Entrepreneurs Should Take Exit Opportunity Sooner Than Later, Says This Investor
This investor believes India has shown that it is extremely difficult to create exits and distributions for the investors as well as entrepreneurs'
There cannot be any debate on the fact that the founding and top management teams are one of the most important reasons behind a company's success. However, with 22 years of experience in the private equity segment, Sarath Naru, Managing Partner, Ventureast, unabashedly says he still does not know how to make that final call.
"Though we do go through the process of spending a lot of time with them, we still comeback short when it finally comes to understanding whether these entrepreneurs are able to deal with challenges," Naru shares while adding, "We shouldn't lose our faith in the entrepreneurs."
As an investor, he has learned that however smart you think you are, one is guaranteed to miss out on facts or even perspectives and therefore, Naru trusts the collaborative approach with like-minded investors to fund companies through the long tough spells.
Ventureast's average ticket size for an investment is $1 million - $5 million. With $400m asset under management, the venture capital firm boast of investing in companies like Gland Pharma that was later acquired by a Chinese major, Little Eye Labs, a tool for app developers which was Facebook's first acquisition in India and agent-based rural banking tech platform called Atyati. The investor's portfolio also includes companies like Portea Medical, Indus OS, Goli Vada Pav, Polygenta, Diabetomics, and Seclore.
On asking him whether a deal for Ventureast are by choice or opportunity, he said, "I would look at it from the point of view of the sectors we have invested in. Roughly two-thirds of the sectors that we have invested in are premeditated as we constructed the fund while about a third were totally new sectors that we did not anticipate we would invest in."
Naru, who is a very calculated man, rarely agitated on the fact that he missed the chance of hitting the goal bypassing a good idea. "There are certain kinds of deals where we like them but then we are not the right investor or VC for them. And then there are other kinds of deals were we believed that there is a chance that they would be successful but again they are not the sectors that we wanted to have exposure to because of our capabilities or sometimes because we think it's too risky," he shared with Entrepreneur India.
Meanwhile, Ventureast's focus sectors are technology (Mobility, Cloud, IoT) and technology-enabled (Fintech, Education, Digital Healthcare), Life science and Clean Environment. The firm prefers to invest in seed or incubation stage businesses.
While discussing exits in India, if there is an opportunity, he suggested entrepreneurs to make the exit sooner than later.
"Though this is, of course, important to the investors, it is more important for the entrepreneurs because India has shown that it is extremely difficult to create exits and create distributions for the investors as well as the entrepreneurs. So if the entrepreneurs are sure of getting an exit and can create one, that's great, not just because of the money that comes in, but they will also be able to attract a larger amount of capital for the next deal," he advised.