Good founders will focus on the right issues, and the role of investors and board members is to ensure things are being built the right way, says Sanjay Swamy, the managing partner at Prime Venture PartnersOver the last few years, the ‘Digital India’ opportunity has come of age. In simple terms, this means that market opportunities have become much more significant.
In the past, Indian companies were forced to either go international or expand to multiple adjacencies, neither of which are ideal for young companies. The new breed of unicorns are seeing the first real wave of Digital India in full bloom. “They are showing the world that the domestic markets are significant,” Sanjay Swamy, managing partner at Prime Venture Partners, tells Forbes India
in an interview.
A section of critics reckon that unicorns are largely driven by easy money. What is your take?
While it may be true that there is a lot of money sloshing around, it is also true that money is primarily available for the right opportunities. I would be hard pressed to say if any of these companies are not worthy of the confidence of investors. So rather than focussing on the valuations, or even the companies, I like to look at the categories that are being backed. It is clear that all these categories are transforming huge opportunities with substantial profit pools. In my opinion, this is the start. The next few years will see Tsunamis that will be even taller.
A good portion of unicorns are from the B2B segment, which does not have high cash burn
We are seeing consumer plays as well, but it is great to see B2B and SaaS [Software as a Service] startups getting the recognition
they finally deserve. The reason has to do with the size of the opportunity that we are experiencing. There is a massive digitisation push across the world, geographic boundaries have broken down, and world-class products can be built and sold out of anywhere.
Is this the beginning of a golden age of unicorns in India?
For sure. The ecosystem is definitely maturing and we are seeing the complete cycle of differentiated products being conceived, built, marketed, adopted and monetised, and companies going to the exit process. We are also seeing founders realising that things are not going well, pivoting or killing ideas and starting afresh
. These are all great signs.
One should also not forget the tremendous role of Aadhaar, UPI, IndiaStack, GST and the digital railroad laid down by the government. Not to mention the willingness of the government to adopt all of these towards inclusive growth in the country. This has truly led to an opportunity for a perfect storm.
What could be the flip side of so many unicorns in such a short span of time?
One of the biggest risks is the lack of quality leadership and management
. As this is a young ecosystem, this can lead to a few short-term and often short-sighted decisions. Companies should not lose sight of focusing on the culture of team building, on customer and using money as a tool rather than as a weapon.
There will be some choppiness in the near-term as some founders will be tempted to chase valuation
rather than value-creation. However, such short-term blips generally will also stabilise quickly and saner minds will prevail. Good founders will focus on the right issues, and the role of investors and board members is to ensure things are being built the right way.
We may see a few companies being unsuccessful; but in general, businesses built on offering solid value to customers, on good business practices and with teams with the right culture, will have a high probability of emerging through the ups and downs. This also means not resting on one’s laurels, constantly questioning one’s value addition, innovating and iterating at rapid speed. For investors, at the end of the day, this is a business of risk. There is no guarantee that any startup will be here for the long-term.
It is a great time to be an entrepreneur. We are witnessing an opportunity of a lifetime in India!
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(This story appears in the 10 September, 2021 issue of Forbes India. To visit our Archives, click here.)