An Investor for the Rookie
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When asked what are the three top parameters he considers prima facie before investing in startups, Tarun Davda was quick with his reply, “Team, Team and Team.” The 40-year-old Managing Director at Matrix Partners, heading the $1 billion fund dedicated for India, pivots his decisions on the founders’ potential more than the idea and market segment they aspire to venture in. Perhaps, his own past successful record of scaling two startups - Big Rock and Step Out - from scratch, immediately after he passed out of B-school, drives his staunch belief in investing in startups even when they are nothing more than a PowerPoint deck. Tarun shares his top three bets so far and the rationale he adopted while investing in them.
OLA CABS, TRANSPORTATION NETWORK COMPANY
”When we invested in Ola, it was a very tiny company, doing not more than thousand bookings a day. Today, it does over two million bookings every day. Initially, we were not really convinced that drivers would be using the technology and cabs would be booked seamlessly on mobile phones. We were convinced at the macro level that transportation is a large market segment as everyone needs to commute to office, home, visit families and places. But, we couldn’t foresee how this problem was going to be solved through an app. It was the way Bhavish Aggarwal was seeing the market - his conviction how it would play out, the speed at which he was executing, and the clarity of thought he had - convinced us to bet on him and his potential more than the idea itself. We made an initial investment of $5-6 million. Over the years, we have made a total investment of over $20 million.”
PRACTO, ONLINE HEALTH SERVICE PLATFORM
“Again, here the bet was made on the individual’s vision of improving the state of healthcare industry in India. Shashank ND, the co-founder, is probably one of the most missionary founders in the country. He had a large ambition and mission in mind which convinced us. He wanted technology intervention in the fragmented healthcare space to solve issues like doctor discovery, online doctor consultation, digitization of health records, booking health tests and checkups, etc. Today, they have become a full blown healthtech platform covering myriad health services. It has a monopoly in number of appointments booked online. It also allows doctors to generate more business through online booking. Our first investment in Practo stood at $12 million. Overtime, we have made investments of over $20 million.”
TREEBO, BUDGET HOTEL CHAIN
“While OYO is the clear market winner, Treebo comes next in that space. Treebo was the first to innovate on standardized budget property in the full inventory model. OYO is a marketplace model. They work on partial inventory properties as well while Treebo operates with full inventory properties only. There is a lot of focus on quality, and they work at a different price point - more in the premium segment. Thus, their customer segment is different. We invested in it even before its name was conceptualized. The founders - Kadam Jeet Jain, Sidharth Gupta, Rahul Chaudhary - just had a PowerPoint presentation for us, nothing else. We believed in their vision of setting up a budget hotel chain. Today, the company has 500 hotel properties across 100+ cities. They have grown very rapidly in the last four years. Our first investment in Treebo stood at $3 million. Overtime, we have invested around $15 million.”
(This article was first published in the May issue of Entrepreneur Magazine. To subscribe, click here)