![]() ![]() Over the last five-six months, a lot of the late-stage investors, mostly hedge funds, haven’t been coming in. This one is proving to be much bigger than that. There was a tiny downturn in 20 but that was short-lived. Niren Shah: The Indian market hasn’t really gone through a major down cycle since the 2000-2001 bust. Is the downturn in India somewhat different from that in the US? What’s really going to matter is how capital-efficient you’ve been when you get acquired or go public. But, our advice is, be realistic about valuations. If they can continue to raise money at high valuations, that’s good. Now they’re raising money at astounding valuations. On the other hand, in some of these companies (the unicorns), we got in early and paid a low price. We’ve generally stayed away from late-stage investments over the past few months. Haque: If anything, it reinforces the strategy (the three axes diversification strategy) we’ve been using for a while. ![]() How concerned are you about the recent revaluation of some of these? You have several unicorns in your portfolio. On the flip side, with valuations coming down, some of the later-stage companies will be more attractive and we would want to get involved in those. The market is reinforcing capital efficiency. Valuations will come down, initial public offerings (IPOs) will happen later than expected and they will have to make their money last longer. In the current market environment, all that changes. The expectations there were either to raise money at very high valuations or to be acquired or to go public. In general, the challenges will be more for later-stage companies. When valuations are high, we slow down, we are selective. They look at how we’ve performed through boom and bust cycles. When limited partners invest in us they don’t look at the current market. We look at what is the rate of innovation happening in the market and that’s not going to slow down. When we invest in companies, our perspective is not influenced by what the public markets are doing. Our view is that many of those crossover investors, such as hedge funds, have withdrawn from the market. Lots of investors were investing in late-stage companies at very high valuations. Haque: We are not a hedge fund or a mutual fund where we have to produce returns quarter-on-quarter. What are going to be some of the key challenges and how are you going to navigate the downturn? The new fund comes amid a correction in the venture capital market. NVP senior managing partner Promod Haque and NVP India managing director Niren Shah spoke to Mint on the new fund, the downturn in the venture capital market, unicorns (start-ups valued at as much as $1 billion) and early-stage investments. ![]()
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