About Optimism and Truth

Time is an often-deceptive master, the movements of its hands a reflection of our minds. How often have you seen that time moves faster when you are engrossed with something? And paradoxically, move slower when you aren’t? When you are having fun and enjoying what you do, time seems to rush by. And that’s how it has been at Kalaari. We are passionate about what we do. We have fun, we enjoy the work, and it is no wonder that time has rushed by this year for us. It feels like only the other day that I wrote a post on Diwali! And here we are now ready to welcome the Festival of Lights all over again! It’s hard to believe that we are now in the last two months of 2018!

I find that this time of the year always makes me introspect and reflect about my personal and professional life. This year, I have also been thinking a lot about the next decade of opportunity that awaits India, the role of Kalaari, and my contributions to this journey.

A decade of transformation

In 2006, an impulsive decision led me to move back to India with the conviction that I could contribute to a nascent venture capital ecosystem and support the country’s growing entrepreneurial talent. Working closely with some of India’s leading entrepreneurs over the last decade and more has been a fulfilling experience for me!

This last decade can be characterised as India’s first phase of VC-driven start-up innovation. During this period, VCs have collectively invested north of $56B in startups. Over the last four years alone, there has been over $35B invested creating over $90B in value. Startup investments have helped accelerate innovation and India has been witness to large-scale digital disruption.

Total Amount of Venture Funding since 2006

The upcoming decade of continuing growth

Though the last decade laid the foundation of the start-up ecosystem, the next one will strongly capitalize on it! India is currently undergoing a rapid digital transformation. The Government of India is aiming to create $1T in digital revenue by 2022 and $1T in economic value from the digital economy by 2025. Around 60% of India’s GDP in 2022 will have a strong connection to digital transformation trends.

We are often asked if Indian start-ups aren’t just copies of other global start-ups without enough original innovation. I always disagree! I think Indian entrepreneurs have shown both creativity and innovation in solving problems that the Indian consumer of today faces. Many of today’s successful companies very much embrace the nuances of “Hindustan Hamara.” As India’s start-up ecosystem matures and evolves, there will be newer themes that will witness unprecedented growth in fields as diverse as Financial Services, Logistics, Digital Content, Health, Education, Agriculture, and Alternate Commerce. I expect these start-ups to leverage advanced technologies like AI, IoT, Blockchain, Drones, and AR / VR to build more innovative products.

I am very excited about India’s digital transformation and working closely with today’s smart entrepreneurs who are powering this growth!

What I value in my role at Kalaari is institution-building

Institution-building should form the crux of a start-up’s long-term vision. A start-up is not just about building a great product or service. A successful start-up can be an architect of change, producing consistent performance that has a long-term impact on society. I too have been contemplating the nuances of institution-building because my goal and aspiration for Kalaari is to make it an institution that sustains in the long run.

That goal is reflected in Kalaari’s mission where our focus is always on our commitment to founders, nurturing our passion for rethinking the future, and the opportunity to create great returns. Part of this mission is reflected in building a values-driven culture. Values provide us with the compass for institution building, making difficult decisions easy, and I have used these principles many times:

  1. Be a seeker of truth
  2. Say it as you see it
  3. Set long-term goals and stay focused
  4. Don’t be short-term and short-sighted
  5. Build institutions for the future
  6. Empower talent and nurture leadership
  7. Make high performance a norm
  8. Ignore detractors, naysayers, and negativity
  9. Integrity and authenticity are not options
  10. Serve the country — exist for a bigger purpose

Being objective and fair

When I was 15, I happened to read, ‘’All The President’s Men” by Carl Bernstein and Ben Woodward, and it had a profound impact on me. That 1974 classic is a wonderful example of influential journalism. It was here that the journalistic ethos of seeking truth met what seemed an impregnable institution — that of the US presidency — but the truth still triumphed! Deepthroat remained forever etched in my mind, and I understood that the need to protect sources is an integral part of a journalist’s freedom and responsibility.

Today, there is a lot of curiosity about startups and their founders in the general public. So, the mainstream media also tend to publish more news on start-ups. And start-up stories certainly make for riveting viewing or reading! Freedom of press can be misused to write unsubstantiated news in the name of journalism if right checks and balances are not in place, it should not be misused for the sake of page views and TRPs versus pursuing the truth.

Start-up founders cross many a hurdle before realizing their dream. The efforts they have made and the path they have taken to reach where they are can make for compelling reality TV! These are truly the stories that bring alive the passion for building and creating startups. But this kind of interest can also encourage speculative news that has little or no basis in reality.

Sometimes when this news involves us, a venture-capitalist firm, I often wonder if this is really of interest to anyone! Some news items quote unnamed ‘sources’ as the basis of their entire story, resulting in grossly inaccurate versions that are really far off from the truth. In fact, the thought has often crossed my mind that, perhaps, there may not even be any source, and any rumour gets published as long as it involves a well-known company or person!

In the last year, I have to confess to feeling baffled about the speculation over Kalaari fundraise and investment team. News about our fund size, timing, LPs and our team matters, if at all, perhaps only to a small group of entrepreneurs and investors, and yet the curiosity of the media over this has surprised me.

Kalaari’s preferred stance on such speculation is to not respond. I am often asked to comment off-record on a variety of news, and my answer has always been consistent: If I have anything to say, it would be on the record and never off the record. I consider it a form of cowardice to offer information “off the record.” After all, we are not talking of whistle-blowers or discussing matters of national security or similar topics of worth. It is just start-up news!

Trial by media and the dangers of it deeply bothered me in the Arushi Talwar case, reaffirming my view that the media can do good but can also cause harm without restraint.

So, rather than respond to reporters in the above instances, we privately addressed our founders. Today, I share the same on this open platform because so many seem curious about our plans.

Our letter to portfolio founders

The response we received from entrepreneurs was overwhelming in support!

Some of the responses from our founders

The goodwill we have with our entrepreneurs is what we deeply care about and feel validated for the last decade of hard work. It’s what motivates the team at Kalaari to continue to play a key role in shaping the start-up ecosystem for the next decade. And to put speculation to rest — Kalaari is confident of raising its next fund in 2019. (We haven’t started fundraising yet, but we are preparing the material for it). We plan to bring in for the first time select domestic investors and raise from global institutional investors as we have done before. Departures and leadership transitions are part of any organization’s evolution while scaling up, and as an experienced organization, we ensure that these transitions are smooth and planned for the long-term alignment of our key goal of building an institution.

Apart from that, we have been busy in 2018. We invested in 5 new companies, exited 4 successfully and participated in 8 follow-on rounds in our existing portfolio companies. Currently, we are busy with closing term sheets for 6 companies. That is a lot to get done before the end of the year!

Let’s put our collective effort into making India a powerhouse of the global economy for the next decade to come!

Celebrating the spirit of Diwali

It’s on that note that I wish to usher in Diwali. This festival is, after all, a festival of celebration, of light and joy. A time when we rejoice for the good to come.

Building relationships with entrepreneurs very early in their journeys and empowering them to achieve their goals has always given me fulfilment, and the thought of creating more such journeys is what I look forward to the most this season and the year that is coming up.

My Diwali will be spent in the cold environs of Boston, but there will be an additional glow of warmth as I will be spending it with my daughters.

My best wishes to all as you celebrate the spirit of Diwali — the triumph of truth.

Happy Diwali everyone! May we all proceed from untruth to truth and from darkness to light.