Dhruv Sharma: Hey there, listeners. It's the middle of the week. It's Wednesday, October 14. This is TON one five one. We're streaming live. We have a great lineup today, and we're gonna welcome our first guest in just a second. Today, we are speaking with... Utsav and I are speaking with Archana Jahagirdar, who is the founder and managing partner at Rukam Capital. Archana, welcome to The Offline Network.

Utsav Somani: Welcome to TON.

Dhruv Sharma: That is so gracious, Biyun. We're we're very, very good to have you, Archana. What is top of mind for you these days?

Archana Jahagirdar (Rukam Capital): Investment, economy, the macro. I mean, there are too many bombs and missiles flying around the world.

Dhruv Sharma: Right. Tell... Pick one of them, and and let's just go deeper and get started over there.

Archana Jahagirdar (Rukam Capital): Look. You know, even though we are in the world and time of deglobalization and the world is now supposed to... Everyone is supposed to fend for themselves, but having said that, supply chains are what they are. So even though India has, of course, a very, very deep market and we are very grateful for that, but unfortunately, supply chain is what it is. So, you know... And everything ultimately is based on the crude prices. So the minute there is any disruption around the world, businesses in India do get impacted. And especially if you're a small business, which is what all startups are, it has an impact and they, of course, don't have the cushion to absorb it and they don't have the cushion or the brand sort of salience to be able to increase their prices. So really then it's the the, big bad wolf, called the VC who steps in and helps with the burn. But, but really, I think, it's a it's a challenging time, for startups because of the macro, not because of... And global macro, not because of how India is or demand is. I think demand is fantastic in India.

Utsav Somani: So you're coming from a journalism background, calling yourself an accidental VC. And there are two camps in venture that I've typically come across. One is like, hey. We need an operator VC. We need somebody who can help us build this company and scale this company. And then there's somebody who says that, hey. Some of the best investors were always from varied backgrounds, like a journalist, like Mike Moritz and others, in the Sequoia camp as well. So how does being a journalist help you pick out that red flag or the green flag to look out for in a founder when you're chatting with them?

Archana Jahagirdar (Rukam Capital): You know, I think too much is being made. I think people are, you know, working on very slim pickings to try and differentiate themselves. And I think this is where a little bit of this marketing thing is coming from there. Oh, I built a zero to one company, and therefore now I know all zero to one journeys. And, you know, nothing is more laughable than that because, you know, if you build something, let's say, in 2010 or 2015, I think you'd be completely lost in how things are getting built today, in 2026. So first of all, I don't think there is a zero to one journey because as the markets evolve, founders evolve, technologies evolve. So it's a discovery. And what you need is actually, again, the much abused sort of phrase of first principle thinking, which is, which has been abused a lot because everybody thinks this is fancy jargon that only engineers understand. But honestly, the whole point of a liberal arts education and therefore journalism is critical thinking. So the... If you know how to think and break down a problem, and then in a very logical, critical thinking way arrive at a solution or a possible solution, that's what you need as a VC, especially when you do early stage investing. If I was doing private equity, I think it would have been, maybe some of my, understanding, you know, could be questioned. But I think when you're doing zero to one sort of a journey early stage, you really are imagining a future which is completely fuzzy. And that's really what you do as a writer. You're looking for something that's not so fully articulated, but when... Once it's articulated, it hits a nerve and it's common condition across a very wide swath of people, which is why literature or any sort of, you know, creative arts transcends time and even periods, you know, so something that was written, let's say, many, many decades ago still holds relevance because it talks about a human condition that's as relevant today in the day of generative AI as it was when there were horse carriages. So I think critical thinking is what sets you apart as an investor, not whether you did that zero to one. And the other very important point, I think, you know, in our attempt to show ourselves to be somewhat somewhat special as investors, what we are forgetting and not acknowledging enough is the entire domestic VC ecosystem that has got set up. The VC business is a very, very challenging and a brutal business. It's a Darwinian business. It's much more brutal than, let's say, an operating business, because you're almost as good as your last investment, as good as your last sort of fund. And, you know, anybody who's building a VC zero to one in India is as much an entrepreneur. So I don't know why we want to be gatekeepers and keep certain people out and anoint certain other people as being more special. So I think, I think we need to be inclusive and embrace whoever wants to, make an honest attempt at something.

Dhruv Sharma: Fantastic. Welcome. Yeah. Yeah. Well said. And so, Archana, if VC is a Darwinian business, what are you guys doing to adapt? What are your peers doing to adapt to the extent that you can speak for them? And and and conversely, you know, the founders were approaching you for advice both from within the portfolio and outside. How are you advising them to adapt in these times?

Archana Jahagirdar (Rukam Capital): See, that's a cool point. Right? I think a founder has to be a generalist. Again, this specialist founder having put on a pedestal is I think slightly problematic because you don't have only a special problem thrown at you on which you are a specialist. Right? So I think the best founders are those who try and solve everyday problems because that's what you need to do as a founder with imprecise and imperfect information and data. Again, anybody, as an early stage founder tells me that, oh, I am top of my data and I just wanna laugh because how can you be on top of data? Because you're building in a space where data doesn't exist. You're building for the future. If you're building for the past, I'm already not interested in you. You know, I might as well then just go into the capital markets because that's where the past lives. In a sense, the past and the present lives in the capital markets. The future lives in the VC, domain. So I think my advice to founders at all times is you've got to embrace your problems and try and find solutions that work in your current context. You cannot try and solve for the next five years. You can't try and solve for everything that's get... Gets thrown at you. So, again, the ability to judge as to which are the battles you pick for that day because there are so many battles that get thrown at you, both whether you want them or not. And that judgment to my mind leads to both failure and success. And to me, the best founders are those who are able to find their way through all of that without getting completely destroyed by the fact that there are no easy answers on a day to day basis.

Utsav Somani: We're getting some awesome nuggets out of you, so I'm gonna continue this trajectory.

Archana Jahagirdar (Rukam Capital): One one positive of being a writer is you know how to give pithy comments.

Utsav Somani: And the other thing is you've watched, you know, short form content yourself, so we're gonna get some short form content for our team also. If I'm a consumer founder walking into your, conference room asking for a 3 crore pre seed round, building a consumer brand and any, exciting d two c category that's out there. What is one or two red flags that will, I mean, shoot... Make you, like, scared and one or two green flags that'll make you lean forward?...

Archana Jahagirdar (Rukam Capital): That amount is itself a red flag today because I don't think you can build anything in...

Utsav Somani: Hypothetically, it's a lot.

Archana Jahagirdar (Rukam Capital): Anyway, but even seriously and, you're not talking in in specifics, I think 3 crores is too little, to raise today. I think a lot of founders are fearful of the fundraising process, especially when they are raising the first round. So their instinct is to ask for a lot less thinking that's how they'll get past the door. While, again, you've got to be both pragmatic and optimistic when you're fundraising because pragmatism will ensure that you have, you know, investors who will take you seriously. But optimism is where you have to be able to communicate a story to the... To an investor who will give you more than 3 crores, and it's very important to get actually more than 3 crores. I think today, the right check size for a a pre revenue company, but which has a plan in place and, you know, where it's about to launch would be at least 5 crores. And, of course, this would change significantly depending if you're doing verticalized coupon. 5 crores is, just enough to sort of, you know, write the term sheet. Maybe it's not even enough to, get you started. So I think for a founder, for me personally, it really matters as a founder understand what... How do you, correctly capitalize yourself? I think capitalization is one of the most misunderstood, part of the entrepreneur's journey today. If you raise too little, you live under this great illusion that you achieved a milestone, you've got some money in the bank, but then it's not enough to... For you to really do the iterative process, which is what it is in the zero to one journey. You raise too much, and, again, you get excited. You got a fat valuation, but then, you know, you have a very, very nervous investor. You yourself make a lot of mistakes because you're no longer thinking judiciously. You think that money is gonna solve all your problems. So I think one important thing I would like to say to founders and is... It's a red flag for me. When a founder thinks that capitalization, is the solution to all problems, and it never is. And the green flag is, of course, when he said that, they understand, what needs to be built.

Dhruv Sharma: Yeah. I wanna ask a related question, Archana, which is, what is a good way and a bad way to arrive at the ask? So... Alright. Let's, let's fly with a five pro number, but what's a good way to arrive at that number or in that ballpark, and what... What's an absolutely stupid way to arrive at that number? Generally, what we hear people say is, figure out how much you need for 18 and then get a little extra money because it... You know, fundraising takes time out of the day to day, so you might as well get a little extra gas in the tank, so to speak.

Archana Jahagirdar (Rukam Capital): So the stupid way that, a lot of farmers do is also and so building, you know, and you can just put any category, and fill in the blanks there. So and so has raised so much at such and such valuation. So therefore, here, give me exactly the same thing. And I'm like, you know, you're not that same founder even if technically you're building in the same category. I think you've got to learn to answer your why as opposed to somebody else's why. The minute somebody tells me that all founders are not born alike, and we must be aware of that as founders and not just, run it as a vanity project that because somebody else got a certain valuation in a certain category, there is no such thing. I think, you know, somebody... An early investor in Innovist was telling me that, you know, he could, very rarely get the skin care sort of, you know, high evaluations. And, but look at the outcome you generated. Right? So you... As a founder, you've got to learn to be pragmatic. You've got to understand that when an investor comes in, it has to be a win win. It's not a one-sided game. And while, you know, the founder, of course, builds everything, but without that risk capital, it is that much harder. Then you become an SME if you can't raise risk capital, really. Right? So you've got to understand that it's a business decision when somebody gives you capital to build, and therefore it has to be a win win. So that's number one. Number two is I'm really tired of founders coming to me and saying, oh, I had oily skin, and I found there were no oily skin products. And I'm like, dear god, stop now because that's not how you really arrive at a market size. So I think if you understand a market and you've paid some attention to what you're building and why you're building, even though that category may exist on my... And and maybe there's already, you know, let's say a couple of big brands over there, I think it's important because if you understand the consumer you're gonna serve, that allows you then to understand how much you should raise. Because then you know what... How many steps you need, what's the friction to get to the consumer, what will you need to do to convince the consumer. And I think that's how you arrive at capitalization. And then, of course, there's a larger understanding of India as a market, to build it, where there are both opportunities and threats. So every business has opportunities and threats. So you have to understand, and that's how you arrive at what's the right size for your, sort of raise as opposed to just mimicking what somebody else in the market might have raised.

Utsav Somani: Tell us about your journey as a solo GP, from fund one to fund two.

Archana Jahagirdar (Rukam Capital): It's, short, brutal, and and hellish. I think, I think not enough people understand what it means to be a GP solo or otherwise. I think it's it is a very brutal business because all your stakeholders are far, far more powerful than you are. And you're constantly doing a balancing act, and you're constantly actually trying to build relationships where there's a lot of asymmetry. So there's asymmetry with your LPs. Your LPs are always much more powerful than you are. The regulator's always gonna be more powerful than you are. The founders you invest in, whether, you know, it's a hot founder for that moment or let's say it's a founder who built a very large company on which, of course, then you're dependent on your, IRR and DPI, then there's an asymmetry there because the founder also sort of knows that they've got you, you know, in a way where you're more dependent on them than they are on you at that stage at... Especially at the time of exit. And overall, the environment is, you know, demands much more of you. So you really got to be able to take a lot of bullets, not be reactive, and keep a, I would say, a very, very stable head on your shoulders and not allow people's opinion. And people's opinions are also actually very volatile, because there's so much that is said both to your face and behind your back. You know? So you really need to be able to manage, all the contradictions, that are there in the ecosystem. And then also within your own peer set, which is other GPs, you both compete and collaborate with them at all times. So there's also that whole, you know, tightrope that you walk as to how do you collaborate and then also compete, you know, from time to time.

Dhruv Sharma: No friends. No foes. It's, it'd be cool to have a VC parliament at some point because I think in

Archana Jahagirdar (Rukam Capital): I agree with you. Yeah. No friends of fools. There are no permanent friends and no permanent enemies in this business.

Dhruv Sharma: But what's admirable is, Archana, you you are building a franchise at the end of the day, and I'm curious, like, what personal convictions did you bring to this endeavor, and what have founders taught you along the way?

Archana Jahagirdar (Rukam Capital): My only conviction is a very thick skin. And I'm telling you, perseverance and a thick skin pretty much takes you through. And I think high energy... If you're low energy and you really want an easier life, I think there are easier ways to make money, than being a VC, where you're building the platform, platform, ground up. You know? But I think it's exciting because it's an opportunity. I think India as it's grown, you know, over the decades, the new sort of, you know, categories, asset classes that have got built out. VC is getting built out as an asset class right now in India, and I think it's exciting to be, part of that journey. And it'd be a a big shame that women are not participating in it, as equally as the male GPs, who are also building, you know, their own sort of franchise.

Utsav Somani: So I think as a final closing question, the festive ecommerce, sale days were here. I think 24,000 crores in GMV was transacted, and a third of that was Gen z's. And you put out a report, saying that Gen z's are, gonna define what commerce looks like in the future. So maybe any insights from that, like, top two, three insights or any fascinating, points that you highlight from the report that you shared?

Archana Jahagirdar (Rukam Capital): See, I think in every country, one is, of course, the GDP growth, which you, you know, track through numbers. But what's the human part and element to it? And I think for India, Gen z is and will be the most consequential consumer sort of generation. And to understand their motivations. Because there's, I think a lot of misunderstanding, and there's a lot of very lazy sort of narrative that, lives out there partly because of social media about Gen z. So I think one, narrative is that they're really influenced by creators. And our reporters, that's not entirely true. They like to make their own sort of decisions. The creators may lead to the identification of, let's say, a brand or a product or a category, but doesn't necessarily lead to sale. The second piece, you know, gen z is seen as a very individualistic generation. Again, what our report shows that family... It's very family first, in terms of how they want to spend their money. So it's on themselves, their family, friends, and others come after that. So I think it's interesting to see the continuing sort of some aspects of what we define as being Indian and some, of course, uniqueness within how technology, information, everything gets, played out. And I think the reason we thought it was important to bring this out, we had done a report on Gen Alpha as well, prior to this, is that as a consumer fund, it's important to understand what are the motivations. You don't also wanna treat them just as a consuming class. How do they think? What are their motivations? Why do they do what they do? And, therefore, I think we we thought it was important as a consumer fund to put out some information, put... Get some color on it, to understand this, cohort of consumers and builders, I would say.

Utsav Somani: Awesome. Thank you so much for coming on our show, Archana.

Archana Jahagirdar (Rukam Capital): Thank you for having me.

Dhruv Sharma: Thank you.

Utsav Somani: Alright, listeners. We've got Jani Pasha from Lokal joining us. Jani, welcome to the show.

Jani Pasha (Lokal): Hey. Hi. It's, hi, Dhruv.

Dhruv Sharma: Hi. Johnny?

Utsav Somani: Miss you and Bali, man. There was good amount of paddle played, and, you could have been a good player to have

Jani Pasha (Lokal): on the court. Yeah. I thought I would I would also play and, you know, win. It was exciting to see all the photographs and maybe see you in Sri Lanka in December.

Utsav Somani: Sounds good. So tell us a little bit about Lokal. Like, what does it take to build a house of apps?

Jani Pasha (Lokal): So, yeah, I'll I'll give introductions. So I'm Jani. I'm the cofounder and CEO of Lokal. I have been building, you know, Internet products for, people in small cities and towns of India for the last eight years. We have around 10,000,000 transacting users across more than 12 categories and 100 plus apps, live on Play Store and App Store, across categories like learning English, poster making, farm consultancy, astrology, matrimony, and many, many more digital content. The ambition is to build a digital conglomerate for Bharat, building multiple consumer businesses with a common platform. So, yeah, that is a brief introduction about us. And, thanks to AI, it doesn't take a lot, to build what we are building today. It just looks from the top a lot we are doing, but... Yeah.

Dhruv Sharma: Fantastic. Jani, why a house of apps and not a super app?

Jani Pasha (Lokal): I... For the first four, five years, I tried to do the super app thing. So I will explain, like, you know, when Internet first came for the English speaking use in the West and also for first, city users, Internet evolved in three prominent phases. The first phase was content consumption because if you have less than 10%... Five to 10% of people using it, it doesn't require any commitment to do it. Once you have that density, once you people understand content, they started connecting with each other for classifieds. You had then, you know, Craigslist and all coming in India. The parallel you can see is human, Satish, Shadi, just dial in everyone. And once more than 40, 50% started using it, digital infrastructure got built in payments and trust got solved. Anything and everything became ubiquitous on Internet. So it was three phases, content, connections, and classifieds, and then essentially, everything online. Commerce, you open Internet for everything to be done. So we... When when Jio came in India, we thought the journey of the user would be the same. They will start consuming content aggressively. Then they would do classifieds, and then eventually, they will do everything. And we started building it in a super app only. We had local app where everything used to happen there. And then UPI came in. It evolved exactly, but the payment fracture came very, very quick. The thing that we realized is that inherently, the user consumer behavior has to evolve. Right? Like, we first started using laptops, mobile phones, quadriple keyboards, navigation. There is an understanding of what is add to cart by journey. Right? For this user, it evolves so fast. The... Still, the user wants simpler interfaces for things to be done. UPM makes easy for them to make the payment if it is small transaction. So we then essentially... How Craigslist evolved into multiple use cases, which simplified. Lokal is evolving into that multiple use cases across these apps. So it might look like many apps, the common infrastructure, tech, distribution, everything is the same. It's just simplified for the user. So there is no conflict between someone trying to find a match on matrimony local or for someone trying to learn English using an AI companion.

Utsav Somani: So you've sort of unbundled Craigslist or a classified app and the others, but what kind of bar do you need for it to be a standalone app?

Jani Pasha (Lokal): So we worked on the playbook itself. Essentially, we kind of identify the use case on our local platform that exists today, like, what are the services being posted, requested, and then how the fulfillment happens. And once we build a hypothesis on top of that, we kind of test it by running ads. There is a testing team, speaks to the user. And once they understand there is this fulfillment that is not being done very efficiently, we kind of then build the product using existing infra. So efficiently. We kind of then build the product using existing infra. So for us to launch any use case, once it is validated with our playbook, it will take us fifteen days. And in fifteen days, when we launch the product, it is not an MVP. It has more than three, four years of tech build.

Utsav Somani: Any numbers that you can share on what needs to be true, or at least met before it's spun out?

Jani Pasha (Lokal): So... Sure. So we, think of the Matrimon use case. I can tell you the exact way how we built it. We have been building it, as a next classified thing on our application. What is true is essentially when you talk to the user, especially from this tier two, tier three location, the existing platforms that are there built for, you know, for decades are typically built for a city user who user who is comfortable marrying Hyderabad, Delhi, interim marriage, or location in a city. A small user from Careem, Nagar, or Salam come on the platform. You know? The price is very expensive, 4,000 rupee and beyond. They make that purchase, and then when they kind of connect with that person, you know, connect and contact, more often than not, our users felt humiliated because, you know, the question is around how much do you earn. If you don't own this much, why are you here? Right? And and most often than not, these people are connecting in that location close by for marriage because, you know, a marriage essentially has a lot of community activity happening. There are many things that are taken care of. A family has to come together. So when we identified the the the disturbance, the the the difference between the existing alternative that exists and the large unmet need profiles being created, we kind of pulled the plug and launched multiple applications like Karimagar Matrimony is one application, which is built specifically for people in and around Karimagar District. Guntur Matrimony is similarly in that way.

Utsav Somani: Very hyperlocal, true to the name.

Jani Pasha (Lokal): Right. Some of these use cases are very, very hyperlocal. Some of the use cases are essentially need specific. So we see a lot of advertisements being posted on our platform for English learning. And when you look at English learning, even for a graduate studying in a small town like, my hometown, their English fluency is not that great. And the way they look at English is that, you know, if I learn English, my salary would essentially 1.5 x or two x because of my communication skill. This might not be true for a city audience. Essentially, they are naturally decent with English. Or let's say my people who work as blue collar also, they would assume that if I learn English, you know, my salary would double. These people used to travel to Hyderabad. The arts typically used to happen from across the location, Stay there for one, two months, spend, you know, anywhere between 10,000 to 25,000 to learn and come back. Now with AI happening, AI existing, all this shouldn't, you know, this shouldn't be as painful. When we realize that there are so many ads happening, the user is not able to travel because of the time it will take, the cost it will take. We build that product for them. So it all happens from the liquidity of classifieds on our platform. We... Our team creating hypothesis and then testing it, and, the signal is around... You know, the the prominent signal that we look at is that what is the price point at which you can open a lot of demand, which essentially people would be comfortable to try, how simpler that experience is, and what will lead to retention.

Dhruv Sharma: Jani, this, MBU or next billion users demographic is obviously very appealing to lots of companies. Many of them are hyperfunded companies. They operate in spaces as varied as, you know, entertainment and and and commerce and others. I'm sure you get a fair amount of competitive pressure. Correct me if if I'm wrong. How do you guys manage to defend your corner and retain your users?

Jani Pasha (Lokal): So the so the user segment fundamentally is actually very different. At the end of the day, all of us have similar needs, but think of this in this way. Today, the venture model of investing in a service in India for tier two, tier three is about first getting to a service where you will have retention, and you subsidize the service for everyone. And once you have a monopoly or near monopoly of two players, then you start increasing prices. That is what we have seen with Zomato's, the geese, or ecomms of the world, convenience fees, and everything. Right? And and you start with that assumption. The market is very, very large. But for this tier two, tier three, or the smaller city audience, the price sensitivity is so much. The margin only exists to the point, you know, once you increase the price by 10, 15%, the demand is gone. And the... This is a fundamental premise on which, you know, you are Misho, Rapido, a lot of respect to them. They are built and... We are building the same premise for all use cases that exist and that are under met.

Dhruv Sharma: And perhaps also that it's not one large homogeneous market. It's made up of several micro mark... Markets that are distinct in their own way and have to be served in their own way.

Jani Pasha (Lokal): Right. So, the way we are building is the same, Dhruv. So it's about solving for this audience. Largely, we... The playbook tells that it is not so small, that there is not value. There is a critical audience, and we kind of build and go after them. There is no VC playbook that we follow for building use case. So we find if there is a genuine problem, decently sizable according to our standards, we'll build it. So competition exists, but the competition can't, play the price games for this audience. So, essentially, you can undersubsidize a user. We will take the hit in that use case, But there is no sustainability for that use case. So the VC money has to dry up, and then, eventually, it's very difficult to prove value there.

Utsav Somani: And you publicly mentioned that voice will be a big interface, for this, audience that you're targeting as well. And a lot of voice AI founders building in the voice AI space have come on the show and repeated that same thing as well. Where are you on that journey, and what unique features and products are you building in that domain?

Jani Pasha (Lokal): We are the... Probably the first company in in India, especially building for MBU, who... Next billion users or small cities or towns who integrated voice very deeply. So even when we were super focused on, you know, hyperlocal updates, the creators who were going around and creating content, we understand the difficulty of a keyboard to text vernacular content. So all our input fields have a voice to text feature. So... And then today, all our interfaces are being changed towards voice first. That means, you know, let's say if I'm trying to learn English, I would want to converse and tell

Utsav Somani: Tools are you using, for this?

Jani Pasha (Lokal): We use anything, everything, essentially, which are delivering the right value at the right optimum price. We need... We we, ourselves, are trying to build something on our own, because we have so much, conversational, translational data over the years. But largely, today, we are model agnostic. We are more around, you know, what will deliver the greatest user experience at the optimal cost.

Dhruv Sharma: Talk to us also about how you guys think about, growth, Johnny. You you mentioned your footprint. It's massive, but how do you decide which is the next district you guys are going to or which is the next language you're going to enable?

Jani Pasha (Lokal): So today, we operate in use case level. We don't operate at a... You know, when the classified journey typically used to be around local supply demand problem. At a location level, you should have density of users, use cases, supply, and demand. As you try to fulfill those services online, the geography is not as a big aspect than the insight and the product that you would be able to build. The way we... So naturally, we launch a lot of use cases. We kill a lot of use skills as well. So we think about as, you know, any product that essentially is adjacent or closer to the modular tech that we have built, which essentially adds a lot of value. Can AI make it easy for that user or not? So we we, ourselves, internally, call ourselves as a AI consumer platform, building multiple AI products, making it easy for them to solve their needs, typically.

Utsav Somani: And as a final closing one, can you tell us about the unit economics? How do you think about, I mean, the AOVs across different categories and verticals? Because if you're passing users across your house of apps, I mean, for them to change behavior and buy a big ticket item versus small ticket item for learning or something else, that habitual change must be hard. Right?

Jani Pasha (Lokal): So largely, all our products start with the very low cost microtransaction because the price becomes low. It'll happen... It'll open a lot of surface area for people to try that product. And then there is a power user behavior or a serious user behavior that kind of adopts to it. So the way we think about, unit economics is around, you know, LTV by CAC, LTV by CAC for us. And and we have not seen a lot of mode of mode behavior in this audience largely because of how they have been bought through. So we have lived on Internet for significant time today, and we associate some sort of coolness for the digital products that we use that we boast about. Are you using Wishpur? Are you using something else? And and this inherent behavior has not been built to an extent that, in fact, the association they have for digital products is more fraud. K. Someone tried to get married to someone. There is some fraud happened. If... Let me... If I introduce that, if something happens, the entire society will prioritize me. It's about bank loans, WhatsApp, digital arrests. So the negativity associated makes it difficult for them to recommend their product. So today, the way we are operating is that we distribute any use case initially across our common users. And then once we kind of, figured out the PMF experience, we kind of distribute on Facebook and Google. But largely, our transacting users volume has become so big that we believe our reliance on digital platforms to grow will reduce over time to an extent. After four, five years, it will be insignificant.

Utsav Somani: Awesome. Thank you so much for coming on, Jani. Wishing you all the best, and see you in Sri Lanka.

Jani Pasha (Lokal): Thank you. Thank you. Yeah. Hi, Rajeev. I read a lot about, the tweets that you do. It's nice seeing you here, man.

Utsav Somani: Exactly. That's why I actually reached out to Rajeev because, Elon Musk was having this, field day on Twitter, and Rajeev tried to put him in his place in some way.

Jani Pasha (Lokal): Yeah. I saw that too.

Utsav Somani: I I mean, at least enjoyed reading your thoughts from the other side. So that's why I reached out. Thank you so much for replying, and now you're on TON.

Rajeev Mantri (Navam Capital): Thanks. Thanks for calling me, sir. Yeah.

Utsav Somani: So should we call you professor Rajeev, or is Rajeev okay?

Rajeev Mantri (Navam Capital): Rajeev is absolutely fine.

Utsav Somani: So your journey is fairly exciting. I mean, you did Lux Capital, then you started investing family capital. You're also teaching venture capital. So connect all those dots for us and also tell us the philosophy that you imbibe in your courses. Like, what are the students learning from you, the top two things maybe?

Rajeev Mantri (Navam Capital): So so the teaching thing at the Indian School of Business happened, you you know, I would say by fortuitous, circumstances. And thanks to my, some of my friends there who encouraged me to try it out. And then, so far, it has worked well. I think the students are liking what I'm saying in the class. So, what I what I try to get across is how one invests in a, asset class like venture capital and a category like venture capital. And, it has been, very, fulfilling for me as well to, teach in that way. As the saying goes, you know, when when one teaches, two learn. And, I think I think it's really, a good way for me to reflect on how we are running our own thinking, our own strategy, our own process in terms of, searching for, startups, selecting companies, supporting them, and it really helps me, do that better, I feel, when I teach. So so it happened, probably, thirty, fourteen years after I'd already been in the VC business. I started at Lux Capital. I started my career there, then returned to India and been actively investing in India now for over fifteen years.

Dhruv Sharma: Fantastic. Rajeev, it's... It is great to have you in the show. We, we really enjoy reading, everything you put out. I wanna get your take on something that is the current thing, Rajeev, which is, the RDI Fund put out a list of fund managers who are part of the first outlay. And as all things in the Internet, it's triggered a debate. Some people say that... Or some of these funds, they've not done deep tech investing in the past. Do you think do you think there's... Like, what do you have to say with respect to that? Like, is DeepTech the sole vestige of just a handful of funds, or can funds become DeepTech funds over a period of time?

Rajeev Mantri (Navam Capital): So if you if you if you really become a purist and see that only those who have been in DeepTech should get to participate in the RDI funds, program, then it'll be, I think, a self limiting approach. What, we should want in India, what what we want in the deep tech ecosystem is that more people should come and invest in the category. I think it is, good for the country, good for our economy if more investors come in. And and, many of these funds, are specialist deep tech funds, and some of them are multisector funds. So they never invested in fintech, for example. But when fintech started catching on the country, some of them started investing in fintech startups. So today, we are seeing certain wave of deep tech companies, getting traction. And, hence, you will naturally find venture capital investors investing in that category as well. I don't think there's anything wrong with that. I'm not a purist when it comes to this. I think capital is always welcome. I've lived in the world in deep tech where there was a real scarcity of capital, and it is not a fun world to live in, for founders as well as for people who are specialists in those areas. So I I really don't think it is warranted. Often, I do feel that there is... I I tweeted this as well. There is certain crab mentality in India where people always want to drag down the other person instead of, you know, paying it forward in some way or, being a good ecosystem player. So I think we should rise above that, and it's perfectly fine if more people want to invest in the category.

Utsav Somani: Love it. And you've done a fair bit of deep tech investing yourself. Ather Energy, Agnico, Galaxy, Unbox Robotics, Veon Therapeutics, and many more. And we'll get to the fun part also. But you've also mentioned in your courses in, ISB where you say that, you'd sort of imbibe that philosophy of value investing in venture, where do not overpay for a deal, otherwise, it's dead on arrival. Right? So how do you do that in companies like this where there's, I mean, no revenue, basically? These are all pre revenue companies when you probably would have invested in them. So how do you value such an asset?

Rajeev Mantri (Navam Capital): So the metrics are different. The metrics are quite different. Obviously, one doesn't apply the conventional value investing, tools and approaches. So I trained in value investing when I did my MBA. I was at Columbia University, which is the home of value investing, the, kind of, intellectual creator of that whole approach, in, in... As as as a practitioners, kind of den as well as in academia. So Columbia has done a lot to actually mainstream the value investing approach, and, I had the chance to kind of immerse myself in that ecosystem and that knowledge, ran for my MBA, and I learned a lot from it. So I've tried to apply some of those principles into the venture asset class, and that's what I teach. And like I said, the metrics differ. There's obviously no financial statement here on which to hang your hat and say that this is worth x and it should not be worth more than y. But there are always, principles one can have. One of the key things that, Charlie Munger and Warren Buffett always wrote about and always spoke about is that one should invest in one circle of competence. So, that is one of the key tenets of value investing as is the point which you mentioned, one should not overpay. And, of course, we do see overpaying happening, in in areas which suddenly become very attractive. Right? So there's a flood of capital which goes in. We are seeing some of that in artificial intelligence, globally now, especially in The US, but also in other geographies. So so, tiny companies being valued at 5 and $10,000,000,000. Sure, they could all work out very well, but, one has to question that is it really worth 5 or $10,000,000,000 when you have nil revenue and users could be expanding very rapidly. But, perhaps, there is a nature of... There there is some degree of speculation built into that type of, investing as well. And that's what we try to avoid. If something becomes really, really attractive like that and, by by definition, I feel one has to go into areas where there's a scarcity of attention.

Dhruv Sharma: Rajeev, there are clearly some campuses in India. We're talking of academia. There are some campuses in India that have done a phenomenal job of supporting their students. IIT Madras is clearly one of them. A third is is one of the best known stories out of that. I'm curious, like, what does seeing, you know, a firsthand sort of homegrown success come out of campus due to the energy, the vibe on the campus, and how does it impact it in a positive way? Plus, please do share some lesser known, you know, lessons from the Ather journey that might be useful to other founders.

Rajeev Mantri (Navam Capital): So I think some institutions in India have done a really good job of, creating the right type of environment and culture for startups to take root and grow. The the institute's leadership itself, their policies, everything has been geared in a way where they are trying to have greater commercialization, and translation of research emanating from these labs there. So, some have done very well. Others have not been so proactive. But I think the successes which are now coming out are encouraging everybody to take it very seriously. I think, at a policy level, the government of India is also noticing who's doing well and who's not. And they are also, you know, in a top down manner also asking questions that, why don't you do more and, you know, why have you been lagging behind if you have all these resources and, frankly, if you're receiving public money. So those questions are all being asked, and I think it's a a great development. And then, I think one... I think what one takes away from the Ather story, the exemplary success which Ather achieved, is that they really stuck to the, core proposition of creating a differentiated product by investing in IP and RND. They never kind of got swayed by, you know, chasing revenue in the short run and, making compromises in the short run. And that is now serving them very well. They have grown with the market as the market has increased. Like, as more and more people are buying electric two wheelers in India, Ather has grown its shares its market share almost 10 times. From a sub 2% market share, they are nearing 18, 20% share now. And, that is on the back of increasing competition in the sector. But Ather has held its own because it invested in r and d, it invested in IP, managed to differentiate itself. And I think it's a case study for all who are building product oriented companies in Deepgram.

Utsav Somani: And I think talking about, I mean, sectors that might actually open up, for private, players. Space was one. And with Ashanti, I think the nuclear industry is also opening up, for private players now since last year. Yeah. What other sectors you think in India are primed for, privatized or... I mean, private players to enter?

Rajeev Mantri (Navam Capital): So I think I think

Utsav Somani: the government

Rajeev Mantri (Navam Capital): has also government has also realized, right, that, the kind of, the scale quality, momentum which private entrepreneurs bring in, cannot all be achieved by, government entities. I mean, there's a rule for government entities. I mean, the way... Is true. The rule is now being restructured. It's being positioned as a research agency, which will pursue, like, deep space missions, more r and d oriented work, and so on. And that is the right rule for a government backed entity. Essentially, it's taking on, areas which, let's say, private entrepreneurs cannot or will not take. So so I think that is the right rule for a a player in a, format like this where you have privatized or enabled private sector to enter a sector. And and some... The same thing applies for nuclear. I think biotech as well is seeing a lot of action. More... One of the more underrated areas I feel today is, biotech and the whole biomanufacturing push that is being, planned by government. I mean, clearly, there are some regulatory bottlenecks there, which still needs to be resolved. But but these are all sectors where India has a deep pool of talent and a natural strength. And, that is being aligned now with private capital, with entry of, private led businesses, and risk taking. So when you combine all of those ingredients together, something substantial will come out of it, I feel.

Dhruv Sharma: One space we haven't covered yet, Rajeev, is Semis, and I saw a very interesting tweet from you where somebody asked the question, when will India see its first trillion dollar company? Your response was, and with a lot of conviction in 2037 and will be a semiconductor company. Help us look into the future with you.

Rajeev Mantri (Navam Capital): No. So that was that was... I think, Vijay and I tweeted that. Vijay asked that. Vijay, she gets out now.

Utsav Somani: Yeah.

Rajeev Mantri (Navam Capital): And and I I mean, there's no deep thought behind it as such. I just gave a date Yeah. Which came to my mind. I said, give it ten years.

Dhruv Sharma: Ten years.

Rajeev Mantri (Navam Capital): I think something very, meaningful could happen. Yeah. Because for for over five years now, government of India has been working with the India semiconductor mission to, kind of create and catalyze a sector like that in India. And the reason India is uniquely well positioned to achieve great things in this space is that there is a wealth of human capital here. So for any new sector, if you look at the factors of production which matter, if you don't have compute, you will be lagging behind in AI as we are seeing in India now. If you don't have some other factor of production necessary to succeed in a particular industry, one would naturally be hamstrung by that. But, in India's case, we have a natural strength with, our human capital and talent in a category like semiconductors. And and, that's why I feel, it it sounds a bit outlandish today. It sounds a bit, kind of a, hard to kind of accept idea, but I do feel that something very, very big will come out of semiconductor sector in India. And we are just on the first start of the test match, so to say, when it comes to semiconductor industry.

Utsav Somani: Maybe to end on a softer note, unless Dhruva has some other question. I mean, a human psychology one. Like, I mean, deep tech founders suffer, I mean, setbacks at a more frequent pace. And maybe, like, after a lot of investment of time, human resources, blood, sweat, and tears into the product. Like, say, the GalaxyEye, Drishti, geomagnetic storm. How do you, I mean, come back from this, come back to the work at a fresh, with a fresh mind? Like, how do you, what kind of founder does it take to actually build a solid deep tech company in this country?

Rajeev Mantri (Navam Capital): No. I think for founders, what I've seen repeatedly is that, something beyond pure commercial success or money is driving them. You know, if if if you really just wanted to make tons of money, there are easier ways to do it. Right? Why would you do all this? Why would you try to build a satellite? Why would you try to develop a chip or develop a drug? So with founders, there's... I think, at least with good founders in deep tech, there's always something bigger which is motivating them, something bigger which is driving them. Because, frankly, there are easier ways to make money in the world. And and then, when it comes to handling a situation like that, where, let's say, an important mission, it started off very successfully, but for various reasons, beyond the company's control, did not go to the t as per plans. And, that's where I think the investors you have, the shareholders you have, that becomes very important. And, hence, curating the right time of shareholder base, which understands the category, which is willing to sort of underwrite those risks, is very, very crucial. So I think it's a combination of, like, good founders with the right intent coming together with the right type of investors. Because this is a long game. It takes many years to play out. Often companies are, you know, pre revenue. We have seen for, like, four, five, six years. And and most conventional venture investors will be like, you know, what is going on here? It may swallow where where is all the money going? Nothing's come out. No revenue. Maybe one customer has come in. But but the value really is being accrued in intellectual property in in the product being, achieving, product achieving its milestones and making progress. So so it's a different, kind of different, metric and, kind of, basis on which some of these, companies have to be evaluated rather than the conventional, VC mindset.

Utsav Somani: Awesome. Dhruv, anything from you to close this out?

Dhruv Sharma: You know, that was a pretty good note itself, but I think I'm tempted to ask just one final closing question, Rajeev, which is... And and I ask that because in addition to being a venture investor, you're also a policy thinker and writer. So if you were called upon to make, one policy recommendation to our reform agenda for the centenary goals, what would you say? What would you add to it?

Rajeev Mantri (Navam Capital): No. I've... You know, I've... We did this many times. I think, many of the changes that are good for entrepreneurship, good for deep tech are just general changes. Like, India has a lot of, like, ease of doing business frictions, especially on the cross border side. I think WhatsApp would be quite familiar with some of those challenges. You know, bringing money into the countries, sending money out of the country, especially as we are looking to have more and more, internationalized and, kind of globalized companies which have businesses in multiple geographies and so on. It can get quite challenging, because I'm sure both of you would have seen that. That's happening sooner. So earlier earlier, you know, going international would be for something which was of a... For... Would be for companies which were which were of a certain size. Today, even companies with $10.20 crores in revenue are doing exports. They are, going to Europe, going to US, going to East Asia, countries like Korea and Japan, and doing business there. But we are stuck with a, kind of policy framework, a legal framework, which was built for, frankly, the license Rajira. So that creates so many frictions, and I think this... I've seen it so many times now. It's a recurring pinpoint for our, investing companies and I'm sure for other start ups and other other kind of, international, internationally kind of exposed builders and entrepreneurs. So I I do feel that we need a lot of general reforms. And if we do those general reforms properly, everybody will benefit.

Utsav Somani: Awesome, Rajeev. Thank you so much. Will we see a Navam Capital, report like, Lux LP reports come out soon on Twitter?

Rajeev Mantri (Navam Capital): We've just been showing it privately. We haven't really, tweeted it out. Josh's tweets, of course, are quite closely followed. He's a very, very, kind of articulate, evocative writer. So so, maybe we'll issue it publicly soon. Let's see.

Utsav Somani: Alright. Looking forward to reading it. Thank you so much for coming on TON, and... Thank

Dhruv Sharma: you, Rajeev.

Rajeev Mantri (Navam Capital): Thanks a lot.

Utsav Somani: Awesome. Awesome. Awesome. Dhruv, do you wanna cover a couple of news items? Or just... It's, like, highlighted for our readers perhaps. Like, I think, the OpenAI stuff, I think the most... I mean, bizarre thing that's happened. Right? You know, somebody who was working at OpenAI for... From FBI actually got this. So you actually need that specialized skills to catch it. It's not that some cleaning staff actually went behind the television and saw that, hey, something is stuck here and,

Dhruv Sharma: there was a... Somebody bugged their office. I was just thinking the other day, thought they know where OpenAI got drama in also.

Rajeev Mantri (Navam Capital): Like, what importance?

Utsav Somani: Anthropic I I mean, what we...

Dhruv Sharma: What is that second line? We used our models to understand the device. I think there's, someone pointed out that never use a good,

Utsav Somani: the middle of the middle of the...... That is somebody from The Middle East. Like, I think, Saudi national was the only Saudi national who met with MBS also when he visited OpenAI, I think, is behind this. But, of course, all of this is with FPA right now. And FPA has also put out a statement. Another thing that's exciting is... I mean, not exciting, but at least, these tech holding companies. You've seen Bending Spoon do a good job of it or at least on paper. They've been acquiring these prime SaaS assets for literally a fraction of their peak valuations, and that's what happened with Bumble as well. Peaked it at $1,617,000,000,000, now acquired for 1,300,000,000 by Itaka Holdings, who's running, who's, Itaka Holdings, which is being run by Ravi Gupta, who's from Instagram and Sequoia previously. He has

Dhruv Sharma: a great blog, good sir. I think it goes by the name rkg.com, and he has his... He's got some essays over there which are as good as PG essays. There's one that I really like. I think I've shared it with you in the past, which is... He calls it demanding and supportive. The fact that if you're a leader in a company, you can be both supportive and demanding at the same time. But... Yeah.

Utsav Somani: Alright. We'll check it out and put it in the show notes of the community as well. Thanks, for for, a wonderful show today. I think it was fun. Good set of guest. Alright, listeners. Thank you so much for tuning in. We'll see you on Friday. Same place, same time. Bye