The first thing that strikes you about Vaibhav Agrawal is that he has all the fabled drive the startup world is known for. The physician turned entrepreneur turned investor quickly brings you up to speed on his background, interrogates you keenly on yours, before moving on to the investment strategy of Lightspeed — one of India’s biggest venture capital firms. Agrawal, a partner at Lightspeed Venture Partners, feels that having been an entrepreneur — his first business was that of a chain of healthcare clinics (Prima clinics) — he understands a startup’s passion for bringing about growth and change. Excerpts :

What is Lightspeed’s investment strategy?

We typically invest in early stage technology companies going after large markets in India and South Asia. We are sector agnostic. The only thing that matters to us is whether you can drive a wedge in a large market in an interesting way. More than half our investments are in Series A (the first equity funding stage), and, within that, more than half of those are seeds. All of us were founders before, operators before, so we enjoy rolling up our sleeves and partnering with the entrepreneurs.

When you are so sector agnostic, doesn’t it become difficult to be on top of everything?

We think entrepreneurial energy is hard to structure. Who are we to draw a bound around what young entrepreneurs decide to do? In some ways we think of ourselves as enablers for founders to realise their dreams.Therefore we don’t apply our agenda on what to go after. Yes, that has both its benefits and challenges. There is a lot more to stay on top of and suss through. On the other hand, we find that great entrepreneurs want to go and solve new and hard problems so it’s an opportunity. Also lessons learnt in one sector are replicable in others. To give a simple example — financial services, education and healthcare are similar. All three are trust driven businesses. And lessons from one can be transferred to the other .

I understand 80 per cent of your portfolio is early stage. What prompted you to invest in a later stage in the remaining 20 per cent? Which are these companies?

Over the course of our evolution over ten years, we have moved from very early stage companies to pre IPO firms. We acknowledge that we cannot meet all founders at the start of their journey. In case there are companies that are farther along the journey, and require funds, we are open to that too. If you look at the journey of a large successful company, it is a multi-decade one, so whether we back a company in the first 12 months, or first 36 months, it is still early enough. Yes, the nature of funding changes, the cheque size changes with the maturity of the company. It might be less about the product marketing but be more about growth. For example, we backed Zetwerk[a marketplace for manufacturing firms] at series B.

You have invested around $750 million in India. What’s the value you have created?

Unfortunately, we are not at liberty to disclose fund performances. But the scale achieved by a few companies we have partnered with can give you a sense of the value created. We bagged, at an early stage, OyoRooms, Byju’s, Udaan and Indian Energy Exchange that went public. In addition there is Sharechat, Zetwerk, and Innovaccer (Reports suggest that Lightspeed multiplied its investment 35 times in Oyo).

How long term is your horizon when you invest?

Our funds are 8-to-10-year fund cycles. In our business, it is about taking long term bets in one market which is why we are comfortable coming in early and almost co-building with these entrepreneurs. This is also why we are very selective in who we partner with.

Well, the average lifecycle of a company is shrinking now. So investors’ investment cycle too must need to come down…

Let me give you an insight. If you just look at startups and VCs on average it never gives the true picture. You need to look at the outliers. And our business is working with and building outliers. If you look at the market cap of most successful companies, or the top five most valuable companies today, it will paint the picture of the value diminishing or increasing in the internet economy.

How much equity do you typically take in a company?

It varies. A variation of the question we get asked is what is your cheque size or ownership pattern. The reality is that the market sets the price and how much capital an enterprise needs. We have handed out cheques from anywhere from $500,000 to $10 million at a seed stage.

Coming to the pandemic and your investments, did you look back at your portfolio and feel the need to rethink investments in future?

I would say Covid-19 has had a super positive impact on the Internet economy. The entire human race had to completely move online. It has been a massive black swan event that ushered in a decade worth of behaviour change in a short ten months. It certainly has a hyper positive impact on categories like education, e-commerce, healthcare, financial services and B2B software. Sectors where companies have been hit are mobility, and the whole sharing economy, whether automobiles, homes, or offices. And travel and hospitality.

So how does that impact the way you look at your portfolio? Especially Oyo?Would you stop going to a hotel forever?

We have a slightly different view of the world. We believe that humans are social creatures and while in the short to medium terms we are living our life differently, we don’t have the view that it will continue. Just as people won’t stop going to doctors, they won’t stop going to a hotel. It may take longer of course. That may be so. But the kind of hotel one may visit will change.

As an investor aren’t you worried?

I don’t have much to add on Oyo specifically. I don’t believe humans will stop travelling.

As an investor what are the trends for 2021 that excite you?

Remote working is one of the trends we are excited about. We believe that a certain fraction of the workforce will continue to function remotely and a whole suite of products, tools and experiences to facilitate this will become important. The other trend is remote conferences. With trade exhibitions, conferences going virtual, there is a unique opportunity for event organisers to create hybrid solutions.

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