Prosus Ventures’ next big bet in India could be in the AI-based agri-advisory segment

Prosus Ventures (formerly Naspers) has been on a roll in India with its portfolio start-ups maturing into unicorns, while a few others are heading for IPOs. Some of these successes include Eruditus, Urban Company, Meesho, PharmEasy, Swiggy and BYJU’s. Recently Prosus acquired BillDesk, taking its India investment in India to over $10 billion. These bets straddle across a unique mix of sectors that have outperformed in the past one and half years. In an interview with BusinessLine, Ashutosh Sharma, Head of Investment for India, Prosus Ventures shares his investment strategies and insights on some of his major picks.

There’s no gameplan. We are not a fund, we are a publicly listed company. We invest out of our balance sheets and our exits also go into them. This allows us a lot of flexibility in terms of holding period. I don’t need to return money to LPs (limited partners) after 10 years. Similarly, I didn’t face the mandate to only do early-stage funding in consumer tech and SaaS in India. We work on very flexible engagement terms and that gives us an edge over our peers investing from funds.

Given the longer holding period, we are never in a hurry to push our portfolio companies to go for an IPO so that we get exits. It’s always a business decision from their end, depending on whether they need public market money, their willingness to provide more predictability to the public investor and the evolution stage of the product. They also would need to follow compliances and that falls on the management bandwidth. On the positive side, if you are a consumer company, there will be a lot of buzz around the brand and that will also help in attracting good hires.

We never look at investments as Pre-IPO, Series A or Series B, and we will never do a pre-IPO to exit, just post listing. All our bets are high conviction bets and we want to hold on to them for much longer. I only intend to do a pre-IPO fundingwhen there will be a long runway left for the company and I would like to continue working with the management to help them deliver on their business promise. We are not opportunistic about what a macro incentive is today.

Our cheque sizes vary a lot as we don’t depend on LPs. Our smallest cheque has been of about $15 million and the largest must have gone a few hundred million dollars. Quite a big spectrum.

The overall strategy is to find a product that will have a critical impact on the masses and that product needs to be technology-enabled. We want to work with local founders who can deliver on both product and technology. All of our companies like PharmEasy and Urban Company, besides providing shareholders value, are creating meaningful impact.

Over time, when some of these companies graduate to become a certain size and we find enough similar companies in our global portfolio, we hive them into separate verticals of the global parent. That’s how when we started investing in Swiggy and BYJU’s, they were within the ventures but eventually, we hived them off.

The ecosystem and quality of founders have matured so much in India that we have started to look into very cutting-edge AI and agri-advisory. It has advanced so much. Today you can take a picture of a plant and upload it on the cloud, and machine learning will tell you what pest is troubling your plant and exactly what pesticide formulation should be used to get rid of it. We are looking into those areas at present.

Our view doesn’t change because of what’s happening elsewhere. We found a great market in India. We take independent decisions and what happens elsewhere doesn’t matter to us either way. For others, in the short term, you will see rebalancing of portfolios and money coming to India. But even before the China crackdown, capital has not been a problem for India, at least for the past one and a half years.

Without going into specifics, Swiggy’s themes and ambitions are very public. They want to bring convenience to the users’ lives. I think the way Swiggy thought of food was to build this one layer and add on more layers to it like groceries, and door-step deliveries. We are very bullish on Swiggy’s plans and will continue to push behind on what they do.

Mergers aren’t easy. They involve two different entities, cultures and people coming together. Both of these managements have spent inordinate time in trying to find a middle ground. Once this is finalised upon, it can take six to eight months to integrate and sometimes even four months. As of why there are acquiring so much, it is pretty clear in both cases that they want to essentially become an end-to-end offering for their customers.

We don’t replicate ideas. At the core, we believe our role is more of support. The founders know the market better. Every country, every economy, and every market has a different context. One of our advantages is that we have investments and operations across 90 countries and therefore, we know what’s happening and the best practices in these markets. Hence, we can open up that ecosystem for our portfolio start-ups if they want to enter into a certain market.

If we do something interesting in India, we will look for similar opportunities in Indonesia, because they are similar economies, but we wouldn’t want to start our own businesses there. Meesho is one such idea that has come out of India. There is no one like this in the world. When we are talking to similar start-ups in Brazil or Indonesia, they say ‘we are the Meesho of Brazil or Indonesia’.

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