I would not call this a valuation bubble but a froth: Avnish Bajaj

Entrepreneur-turned-investor Avnish Bajaj talks about why Matrix upped the ante on early-stage tech investing in the past few years, and with signs of the funding exuberance ebbing, how 2016 will emerge as a better year for venture investing Stock Market Trading Tips

How significant is it to have two unicorns -Ola and Quikr -in your portfolio considering Matrix was an early investor in both? 

It is and it isn't. It's significant that we are associated with two of the best entrepreneurs in India - Bhavish (Aggarwal) and Pranay (Chulet) early on and lucky to participate in the massive value creation. It isn't to the extent that all the achievements get boiled down to the one number and the unicorn moniker. So while we'll gladly take it, our focus continues to be in business with entrepreneurs like these two and we will be happy to have a few more in our portfolio. 

It has been almost a decade since Matrix started investing in India but you started focussing on early-stage tech only in the past few years. What made the fund change its strategy? 

We believe that India had a number of false starts in early-stage investing from 2000 till 2012 with three `bubbles' - 2000, 2007 and 2010-2011 (some would argue 2015 as well). All three burst and left few survivors. The venture model breaks when the large outcomes are this few. So we were negative on earlystage since we did not believe the market had developed enough. This changed in 2012 -first the daily active internet user base crossed 20 million and almost simultaneously the number of mobile internet users crossed the number of desktop internet users. That was coupled with a lull in early-stage in vesting due to the 2010-11 bubble bursting. At the same time, a new breed of young, fearless, and super smart entrepreneurs started cropping up. This was the perfect investment en vironment and was the time we stepped up Himanshu Tiwari Astrologer Blog

You have not raised new capital, maybe one of the few funds not to have done so this year. Do you feel deep pockets give early investors an edge in a competitive market? 

We think 2015 was a not-so-great vintage for early-stage investing -in terms of deal volumes, values and velocity. We tried our best to navigate the bubble-type environment by investing very selectively and early (via seeds). Not having a capital overhang via another fund helped keep us disciplined. With the latest exuberance bursting, we believe that 2016 will be a much better year for venture investing and we'll duly show up with a fund. Deep pockets are a double-edged sword. We have about the right-sized pocket and will continue to keep the fund size similar as it's the best way to generate great returns for our investors. It also helps us stay disciplined. Deeper pockets do help in an environment like the one we were in for the last year but they also lead to indisciplined behaviour. 

How do you, as an investor who has seen more than just this one boom cycle, evaluate the current environment in terms of valuations, cash burn and innovation around technology? 

I'll tell you what's different this time and why I don't call it a `bub ble' but rather a `froth' -be cause if you prick a bubble there's nothing left; remove froth and there still is something. That something is an increasingly fast growing mobile internet market which will scale to 500 million users in the next four-five years and we're the only country other than China where this is actually possible.China has created 100 billion dollar companies and I believe we'll create at least half as many. We need to stay focused on through the boom and bust cycles as the game has changed for the next decade. That said, companies need to focus on real, scalable business models (gross margins) and not grow by giving money away  Indian stock market astrology prediction

As regards innovation, as a `copycat entrepreneur' myself, I don't have any negative views on copying business models which have worked elsewhere -in fact, why reinvent the wheel? However, even such businesses require a serious degree of local innovation and indigenization to make them work, so we back the entrepreneurs who have unique insights on this front. That said, the lifeblood of our business is true innovation and a few companies in our portfolio have pioneered unique models (Practo; Dailyhunt; Limeroad; Stayzilla; Belong etc.) which have not been done anywhere in the world. So it's a balance -and I think this will continue to be the case. 

What's the road ahead for venture investing in India? There's no prescribed exit route for early investors other than secondaries and some amount of M&As. Isn't it still tough making money in India? 

It absolutely has been -but that is also a function of market depth and scale so a bit of a rear-view mirror issue while we are driving forward.As the market deepens and companies create serious value, liquidity and exits will improve. India has created more internet market cap (admittedly private and illiquid), in the last year than in its entire his tory. While excesses will correct, as they should, the trend line is clear and pointing in one direction. Exits will follow. A big issue that hampers and will continue to hamper exits is that most com panies in India spend at global levels for revenue at local levels so its high burn with lower monetization. And valuations in India tend to be very high. So some of this water needs to find its level and then we'll have a more mature and stable early-stage ecosystem -with IPOs; M&As and financial sponsor exits. One trend that has already changed is that in the last year, one saw domestic tech M&As for the first time at fair market values (OlaTFS; SnapdealFreecharge; FlipkartMyntra) --else it always used to be distress or fire sales. Some inves tors got exits.This is a good beginning Commodity Market Astrology Tips