Economy

At Sequoia, it is think ‘scaling up’

N. Ramakrishnan | Updated on March 12, 2018

V.T. Bharadwaj, Managing Director, Sequoia Capital Advisors

We continue to discover exciting opportunities and, therefore, we continue to be excited.

“We are always excited about business models that are focussed on value and mass. There is no fun investing in a company that is going to cater to the top 10 per cent of India because the ability to scale and the ability to make a difference is less,” says V.T. Bharadwaj, Managing Director, Sequoia Capital Advisors India Pvt Ltd, on the venture capital firm’s strategy in the country.

Sequoia has three India-dedicated funds. The first, a $400-million one, has been fully invested. Most of the second fund of $300 million has been invested and Sequoia is now making investments from the third fund, which is about $720 million in size.

In a recent interview in Mumbai, Bharadwaj – or VT, as he is known within Sequoia and industry circles – said the year so far has been pretty decent as far as Sequoia is concerned.

“That basically means we are finding enough opportunities in the sectors we are focussed on,” he says. There are companies in these sectors – consumer, healthcare and technology – wanting to raise money and that are confident of growth.

On the whole the industry may not see as many deals as last year because of the economic environment, but there are sectors that still see quite a number of good deals.

VT – a BS in Engineering from BITS Pilani and an MBA from IIM-Ahmedabad who worked in McKinsey before joining Sequoia – says the sectors where people are more nervous about investing are those with a significant amount of Government involvement, especially those that lack clarity in terms of policy and demand. Infrastructure is one such where fewer investment deals are happening.

However, for businesses in the sectors that Sequoia focuses on, the issues continue to remain the same – managing growth, getting the right talent, raising funds, roping in professionals and getting expertise.

What does Sequoia bring to a company it invests in, for instance, in a sector like rural healthcare? There are two types of help that a company can get, says VT. One is domain specific expertise. The other is expertise required to scale up.

“We don’t see ourselves as people who come in with domain expertise. We think of ourselves as people who have seen the challenges of scaling up,” says VT. Sequoia has lots of experience in models that have worked and not worked in scaling up. This covers a range of functions – recruiting, marketing, financial processes, corporate governance.

According to VT, Sequoia has built a strong portfolio services team thanks to which it can take out all the functional elements in a company it invests in. These include marketing, HR, legal, finance – all areas in which Sequoia will be able to provide support. That is the functional expertise that Sequoia provides to the companies. The third aspect is the strategic side - what mistakes people make and how to avoid them.

On trends in fresh businesses, VT says there is a lot of activity on the technology front. There is a growing number of product companies with their base in India but looking at the global market for their products.

Has the economic situation altered Sequoia’s investment and exit strategy? “For us nothing has changed,” says VT, and adds, “we are a long-term investor, with a 10-12 year perspective.”

Sequoia has a portfolio of 70-odd companies and has invested close to $1 billion and it continues to do so at a steady pace. “We continue to discover exciting opportunities and therefore we continue to be excited.”

On the exit environment, VT says, “we have always held the view that if you build a good company, exits will happen.” When the exit will happen is a function of time. Sequoia, he says, does not have a preference on the exit mode. “The preference for exit is driven entirely by the entrepreneur.”

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Published on October 07, 2012
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