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Bala Deshpande: A Candid Perspective on India’s Ever-Evolving Start-up Landscape

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In the world of venture capital, Bala Deshpande is known for her incisive and candid conversations. With nearly two decades of experience, she has held close to 40 board positions in various industries, making her a seasoned investor with a wealth of insights. Bala Deshpande’s investment journey began in 2001 with ICICI Ventures, and in 2008, she joined the American venture fund, NEA. Later, in 2018, Deshpande co-founded MegaDelta, a mid-market growth fund with $300 million in assets under management.

MegaDelta: Born Like IVF

MegaDelta’s inception is a unique story. In 2018, NEA decided to sell its India portfolio, and Deshpande, with the support of global investors, acquired the entire portfolio, laying the foundation for MegaDelta. As a venture fund, MegaDelta specializes in late Series A or Series B investments, typically ranging between $15 million and $25 million. Their focus is on companies that are at the point of acceleration, primarily in the Series B stage, where the strength of the business model is put to the test. Deshpande believes that this is the most challenging phase for Indian companies, where growth often stalls after the initial phase.

The venture capital landscape in India has transformed significantly over the past decade. One of the most significant shifts has been the behaviour of capital. A glut of capital has poured into the Indian start up ecosystem, leading to a notable increase in start-up valuations. The phenomenon of capital “creating its own unicorn” has become prevalent, where large amounts of capital are invested in start-ups based on future potential rather than current revenue. Entrepreneurs are now readily taking in $100 million investments, even if their revenue is relatively low. For investors with substantial capital, allocating $100 million is just a small portion of their overall fund.

Deshpande emphasizes that capital now seeks to discover valuation based on the strength of the entrepreneur, the uniqueness of the business story, first-mover advantage, and the potential for a long-term, sticky consumer base. The valuation is not solely determined by current revenue but incorporates elements of scarcity, future potential, and the hope of even higher valuations in the future.

The valuation-performance mismatch has raised concerns, especially when loss-making companies go public and face market scepticism. Deshpande offers perspective by highlighting that when investors allow loss-making companies to go public, knowing that profitability may be several years away, and traditional quarterly analysis might not be helpful. The focus, instead, is on the long-term vision and potential profitability down the road. Deshpande underscores the importance of founder DNA in determining the success of an investment. She points out that some founders have a “self-destruct button” due to a lack of understanding of the entrepreneurial journey. The story of a founder who left the task of monetizing the business model to the CFO serves as an illustrative anecdote. Deshpande believes that entrepreneurship is a continuous learning process and that entrepreneurs must choose the right business model and sector carefully.

For founders, the primary challenge is increased competition. In today’s market, numerous businesses are pursuing similar dreams, intensifying the competitive landscape. Moreover, when capital rushes to invest in a particular sector and a few entrepreneurs, it creates challenges for funds like MegaDelta. The solution, Deshpande suggests, lies in maintaining a well-calibrated risk-return approach. She notes that the only time when returns are elusive is when there is either no growth or a significant regulatory impact.

While India’s start up ecosystem has experienced remarkable changes, the future holds the promise of even more exciting entrepreneurial stories. For Bala Deshpande and MegaDelta, the path forward is guided by the understanding that strategic and selective investments, combined with a comprehensive understanding of the business landscape, will lead to success in the ever-evolving world of venture capital.

Entrepreneurs

Harsha Majety: Architect of Swiggy’s Culinary Empire

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In the dynamic world of food delivery, Harsha Majety stands out as the visionary founder and CEO of Swiggy, the platform that has redefined the way India dines. With an unwavering commitment to customer satisfaction and a keen understanding of the evolving market, Majety has propelled Swiggy to the forefront of the food delivery revolution.

Harsha Majety, a BITS Pilani alumnus, embarked on his entrepreneurial journey with a clear vision — to address a fundamental challenge faced by consumers: reliable and efficient food delivery. Born out of the desire to eliminate the frustrations associated with late or cold food deliveries, Swiggy was conceptualized as a solution to redefine the food delivery landscape.

The Swiggy Saga: From Conception to Culinary Dominance

1. Identifying a Gap in the Market:

In 2014, along with co-founders Nandan Reddy and Sriharsha Majety, Harsha identified a significant gap in the food delivery segment. Existing options were plagued by delays and inconsistencies, laying the foundation for Swiggy’s disruptive entry.

2. Focus on Customer Experience:

From the outset, Majety emphasized a customer-centric approach. Swiggy wasn’t merely a food delivery service; it was a commitment to providing a seamless and delightful experience for every customer, ensuring that their culinary cravings were met promptly.

3. Technology as the Enabler:

Under Majety’s leadership, Swiggy leveraged technology to streamline the entire process, from order placement to delivery. The robust tech infrastructure not only facilitated real-time tracking but also optimized delivery routes, ensuring that food reached customers in the best possible condition.

4. Diversification Beyond Food:

Learning from the challenges faced by early hyperlocal startups, Majety and his team strategically diversified Swiggy’s offerings. Beyond being a food delivery giant, Swiggy expanded into groceries, medicines, and essentials, transforming into a comprehensive hyperlocal platform.

5. Weathering Challenges and Emerging Stronger:

The hyper-competitive nature of the food delivery industry posed challenges, but Swiggy, under Majety’s guidance, navigated through them successfully. The company not only survived but thrived, becoming a unicorn and synonymous with efficient food delivery.

Harsha Majety’s leadership style is characterized by a relentless pursuit of excellence and an emphasis on innovation. His ability to foresee market trends and adapt Swiggy’s strategy accordingly has been instrumental in the company’s success. Looking ahead, Majety envisions Swiggy as more than just a food delivery platform. The goal is to make Swiggy a ubiquitous presence in the daily lives of consumers, offering a wide array of services beyond culinary delights. The strategic diversification into groceries, medicine, and essentials aligns with this vision of becoming a one-stop solution for every hyperlocal need.

As Swiggy continues to shape the future of hyperlocal services, Harsha Majety’s legacy as a pioneer in the food delivery industry solidifies. His entrepreneurial journey, marked by resilience, innovation, and a commitment to customer satisfaction, serves as an inspiration for aspiring founders in the startup ecosystem. Harsha Majety’s Swiggy isn’t just delivering food; it’s delivering on the promise of a revolutionary hyperlocal experience.

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Entrepreneurs

Deepak Sahni: Revolutionizing Diagnostics with Healthians

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In the realm of healthcare, Deepak Sahni, the visionary founder and CEO of Healthians, is leading a transformation in the diagnostics sector. Healthians, a home diagnostics service provider, has emerged as a trailblazer in an industry that has traditionally grappled with issues of regulation and unorganized players.

The Delhi High Court’s interim order seeking a ban on the ‘illegal’ sale of medicines online served as a catalyst for Sahni. While Healthians isn’t directly involved in offline retailing of medicines, Sahni resonated with the court’s concern about the risks associated with unregulated practices. He is eagerly awaiting a ‘regulatory moment’ for the diagnostic segment, emphasizing the potential dangers to public health posed by unregulated and unlicensed diagnostic labs.

Founded in 2015, Healthians has experienced rapid growth under Sahni’s leadership. The company’s revenue journey is emblematic of its success — from a modest ₹1.1 crore in its first year to an impressive run rate of ₹80 crore. With operations spanning 30 cities in North India and a recent foray into Bengaluru, Healthians is making significant strides toward becoming a pan-India player.

What sets Healthians apart is its contrarian approach to building a brand directly with consumers. While many diagnostic labs rely on referrals from doctors and hospitals, Sahni opted for a direct-to-consumer strategy. This decision was bold and unconventional, considering the prevalent industry norms. “People thought we have gone insane by not taking the doctor route,” Sahni recalls. Despite facing initial rejection from investors, he persisted in building consumer loyalty rather than relying on franchises.

Healthians employs an asset-light model, strategically partnering with standalone pathology labs equipped with high-quality equipment. The brand has positioned itself as ‘different’ by offering a range of free services, including home sample collection, doctor and diet consultation, and vital health checks for family members. This consumer-centric approach has proven to be a winning strategy, with Healthians collecting around 3,000 samples daily and completing 10 million tests to date.

Choosing the National Capital Region (NCR) — India’s most competitive diagnostic market — for its initial operations, Healthians embraced a ‘Red Ocean’ strategy, directly competing with market leaders and rivals. Today, 90 percent of the company’s revenue is generated from this region, showcasing the success of this strategic decision. Healthians navigated challenges through strategic pivots since its inception. Starting as an aggregator of diagnostic labs, the company transitioned to a logistics model and eventually took control of lab operations to ensure both timely sample collection and test quality. The unique challenges of each pivot underscore the company’s agility and commitment to delivering accurate and reliable diagnostic services.

Looking ahead, Healthians aims to deepen its presence in South India, with planned investments of ₹50 crore to expand into Bengaluru, Hyderabad, and Chennai. The company anticipates adding over 200 labs and 3,000 phlebotomists across 30 cities in the next 18 months. However, the challenge persists in smaller cities, where unorganized players dominate the diagnostic market.

While online penetration of diagnostic tests in India is currently under 1 percent, Sahni sees this as an opportunity for significant growth. A potential game-changer could be government intervention to regulate the industry, standardizing equipment use and calibration. Sahni believes that building a business around consumers will naturally thrive once regulatory measures ensure industry standards. In conclusion, Deepak Sahni’s journey with Healthians exemplifies a commitment to innovation, consumer-centricity, and overcoming challenges in a complex sector. As Healthians continues to redefine the diagnostics landscape, Sahni’s vision for a regulated and consumer-focused industry might well be on the horizon.

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Entrepreneurs

Aravind Sanka, Pavan Guntupalli, and Rishikesh SR

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In the bustling landscape of India’s transportation industry, where giants like Ola and Uber have long dominated the ride-hailing sector, a unique and dynamic start-up is making waves. Rapido, the two-wheeler taxi service, has not only captured the attention of commuters but has also attracted significant funding from prominent investors. At the helm of this innovative venture are the visionaries Aravind Sanka, Pavan Guntupalli, and Rishikesh SR.

Aravind Sanka, one of the co-founders of Rapido, is a visionary leader with a passion for transforming urban commuting. Armed with a degree in Computer Science from the National Institute of Technology, Warangal, Aravind brings a strong technical background to the table. Before co-founding Rapido, he gained valuable experience working at companies like Microsoft and Tally Solutions. Aravind’s vision for Rapido goes beyond just creating a successful business; it’s about revolutionizing the way people commute, especially for short distances. He believes that two-wheelers can play a crucial role in easing traffic congestion and providing a cost-effective solution for daily commuting needs.

Pavan Guntupalli, another key figure behind Rapido, is a seasoned entrepreneur with a knack for navigating challenges. With a background in Computer Science and Engineering from the Indian Institute of Technology (IIT) Madras, Pavan embarked on a journey that led him to co-found Rapido. Pavan’s expertise lies in understanding the complexities of the Indian market and devising strategies to overcome obstacles. His commitment to building a sustainable and user-friendly platform has been instrumental in Rapido’s success. Pavan envisions Rapido not just as a service but as a solution to the daily commuting woes of millions.

Completing the trio of visionaries is Rishikesh SR, who brings a unique perspective to the table, especially in shaping user experiences. Rishikesh is an alumnus of the Indian Institute of Management (IIM) Indore, with a background in Computer Science and Engineering from the National Institute of Technology (NIT) Calicut. Rishikesh’s role in Rapido extends beyond the technical aspects; he focuses on ensuring that users have a seamless and enjoyable experience when using the platform. His understanding of consumer behaviour and market trends has contributed significantly to Rapido’s growth. Rishikesh is committed to making Rapido the go-to choice for daily commuting needs.

The journey of Rapido hasn’t been without its fair share of challenges. In the initial years, convincing both consumers and investors about the viability of a two-wheeler taxi service posed a significant hurdle. However, the founders’ determination and belief in the potential of their idea propelled Rapido forward. The company’s commitment to safety, affordability, and efficiency has resonated with commuters, leading to a steady increase in its user base. Rapido has not only transformed the daily commute for millions but has also become an attractive investment opportunity for venture capitalists.

Rapido’s success can be attributed to the innovative mindset and strategic thinking of its founders. In a market where four-wheeler ride-hailing services dominate, Rapido found its niche by offering a faster and more cost-effective solution for short-distance travel. As Rapido continues to expand its footprint across cities in India, the founders remain focused on enhancing the platform, exploring new technologies, and addressing the evolving needs of their users. The recent funding rounds indicate a growing interest from investors who see the potential of Rapido to revolutionize the urban commute landscape further.

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