Deepak Shahdadpuri, managing director and founding father of DSG Consumer Partners (DSGCP), isn't always your average mission capitalist. In a international passionate about generation, he doesn’t care much for it. But that hasn’t stopped him from making a success investments in a number of the largest and most promising Indian tech startups such as the likes of OYO, Zipdial (offered to Twitter), and Cleartrip.
As part of the Moneyball series, in which we communicate to the top traders within the country to get their views and insights on the new sectors within the Indian startup ecosystem, CFT stuck up with Deepak Shahdadpuri this week.
His investment organization, DSGCP, became released in 2012 and is headquartered in Singapore. It has extra than $one hundred Mn under management and 37 businesses in its portfolio. Deepak has revel in of correctly scaling brands like Sula — growing it from having a 2% proportion within the Indian wine marketplace to a market chief with 60% dominance. He has extra than 16 years of enjoy in non-public equity and has labored with the likes of Reuters Venture Capital, Bain & Company, and Ernst & Young.
Deepak just specializes in constructing customer manufacturers, he says. According to him, era advancement has enabled organizations to transport far from conventional modes of advertising and marketing through print and broadcast to devising customised and targeted advertising techniques based on patron likes, dislikes, behavior, intake patterns, and different records.
He says that Millennials don’t realize of a existence minus technology — they have grown up with mobile telephones and smartphones and the internet, and businesses can’t promote common products to them. They also are in all likelihood to invite why there may be no unique product class for humans like them. A lactose illiberal purchaser who wishes a non-dairy equal of milk is consultant of this evolution in consumption behaviour.
Legacy players and massive, installed manufacturers still haven’t gotten used to the new regulations, says Deepak, including that they will take a long time to get to a place where they can cater to such niche demands.
There are innumerable such small segments that have awesome market capability, but huge players fail to realise them. Their loss is startups’ benefit. Startups are diving into these spaces and growing products to cater to area of interest consumer demands, regularly leapfrogging their large incumbents.
He believes that each in area of interest classes wherein there may be no nearby champion and in massive categories with massive players, entrepreneurs have the scope of making it huge because they are extra agile at meeting customised desires in comparison to large groups.
Deepak DGCP investment
Here are a few excerpts from this week’s Moneyball with Deepak Shahdadpuri:
CFT: What is your funding thesis?
Deepak Shahdadpuri: Over the next couple of many years, we can see the next generation of brands inside the client packaged goods area (CPG), in an effort to create categories that don’t exist in India nowadays and could task the set up manufacturers. This is being pushed by means of some of tendencies that allow new brands to talk with their target customers greater correctly and the clients demand that products be greater personalised. At DSGCP, we handiest spend money on these customer manufacturers growing merchandise, offerings, and ancillaries.
CFT: One of the common lawsuits from the Indian startup surroundings has been about the frequency and price of departures. Many consider this can trade after the Walmart-Flipkart deal. What is your view?
Deepak Shahdadpuri: The hassle with the media is that it's far too focussed on unicorns, too focussed on tech, too focussed on the likes of SoftBank and Tencent, which to me is all noise.
Businesses are being disrupted throughout classes. I don’t do natural tech performs; tech is probably an element however I do only customer. When I commenced DSGCP in 2012, I positioned the word “patron” in my firm’s call — there weren’t many that could try this due to the fact they felt it'd were uninteresting.
I’ve had 5 exits and I could have had more, however I decided now not to sell many positions. In the coming instances, you may see a large amount of M&A and other transactions like IPOs, but India is at the back of the curve. When as compared to the likes of the United States, China, and Europe, we're in the back of on each metrics by as a good deal as 10 years, so there is nevertheless an extended way to head.
CFT: How do you method your investments?
Deepak Shahdadpuri: I don’t spend even one 2nd obsessing approximately the generation and I don’t consciousness on IP (intellectual assets). What I do examine are consumer manufacturers… manufacturers which can be a characteristic of boom in India on discretionary spending, because our in step with capita GDP is going up inside the time to come back and that’s all I care approximately.
If you were an entrepreneur who wanted to get into the branded non-tech space, 10 years in the past, there has been no one (investor) you could visit. Going with the aid of my song report, I can’t consider many entrepreneurs within the customer area who received’t take money from me over someone else, and this is a end result of specializing in one place. Success breeds fulfillment.
At my company, we don't have any listing of what we do but we've got a protracted listing of what we don’t do.
Over the last five years, my largest competetion has been Sequoia — they have a totally capable non-tech crew and we've got finished deals where we have co-invested with them. We have also co-invested with Saama Capital, with whom we have had 8 deals during the last 10 years.
Some other gamers running on this area these days consist of Kanwaljit Singh at Fireside Ventures and Nikhil Vora at Sixth Sense, each of whom are consumer-dedicated traders, very just like me.
CFT: Is there a trend that’s emerging most of the groups you invest in?
Deepak Shahdadpuri: Within my section, the very exceptional founders are targeted on solving a actual patron trouble with a very focused and personalized answer. Generic manufacturers solving broad issues aren't as applicable.
CFT: Has there been a alternate over time in how VCs are perceived?
Deepak Shahdadpuri: VCs at the moment are beginning to become greater specialized and seeking to make investments where they could carry real cost similarly to capital. This may be in many forms, consisting of sector expertise, operational excellence, geographic specialisation, or some different tangible detail that founders are seeking out. The days of providing capital simplest are long past and the excellent founders are searching out VCs to be companions, and now not simply sources of capital. VCs who do no longer convey price addition will locate it tough to compete for the very nice offers.
CFT: What kind of agencies/sectors do you cognizance on?
Deepak Shahdadpuri: The patron segment has a completely large definition and covers the entirety from CPG, meals, liquids, personal care, healthcare, schooling, food production, clothing, electronics, and so on. At DSGCP, we consciousness on companies that we consider can both create a category or can disrupt the prevailing players in the class.
Our project is to put money into corporations which can become #1 or number 2 in their category or in a niche one.
Examples from my investments consist of Sula Wines, India’s No 1 wine brand, cold press juice organisation Raw Pressery, main Greek yogurt emblem Epigamia, condiments and food offerings employer Veeba and leading chai meals services emblem Chai Point. Then there is Chope in Singapore and Eazydiner in India, both leading restaurant reservations corporations.
CFT: How a lot stake do you observe taking and at what price tag size?
Deepak Shahdadpuri: We like investing early — often pre-product, pre-sales, or even pre-incorporation. We paintings with the founders to assess the capital required to do the desired new product improvement after which take it to market for a pilot to evaluate the product-market in shape.
From beyond revel in, our first investment price ticket is between $250,000 to $ 2 Mn. We follow-on our fine agencies and might make investments up to $5 Mn in keeping with company from our flagship fund. Anything above that might should come from our opportunities fund.
CFT: Have you finished with Fund 2?
Deepak Shahdadpuri: We have stored a massive part of the fund in reserve which we utilise for follow-on investments. We enhance a fund every three years and for each fund, we observe about 20 corporations. Our fund length is surprisingly small due to the fact for seed and Series A, you may’t install plenty capital. We will enhance Fund three atthe give up of this year or next 12 months.
CFT: What books/authors/personalities do you observe, what might you suggest?
Deepak Shahdadpuri: I like books on entrepreneurship. Authors I might advocate are Peter Thiel, Ben Horowitz, and Tony Hsieh. These days, I study fewer books and greater on-line on The Information, Medium, and different websites centered on entrepreneurship and client brands.
CFT: What’s your advice for startups trying to pitch to you?
Deepak Shahdadpuri: Do what you’re virtually captivated with, choose a niche and be damn good at what you do. Many are too broad too early in their method. In the context of the purchaser international, a emblem cannot be the whole thing to all of us. Brands should communicate some thing this is applicable to their goal clients.
This article is a part of CFT’s MoneyBall series in which we carry you up close and personal with the pioneers of the funding world. Dive in to find out approximately what excites them, their perspectives at the modern era and funding developments and what the destiny looks like from their viewpoint!