Rajesh Sawhney Curated
Co-founder of Innerchef, Founder GSF Accelerat...
CURATED BY :
How is the Media scenario of India?
India is moving into an entertainment economy. The power of the consumer is shifting to the small screen from the big screen. We are witnessing Four Screen Paradigms – cinema, TV, PC and, most importantly, mobile. I think the coming decade will belong to mobile screen as far as entertainment is concerned.
How do you feel about Reliance Entertainment?
I am thrilled to be part of Anil Ambani’s vision to drive entertainment on the mobile screen. He has ambitious plans in the entertainment business. I will be driving the growth in mobile, gaming and portal space.
What’s the future of accelerators in India? Is there a consolidation in making?
We are at a very early stage of accelerator evolution ( or revolution) in India. In Silicon Valley alone, there are 100 plus accelerator while in the whole if India we don’t have more than 5-6 active accelerators. I think coming years will see many many newer types of accelerators and incubators and hybrid of them, but as is true for all startups, only a few will thrive. At GSF we believe in working with the best talent whether it’s the startups or EIRs. This obsession with quality is now manifesting in the performance of our portfolio companies. Already 15 of our companies have raised seed rounds and 6 have raised series A rounds from leading global VCs.
GSF has been interacting with global entrepreneurs. What do you think Indian entrepreneurs can learn from their global counterparts?
The ability to think big and execute at scale is what distinguishes a global entrepreneur from the rest. I think many Indian entrepreneurs have this opportunity now to build global scale companies, but they need to build cross-culture high performance teams and have the agility to move quickly. They also need a much deeper strategic vision.
As an entrepreneur, what has been your biggest learning building GSF?
Biggest learning is to unlearn everything that learnt over 21 years of corporate career building big businesses. Working with startups requires an extremely agile mindset and yet infinite patience, which at times appear contradictory. One needs to be in a state of continuous and disruptive reinvention.
You have been an investor and an entrepreneur. What do you enjoy the most about these two completely different roles?
Being an entrepreneur is definitely more challenging and exciting. One enjoys the ups and downs that come with being part of a start-up. Also, one learns to deal with an unforeseeable situation and unexpected challenges and roadblocks that arise very often in the course of growth of a start-up. On the other hand, as an investor, I enjoy getting exposed to different ideas and meeting some very smart and talented founders. Wearing the investor’s hat helps me to keep learning and stay connected with the fast-paced tech world.
What draws you to the foodtech space and how do you see start-ups this sector performing in the near future?
We think “Cloud Kitchen” opportunity, especially in India and South-east Asia, will offer great opportunities to investors to build new-age foodtech businesses that not only scale fast, but also become profitable faster. As the founder and CEO of InnerChef and Healthie, I am fortunate to be at the center of this transformation; and feel happy and thrilled with the possibilities that are opening up.
How far are we from witnessing a truly global start-up success story out of India?
We have already created some of the most successful start-ups in B2B and B2C domains. B2B companies such as Mu Sigma, Zoho, Freshdesk, inMobi, HackerEarth and whatfix are already global companies and scaling fast. On the consumer side, companies like Paytm, Zomato and Ola have already built significant international operations and show positive signs of growth in the future. As a nation, we should be able to support as many start-ups with high potential as possible, as there is infinite scope: both for the market (to embrace new products) and for new start-ups to develop and expand. We are appropriately placed well on the world map when it comes to building start-ups, all we need to do is to continue nurturing start-ups and let them conquer the world on their own strength.
Is it fair to say that India’s start-up ecosystem is back in business?
Yes, the investment cycle is finally turning around after two years of relative drying out of capital. Indian start-up system has also matured and become more robust in the last two years and there are many quality companies at different stages of investments (seed, series A, Series B and beyond) that will benefit from the new investment cycle. The ‘Make in India’ initiative by the central government is now bearing fruits with many foreign players betting on Indian start-ups.
What can governments do to nurture young tech start-ups in India?
There are four key roles that governments can play. First, governments can provide direct and indirect funding for the young start-ups. This could be in the form of grants or direct funding to start-ups based on formal evaluations and due diligence of the applicants. Indirect financial support could be through relaxed tax policies or tax waivers to early stage start-ups, providing of necessary infrastructure and resources and allowing start-ups to use government-owned data for their product-market validation. Second, governments can help leading accelerators and incubators create labs and necessary infrastructure for nurturing start-ups; like what Andhra Pradesh government has done with Gastrotope. Third, governments can support seed funds by becoming a limited partner in them. And finally, they can also support angel investment in start-ups, by offering tax incentives towards such investments.
How do partnerships with governments help young tech start-ups?
Both state and central governments have to play the role of nurturer of the start-up ecosystem. A start-up can flourish only when government policies are aligned to foster new businesses and support them in their initial stages. Further, partnerships with the government can enable start-ups to work with government departments or ministries to create new solutions for the citizens. In this way, governments also end up improving the quality of citizen services and facilities with the help of start-ups.
What would be the repercussions of the TinyOwl incident on food tech?
In the last three years, investors have started funding young people. I celebrate that. We should be age agnostic. Will one of the repercussions be on young founders? I hope not. But food is a more complex business - it is not an app business. If you fund the company ahead of its maturity curve, that's the problem. I think food will attract massive capital in 2016-17 across the world. Don't write off the sector.
Does InnerChef incorporate a home-chef model?
We have a hybrid model. In Home-chef, we only do desserts. They have a shelf life of two days. We also do ready-to-cook. We created an ingredient box and said you can cook a meal in 15 minutes. This trend is becoming mainstream in the U.S. Of course, we have the kitchen-in-the cloud model too. We are going after the Rs 100-300 price point market. I'm not interested in Rs 100 and below. InnerChef has the highest per order value at Rs 500 in the industry. That's a great model. If you take out 30 per cent food cost and 10 per cent packaging cost, I have 60 per cent gross margins.
What do you think of the 'home-chef' model where a start-up aggregates chefs on its platform?
They are doomed if its food - apart from desserts. It is not scalable. It all fails at the delivery. It is a double delivery cost. Food needs to be delivered fresh. It cannot be brought in, stored, and forwarded. It is a nightmarish model to scale. Then the other issue is that the home-chefs are inconsistent. Everyone is struggling with this model.
Is the 'kitchen-in-the-cloud' model scalable?
Hugely scalable. You replicate the kitchen. Every kitchen has a catchment area - if the catchment area is too big, food will be delayed. This model is working across the world - Munchery and Sprig are examples.
Is there a bubble in the food tech sector?
Not a bubble; just froth. There are two models - one is the marketplaces or aggregators. A marketplace inevitably becomes a winner takes all market. This is the VC assumption about marketplaces. You cannot have five-six marketplaces. Consumers will inevitably use one or two. What we are seeing is consolidation - initially 10 angel rounds happened. Six will go to Series A, which has happened. Two or three will survive and that will happen at Series B and C levels. Venture Capitalists have put in too much money into too young companies, too early. Think of TinyOwl and Swiggy. They are two years old. VCs pump money fast and say 'Download lao'. How can the founder get downloads? He will employ more people, go to 30 markets instead of three, starts incentivising consumers with discounts. Inevitably, in this market, consolidation will happen. We shouldn't worry about it. This is the nature of venture industry; the nature of Internet markets. So companies will pivot, change, merge. The other model is the 'Kitchen-in-the cloud'. I think it is a deeper disruptive model which people have not understood yet. If you go out and eat today, the bill is Rs 1,500. InnerChef can give you the same food at Rs 500. Why? Because we do not have real estate costs. Then restaurants have capacity constraints. If there is 1,000 sq ft. space, 800 goes to seating people; 200 for kitchen. For me, 1,000 sq ft. is all kitchen. I have far more capacity to serve from that kitchen. The restaurant's per unit realisation is higher but kitchen-in-the cloud model will have a long life. It has worked out all across the world.