SAIF Partners invested in Swiggy when they just had a landing page – today they are going after more seed stage startups, here’s why

• In an exclusive interview with Business Insider, the million dollar men Mukul Arora, Deepak Gaur and Mayank Khanduja, of SAIF Partners sit down to discuss how they invest in startups.
• They are now willing to go as early as possible in the fund cycle of a startup.
• SAIF Partners has been an early investor in Paytm, MakeMyTrip, Swiggy, Firstcry, BookMyShow, Rivigo, Meesho, Sharechat, Urbanclap and multiple others.

In one of Gurugram’s hottest properties, in a swanky new space, we walked into the office of SAIF Partners. Huddled in the conference room were Mukul Arora, Deepak Gaur and Mayank Khanduja, men who have made million dollar bets in the Indian startup ecosystem – most of which have taken off and how.

SAIF Partners has invested early in most top startups that saw a meteoric rise— like Paytm, MakeMyTrip, Swiggy, Firstcry, BookMyShow, Rivigo, Meesho, Sharechat, Urbanclap and others. The investment firm stood with them through the growth phase of these startups.

Investing at the seed stage and Series A round has always been their strategy. They are now more leaning towards investing early. They meet more than 100 companies in a week, but with few breakthroughs.

We sat down with Arora, Gaur and Khanduja, as they discussed what they look for in a company.

“Our approach is to invest in the best team in place. We have a very focussed approach to investing - unlike some other funds which invest in multiple companies in the sub sector, we map out each sector and try to invest in the best in them, and come in as early as possible,” said Gaur.

SAIF Partners invests across sectors – consumer tech, education, finance, healthcare, internet and IT services, logistics, mobile and SaaS companies and more.

The second leg of their approach to investing is a fundamental one – looking for the right business model. They look for companies that are customised for India, rather than replicate what’s happening in other countries.

The third aspect is that they continue to support and invest in those companies as their horizons are fairly long. “We invest for 7-9 years. We try to invest as much we can according to our fund circumstances across multiple rounds,” said Gaur.

So what’s the trick to getting funded by them?

A team that has a very fundamental approach to problem solving, where it understands how to solve a real problem in the right manner. It has to be a strong and ‘rightly motivated’ team – which is not creating short term goal or scale but sustainable impact. And of course, capital efficiency in the initial stages.

How they cracked Swiggy

SAIF Partners invested in Swiggy, when the foodtech unicorn had just a landing page. They had met over 50 teams in the foodtech space, including some of the large names out there today. What they liked about Swiggy was that they understood the problem deeply – the only way is to deliver food on your own, when you have your own logistics in place and — not just build an app for ordering.

“First time, we pinged them even before they were live, they just had a landing page in July or August 2014. Then we saw the progress – they were very customer-obsessed even at a small scale, their retention was very strong, they were not offering discounts, charging a convenience fee on every order. They also have a complimentary founding team - Harsha is a very strong business leader, Nandan is great in operations and Rahul is a strong tech guy. Then we invested in the seed round,” said Arora.

Could they have predicted then that Swiggy would today be a marker leader? “No,” comes the answer.

“But that’s true for the entire consumer tech market, acceleration has happened much faster than we could have imagined in the last four years. But given their building blocks we were sure that this is the team that is likely to be a leader. We had a strong conviction,” said Arora.

Why do they go after seed-stage startups

As the internet penetration in India has gone deeper, so has a startup’s ability to reach out to more consumers. This has also led to investors going in after startups at an early stage, catch them before they become the hotshot company that everyone’s after.

“We are now willing to go even earlier than in the past. We are even talking to companies that are in the pre-launch phase,” said Arora.

A big reason for that is that the adoption of these new products or services by consumers is so much faster.

“People are so much more open to trying out some of these new products and see if they are satisfying. We had invested in No Broker long time back, we knew that there would be a market for a real estate transaction without a broker. They took two-three years to build a user base but when they started to monetise, I think everyone was pleasantly surprised to see how many people were willing to pay the money. If there’s a high quality service out there, consumers are now more willing to pay,” said Khanduja.