Mumbai: Last week, storied American venture capital investor Sequoia Capital announced that its Indian arm Sequoia Capital India had wrapped up a $695 million fund to invest in India and South East Asia. The milestone, however, came with the announcement of another senior exit from the India investment team.
Abhay Pandey, a managing director who spent over 11 years with the VC firm decided to chart his own path. Pandey’s exit followed those of other managing directors, V.T. Bharadwaj who quit the firm in April and Gautam Mago who left last year. The firm has announced several promotions at managing director and principal levels to fill the voids.
Despite the major exits, the firm expects to continue to put up a good show on the back of its bench strength, according to Sequoia India’s leadership.
“We have probably never felt that we had a stronger bench strength. The reason I say that is most of us who took over the leadership seven to eight years back, had been advising on investments for over 4-5 years. If you look at the people who have got promoted and stepped up, they have been with us for over 5-8 years. So we feel that we have a reasonably deep bench strength. And our job is that every few years we are adding to that and ensuring that more younger people keep rising up over time,” said G.V. Ravishankar, managing director at Sequoia Capital India.
The current crop of leadership, including the managing directors who have left recently, emerged after a split between Sequoia Capital India and Westbridge Capital in 2011. Westbridge and Sequoia had teamed up in 2006.
According to Ravishankar, the firm, as a strategy, does not rely on single individuals or board members to build relationships with investee companies, and instead has multiple people engaging with them at any point, which helps the venture capital firm to brace itself for such eventualities.
“More often than not, for the companies that Sequoia India works on, there are two or three people engaging with them from the investment team and then the support functions like marketing, finance, also continuously interact with them. So people see Sequoia India and not just the individuals,” said Ravishankar.
That also gives the firm the opportunity to keep helping its young people step up over time, he added.
The firm has promoted Abheek Anand to managing director, while four vice-presidents have been promoted to principal.
The latest fundraise at Sequoia India comes at a time when India’s startup ecosystem has witnessed a pick up in activity with large cheques being written for Indian startups and several headline exits such as Flipkart’s acquisition by global retail giant Walmart Inc.
The activity, however, has been on the back of large and deep-pocketed investors such as Japan’s Masayoshi Son-owned SoftBank’s about $93 billion Vision Fund and aggressive Chinese investors such as Tencent and Alibaba.
According to Mohit Bhatnagar, managing director at Sequoia Capital India, the VC firm plans to stay focused on its strategy and not get swayed by the exuberance of fellow investors.
“There are ebbs and flows. There are times when people can’t get enough of India and there are times when people want to run away from India. Our learning of being here for the last 12-13 years is that just stay balanced and don’t get swung on both sides of the pendulum too much. Sequoia India is completely local and will be investing in India for the next many decades. So whether SoftBank or a large Chinese investor or hedge funds are a flavour in a particular year is almost irrelevant at some level,” said Bhatnagar.
With its latest fund and the ones that will come next, Sequoia India aims to bet on companies that are leveraging a combination of technology and traditional brick and mortar business models.
“If you look at what Sequoia India was investing in five or 10 years back versus what the company invests now and what they are going to be investing in future, you are truly seeing a convergence of traditional consumer offline companies along with online only companies, a mixing of the good of both, Byju’s and HealthKart are good examples of companies that have leveraged this model,” said Bhatnagar.
“Companies like that just did not exist 5-10 years back and they are representative of what we are seeing going forward as well, whether it is in healthcare, education or food,” he added.
The convergence of offline and online worlds is also a recipe for building businesses with robust competitive advantages and better economics.
“Convergence is creating better companies because the moats that get created when you converge is what protects you from some guy sitting in the valley from launching a technology only company and disrupting you. It is difficult to challenge a company that has gone into the offline world, combined the experience of the offline world with online,” said Bhatnagar.