Sasha Mirchandani helps portfolio companies build low-cost operations in India to improve capital efficiencies and to leverage BlueRun Ventures’ global platform to help Indian companies to expand globally. Mirchandani also founded Mumbai Angels.
This is the first time that a group of angels has come together to invest in seed stage companies in Mumbai. Some of the companies they have invested in are mKhoj, Madhouse and Netelixer. He completed Business Administration from the University of Virginia and an MMDP program from IIM, Ahmedabad. He is a past president of the Mumbai chapter of the Young Entrepreneurs Organization.
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| Sasha Mirchandani Senior Investment Director with BRV India |
How is VC investment in India getting affected because of the US financial turmoil?
I think a lot of money will go towards growth capital, which will be advantageous to us. This is because we are early-stage investors and will remain true to our form. We will continue to invest in early-stage opportunities. There will be more opportunities with the market going forward. We are long-term investors and look at five-seven year windows.
It is true that there is a lot of panic around the world. But my guess is that things will settle down once the governments, not only in the US but around the world, put their acts together. Once that settles down, we will have much more to say and understand. Right now, people are just holding back, saying ‘let’s conserve costs, manpower and let’s be low-key right now, and let’s see how things go’. In one week if you have five big financial institutions collapsing, it is not a normal time. There are some tough times ahead.
With the recent developments in the financial space, a lot of entrepreneurs are worried as to whether they will be able to raise enough funds. What should entrepreneurs do now?
They should focus on their business. If they think their business requires capital, they should go and raise it and not worry about valuations. I think in the last year or two, this market has been grossly overvalued. An intelligent entrepreneur would realize this, and that he/she should go with the best investor, and valuation is of the least concern at this stage. Just get the deal done if you find an investor of good value. Don’t dither too much on valuations.
I would advice entrepreneurs to focus on the business, cut costs and keep an eagle-eye on global developments. At the end of the day, focus on the macro-economics of your own business.
Has BlueRun reworked on its strategy in view of the changes taking place in the global markets?
We will stick to our knitting and do what we are good at.
What is your investment strategy for India?
Our investment strategy for India is the same as that we have globally. We look for early-stage technology companies; we look for opportunities that have global potential in the value chain. We are active investors in all our companies.
How does BlueRun evaluate a startup? How much money do you put in any business?
We look at three things. Firstly, the management team, which is the most important and gets the highest priority. Secondly, we look at large opportunities, which depends on the market. Thirdly, we look at a clear exit: five-seven years.
When we say large opportunities we mean that the company should reach a certain size, good enough for us to exit. We don’t have to have an investment where the company has to go out of India. The Indian market is big enough. But it should grow to a certain size to be able to go public in the Indian market. As for the amount of money that we put in: our rule is that we put $2-8 million initially, and then up to about $15 million in the life of a company.
What kind of returns do you expect from your investments?
We look for a minimum 10x return. This means that if we put in $5 million, we want $50 million back.
What support, other than money, do your investee companies get from BlueRun?
There are a plenty of ways in which we can help a company. We help in strategy, business development, and getting key personnel into the company. When someone knows that a fund like BlueRun is behind the early-stage company, and we want to go after senior management, you get listened to. That helps tremendously. BlueRun can help take the company global. We can help the company raise capital from other VCs too.
Our investee companies also come back to us for more funds.
Have you invested in or are planning to invest in companies that are likely to benefit from 3G and WiMax services? Which sectors are you bullish on and why?
We are looking at it actively. We haven’t really made up our mind about a particular company. It’s a big space and we understand it, and we will actively look for companies in this space.
There are four sectors we are bullish on: clean technology, telecom, mobile VAS, enterprise opportunities. There are plenty more and we are also looking at media and entertainment too. We will definitely invest in mobile VAS companies. There are some interesting companies that we are currently evaluating. We can see that these companies have created business models that are now profitable. We are quite excited about this sector.
If an entrepreneur gives you a business plan today, how long will it take for you to analyze and take a final decision?
One to six months, depending on the opportunity.
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