The Covid has not changed the fundamentals of investment: MD, Picus Capital

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Picus Capital, a privately funded venture capital firm headquartered in Munich with offices in New York, Berlin, London and Beijing, has been a prolific investor in Indian startups. Picus invests primarily in pre-seed, seed and Series A cycles and focuses on technology companies in the real estate, finance and insurance, human resources, renewable energy, mobility sectors. , e-commerce and health. In India, it has invested in startups such as Moneyonclick, Basic Home Loan, Meddo Health, Lido Learning and Simplicontract. Florian Reichert, Partner & MD at Picus Capital talks to TOI about the company’s strategy in India. Excerpts:

What are Picus Capital’s specific topics of interest when it comes to investing in India?

Our investment topics for India are roughly the same, in line with our theme and global ambitions. The focus is on emerging software technology companies in sectors such as real estate, finance and insurance, human resources, renewable energy, mobility, e-commerce and healthcare.
With regard to India, we are also taking a close look at investing in companies that fill specific infrastructure gaps in the market. For example, companies that provide access to financial services, like our two holding companies in India called MoneyOnClick and BASIC Home Loan. Both companies cater to people who do not have access to a full range of financial services, especially credit, but also other banking products like cards or investing.
They are basically trying to reach them digitally so have a much lighter cost structure and can serve customers in India in Tier 2, 3 and 4 cities.
Another of our investments, which fills the infrastructure gap, is a company called Meddo Health. Meddo Health is building a network of OPD clinics, enabling better quality health service for clients. They are transforming physical clinics into digital health centers, allowing physicians to digitally interact with patients and additionally offer outpatient care insurance. In addition to this, there are many opportunities in the B2B software systems space, where we see many teams in India creating products for global markets by leveraging technology, expertise, knowledge and knowledge. talent that the country offers.

What type of blocking period does Picus Capital consider when investing in companies?

We have a different approach than a typical venture capitalist. We are a privately funded investor, which means we do not have fund structures in place. For this reason, we have a very long-term investment horizon, which is 10 years and more. We ultimately want to invest in category leaders who will have a positive impact on the way we live, the way we work today and who challenge the status quo.
We believe that changing the status quo in a market often cannot be done in five or six years, which is why we think with a horizon of more than 10 years. For example, for us, even an IPO isn’t an exit event, it’s actually another step in our journey towards building a category-defining business. So therefore, in that sense, we are probably different from a typical venture capitalist.

A few news reports have mentioned that you have a budget of around 25% for the Asian market, out of your total planned global spending for the next 12 months. What are your specific budgets for India?

We don’t have a fixed percentage in mind for India as such. It’s a budgeted amount for Asia (including India), but as a company we don’t believe in strict allocations. These are the good opportunities that are presented to us. If there are founders / companies that we believe can disrupt the future of the sectors in which they operate, we would invest over 25% in Asia or India, for example.

How are the goals of start-ups in India different from the rest of the world, where Picus Capital has made investments?

If you compare India with more developed markets like the US, the companies here are filling more fundamental gaps / white spaces (e.g. companies like Meddo in healthcare or MoneyonClick in finance). level given a more advanced status quo that they address. For example, companies are building a better software solution than an obsolete solution as part of digitization and all space from scratch. However, the potential for these incremental improvements is very large given that the addressable market is often larger.

Do you think the pandemic has accelerated the acceptance and growth of e-commerce / online business in India? Do you think the trends induced by COVID are here to stay, or is it just a RADAR?

Yes, the pandemic has had an accelerating effect on the acceptance and growth of e-commerce / online businesses in India. While adoption has steadily increased due to the pandemic, a few years have likely been missed. There could be a setback after the pandemic, but I’m quite sure it will stabilize above pre-pandemic levels. It is interesting to observe India-specific e-commerce business models such as Meesho which focuses more on the social commerce tribe, providing the consumer with a local market flavor with a high level of trust on the part. community leaders presenting and carrying out transactions on the Platform.

Do you think that Indian start-ups that are filling the fundamental gaps are more promising than what is happening in the developed market?

Not really! There is a very different kind of innovation you can do in India compared to developed markets like the United States. From an investor’s perspective, the opportunities in the United States or other developed markets are just as attractive as the opportunities in India.
I would say you find a lot more white space in India and less penetrated markets here. There is more fundamental innovation that can be done, so the positive impact you can have on society or the environment is often higher as well.

There is an investment method for VC companies. Do you think COVID has changed the lens through which investors have started to look at start-ups?

I don’t think COVID has changed the fundamentals of investing. A strong management team, a large market, financial data and many other factors that every investor takes into account remain the basis of a start-up investment. However, market trends have of course changed, making many investment opportunities like for example in digital health or digital education more interesting compared to the pre-COVID era.

What are the next companies you are going to invest in in India?

As mentioned before, we are very interested in companies working to fill the infrastructure gap in the Indian market – in this context, we are closing another investment in the FinTech space. We also very recently invested in a company called Simplicontract which is developing a B2B contract lifecycle management software solution for international markets.


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