Profitability for Ola and Scalability for Druva are the Biggest Hurdles before Going Public
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Rehan Yar Khan, managing partner at Orios Venture Partners, means business. Orios Venture Partners has some of the biggest start-up names in its portfolio. Unicorn cab aggregator Ola and software-as-a-service (SaaS) start-up Druva are some names to start with, followed by the likes of pharmatech start-up PharmEasy, traveltech start-up Zostel. Entrepreneur India caught up with Khan at the LetsIgnite conference organized by LetsVenture.
Two of Orios Venture Partners’ star portfolio companies, Ola and Druva, are preparing for initial public offering (IPO).
Khan says that both Ola and Druva have certain hurdles to overcome to be fully prepared for the public listing milestone. He says, “The first hurdle Ola has to overcome is profitability.” Khan is optimistic saying that “they are almost there” and would be able to establish profitability by this year end.
Druva will be listed in the US, where profitability is less of a challenge compared with India. The challenge with Druva is scalability. Khan says, “We want to reach a certain scale before the IPO.”
Learning from Uber and WeWork
While a lot has been spoken about IPO failures of Uber and WeWork, Khan points out that the common factor in both companies spiraling down was the lack of profitability. He added venture capitalist firms, including Orios, are now asking portfolio companies to focus more on profitability and less on growth. He matter-of-factly explains the biggest takeaway from the two companies, “Clearly, the public market hasn’t respected the growth-only strategy.”
Fundraising strategies change with and due to different factors. “India is an immature,” he says. “You should make money on your core product.”
He also said that the number of start-ups failing in India is high but “not higher than the Silicon Valley”.
The biggest reason why start-ups fail according to Rehan is when people are not ready to buy a product the start-up is offering or not ready to buy it at the price it is being offered.
3 Sector That Will Rule
“Fintech! Fintech! Fintech!” said Khan on being asked the three sectors that will rule in India. The reason? “Because India is so underbanked.”