI powered holograph by Holoconnects.
• While the outlook for metaverse’s profound and fast-emerging, access remains a work in progress for now. Creating immersive content is difficult and current XR hardware and software can pose friction points for today’s early adopters and first-time users. But barriers to entry are expected to fade quickly.

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We expect this year, we will see newer, more affordable and more immersive and engaging platforms for enterprises to connect with their customers.

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3. Carbon Neutrality gets further mainstream

• Given the ponderous action by governments world-wide, to cut carbon emissions – the world is still dwindling towards disastrous climate breakdown. With mandates emerging from Governments and Regulators, carbon monitoring and neutrality has been moving in the direction of voluntary to mandated. Greater efforts will be needed on ‘carbon management’ – which includes directly removing carbon as well as capturing emissions at their source from industrial facilities.
• The recent Cop28 summit in Dubai saw innovations ranging from Machines to magic carbon out of the air, indoor vertical farms to grow food for our escape to Mars, and even solar-powered ‘responsible’ yachts: with the promise of technological fixes for worsening global warming and ecological degradation.

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Since there is no single solution to meet the goals of climate action, we expect multi-pronged innovation around (a) accelerating efforts to transition to clean energy and (b) biotechnological and new material innovation that converts carbon-rich waste emissions into new plastics, synthetic fibers, and fuels helping create a circular carbon economyWe are excited about these trends, as they align with our investment interests and thesis going forward.~ NanikaLearn more about: CSVP Fund | CGES Index | Enterprise SaaS

Retail & eCommerce are in hyper-growth in India – the fastest growing consumption economy in the world:

The Indian retail sector is expected to reach $2Tn by 2032 from $836Bn in 2022. As per the India Retail and E-commerce Trends Report 2022, While the contribution of organized retail in India is comparatively lower (~18.5%) , the Indian e-commerce industry is growing at a CAGR of 23% and is expected to touch $350 Bn by 2030 making India the 3rd largest online retail market (trailing only the United States and China) with over 6 Mn MSME merchants. The continuous growth of online shopping along with need to provide convenience to end customer with easy returns has magnified the importance of reverse supply chain management in the e-commerce industry.

Complexities of Returns Management:

E-commerce firms are looking to build a sustainable business by driving internal efficiencies. In this context, efficient returns management has become indispensable for retailersnavigating the ever-evolving landscape of consumer preferences. It has been estimated that the return rate for online shopping in India is around 25-40%, which is higher than the global average. The report ‘India Reverse Logistics Market Report 2022-2027’ states that India’s Reverse logistics market is expected to reach $39.81 Bn by 2027 from $29.57 Bn in 2022, growing at a CAGR of 6.15%.

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Retail and eCommerce enterprises are now in a race to integrate circular economy principles into their core products, aiming for disassembly, waste accountability, and revenue activation through reuse. And most importantly unlocking the capital stuck in the reverse supply-chain in order to enhance efficiencies and profitability.

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However, the existing challenges of clunky IT infrastructure, complex logistics, and poor data hygiene make processing returns challenging at scale for most enterprises, leading to revenue leakage and a compromised customer experience.

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This is the very problem that Blubirch is pioneering in addressing. Blubirch’s ‘MARS’ platform (Managed & Automated Returns Solution) emerges as a true game-changer, leading the transformation of retail returns through its API-led connected platform. It’s an integrated suite spanning Returns Management and Liquidation to transform reverse asset flows into efficient and sustainable processes.

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Consider the journey of any shipment returned by a customer.  The MARS platform’s inspection and grading engine accurately assesses its condition while its policy engine validates eligibility of return and the decisioning recommends further course of action – all in real-time. With AI capabilities being developed in the platform, it has started helping choose the best actions such as resell as a fresh product, place for refurbishment, return to OEM, or send for disposition. Lastly, it’s disposition engine, enables the bundling of the unsold goods and runs a bidding engine to dispose the products to 3^rd party buyers (over 15,000 buyers),  via. Blubirch’s integrated secondary marketplace.

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Across its automation capabilities, Blubirch expedites working capital unlock and prevents any revenue leakage by eliminating human intervention and biases across the reverse supply-chain. Blubirch transforms returns from sunk costs to profit engines while also helping enterprise meet their sustainability and carbon neutrality goals with real action.

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Today Blubirch has demonstrated its significance with an annual unlock of INR 200+ crores for marquee Indian retailers, e-tailers and marketplaces like Amazon, Flipkart, Reliance, Croma, among others. Blubirch has started entering new markets as well taking this disruption to global scale (including Middle East, US, South East Asia).  The platform is well on a path to building upwards of INR 1000+ crores in returns managed in the next 2-3 years!

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Why Blubirch Fits Our Thesis:

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Built for Global Scale:

Returns are projected to balloon as the retail sector grows at 25%+ yearly. Managing returns profitably and sustainably emerges as a competitive advantage for retailers. Blubirch brings together the key stakeholders that are an integral part of the value chain including retailers, OEMs, resellers, and warehousing partners to enable the circular processing capability needed to handle exponential scale. It’s MARS platform is a one-stop solution for any retailer to unlock value jammed in the reverse supply chain – a problem of global relevance!

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Unlocks Multiple Revenue Streams:

Blubirch moves far beyond conventional return-to-origin approaches. Its predictive engines accurately triage item condition while automated recommendation algorithms route stocks to optimal recovery channels like refurbishment, resale, and recycling. Blubirch unlocks entirely new revenue streams from returns through re-commerce, working capital recovery, and waste elimination - turning historically sunk costs into profit drivers. Over time, Blubirch  will be in a position to under-write returns for retailers, and take on the complete control of the reverse supply-chain, of course leading to unparalleled operating margins!

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End-to-End Unmatched Platform Capabilities:

It’s amongst the only end-to-end and one-stop solution platforms in the world! The product modules cover returns initiation, processing, disposition, and seamless integrations. The disposition engine efficiently manages downstream processes, recommending the most appropriate disposition process and channel through evolving AI capabilities.

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Visible Impact and a Massive Whitespace:

Blubirch enables the circular capabilities needed to optimize returns profitably while minimizing waste - alleviating key pressure points for margin-starved retailers. With the target market size expected to grow from $5 billion to $15 billion+ by 2030, Blubirch doesn't merely tap into the circular economy – it unleashes new revenue streams, reshaping the business landscape.

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Seasoned Leadership Team:

Blubirch, under the seasoned leadership of industry veterans Sapan, Jeby, and Amit, boast a collective 40+ years of domain expertise. Sapan, a former IBM global reverse logistics leader, and Amazon Category Manager brings over two decades of experience in collaborating with retailers on profitability and sustainability initiatives. Jeby, with 15 years of experience driving complex transformations and building high-performance teams at IBM’s global consulting arm, is instrumental in cultivating resilience within the organization. Leveraging enterprise leadership credentials from Infosys and CSC, Amit spearheads Blubirch’s commercial engine.

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Conclusion:

A massive global opportunity with an ever-expanding TAM, a highly sophisticated tech platform, and visionary leadership, to us, Blubirch is a great investment opportunity. We are excited to be part of this incredible growth journey and working alongside the founders to make this vision come true!

~ Kunal

Learn more about: CSVP Fund | CGES Index | Enterprise SaaS

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With global warming coming to the forefront for world economies together, the onus to curtailing the carbon emissions lies with the largest contributors – the enterprises. Industry policies and regulations are tightening, to face the challenges of carbon emissions and greenhouse gases emitted by these enterprises. With businesses also becoming aware of these activities and wanting to address the same, sustainable and scalable solutions that can cater meaningful change are the need of the hour. As per McKinsey, spending on physical assets and solutions on the course to net-zero would reach about US$275 trillion by 2050.

As per EU’s Database for Global Atmospheric Research, the total GHG emissions for 2022 stood 53.8 Gt CO2eq, for context a gigatonne is equivalent to 10,000 fully-loaded U.S. aircraft carriers At Cornerstone, innovation, with a scalable and sustainable business models are pillars of our investment thesis in the next generation tech ventures and our latest investment  fits right in. Olive Gaea’s core product – Net Zero Platform, is a full-scale carbon management solution to measure, monitor, reduce and offset greenhouse gas emissions to bridge the climate gap. With a first mover advantage in the Middle East, its growing client base in India and the founder’s fiery passion to cater this solution at scale, Olive Gaea became a natural choice for us with its shared vision. They are working with some prominent names across both India and Dubai like The Sharjah International Airport, Shobha Realty, ITC Hotel Group, Navi Mumbai Municipal Corporation and many more.

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End to end decarbonization platform:

What’s exciting about Olive Gaea, is its competence to cater its client in the entire journey of decarbonizing. With its SaaS solution, Olive Gaea brings efficiency and precision for its clients allowing them to address every stage of the process via a centralized hub. The first step of reducing emissions is measuring and monitoring these emissions. The platform measures and assess carbon footprints across the organization (Scope I, II and III) in an automated way, providing real-time insights into ongoing emissions. Next, the platform also facilitates tailored recommendations and reduction strategies to effectively minimize these carbon footprints. While reduction strategies aim to minimize emissions, some emissions may be unavoidable. The platform goes a step further, and also provides options for investing in carbon offset projects and purchasing carbon credits.

Olive Gaea is not limited to just businesses but extends to the consumers of these businesses too. Businesses can offer their consumers an alternative to offset carbon footprints associated with their purchases made, in just a single click. With this, consumers can now have transparent insights into the environmental impact of their purchases and can accordingly make a decision to offset it. This gives businesses to engage their consumers towards sustainability.

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Automated monitoring & Intelligent Reduction Strategies:

What we loved about Olive Gaea is that it takes the manual and cumbersome  task of calculating carbon footprints and makes it an automated data-driven activity, taking subjective inputs out of the picture. Its ability to compute carbon footprints across segments capturing granular details of the source is what makes the platform impactful. The platform breaks down the sources and origins of such footprints and provides a holistic view of emissions across all three Scopes. The detailed approach helps business to identify and address the root cause while forming a decarbonization strategy.

The tailored  recommendations are based on the business activity and its identified sources of emissions. These recommendations are very specific to industries, operational nuances, and feasible interventions, ensuring that the proposed strategies align with the company's capabilities and objectives.

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Adaptable and Scalable Model:

Olive Gaea’s platform has the ability to expand and adapt its functionalities to cater to businesses across scale and industries. This is what makes the platform so agile and a firm solution for growing enterprises ensuring that it remains a valuable and effective tool in their ongoing pursuit of sustainability and achieve their net-zero goals. Olive Gaea currently serves clients in industries like Travel & Hospitality, BFSI, Govt Organizations, Real Estate, Manufacturing and more. As the platform scales, it has enhanced it’s focus on the BFSI segment, since they are a key stakeholder driving and fuelling many industries and can hold their borrowers accountable for their emissions.  As for us, we love seeing such adaptable solutions which can be served to businesses globally and at every scale.

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Founder’s Commitment:

The company is working with some of the prominent names across India and Dubai. Vivek’s 15+ years of experience across industries and major conglomerates and Jessica’s previous experience driving sustainability for some of the big corporations globally makes the team strong enough to execute and scale Olive Gaea from here on.

As I write this piece, I am thrilled to share that Olive Gaea has been recognized as one of 50 most innovative companies in the MENA Region by PwC in its 2023 State of Climate Tech: PwC Net Zero Future50 - Middle East. We’re delighted to support Vivek & Jessica in their journey to drive sustainability and achieve net zero target!

~ Sona

Learn more about: CSVP Fund | CGES Index | Enterprise SaaS

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In the airline industry, where countless distributors compete for passenger bookings, a robust and efficient distribution system is essential. The Global Distribution Systems (GDS) that underpin airline distribution, face their own set of infrastructure challenges and costly distribution fees in the complex web of airline ticketing. GDS are old school and haven’t evolved with time, but airlines and distributors are often left with no choice but to work with these archaic and expensive systems.

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In fact, the industry has often been plagued by singular focus on cost optimization and barely any focus on customer experience, retention, and therefore revenue maximization. With ever evolving consumer preferences and needs, GDSs’ are struggling to keep pace and provide a new-age experience. From limited flexibility in content customization to outdated data updates, airlines face hurdles in delivering seamless, personalized travel experiences to customers.

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This is where Mystifly, a new-age, tech-enabled GDS, is transforming the airline distribution industry and helping airlines and distributors offer the end customers a contemporary tech-driven experience, leading to better revenue realization for all stakeholders in the value-chain.

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Mystifly is a travel SaaS company that offers a powerful API-first platform for accessing real-time global airline data and content. With its comprehensive, modular API stack, it empowers any digital business to effortlessly sell airline tickets and  and offer travel as a vertical to their captive customer base. It operates as an embedded marketplace that aggregates airlines and other ancillary service providers on the supply side and provides an API-based access to this supply in real-time to digital businesses that are looking to offer travel solutions to their end customers.

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Mystifly provides a value-addition for both - airlines and OTAs (Online Travel Aggregator), providing them  real-time connectivity, enhanced personalization capabilities, and ultimately, an unrivalled passenger experience. It helps the OTAs in significantly improving the revenue by providing them access to inventory from multiple airlines in one go, ability to provide value-added service to passengers and ability to price these dynamically. It helps airlines to improve its reach and reduce the cost of distribution, provide real-time reconciliation and improve the booking-to-cash efficiency.

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Mystifly was founded in 2014 by Rajeev, who comes with complex product build experiencefor multiple industries. He was later joined by Bharat, who brings many years of experience in building enterprise grade financial products.

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Our thesis for investment in Mystifly can be summarised as:

1. Scalable solution for a complex industry that desperately needs modernization – Mystifly simplifies the distribution of retail ticketing for airlines, global and local OTAs (Online Travel Aggregator). With a transformative tech solution, Mystifly has made it easy for the players in the industry to access global inventory. With the current GDS, that offer standardized content, Mystifly is able to provide very flexible and customized offerings making it a scalable solution across the industry

2.  Pioneer in Transforming the travel industry – While we have seen Technology transform industries like BFSI, Healthcare, Retail; Travel has actually gone back a few years, with no hint of personalisation. Mystifly’s Single Order is able to attribute each value added service purchased by the passenger, and offer comprehensive ticket for his future purchases. In our estimate the total addressable market that Mystify is able to target is $2 billion and it can easily capture $200 million+ in terms of revenue from this opportunity

3.  Bringing cost efficiencies across the board for all stakeholders – Mystifly’s solution is not only flexible but also cost efficient. Where traditional GDSs are charging 10% to 12% as distribution fees, Mystifly is able to offer its suite at a fee of mere 2%. With it’s payments offering, Mysti-Pay, Mystifly, is able to unlock 100’s of millions in working capital for airlines, making it’s solution suite indispensable for airlines!

4.  Unmatched Value Chain Control – Through it’s modular approach, Mystifly is able to embed itself in various stages of the same transaction. For ‘a single purchased ticket’ Mystifly has modules for distribution, value added purchases / retail personalisation, cancellation and changes of the same ticket, reconciliation and settlement between distributor and airline. Thus making it a powerhouse for the airline travel distribution industry

Having survived and built some of these attributes through the Pandemic (darkest for the travel industry), this is truly an anti-fragile business. Rajeev Kumar, (Founder) has plans to take this higher and truly taken on the global opportunity. We’re excited to support the team in building the platform and in enabling the hyper-scaling of this unique opportunity!

~ Nanika

Learn more about: CSVP Fund | CGES Index | Enterprise SaaS

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The dream of pursuing higher education aboard comes with its own share of challenges for any student. Every year, over 20-25 mn students traverse the daunting journey of studying abroad - right from  university and the course selection, to application, arranging finances, complex visa applications, and finding an accommodation for more than year. Adventum Student Living (ASL) is disrupting the market with its mission to simplify the study abroad experience with personalized counselling, innovative financing options, and seamless accommodation services, ensuring that every aspect of students’ journey is met with expert guidance and support.

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Founded by Amit Singh and Sayantan Biswas, ASL is an end-to-end student admission lifecycle management platform from application to accommodation. It offers 3 key solutions under its sub-brands as follows:

1. UniScholars (Admissions & Counselling), is a premier digital counselling platform for the admission process starting with student counselling, university application & review, interview preparation and selection process. UniScholars brings a digitised and standardised experience to the counselling process which is otherwise pretty much broken, fragmented and unstructured. The platform is powered by ML-based matching algorithms to allocate appropriate counsellors to students based on their profile, intent, course selection and other variables. The platform also recommends the best suited universities with highest probability of admission based on the students profile and the unwritten university criteria learnt by the platform over time.  
2. UniCreds (Education Financing) is a global education financing platform backed by 20+ global lending partners. It automates an applicant’s journey of financing by enabling initial underwriting, digital kyc, profiling and application processing. The platform, on the basis of students’ profile connects them with a suitable lender with the lowest interest rate possible and the best turnaround time. The platform offers loans in all major currencies – USD, Euro, Pound, INR, etc. and provides the flexibility to the students to chose from lenders in their home country or lenders in their destination country.
3. UniAcco (Student Accommodation Marketplace), is an integrated marketplace for students to discover, evaluate, compare and book short-term and long-term rental student accommodations across the globe. It’s a market leader in UK student accommodation and an emerging player in Canada, Australia and the US. Its built a massive inventory of 3M+ beds across 500+ PBSAs. It provides 100+ parameters for students to compare & select the property that best meets their needs. ASL’s partnerships with some of the top PBSAs like Blackstone and Brookfield gives it exclusive access to inventory

Why we invested in ASL?

1. Tech-enabled, scalable, integrated platform – The higher education assistance market is highly fragmented with thousands of small regional & local operators providing piece meal solutions in a service-based model. ASL is the only platform in India that is building a productized solution with a standardized experience encompassing the entire student lifecycle journey – counselling, financing and accommodation under one umbrella, powered by a community-led platform. This makes it highly scalable and cost-efficient compared to any other regional player
2. Large Market Opportunity, ripe for consolidation – The international student education market is estimated at $200 billion, primarily dominated by tuition fees (~40%) and accommodation (~25%) as the largest categories. Over 20-25 million students travel outside their home cities for higher studies at a global scale. There are only a handful of scaled players that can cater to 1000+ students – leaving a huge room for organized players to consolidate
3. Value-chain Controller – Because of its integrated approach, ASL is a significant controller in the entire value-chain. Right from its partnerships with PBSAs like Blackstone for exclusive inventory access, to its network of partner universities and network of lending partners, ASL has built an unmatched network of supply that touches every aspect of the students application journey, making it an indispensable platform and one of the largest demand generator for any service provider in the ecosystem.

Learn more about: CSVP Fund | CGES Index | Enterprise SaaS

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The healthcare industry has long struggled with the challenge of leveraging data to drive critical insights to (1) drive higher revenues and (2) run efficient operations. Traditionally, companies resorted to acquiring vast and raw datasets encompassing prescriptions, medical claims, and more. Given the fragmented nature of the industry and the complexity of the data, extracting meaningful insights from these data troves proved to be a daunting task, which requires the expertise of expensive consultants who painstakingly navigated through the overwhelming volumes of data, which was typically disparate, unstructured, and did not have a common meta-data layer.

Without the ability of seamlessly deriving intelligence from the data, healthcare providers would struggle with customer engagement. This still poses a critical challenge, as reaching and educating both patients and physicians requires significant investment in marketing efforts. This inefficiency not only consumes valuable time and resources but also hampers effective customer engagement strategies - especially when the customer engagement is either too late or too irrelevant. In a world where data is quintessential for progress, data held by these healthcare enterprises holds valuable insights critical to drive customer engagements, retention and improve customer experiences to foster trust and loyalty, eventually leading better top-line performance!

As per McKinsey’s research, Med-tech’s value to healthcare systems could reach $3 Tn by 2030. Healthcare enterprises across South Asia, SEA and ME markets cumulatively spend $3-$5 billion annually on business intelligence, customer engagement tools and real-world clinical evidence. This is where THB – Technology, Healthcare and Big Data is revolutionizing the healthcare data analytics space. THB has built an intelligent CRM to cater to business intelligence needs, customer engagement and real-world clinical evidence needs for healthcare providers (hospitals & clinics), pharmaceutical companies and healthcare insurers.

THB is founded by Akansh Khurana, Kritika Tandon, Rohit Kumar and Rajesh Pachar. Each one of them comes with 15+ years of experience in management and consulting with some most renowned enterprises like McKinsey & Co, Bain & Co, Microsoft, etc. The team is now joined by Chirag Adatia, an ex-Senior Partner at McKinsey & Co., who is taking over as the CEO to take the company through it’s next phase of growth.

THB is a full stack, verticalized data management and analytics platform. Its proprietary data models ingest data from multiple sources (e.g.: Hospital Information Systems, ERPs, Clinical Data and Third-Party Data) and in multiple formats (structured & unstructured) and eventually derive analytics and hyper-contextual, micro-actionable insights for cost efficiency and revenue growth opportunities. THB’s secret sauce is in its ability to correlate clinic data with patient & physician data to create the right context, unlocking new cross sell and upsell opportunities.

Its Customer Engagement Product for Providers offers a unified patient experience with modules like Smart Patient CRM providing an organization wide profile and Automated Campaign Management on top of the Patient CRM. Its product modules for Physician engagement takes care of Lead Management, Physician CRM, Marketing Cloud, etc. primarily aimed at increasing inflow of referrals from physicians (for hospitals) and increasing share of prescription (for pharmaceutical companies).

Overall THB’s product suite helps almost every stakeholder in the healthcare value-chain (whether a provider i.e., hospitals and doctors, or a payer i.e., insurers, or enablers i.e., pharma) leverage data for better revenue realization.

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Why we invested in THB

1. Large, Untapped Market Opportunity – The spending on business intelligence by healthcare enterprises in the South Asia, SEA and ME markets is estimated to be ~$3 bn, growing at a healthy rate of 15 - 20%, validated with THB’s increasing NER (Net Expansion Ratio). Within its existing enterprise customers, the spending on data analytics solutions has increased by more than 30% yoy.  
2. Limited Competition in the operating regions – THB has no direct comparable peer that offers an integrated healthcare data suite with multi-functional applications across the healthcare value chain in the region it operates. While it faces some competition from generic CRMs like Salesforce, Microsoft Dynamics, etc. its competitive edge comes from its ability to overlay real world clinical data with the CRM data and provide healthcare specific nuanced insights which generic CRMs are unable to derive.
3. Strong founding team with domain experience – THB’s business is led by highly experienced founding members with an industry rich expertise. Each of its founder comes from a background of more than 15 years in healthcare and healthcare technology. The founders have built a strong layer of an Executive Management team under them that comes with similar industry experience and understand the customers’ requirements.    
4. Value-chain Control – THB’s offering creates value for multiple stakeholders like hospitals, clinics, pharmaceutical companies and health insurers across critical processes. Its ability to create impact for each stakeholder makes it an integral part of the entire value-chain and makes it even more critical when all major stakeholders are using the THB platform.
5. Value Attribution & Share of Value – THB’s platform is seamlessly able to demonstrate the value created by process and by stakeholder, be it conversion ratios, customer retention ratios, or simple data monetization, and therefore establish clear attribution of value created by the platform. This not only leads to better usage by the customers, but also opens up opportunities for THB to dabble with value-sharing models with customers, where THB is able to maximize its revenue realization from customers that have become mature uses of the platform. This ability to take a ‘share of the value created’ is extremely rare, and among the biggest USPs of THB, as it’s far more valuable than any price one might be able to charge customers!
6. We are excited to onboard the journey ahead of building a truly global healthcare data company alongside the THB team!

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True to our mission of ‘Winning Together’ – we learnt from the Masters and all the Participants about some of the most important aspects of building a global-scale business. Here’s a summary and key take-aways from our conversations around each of the building blocks -

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1.       Building Scale within an Organization

The foundation of a scalable organization is laid by its initial set of believers that bring in diverse skill-sets to help the company surpass the $1 million (revenue) milestone. This set of individuals, the Founders, don multiple hats, work round the clock, and may even overachieve compared to pre-determined targets. Founders, however, should be cognizant of the fact that scaling an organization from $1 million to $10 million may require a completely new skill-set vs. scaling from $10 million to $100 million. Each step of the journey needs a structural change.

One of the most important steps is building an Executive Management Team (EMT) that would take control of specific functions based on domain expertise. As the EMT represents the organization’s values, it is crucial to ensure cultural alignment with each member of the EMT while onboarding them. This alignment promotes constructive discussions, and the ability to collectively address challenges and solve problems.

An EMT that exhibits GET leadership – the collaborative spirit of Geese, the agility of Eagles, and the territorial expertise of Turkeys, will create an environment where every team member will contribute, lead, and take ownership when needed. Geese form groups (gaggle), communicate extensively, cooperate in decision-making, and demonstrate leadership succession, whereas, an Eagle possesses qualities such as adaptability, clear vision, and independence, enabling them to zoom in and zoom out when required to gain a broader perspective. Turkeys are territorial experts who love to maintain order, but when attacked, they defend their territory by displaying their aggressive nature. Founders should look for leaders that exhibit these qualities comprehensively.

In essence, this layer potentially decides the fate of the organization – an EMT that builds and blends in the culture seamlessly, narrows down the targets, and achieves them while identifying and filling the gaps on the side-lines, will outgrow its competitors in the space.

A fast-paced business environment comes with its constraints, and building a team to thrive in such a state means attracting people with complementary skills and contrarian views, giving control to domain experts. It is easy to focus on the lagging indicators, which works for the bottom of the pyramid but for top management, companies should track leading indicators. Such leading indicators could include understanding the 30-60-90-day targets and setting function-based processes, among others. It is also important for founders to act on these leading indicators - if the leading indicators don’t add up, it is better to sever ties sooner rather than later.

An interesting approach taken by some of our portfolio companies to hire EMT is by integrating potential experts to join the advisory board for an elongated period (6 months) where they understand the company and its vision in detail while working on adding value to the core operations. This is a great leading indicator to understand if the person would fit the organisation and bring in the skills needed to scale the business.

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2.       Going Global & GTM

Every entrepreneur has plans for business growth and scaling. Exploring new markets and introducing the product to a new geography is a different ballgame all together.  

The first question to ask when entering a new market is whether the product is a global fit. It is critical to determine whether your product is designed to scale globally in new markets or is intended to scale in a single market. Product market fit can differ depending on geography. For example, a product that is popular in India may not have a similar resemblance or need in a market like the United States. A different market may necessitate a shift in strategy. A different market may require a change in product approach and possibly require customizations. While considering customization, one needs to be mindful about the level of changes as new customers are targeted, to ensure viability of these investments. Customer sentiments across geographies may differ significantly, and this initial assessment is an important step when deciding to explore markets. This is what we call Culture-Market Fit.

The size of the market or the opportunity should be taken into account while assessing new markets for expansion. Markets with significant TAM should be carefully studied, regardless of the level of competition. Great TAM shows great demand; hence it makes sense to be present in such geographies despite competition.

It is also crucial to have some local presence when developing a global brand, such as country-specific heads, as this will increase client trust for that particular region. To have a local champion in a market and an insider promoter can be a key to success in a new market. In addition to ensuring long-term survival, a brand value driven by the calibre of your products and a customer-centric strategy will help convert customers. It is advisable to not use pricing as a means to enter a new market – pricing can never be a competitive moat. Product differentiation and superior product quality will enable market penetration.

One of the most sought-after strategies for growth in new markets is acquisition of a small player as it offers a head-start in the new territory with existing market intelligence and puts you considerably ahead along the road map than forging your own path into one.

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3.       Raising Capital for Scale

Capital is an important lever for growth once companies achieve a product market fit and assemble the right team. Global investors are increasingly scouting for early-stage opportunities, even as early as the Pre-Seed stage, to eliminate the fear of omission. However, despite the stage of investment, certain fundamental principles remain constant. Investors are drawn towards sound business models with a sizable Total Addressable Market (TAM) and founders possessing strong execution capabilities.

Today’s dynamic and competitive business landscape requires startups to prioritize high growth to establish a strong market position and stay ahead of their competitors. Investors are willing to fund fundamentally strong business models regardless of global macroeconomic conditions. One needs to revisit the relevance of an investment thesis every time there is a significant shift in the macros and venture ecosystem - ensure timely pivots and garner right-sized capital to support the same to realize the best results!

The current funding winter has largely affected companies with high burn and churn rates and in such companies, even their existing investors are cautious of injecting additional capital. On the flip side, companies quick to adapt and revise business plans have received ample support from their existing investors and are able to attract new investors.

A company addressing significant whitespace indicates untapped market potential, lack of saturation or immediate constraints in scaling, and an opportunity for it to be a market leader. Investors are keen to evaluate such companies as they bring substantial value beyond their financial investment. They assist companies with strategic decision-making like opening new geographies, refining business plans, identifying market trends, networking, and exploring business opportunities, among other areas. Moreover, they work closely with scaling teams to identify fresh avenues of monetization and achieve growth, recognizing the importance of time constraints while ensuring that capital is available for the right companies.

This translates into building scalable businesses with solutions that are impactful and addressing a core need of their customers and not just a temporary need.

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4.       Exit, Wealth Creation & Philanthropy

The right time to exit is when an entrepreneur identifies his limitations for the next phase of organization’s growth & expansion. While it’s important to create value for all stakeholders involved, a nuanced approach needs to be adopted towards chalking a plan for exit – it isn’t an overnight event – it is a process that gradually unfolds in steps and stretches over months together. Some important aspects of transitioning have to be taken into consideration before exit. It’s often a multi-year process with founders continuing to build value in the acquiring organization.

First and foremost, the EMT teams should be prepared for the handover. It’s critical to select the right ultimate destination for the company and its people. It takes more than monetary value to decide a right buyer. Company culture needs to be cultivated early on for organisations to thrive successfully. It is extremely important to consider a buyers’ culture that matches your own. Communicating with employees about the rationale for the decision, how it will benefit the company, and in-turn them, is of utmost importance.

Another key aspect of an entrepreneur’s journey should be philanthropy. Philanthropy is for everyone! One can start as early as today instead of waiting for the right time. Philanthropy is not always monetary – it is way beyond money and capital. The under-served require our presence, our skills and intelligence and above all, our service. The capital will flow from multiple sources but putting that capital to best use with maximum impact is what philanthropy is all about. Founders need not wait till an exit event for contributing to society and ecosystem. Philanthropy can be through mentoring, upskilling, promoting & many other ways.

~ Kunal, Sona, Surabhi

Learn more about: CSVP Fund | CGES Index | Enterprise SaaS

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While 2021 was the year of Unicorns with 44 technology companies in India alone achieving the unicorn valuation, 2022 was a stark contrast. 2022 witnessed a major slowdown in global economic growth for various reasons (as detailed in our previous edition) leading to the biggest lay-offs and rationalization, especially in technology companies, since the global financial crisis of 2008.

Many global funds that were extremely active in deploying fresh capital throughout 2021, have either slowed-down on new investments in 2022 or have been focusing on getting their house in order after due to ripple effects of careless investments

While the other venture funds were chasing ‘growth-at-any-cost’, we kept our head down and continued to tread on the first principles of value-investing and value-chain control. We consciously slowed down fresh deployments in 2021 due to extremely high valuations. We knew this was unsustainable and had to come crashing down as the liquidity from the market would vanish. The start of 2022 proved us right! The markets came crashing down on the back of liquidity pull-back by the Fed and the valuations corrected across the board – especially for the technology sector and particularly for SaaS businesses that saw the maximum inflow of capital.

Technology was the worst impacted sector in 2022, where we saw companies lose significant valuation in the market correction. Even within technology sector, SaaS businesses were hit the worst due to excessive inflow of capital at very low cost, that suddenly dried-up.

We saw this as a unique opportunity to invest in great businesses available at reasonable valuations. We continue to believe that Technology is an inherently Antifragile sector and within this sector, Enterprise SaaS business have an added advantage.

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Antifragility

Antifragile, a term coined by Nassim Nicholas Taleb, refers to systems that are positively impacted in the by short term volatility, adversity, or shocks. Antifragility is the true antithesis of fragility. It is beyond resilience or robustness.

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The Fragile breaks; the Resilient endures; the Antifragile strengthens !

A classic example of antifragility is the human immune system. Every time a human is infected, the immune system develops antibodies to fight the infection and the ability to avert similar infections in future. Thus, with every infection, the human immune system becomes stronger and better than ever. More so, the newly acquired immunities are passed on to the next generation so that they don’t have to build it from scratch – a scalable antifragile system!

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Technology - an Antifragile sector

Every economic crisis pushes enterprises to focus on cost-efficiencies and improving margins – providing a strong tailwind to new-age technologies that can enable operations at lower cost. As the economic situation start improving and enterprises start growing at healthy rates, they require solutions that can help them sustain the growth momentum at fractional cost, leading to adoption of revenue enhancing solutions.

Hence, every economic shock leads to the emergence and accelerated adoption of two breeds of technologies – (1) cost optimization solutions and (2) revenue enhancement solutions.

Below is a chart of Nasdaq Composite’s performance over the past 30 years, where the world has seen 4 major economic setbacks (the respective periods highlighted in grey).

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Nasdaq grew by ~1000% post the crisis of 1990s; ~200% post the dot-com bubble of 2000s; and ~800% post the 2008 financial crisis up till the post-pandemic slowdown of 2021

Comparing this to Dow Jones’ performance over the same period - it grew by just ~350% post the crisis of 1990s; ~33% post the dot-com bubble; and ~300% post the 2008 financial crisis.

It’s evident that every single economic shock has setup the Technology sector for outperformance with new breed of companies leading the growth.

The dot-com bubble of 2000, led to the emergence of large tech platforms like Google and Facebook that capitalized on the growing penetration of internet and provided enterprises an entirely new paradigm of digital advertising and marketing.

The global crisis of 2008 led to the accelerated adoption of cloud technology due to its cost effectiveness, creating market leaders like AWS, Nvidia and Salesforce in their respective domains.

Enterprise SaaS emerged a winning pricing model for many cloud companies post 2010, but the struggle of adoption and pricing continued.

The Covid-19 pandemic boosted the adoption of Enterprise SaaS solutions across segments and companies like Snowflake, Zoom, etc. saw an unprecedented demand during the pandemic and global lockdowns. The enterprises realized the need of such solution for scalability and continuity – making enterprise SaaS solutions an absolute necessity for sales and business operations.

We believe the current economic slowdown is helping the Enterprise SaaS companies deliver “value” to their customers – in turn making a strong case for better pricing and value-capture. Over the next few quarters, we will see the emergence of innovative SaaS pricing that will enable the Enterprise SaaS companies to capture a larger pie of the value-chain. Example: Subscription pricing like Amazon Prime has scaled up from pure-play fixed subscription to a fixed minimum subscription + pay per use pricing to capture higher value from high-usage customers.

Similarly, many such innovative pricing models are emerging as the customers have realized the value of these products over the past few years and are willing to pay more. The companies with stronger pricing models will continue growing profitably – forcing the fragile businesses to scale-down and leaving the market to be captured by the antifragile !

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The Indian Economic Outlook

Historically, after every global slowdown, Indian economy has managed to bounce back stronger and higher than the global economy in just one year. This is primarily due to the timely structural reforms undertaken, coupled with favorable demographics and inherent ability to adapt to changing trends.

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For eg: India abolished its licensing policy in 1991 and opened the economy for globalization and privatization – creating mammoth industries in just few years. The Indian IT companies capitalized on the dot-com crisis to realign themselves as the most cost-efficient outsourcing destination for IT services. In 2016, the introduction of GST unified the taxation system across the country, leading to structural shift to organized sector and uniform taxation across all industries.

The ‘Make in India’ initiative helped Indian companies to significantly reduce its dependence on the global vendors – a strategic decoupling from the world that proves to be a great advantage for the Indian economy in the current global situation. As per the economists, India will be the fastest growing economy in 202324 on the back of prudent financial management by the RBI, strong domestic demand & supply and inclusive initiatives by the government.

We expect accelerated adoption of digital solutions – even faster than in the pandemic, primarily driven by the need of enterprises to grow consistently and profitably. This underlying current will keep the economic growth engine running, ensuring that India continues to grow its economy in higher single digits for the next 2 years and reach a double digit growth by 2025.

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Transcending to Antifragile SaaS

Throughout 2020 and 2021, we were focused on investing in resilient SaaS businesses – businesses that could withstand pandemic and economic downturns without any distress.

At the start of 2022, we realized that investing in resilient business wasn’t enough. The uncertainty and volatility in the markets is here to stay for long, perhaps throughout 2023. We expect 2023 to be a year of extreme volatility as the world recovers from the shocks of 2022 and readjusts to the new normal. Hence, we decided to invest in businesses that could not only survive the volatility, but rather thrive and grow stronger than its competitors.

Antifragile portfolios are built to outperform in a growing economy and minimize the capital risk in case of economic downturns. Antifragile portfolio are built to maximize the return while minimizing the risk. The individual investments or asset classes in the portfolio itself are antifragile in nature - with every shock or volatility in the economy, the weaker investments are weeded out and the exposure to the outperforming investments or assets is increased – thus improving the overall performance of the portfolio over time.

We have intrinsically adopted the concept of antifragility in our investment thesis and portfolio allocation strategies. Our top-down investment thesis has been a conscious selection of an antifragile business model, from an antifragile sector in an antifragile economy – Enterprise SaaS from the Technology sector in India ! This inherently makes our investment approach an antifragile approach.

Our every investment is carefully chosen to build a diversified concentrated portfolio – large bets spread across a few un-correlated sectors. This helps maximizing the returns while minimizing the risk. A few early bets in emerging technologies also help to improve the overall return, while capping the capital risk to a very minimal of the overall portfolio.

The companies we have invested in, have inherent anti-fragile businesses – their solutions are always in demand – whether the economy is expanding or contracting. The Enterprise SaaS solutions we invest in have a significant impact on the business operations of their customers.

The market correction presented a unique opportunity to invest in antifragile businesses that were available at attractive valuation and had built business moats that delivered significant value to customers even in economic slowdowns.

A few examples of antifragility in our portfolio companies:

1. Credit Nirvana – a debt management and automated collections platform – sees a strong rising demand from customers incase of an economic slowdown / crisis, when the risk of default increases and a strong volume growth in existing customers when the economy is growing, and credit disbursal is pervasive every form of transaction. Credit Nirvana charges its customers a % of the loan book that is managed on the platform. As the customers’ loan book grows, so does Credit Nirvana’s share of revenue from the customer
2. Blubirch – a reverse supply chain management platform. In a booming economy, its customers see explosive growth in sales – leading to equivalent growth in volume of reverse logistics requiring an efficient technology platform to manage at scale. In an economic slowdown, the customers need to optimize the cost on reverse supply chain, reduce obsolete / damaged inventory and improve working capital – again requiring a technology enabled solution. Blubirch typically charges the customers a % fee of the value of the product shipped, thus scaling with the growth of its customers.

We excitedly look forward to 2023 as we double-down on our investment strategy, identify new areas of investment and look to build an outperforming portfolio of antifragile Enterprise SaaS businesses !

~ Vatsal

Learn more about: CSVP Fund | CGES Index | Enterprise SaaS

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Cornerstone Venture Partners Fund I invested in Karomi (goes by the brand name - ManageArtworks), a brand asset management platform that digitises and automates end-to-end designing and artwork process for brands

Core to our Fund’s focus, ManageArtworks is a pure play Enterprise SaaS solution for Brands to enable them take products to market quickly – delivers >80% reduction in design verification, regulatory validation, and multi-stakeholder iteration process!

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Who needs this product?

Currently most relevant for any manufacturer of packaged products. Products that we consume on a day to day basis (broadly covered in these 5 segments – Food and Beverages, cosmetics, personal care, pharma, chemicals) come under the regulatory scanner FSSAI in India, FDA in US and the likes. In the near future, we believe the platform could be leveraged by any brand of any kind – including D2C brands, digital native brands, etc.

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Why is this a complex problem to solve?

While it may seem that Artwork is limited to the logos, and taglines, the real estate on these labels and packs carry multiple parameters that can go up to 150 data points that are aggregated from 18+ sources across the organisation. If we pick up a packet of lays, or a strip of medicine, a toothpaste or a bottle of disinfectant, each packaged product in different sized SKUs has detailed information on Ingredients, nutrition panel and claims, Allergen panel, manufacturing date and manufactured by with address, marketed by, net wt. and regulatory parameters like License no, redressal contact information, bar code, batch number, best before. The complexity to address this comes in since the source data of this information is not unified for a brand. All these parameters also need to be fitted in to smallest package SKU with limited real estate

Complexity of the problem is magnified with regulatory compliances that mandate the font size, spacing, and location of this information on the packaging artwork  

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How ManageArtworks helps save the day?

Brands struggle with new product launches / new activation launches, shuttling between multiple stakeholders trying to get their artwork complete and complaint. In this hyper-competitive market, ManageArtworks empowers the brand with solutions that help them manage their packaging content, print and packaging specifications, and automate the artwork journey while helping them stay compliant across geographies and regulators. ManageArtworks suite of solutions has helped some of the world’s leading brands reduce their time to market by 80%.  

We love how easy it is for brands to manage this on ManageArtworks platform. An overnight small change / addition by a regulator can lead to a logistical nightmare for brands. ManageArtworks is able to annotate changes which make manual checks redundant and reduce absence time from market shelves.

1. Impact on Customers: While ManageArtworks enables quicker time to shelf, and reduce recalls which help revenue realisation (reducing time from conceptualisation to realisation), it also impacts bottom line by bringing in efficiencies in the entire process. On the platform – (1) their brand asset manager can build new designs for activations within minutes through their automation engine, (2) the recommendation engine ensures compliance through annotation eliminates the need to physically verify copies, (3) their intelligent claim verifier ensures compliance – e.g. if the label has a vegan symbol on the front pack for marketing, while the ingredients list contains milk – this can be flagged off by the system to avoid making such lapses, (4) automated 3D renditions enables pre-market design and (5) insights on impact created by creatives on top-line, that has always been a black box for brands
2. Continuous Relevance: ManageArtworks’ Data Asset management platform helps brands to maintain true copy of their artwork and info across print and digital (e-commerce portals) in GDSN complaint formats  
3. Large & Growing Market: With the advent of new D2C brands hitting the market in all segments, inherent brands and conglomerates are under huge pressure to bring new products to appease customers and maintain their market share. With an ‘industry-first’ tech and data solution built on AI and ML to optimize artwork design – a new or an update product can be done in minutes
4. Clear Category Leader: Productized and serving multiple stakeholder, ManagArtworks with intelligent platform is able to cater to multiple geographies with not just its multi-language offering but also multi-geography automated and real-time compliance management

We are excited to be on this journey with Vilva (Founder) to scale the company further globally, in the US and Europe and continue innovating for category leadership.

~ Nanika

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Credilio is building India’s largest ‘phygital’ distribution platform of financial products to provide credit access to millions of Indians across the country using AI-driven personalization and hyper-contextualization.

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Credilio has built deep-integrated workflows with some of the largest banks and nbfcs in India to complete the entire product application digitally - right from lead generation to final approval decision in hours !

Credilio works with two types of distributors - (1) Independent Financial Advisors (IFA) for assisted applications and (2) Consumer-focused Digital Platforms for self-serve application. To IFAs, Credilio provides a mobile app with an extremely ease-to-use interface to manage lead gen, accept application, access financial products from all banking partners and complete the application journey. To Consumer platforms, Credilio provides APIs via which the platforms can access the financial product and allow their customers to complete the product application journey from within the partner platform

With the above background of the Company, I’ll jump right into ..

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Our Investment Thesis for Credilio

Credilio is a great example of a scalable solution solving a pressing problem, with a large market opportunity, executed by founders with deep domain experience and proven success and coupled with a sound, profitable business model !

1. Highly Scalable Solution - The fully self-serve solution for IFAs and an API based solution for Corporates makes the platform highly scalable from technology standpoint. The business and the product is built in a way that it can be replicated across geographies and product categories - opening an even larger market for Credilio to tap into !
2. Large Market Opportunity - India’s retail sector is credit starved. As per industry reports, India’s retail credit penetration is ~15% of the country’s GDP, while the similar stats for developed nations like USA & UK is ~75%+. So, a huge potential for retail credit growth. To top this, more than 50% of credit products are sold via assisted journeys - i.e., financial advisors and agents.
3. Experienced Founding Team - Anand, Aditya & Sandeep has previously cofounded a fintech payments company which they successfully exited in 2019. We’ve known the team since, and found them to have strong domain knowledge, complimenting skills and a proven track-record of execution at scale. We believe this team that stuck together through thick & thin has the resilience to build a resilient business !
4. Positive Unit Economics - Every transaction that flows through Credilio’s platform is margin accretive. The funding is required to blitz-scale the operations pan-India and not fund their working capital. With sufficient funding, their proven model in one region can now be replicated across all other regions in India and with other partners
5. Potential for Category Leadership - The largest digital distribution platform in India - PaisaBazaar has disbursed only ~Rs 6,600 Cr of retail credit in FY22 - that is just ~2% of the total retail credit availed in the period. With its unique distribution strategy; fully integrated, end-to-end application journeys and AI driven personalization; Credilio has a strong potential to become the leader in this category
6. Delightful Customer Experience - At the heart of product is the AI-powered recommendation and personalization engine. The platform can intelligently predict & recommend the best suited product for a customer based on his/her profile with high probability of successful underwriting. It can intelligently recommend best-fit products based on the context of the customer journey (Eg: offering an Indigo Rewards HDFC Credit Card to a customer who is booking an Indigo flight on a partner OTA platform)

Basis our thesis above, we decided to lead the pre-Series A investment round in Credilio and will continue to back the team and work with them to become a Centaur (a $100 mn ARR co.) over the next few years !

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~ Vatsal

Since the beginning of December 2021, we have seen a massive correction in the valuations of listed technology companies across the globe, especially the SaaS companies.

Over the last 6 months, some of these SaaS companies have lost upto 75% of the market-cap in the on-going SaaSacre (a massacre of the SaaS companies), aptly coined term by Bessemer Venture Partners (BVP).

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Both, our CGES Index and BVP’s EM Cloud Index are significantly down from the highs of September 2021. Even then, the CGES has outperformed all other indices, due to the fact that enterprise SaaS business are inherently more resilient to macro-economic factors compared to consumer SaaS businesses.

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Why did this Saasacre happen and how is CGES Index still outperforming ?

Lets start from the basics - SaaS businesses are valued basis their future expected cashflow (which are highly predictable in nature). These forecasted cashflows are then discounted back to present value using a discounting rate (typically linked to government treasury rate) to arrive at the current valuation of the business.

This is represented via a simple metric - Revenue Multiple. SaaS companies are valued as a multiple of their one-year forward revenue. At its peak in the pandemic, the average Revenue Multiple for the SaaS companies went upto ~50x of the revenue. These lofty valuations assumed extremely aggressive growth momentum for the SaaS companies.

We all know, the pandemic did accelerate the adoption of SaaS products across the board and some very interesting use-cases emerged. But, this accelerated adoption would have not sustained for long, the growth was expected to normalize (pre-pandemic average) with time, maybe the market wasn’t just expecting it anytime soon !

In November, as economies started opening up and businesses reverted to pre-pandemic way of operating, the growth and outlook for these SaaS companies started reverting to the mean growth. To top this, the Fed started increasing the treasury rate to control the rising inflation - effectively increasing the discounting factor used in discounting future cashflow.

Thus, a normalizing growth, coupled with higher discounting led to sudden drop in valuations. Since Enterprise SaaS companies were comparatively valued at lower Revenue Multiple compared to Consumer SaaS, the reversion to mean had a lower impact on CGES Index compared to other indices.

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Emergence of resilient SaaS

As an investor, we are extremely bullish on the SaaS businesses. Nothing has changed fundamentally - infact the SaaS story is more compelling than ever given the more reasonable valuations now.

While the global SaaS multiples had reached to ~40X - 50X, we had cautiously stayed away from investing in such highly valued companies where the super-normal growth was unsustainable. Even now, when the mean Revenue Multiples have corrected to 20X - 25X, we prefer investing at lower multiples to have a reasonable margin of safety while at the same time enjoy the double benefits of valuation growth due to revenue expansion and multiple expansion!

Given the global valuation benchmarks are reverting to long-term mean and the demand for the SaaS solutions is growing as expected, we are aggressively investing in enterprise SaaS businesses with a resilient business models, reasonable valuation and high potential for growth.

Post-pandemic, we have seen the emergence of more resilient SaaS models that are intelligently diversified with scalable pricing models and catering to businesses that are inherently more stable. We are building a structured portfolio of such enterprise SaaS companies that together make our portfolio even more resilient.

- Vatsal Bavishi

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Excited to share more about our investment in NimbleBox.ai from Cornerstone Venture Partners Fund-I !

NimbleBox.ai is a full-stack MLOps Platform and automated workbench for AI/ML developers to significantly reduce the time-to-production, improve performance and optimize infrastructure cost.

With every software and digital workflow moving towards automation, the need for machine learning models is only ever increasing. In such a scenario, its highly imperative for ML developers to build and deploy models as quickly and efficiently as possible.

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Why we invested in NimbleBox.ai ?

1. High Scalability - The plug-n-play, self-serve nature of the product makes its highly scalable and easy to deploy; truly product-led growth. Its built-in integrations with all major ML frameworks, cloud infrastructure providers and other developer tools ensures minimal onboarding and deployment effort; minimal disruption in the existing workflow of users.
2. Large Market Opportunity with Low Competition - The AI/ML development community is growing globally and the market is estimated to be well over $100 bn. Of that, ML deployment products market is projected to account for ~$5+ bn with very few players globally. The market is large enough and growing rapidly for atleast 2-3 leaders to emerge and survive.
3. Strong Impact - The product has a very high impact on the operations of its target users - enabling to deploy models upto 80% faster and optimize costs upto 40%, leading to high customer stickiness and pricing power.
4. Potential for Category Leadership - A community-driven ‘developer first’ product roadmap to build this into a full-fledged automated workbench & MLOps platform can add a strong “virality factor” that could accelerate the adoption of the platform multi-fold.

We believe NimbleBox.ai is poised for hyper-scale to become an industry leader for MLOps, on lines of Git & Jira !

~ Vatsal

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India is set to witness an unprecedented ‘Exit Boom’:

• With ~90 unicorns today (~50% of these achieved unicorn status in 2021); this number is expected to double in the next 12 months; that’s about 150-200 unicorns by the end of 2022!

• These unicorns have raised capital that is good enough for their growth aspirations for the next 3 years at least, and they have also been valued at least 3 to 5 years ahead of when their businesses would hit the scale required to justify these valuations

• Global capital is aplenty and has been chasing these opportunities to capitalize on the potential of the India opportunity, while also laying its faith in the depth of the Indian retail investor appetite – slowly but surely planning on listing via the IPO route to exit these companies!

• Of course, the stock markets have been keeping up, demonstrating maturity with listings of large (mostly over-valued) hyper growth digital companies (Zomato, Nykka, Paytm, etc.) –India is gearing up for an array of IPOs in the technology space

• Such an unprecedented pool of highly valued companies that are seeking opportunities to cash out on the India markets will unleash a ‘big-bang’ of acquisitions by these cash-rich unicorns – acquiring small to mid-sized startups for revenues, augmented capabilities, value-chain expansion, product / platform differentiation, and of course for talent to scale themselves!

• This situation plays right to our advantage, where we are backing and building businesses which are ripe for mergers and acquisition by these unicorns – giving them the right metrics to truly defend their over-stated valuations and adding core capabilities to their platforms to help them differentiate in highly competitive markets

• In fact, our exit from Wigzo to Shiprocket (a recent unicorn), was exactly driven by Shiprocket’s intent of taking Wigzo’s ‘Marketing Cloud’ as an offering to it’s 25,000 D2C customers and 150,000 SMEs, while also pooling in a very healthy ARR from Wigzo’s topline!
• Several such transactions have already started taking shape in India, a few examples include:
  • Delhivery’s acquisition of Falcon Autotech
  • Good Glam Group merged 4 influence platforms to create Good Creator Co.
  • Mensa Brands formed to consolidate several successful brands into one D2C powerhouse

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• We estimate that these Indian unicorns will make over 500+ acquisitions over the next 3-4 years - such a massive ‘Exit Boom’ in the works - what an incredible time to be investing in Indian startups!

~Abhishek

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Cornerstone Venture Partners Fund is happy to announce our latest investment from Fund I, in Wootag, an AI enabled video-based marketing content enrichment platform

Core to our Fund’s focus, Wootag is a pure play Enterprise SaaS solution for Brands to make any video or marketing content shoppable

For Brands, return on investment on massive marketing dollars spends has always been a black box for the inability to attribute sales jumps to ad spends. Wootag closes the loop with its end-to-end innovative solution by allowing customers to shop directly from the visual content, enabling a friction free shopping experience. In addition, it enables personalized ads, pushing personalized promotions and offers based on both individual consumer and external parameters, and even helping Brands design new product advertisements based on consumer data.

The platform also provides (first of its kind) programmatic recommendations basis external / macro data to aid advertisers to enhance relevance, prominence and contextual placement of content and campaigns.

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Why we invested in the company:

§ Built for Scale –The product is completely self-serve, allowing brands to enhance their content for various user intents and end goals. Deeper insights enable brands to view and re-structure campaigns based on real-time customer engagement

§ Built for Personalization – We have come a long way from mass advertising to personalized adv in the hands (handheld devices) of the consumer. Wootag enables just that with it’s geography, marketplace, and publisher agnostic platform allowing brands to enhance and personalize their content in minutes

§ Large & High Growth Market – The Pandemic has induced a revision in every brand’s budgets towards digital advertising and need for personalization

§ Clear Category Leader – Productized and serving multiple stakeholder, Wootag with it’s data rich sets has the potential to evolve into fueling intelligent personalized programmatic purchase bidding for ads

We are excited to be a part of this journey to build a category leader in this space together with Raj (Founder Wootag). We are joined by Wavemaker and Enterprise Singapore in this round

~ Nanika

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Let’s take a deep dive into how the CGES Index is built, how were the constituents selected and what is our thought process behind the Index

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How is the CGES Index built ?

The CGES Index is built to track the real-time performance and investor sentiments for pure-play emerging Enterprise SaaS companies.

Unlike most public indices, whose constituents are selected mostly on market capitalization, the constituents of CGES Index are selected for an equitable representation across multiple business models, sectors and size of operations.

We categorize Enterprise SaaS models as Self-serve SaaS and Serviced SaaS, primarily depending upon the nature and complexity of the delivery of the SaaS solution (we will discuss more about these models in our forthcoming blogs! ). The Index aims to maintain a healthy ratio representing both the business models.

Infact, our SaaS Metrics are also reported explicitly for both the business models to truly capture the nuances of these models.

The Index covers all major sectors and segments of Enterprise SaaS companies - Core Operations Platform (Vertical SaaS), Process Automation, BI & Data Analytics, IT Infra Management & Cybersecurity, Sales & CRM and Support Function Platforms.

The Index has an inclusive market-cap representation across three categories: (1) Market cap < $10 bn, (2) Market cap < $ 100 bn and (3) Market cap > $100 bn.

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Selection Criteria

In addition to ensuring the above representation criteria are met, our selection criteria is simple - Enterprise SaaS business ! Only companies that satisfy the below conditions are considered for the Index :

1. At least 80% of the annual revenue is generated from sale of software product(s),
2. At least 80% of the annual revenue is generated from Enterprise Users and
3. At least 80% of the annual revenue is recurring in nature

Basis above, we excluded some of the most popular tech giants like Apple, Microsoft, Google, Facebook, Amazon, Netflix, etc. that could not satisfy one or more of the above condition to qualify as pure-play Enterprise SaaS company.

Check out more details in our video here.

The Index constituents are reviewed every quarter to ensure optimal representation at all times. The review considers the changing revenue mix of companies – that may qualify or disqualify them as “Enterprise SaaS” and account for corporate actions like mergers, new listing, and delisting that can affect the Index constitution.

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The Index Constituents

Here is the list of the Top 30 Enterprise SaaS companies that are part of the CGES Index. These companies represent the universe of Enterprise SaaS across business model - Self-serve & Serviced SaaS, across sectors and scale of operations.

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How exactly is the CGES Index calculated ?

The CGES Index is calculated using a modified market capitalization-weighted method as opposed to a price-weighted method used by DJIA or a free-float weighted method used by NIFTY.

We have built a proprietary formula that assigns a “multiplier” for every stock based on various business parameters (that’s our secret sauce !) which when multiplied with its market-cap & divided by the total market cap of the Index, gives the weightage of every stock in the Index.

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As the stock prices move during market hours the Index’s real-time value is calculated and reported live on our website here.

The Index calculation formula ensures that no individual stock weighs more than 20% and Top 5 stocks together do not weigh more than 50%. Over time, we will endeavor to reduce the weightage of Top 5 companies to under 40% without losing the essence of the Index.

Learn more about: CSVP Fund | CGES Index | Enterprise SaaS

~ Vatsal Bavishi

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CSVP Fund’s Cornerstone Global Enterprise SaaS (CGES) Index is live now !

The CGES Index has outperformed the NASDAQ by 25% yoy as of 31st March 2021 !

Read our official press release in Economic Times.

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Most of us are aware of consumer apps and products like Netflix, Spotify, etc. which charge a monthly / annual subscription fees for availing their services. These are typical consumer SaaS companies that have been around for over a couple of decade now.

Enterprise SaaS, or e-SaaS as we call it, are a breed of new-age companies that leverage similar business model to provide enterprise grade software product over a cloud-based subscription.

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Enterprise SaaS vs other SaaS companies

Over the past few years, Enterprise SaaS companies have been getting much higher valuation multiples compared to other SaaS companies - on an average, Enterprise SaaS companies are valued at ~20-22x their ARR, while the similar multiple for Consumer SaaS companies has fallen to ~10-15x

As Venture Capital investors, we love e-SaaS companies primarily for the following characteristics:

1. Scalability - In addition to the typical technology & business model scalability that any SaaS company offers, Enterprise SaaS business have a very high sales scalability - which means that adding one new enterprise customer brings 1000s of new users in one go !
2. Resilience - Enterprise products are built to solve a particular business problem -, the value of which can be measured in terms of higher revenue or lower cost (in most cases). Due to this tangible value-add of enterprise products, it is very difficult for a customer to switch-out of the product once they start using it. The product eventually becomes a part of the regular business operations and starts to drive significant value-add with scale
3. Capital Efficiency - Over a long period, Enterprise SaaS products have excellent capital efficiency, primarily due to the recurring nature of revenue, forward revenue visibility, higher gross margins (low cost of delivery) and significantly lower sales & marketing cost compared to other business models. For every $1 in revenue, e-SaaS companies end up spending $0.8 and every $1 spent on sales & marketing typically yields $1 in ARR
4. Multi-player Markets - Unlike most consumer markets where the “winner-takes-all”, enterprise markets are more accommodative for multiple players to thrive & grow together. e-SaaS companies eventually find their niche to differentiate and survive, because a “one-size fits all” solution rarely works in the enterprise world.

Thus, as investors, we see better risk-adjusted returns from e-SaaS, given the returns are similar or better than any other SaaS companies, while the risk is significantly reduced due to the higher resilience and capital efficiency explained above.

~ Vatsal Bavishi

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We, at Cornerstone Venture Partners Fund, are proud to announce our latest investment from Fund-I, in EnParadigm Performance Solutions: Sales Intelligence platform for Frontline workforce.

Find our detailed media release here.

Core to our focus, EnParadigm has a pure-play enterprise SaaS business model with two distinct products - SmartSell and LaunchPad.

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SmartSell is the Sales Enablement platform that empowers the sales team with the right content at the right time to close a new sale, up-sell and cross-sell.

LaunchPad is a digital platform to train and upskill the sales team to improve thier productivity by 20%+ and in-turn reduce the attrition of commission-based frontline staff by upto 50%

Powered by proprietary AI-algorithms, both the products provide highly contextual and personalized content to the user based on his/her strengths and ability to sell a particular product.

The Company has built an exclusive library of sales training content in 8+ languages that is easy to consume on the go (short format videos) and intelligently delivered to the user at the right time in the right context.

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Why we invested in EnParadigm ?

1. Strong founding team - John, Hanuman, Arun and Kumar together bring the perfect blend of product management, technology and enterprise sales domain experience. Their leadership give us immense confidence to back them with our capital and expertise
2. Enterprise SaaS - SmartSell and LaunchPad products are pure-play eSaaS products, built on scalable technology, providing strong recurring revenues using a per-user per-month pricing
3. Extremely scalable and cost-efficient business model - a single enterprise customer brings 10,000+ users. The LTV:CAC ratio is significantly improved due to multi-year contracts and smaller sales cycle
4. Unmatched product capabilities - powered by AI with strong potential to leverage the learnings from each product as a feedback for the other product (Eg: based on a sales persons’ capabilities determined by LaunchPad, he/she can be assigned to a particular product, geography and customer segment by SmartSell to maximize sales)
5. Large & Growing Market Opportunity - The total organized global frontline workforce is estimated to be in the range of ~30-40 mn people, of which ~10+ mn workforce is in the emerging markets of SEA alone, leading to an untapped market opportunity of over US$ 2 billion
6. Potential for Category Leadership - A strong product roadmap to build this into an end-to-end Sales Intelligence and Automation platform for any front-line heavy enterprise + DIY tool for SMBs puts EnParadigm Solutions in sweet spot to become an industry leader in Sales Intelligence solutions

We look forward to building a global-scale Sales Intelligence platform together with the Founders !

~ Vatsal Bavishi

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Globally, organizations have been forced to move their workforce remote, almost instantly, without any opportunity to plan or prepare for this new reality. While it’s been extremely challenging for several businesses, it has also created opportunities for as many and accelerated certain value-creation opportunities that have been around but struggled with adoption hitherto.

It’s important to acknowledge that we have never been as prepared as a species to adopt this new way of working from a technology infrastructure perspective – be it the ubiquitous availability of fast connectivity, or the unmatched prowess of cloud computing, allowing us to be ‘online’ anytime anywhere!

We believe this new and accelerated ‘Future of Work’ is further empowered by the sudden and unexpected urgency for businesses to go digital and the growing adoption of artificial intelligence, that have significant and permanent on the workplace, the workforce, and the nature of work itself.

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1. The Workplace - Organizations will change how they work

Improving internal business operations is a benefit on par with enhancing products and services. The AI-aided process reduces actionable events, enabling the professionals to easily manage highly complex operations and make better, data-backed decisions and be more creative

2. The Workforce - Resource models will change:

Organizations will have to work around growing prevalence and acceptance on floating resources, workforce not committing to a single job, resource sharing models where specializations will be paramount

3. The Nature of Work – High-end skills will dominate

With increased dependence and process-oriented tasks taken care of by automation, there is an increased need to consider both the dynamic nature of jobs and the equally dynamic potential of people to reinvent themselves. To do this effectively, organizations need to focus on building workforce resilience for both the short and the long term—a focus that can allow organizations to increase their resilience in the face of constant change

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Emerging Opportunities

These changing models and dynamics will give rise to the need for Cognitive Collaboration; and will be applicable and embraced across Healthcare, Education, BFSI, Retail & E commerce, Enterprises including SMEs and Manufacturing facilities

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Cognitive collaboration where data may be obtained from many relevant sources, including sensors, bots, enterprise applications such as CRM, Internet of Things (IoT) sensors, people profiles, insights into enterprise calendars and meeting resources, health record, learning patterns, and social data. When combined with analytics that identifies patterns and relational clusters for individuals, teams, organizations, and customer insights, the results can present the right information, to the right team, at the right time and place

New use-cases and cross-platform collaborations will continue to evolve … only far more rapidly!

- Nanika

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Private Equity’s best returns tend to follow recessionary periods. With Covid-19 turning the global economy into recession and causing turmoil in public financial markets, investors are reviewing their investment strategies and taking higher exposure to Private Equity as an asset class: “the best time is to invest is NOW!”

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So what enables PE / VC Funds to outperform in a crisis?

1. Funds can invest in companies at lower valuations, leaving more room to expand multiples after recovery

― being able to acquire the same businesses at lower valuations further increases the potential and thus drives returns.― with both Revenues and EBITDA (as applicable) would also be depressed by the business downturn; undervaluation of companies and provides opportunities for Funds.― leverage these lower, sometimes distressed valuations; making more and smaller investments to take advantage of these opportunities.

2. Funds have better access to capital and deploy it more flexibly, allowing portfolio companies to seize growth opportunities in a crisis, while competitors may be mired in austerity measures.

― flexible access to capital in a downturn can be essential to prevent bankruptcies― the risk of ‘catastrophic loss’ is less than half for PE-backed companies compared to public companies, during crises like Covid-19― Fund backed companies recovered faster from the crisis and captured more market share― Fund backed companies are better prepared for an economic shock

3. Funds’ active management approach and operational support gives PE-backed businesses a competitive advantage as they respond to a crisis more quickly; effectively “future-proofing companies”

― close contact between company management and the fund manager and advisors – monthly reviews, quarterly board meetings, etc.; in times of crisis, this frequency increases even more.― outside expertise: most top tier funds retain senior advisors who join the boards of various portfolio companies. Typically, these advisors are experienced former CEOs with expansive industry and leadership experience. Senior advisors support the CEOs and make their time, knowledge, and network available to the portfolio company.― operational support: Funds establish operational teams to support their portfolio companies, helping businesses develop new capabilities and manage transformation programs. Hard to access expertise, in areas such as finance compliance, marketing, and new market entry, are where funds’ operational teams provide particular-value. In addition, cross-portfolio synergies could offer portfolio companies significant cost advantages and strengths in their supply chain.

We are witnessing increased traction from our LPs - a clear validation of how private equity as an asset class is clearly far more tenacious as compared to traditional investment classes, both in terms of risk protection and potential returns.

(Note: Reference - Moonfare’s whitepaper on this topic: “Now is the time to invest in PE”)

- Abhishek

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We’re extremely glad to announce yet another investment from our Fund - I !

Credit Nirvana, an AI based NPA Prediction, Risk Management & Collections Automation platform for Lenders is now a portfolio company of Cornerstone Venture Partners Fund !

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It’s one of the first movers in this segment to extensively use ML-based models to predict delinquencies, recommend preemptive / corrective actions in real-time, personalize communication for customers and automate the end-to-end EMI collection process. In short, it enables Lenders to boost their cashflow by upto 5% every month !

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Why we invested in Credit Nirvana

1. The Founders, Raj, Partha & Vijay come with deep domain knowledge and relevant technology expertise. All have 20+ years of experience in building technology solutions for Financials Institutions to improve their processes and cashflow
2. The Product directly impacts one of the most critical processes for its customers - loan management & collections, creating a significant impact directly on the revenue performance of the business. It completely transforms the way loans are currently managed by lenders and empowers it with multiple layers of automation and intelligence. While early days, the platform delivers on achieving ‘Impact-Scale’ - evident from it’s relatively high revenue per customer (minimum INR 5+ mn per annum).
3. A clear road-map to ‘Category Leadership’ is already in place. In the next 24 months, the product will further evolve to digitize & automate the end-to-end processes of loan management & collections across Retail & SME loan products. We expect the platform to become the ‘de-facto’ standard to loan management & collections in any kind of lending business globally.
4. Most importantly, the platform to will slowly but surely establish value-propositions for each and every stakeholder in the value-chain, creating universal acceptance, visibility and ‘Control across the Lending Value-chain’. With its proprietary intelligence, the platform has the potential to provide input & feedback to close the loop right from underwriting to management, renewal and collections.

Conclusively, our investment hypothesis is supported by a highly scalable technology, proprietary ML algorithms & data models, unmatched data intelligence and proven product-market fit with top Lenders of the country as their customer.

We are trilled to join Credit Nirvana in it’s journey!

Learn more about: CSVP Fund | CGES Index | Enterprise SaaS

~Vatsal

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