Nikhil believes that there are two priorities for an investor currently. The first is the portfolio, which has been deeply impacted by COVID-19. Investors are trying to find creative ways to address challenges and should be involved with founders to help them overcome these efficiently. Apart from this, the second priority is to find fresh investment opportunities.
In today’s uncertain times, it can be helpful for entrepreneurs to understand the situation from an investor’s point of view. I, Shashank Randev, Founder VC at 100X.VC, warmly welcome Nikhil Kapur to share his insights on the same.
Nikhil Kapur is a Partner at STRIVE, a seed-stage cross-border Asia VC fund, headquartered in Tokyo, with offices in Singapore and Bangalore. Based in Singapore, Nikhil oversees India and Southeast Asia investments from the firm’s recently raised third fund of $100M.
Investment Scenario for STRIVE portfolio
STRIVE is headquartered in Tokyo and has an office in Singapore. Apart from China, they are open to investments across Asia. They have been present in Singapore and Indonesia for close to 9 years. They are diversified in their portfolio and thus bring a high amount of knowledge and competencies to the table.
Micro Challenges During COVID-19
There are two major issues concerning founders. The first is adapting to the lockdown, and the second is team disruptions. CEOs need to work on repositioning and understanding cash flow constraints. Their priority should be increasing margins.
It is much more challenging for founders to start thinking long-term. VCs can be of great help at this junction. For example, a start-up in the healthcare sector was previously not considering online teleconsultation but has now pivoted to using teleconsultation to treat chronic patients beyond lockdown as well.
STRIVE and its Investment Policy
At STRIVE, we know that even after investing, deploying the funds immediately is not always the case. When it comes to sectors, it is too early to tell which ones are more or less lucrative than others. However, food, health and education are consumer priorities at the moment.
The agricultural supply chain has also gained importance in these challenging times. STRIVE is spending time in sectors like pharma and edu-tech. Development Tools are also looked at keenly since they act as a shovel for the tech industry. Many companies are facing challenges in cultivating and maintaining customer relationships, and STRIVE is spending a lot of time to help overcome the same.
When it comes to sectors, CPG and the FMCG sector will make strides as compared to premium and luxury goods which might go through a tough phase.
Work-From-Home Policies at the Workplace
Founders should not take anything for granted. They need to go back to the drawing board and realize that this is a new world and a new era. Rather than falling into the sunk cost fallacy, they need to focus on building something critical.
Foreign Investments in India
India needs foreign investment. Being an emergent and developing market, founders need to focus on equity rather than debt. Ripple effects would be higher in countries like the US due to being highly debt-ridden. This is a great time to find talent in India and to build a definite competitive advantage with expertise and capital. We have all seen the masterstroke by Facebook in India. Facebook is a company which has 20 billion dollars of free cash flow, and it is exciting to see how the two firms, Facebook and Jio, collaborate. India also has the presence of high engagement platforms like WhatsApp.
Questions & Answers
Q: What would be the scenario for travel and e-commerce investments?
A: The travel industry still has a long way to go before recovering. Even after restrictions loosen up, travelling will take time to go back to normal. Meanwhile, E-Commerce is doing great and is facing an overall industry boom.
Q: Should Indian companies jump into a joint venture/takeover at this time?
A: Founders need to be quite cautious though many companies are venturing into unknown spaces at the time and would, therefore, present more opportunities. Every risk needs to be calculated precisely before making this decision.
Q: What permanent shifts do you expect for consumer goods?
A: There might be an increased affinity towards online items. This habit might not switch back after the crisis is over.
Q: What is the scenario for deep-tech in batteries?
A: With oil prices going down, batteries might take a back seat even with the government’s push.
Q: What are your thoughts on the mental health sector?
A: This is an important sector. While pharma is the main focus, mental health can be said to be a side focus. We all face a lot of mental health challenges in the current world due to remote working and other constraints.
Even apart from mental health illnesses, there is a need to change typical human behavior to increase people’s productivity in the “new normal”. People are paying attention to this and trying to adapt; thus, this sector could get a lot of focus.
