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No hurry to sell, indefinite horizon on Zomato holding: Sanjeev Bikhchandani
Entrackr
·
1y ago
Medial
Info Edge, India’s largest and most storied recruitment portal, has had a stellar run in the last three years with its portfolio company Zomato’s market cap surging almost 2.3X since its stock exchange debut. The firm’s bet on fintech unicorn Policybazaar is also paying off well. The company has made it clear it is in no hurry to book profits on these investments, even as it continues to nurse its own brands beyond Naukri to profitability. The firm, one of the few to survive the dotcom boom and bust cycle of 2000, has been led by founder and chairman Sanjeev Bikhchandani for a large part of this journey. And today, Bikhchandani has earned the right to be looked up to as the statesman for the sector. Entrackr caught up with Bikhchandani in his Gurugram office and he spoke on a range of topics including Naukri, Info Edge’s investments, serial entrepreneurs and corporate governance. Here are the edited excerpts. As a listed firm that carries a heavy overhang from its investment portfolio, does it worry you that it might impact the valuation of the core Naukri business? Not really. Institutional investors are smart. We give them adequate data so that they analyze Naukri thoroughly before making a conclusion about valuation. We don’t run Naukri for valuation every day or month or quarter. We look at how we create value for our shareholders in the long run. And that’s how we run our businesses. So, this hypothesis about our core or even group business doesn’t stand. Info Edge has been an investor in Zomato for over 14 years and despite the latter’s share price rising nearly 14o% from its listing price, Info Edge didn’t sell its shares. What level of return are you anticipating from Zomato? Actually, we don’t calculate Investment Return Rate (IRR). Info Edge invested in Zomato because of our conviction that it could become a great company. And if you are convinced about your conviction then it will happen. So, IRR is the happy incidental outcome of investing early behind companies that you want to help. That’s my belief. We are not in any hurry to sell and have an indefinite horizon. Every VC firm has a fund cycle and pressure to return capital to their limited partners but that’s not the case with Info Edge as you are investing from your own balance sheet. Could you elaborate on this? That pressure does not make this choice. We have a long term horizon and we call it patient capital. To be a successful early stage investor in India, you have to be quite patient because companies take anywhere between 10-15 years to go to IPO from seed stage. So if you have funds for only 6-10 years, you will not realize the full fruits of your investment. If you have a 20 year fund, you tend to perform better. However, such a horizon could be possible only when you’re investing from your own whole balance sheet. Do you believe that Blinkit could become bigger than Zomato? I think both are large but Blinkit is going to be fairly large. If we look at Zomato’s quarter-on-quarter numbers, online food ordering appears to have stagnated in top 10-15 cities. What’s your take on this? Obviously, there is the base effect. But, we don’t see stagnation. Also, you need to compare year-on-year, not quarter-on-quarter. When YoY numbers are compared, there is growth. I think full fiscal year performance is more important than quarter. We used to commonly hear about Naukri’s recruitment business that it was not the online presence, but your sales force or feet on the street that made the difference. Does that still hold true? Online sales have never been a big part of our strategy. When you want to sell more expensive products, you need face-to-face contact. At Naukri, we have clients whom we bill several crore rupees for annual subscription and such accounts need heavy offline touch. While the product will be consumed online, the stuff around it very often will be offline. Over the years, several players have tried to crack the recruitment business in the blue collar segment but most of them died. What are the challenges in the segment? Blue collar segment has broadly three challenges. First, it’s hyperlocal. The job seekers in this segment don’t move to different cities as they look for opportunities in and around their locality. Second, very often there isn’t a detailed text CV which makes the process slow and inefficient. Third, potential workforce in the segment do not search for jobs on the laptop and use vernacular languages. They are mostly on mobile. So you’ve got to adapt to all these things and still somehow get revenue and profit. We have been trying to get inroads in the blue collar segment for over two years now but we have just started monetizing it. Our future position in the segment depends on monetization. Some of the celebrated entrepreneurs are launching a second or third company without their first startup churning profit. How do you see this trend? I think this isn’t a progressive trend. As an entrepreneur, you need to focus on one thing and do really well. Once you’ve cracked that you can add on a second thing in the same company. Over the past couple of years, we have witnessed corporate governance issues with some startups. Even Info Edge saw serious lapses at 4B Networks. What’s your opinion about this? By and large, my belief is that 95-98% of Indian founders are genuine but there will be a few bad examples. Investors make sure that when something wrong happens in their portfolio, it is highlighted and actions are taken to ensure that such incidents do not repeat. Any governance issue isn’t good for anyone including limited partners, investors, founders and the startup ecosystem. What factors contributed to the lack of success with Info Edge’s e-commerce investments 99labels, MyDala, and Happily Unmarried? Limitation of raising foreign direct investment (FDI) and heavy investment into competition were two major reasons for failure of 99labels while MyDala had a product market fit (PMF) issue. Happily Unmarried is now a part of VLCC and we are still a shareholder there.
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Related News
Soaring stock prices mint super rich founders
Entrackr
·
1y ago
Medial
The rise in the market cap of Zomato, Policybazaar, MamaEarth, EaseMyTrip, TBO, and Ixigo has laid out a promising future for Indian startups aspiring to go public. This phenomenon has also helped create fortunes for shareholders, retail investors, and founders alike. Most recently, Zomato co-founder Deepinder Goyal checked into the billionaire club with his food tech company crossing the market cap of Rs 2,00,000 crore or $24 billion. Entrackr in collaboration with startup data intelligence platform TheKredible dives deeper into the holdings of startup founders, and their respective (current) worth. We are focusing on founders who have taken their startups public in India. At the top are Nykaa’s Falguni Nayar and her family (including trusts) as they command over 50% of the company. The collective worth of their holding is over $3.25 billion. Veteran entrepreneur and investor Sanjeev Bikhchandani comes next with his shares (via Info Edge) reaching $3.24 billion. Info Edge is an early investor in Zomato and Policybazaar, ShopKirana, Sploot, and Skylark Drones. ALSO READ: No hurry to sell, indefinite horizon on Zomato holding: Sanjeev Bikhchandani Zomato’s founder and CEO, Deepinder Goyal, joined the billionaire club as the value of his stock ownership surpassed $1 billion. Rashmi and Rakesh Verma, founders of MapMyIndia, have holdings valued at $830 million followed by Mamaearth duo Varun and Ghazal Alagh at $657 million. Despite the bumpy ride after its public offering and recent regulatory jolts, Paytm’s Vijay Shekhar Sharma currently holds stocks worth $319 million, while PolicyBazaar’s Alok Bansal’s holding is valued at $129 million. Ixigo, recently listed and now a unicorn, has seen its founders Aloke Bajpai and Rajnish Kumar create a combined value of $81.5 million. While net worth numbers based on the public value of holdings in their own firms is one figure, it’s important to note that almost all the founders mentioned here and many who are yet to go public, their personal net worth is well beyond just the value of their stake in their own firm. Liberalization has been particularly generous when it comes to founder compensations and options in the past decade, which has allowed many professionals and non-founders also to benefit. We have also observed the phenomenon of loss making startup founders investing in a parallel portfolio of other startups, many of which have delivered handsome returns as well. In a market awash with liquidity driven asset prices, one can only hope that the new status as acknowledged multi millionaires or billionaires doesn’t lead to the kind of visible excesses that can turn public opinion in the wrong direction. ‘Self made’ startup founders have an obligation to give back, be seen as giving back, and most importantly perhaps, set an example in how they do it better.
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No Plans To Exit Portfolio Companies: Zomato-Backer Info Edge
Inc42
·
12m ago
Medial
Info Edge co-founder, Sanjeev Bikhchandani, advises investors to stay invested for a long time to maximize their returns based on his previous experiences. Info Edge has seen significant gains on its investments in Zomato and PB Fintech, amounting to INR 2,189 Cr and INR 749 Cr respectively. In Q1 FY25, Info Edge's profit surged by 75% YoY to INR 258.85 Cr, with a 20% increase in revenue from operations to INR 827.92 Cr.
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Private companies not chasing profitability are only 'postponing the trouble': Info Edge’s Sanjeev Bikhchandani
Money Control
·
1y ago
Medial
Sanjeev Bikhchandani, Founder & Vice Chairman of Info Edge India, states that non-listed companies that are focused on growth and not profitability are simply delaying the inevitable. He highlights the tighter availability of funding and the need to manage with existing resources. Bikhchandani also mentions that private investors are now emphasizing the importance of profitability before providing further funding. However, Info Edge plans to maintain its stakes in Zomato and PBFintech, as it expects further growth in these companies.
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No plans to exit from any portfolio companies: Sanjeev Bikhchandani
Economic Times
·
12m ago
Medial
Info Edge co-founder Sanjeev Bikhchandani has stated that the company is not currently considering exiting any of its portfolio companies. This comes as the stock markets reach all-time highs and some of Info Edge's listed portfolio companies, like Zomato and PB Fintech, have seen significant increases in their share prices. Bikhchandani emphasized the need for patience when investing in Indian startups, noting that the majority of the value is typically realized after several years. He also mentioned that if a portfolio company experiences major issues or receives a great acquisition offer, an exit may be considered. Info Edge reported an 8% YoY growth in operating revenue for the quarter.
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Passed On Opportunities To Invest In Flipkart, Snapdeal, Ola: Sanjeev Bikhchandani
Inc42
·
1y ago
Medial
Sanjeev Bikhchandani, the co-founder of Info Edge, reflected on missed investment opportunities in startups like Flipkart, Ola, Bigbasket, and Snapdeal. Despite the misses, Info Edge owns a significant stake in Zomato and Policybazaar. Bikhchandani mentioned that the perception of being a good investor is based on whether enough investments turn out to be successful. He also expressed skepticism about the public market's receptiveness to loss-making companies' IPO ambitions unless there are clear prospects of profitability. Info Edge recently reported a 157% YoY increase in net profit for Q3 FY24.
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Investors Need To Identify Early Stage Gems To Chart Growth Roadmap: Sanjeev Bikhchandani
Inc42
·
10m ago
Medial
Info Edge founder and vice executive chairman, Sanjeev Bikhchandani, highlighted the importance of identifying early-stage startups with potential for investment success. Speaking at Inc42's MoneyX 2024 event, Bikhchandani advised investors to exercise patience and take calculated risks when investing in unlisted companies and early-stage funds. He mentioned the example of Info Edge's investment in Zomato, where they saw promise in the startup's founder, Deepinder Goyal, despite it being a high-risk venture initially.
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'If you are broke and starting out...': Sanjeev Bikhchandani on India’s April 1 compliance loophole
Business Today
·
4m ago
Medial
Sanjeev Bikhchandani advises entrepreneurs who are starting out and financially constrained to conduct their groundwork in the fourth quarter but officially incorporate on April 1. This strategy takes advantage of a compliance loophole in India. Notable companies like Naukri, Indiamart, Makemytrip, Zomato, and Policybazaar are referenced, showcasing the context of leveraging this strategic incorporation timing to potentially benefit from regulatory frameworks.
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How Zomato backer Info Edge's startup bets are shaping up
VCCircle
·
1y ago
Medial
Indian venture capital firm, Info Edge India Ltd, led by entrepreneur Sanjeev Bikhchandani, has invested in several new startups to expand its portfolio, which already includes Zomato and Policybazaar. However, the firm has also written off some of its previous investments. The growth of Info Edge's investments in Indian startups reflects the firm's continued interest in supporting entrepreneurial ventures.
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Market not willing to bet on loss-making startups: Info Edge founder Sanjeev Bikhchandani
Money Control
·
1y ago
Medial
Sanjeev Bikhchandani, founder of Info Edge India Ltd, believes that the market will remain cautious about loss-making startups unless they demonstrate a clear path to profitability. He expressed doubts about the public market's willingness to give high valuations to such firms after market corrections in 2022. However, he noted that the investor sentiment towards tech companies has improved in 2023, with Zomato, Paytm, and PB Fintech showing profitability. Bikhchandani also mentioned that a capital squeeze could benefit startups by forcing them to become more frugal and conscious of unit economics.
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Info Edge clocks 36% return on startup investments
Economic Times
·
2m ago
Medial
Info Edge, parent of Naukri.com, has achieved a 36% gross internal rate of return on its startup investments, with its capital growing from Rs 3,959.16 crore to Rs 36,855 crore in value. The company, led by Sanjeev Bikhchandani, has backed 111 startups, including Zomato and Policybazaar, and launched a venture capital fund, Info Edge Venture Fund, in 2019. With strategic investments, the firm aims for sustainable value creation and market leadership.
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