The Series A VC Reshaping Indian Startup Funding | Rajeev Kalambi @ Cactus Partners

Speaker A: The best performers are manufacturing companies.

Speaker B: Most VCs tend to avoid asset heavy businesses like, say, a manufacturer.

Speaker A: If you're creating an AI product, you might be successful, you might not be successful.

Speaker B: Right. Most VC funds operate on the power law principle, which means that 2 out of 10 investments are so successful that they make up for all your bad investments. As Rajiv Kalambi talks about how he is running Cactus Partners on the anti power law thesis is skipping the AI gold rush and actually invests in factories.

Speaker A: We look at the top 10% of the population because the top 10% of the population has the ability and the intent to pay.

Speaker B: What's an example of a, uh, success story of a company catering to the top 10% which has really broken out?

Speaker A: If you try middle India, bottom India, you might be able to get some scale, but you will not be able to get profits. Right.

Speaker B: With the power of hindsight, could you have invested in Raw Press? Uh, Rajiv Kalambi, welcome to the Founder Thesis Podcast. You, uh, are running the VC fund, Cactus Partners. My first question to you, um, what makes you qualified to be a vc? I am a startup founder. Why should I be pitching to you? Why should I be listening to your inputs on my business?

Speaker A: Okay, so to get straight to the point, what, uh, qualifies me to be a venture capitalist is my experience. I have 26 years of experience across consulting, research, investment banking, corporate banking, and on the buy side, sitting on the boards of companies and working closely with founders and helping them scale businesses. So all of this together sort of has given me a holistic, um, exposure experience, uh, which I think I can bring to the table. And when I meet with founders, I, uh, understand the kind of challenges that they are, uh, going through, encountering, uh, and what really, uh, how they could try and overcome the stumbling blocks. So there are always new things that even we see along the way, uh, and we also learn from the founders. But at the same time there are some things that just don't change. Right. So, uh, in terms of how do you put systems in place, how do you put policies, stumbling blocks along the way, how do you try and resolve them, how do you troubleshoot? So all those sort ah, of, uh, let me call it coaching or mentoring is something that we bring to the table for, uh, uh, young, uh, founders who are looking to build their businesses.

Speaker B: Uh, you use the term buy side. Uh, a VC business is essentially a buy side business. If I'm not, what exactly does that mean? Buy side, sell side, These are all investment banking terms, right? Yeah.

Speaker A: Ah, so Sell side is when a banker or an intermediary goes out and tries to raise money for you. The buy side is the people who are the custodians of uh, investors, uh, money to invest. So it could either be investing in debt or it could be investing in equity. But people are doing the investing are called the buy side and the people who are assisting or helping uh, founders to raise money are called the sell side because you're selling a stake in a company to an investor. So that's the sell side and the uh, investor is buying a stake in the company. So that's the buy side.

Speaker B: Okay. And you've played both roles if I'm not mistaken. Sell side, buy side, uh, just give me a summary of what you did in sell side, what kind of businesses and again in buy side, what kind of businesses, what kind of check sizes, stuff like that.

Speaker A: So on the buy side, uh, I have been on both the debt and the equity side. So just to give you a background as a corporate banker, uh, you are lending money to companies. So as a lender you are effectively buying into their business. Right, uh, the debt side of things. So that's the buy side on the debt, uh, on the equity side as part of uh, being part of a uh, fund, uh, you are buying uh, into the equity stake on the cap table of a company. So that's the um, buy side on both ends. On the sell side I have been an investment banker with uh, Edelweiss Capital which is now renamed nuvama. It's been a while now. I used to be with them many moons ago. Uh so you know we used to help companies raise uh, private equity. We used to help them uh, with structured finance, we used to help them go ipo, right. And the same with another company called SMC which was a retail, largest retail broker in those days. And now of course everything has gone digital. But they used to have a very large franchise operation in India. So they were doing a lot of work on the capital market side. So helping companies do the same thing basically raise uh, private equity, uh, structured finance and uh, go public.

Speaker B: These would be late stage companies.

Speaker A: Uh, so typically in those days it used to be late stage companies. Uh but gradually if you see the way my career has moved, uh, I started with debt in corporate banking after my mba. Uh, and it started with large corporates when I was with hsbc. Gradually uh, moved to mid sized corporates with HSBC and then with DBS Bank. Uh, so the large corporates used to be MNC in India, uh, and Gradually in those days, the Indian economy was growing rapidly and uh, banks, which were relatively risk averse, had started developing a little bit more of credit appetite. So they went to the middle markets. Now with the middle markets, then I moved to the equity side where a lot of middle market companies wanted to raise capital and grow.

Speaker B: Right.

Speaker A: So that's when the sell side angle came in. But I was on the middle market side, uh did that and then when I joined the uh, you know, the fund industry, uh, with uh, you know my. I moved from uh, investment banking to the fund industry. We were doing investments in very early growth private equity funds. Right. And that in fund.

Speaker B: So this was a fund of funds?

Speaker A: No, no, no. It was uh, sorry, uh, in companies. But it was an early growth private equity fund. So they would, uh. We did about what, six, seven investments, uh, in India. But I used to be based in Dubai in those days. So I did one full fund cycle with a uh, fund called Fidelis World and invested in India.

Speaker B: Uh, and Fidelis is like it has LPs from Middle East.

Speaker A: From the Middle East.

Speaker B: Correct. Okay. LPs for my audience who's new to this world is limited, uh, partners, the people who give money to an investor like yourself to as a. So you are the custodian for LP's money, basically. Okay. Uh, and what businesses did you invest in under Fidelis?

Speaker A: So it used to be largely early growth in uh, sectors that were in sports, health, fitness. So that was the focus area consumer with $100 million fund, consumer oriented, uh, and largely in sports, health, fitness with uh, three broad.

Speaker B: Uh, wasn't it too early to be doing consumer investing in India, like consumer investing in India only now I feel is kind of paying off. True.

Speaker A: Uh, the focus on sports, health and fitness was early consumer was always there. Right. But uh, it was a niche within a growing consumer, uh, segment. And uh, the Western world has evolved significantly at that point in time. So I was with Fidelis world from 2015 to about 2021. And prior to that the Western world had a lot of investments in uh, sports. So clubs, leagues, uh, sporting businesses, um, so stuff like that. In India it was a little early, which is why the strategy there was not to invest in leagues and clubs, which were just about sort of coming up. And in those days there was only ipl which was profitable. Right. And many of them are still struggling. They are not making money. Maybe the Kabaddi league has reached some level, uh, but I've not been tracking that sector now. But uh, you know, in those days. So what Our strategy was to work with the picks and shovels. So anything that is ancillary to sports, health and fitness. So some of the investments we did were in companies which would uh, you know, uh, in stadiums they would put the LED boards. Okay, right. So you're providing infrastructure for that. Then we invested in a company which is the big data side of things, uh, which covered some 20 odd sports globally, not just in India. And uh, for example when you nowadays Google, you know, uh, some game going on, you want to know the score, that information was powered by this company.

Speaker B: Okay.

Speaker A: So stuff like that, uh, we invested in the health side. We invested in a company called Raw Pressery which is a cold pressed juices brand. Right. So stuff like that. So we did, while we did not really go into clubs and leagues, um, and, but, but on the periphery of that. Right. So, so that, that worked well because we needed to look at businesses that could uh, continue growing in scale. Uh, but when you put money into a club or a league, uh, it depends on how well they perform in that league in that year, the club performs in the league in that year. Sometimes you do well, sometimes you don't do well. And there are ups and downs and uh, private equity or venture capital requires a one way up. You don't want fluctuations. So that's why the strategy focused a lot more on uh, the ancillary and the uh, infrastructure side of things.

Speaker B: With the power of hindsight, would you have invested in Raw Pressery?

Speaker A: Raw Presserie was a fantastic company and is still doing very well. So just to give you some background there, the challenge Raw Presserie faced was uh, Covid, uh, so they were growing rapidly, um, they were doing very well. The product is fantastic. And uh, we ended up having a cash crunch during the COVID period because no investors were looking to invest. They were sort of holding back their investments to use their capital for their portfolio companies to support them during this difficult phase. Because people weren't sure how long this would last.

Speaker B: Right.

Speaker A: Uh, so at that point in time the company needed to do a raise and they needed capital and it was so difficult at that point in time to get people to put in money that you know, uh, we decided to do an M and A transaction. Right. So it was acquired by Wind Greens Farms and uh, in fact today I'm told it is the, you know, the flag bearer for Wingreen Farms, uh, products. Wingreens went on to, they had their own uh, bouquet of products. And after the Raw Pressery acquisition they went on to acquire several other brands also to Sort of create a sort of a bouquet bouquet, uh, you know like a breakfast bouquet saying that you're not healthy breakfast, uh, type of uh, brands across various categories and raw plastery today is I think about 4x of the uh, you know uh, the revenues they were at when we ah, sold them to farms is India.

Speaker B: You know people say that premiumization is a trend and Indians are willing to spend more. But like in the beverage space, uh, none of the premium beverage players like say Hector beverages or all of these haven't reached meaningful scale. Uh, do you think that India is a market for premium beverages? Uh, you know like 100 rupee for a bottle, a single serving bottle of juice.

Speaker A: So if you're focusing only on beverages I would say maybe it has not reached that stage. It's still a niche because see if you look at India, uh, there are some three or four Indias, there's no one India. A per capita income might be 2,800, $2,900. But the inequality is very, very wide. So effectively, and that's something we do at Captus Partners also when we look at consumer businesses we look at the top 10% of the population because the top 10% of the population has the ability and the intent to pay. Right. The two things you have to see or so there has to be the ability and the intent to pay that you don't see maybe below the top 100 million. We are looking at 140, 50, 150 million people by saying 10% but 100 million and below. Uh, it's very difficult. You don't have too much of disposable income now within that uh, if you're looking at only beverages, yes it is a challenge. Uh, in fact in one of our portfolio companies also uh, which started off with beverages, we have actually moved out of beverages and gone into other form factors uh, sticking with. So for example the portfolio company is called Oric. Oric uh started off with beverages and uh, Ayurveda based beverages. But you know we uh, I shared my uh, insights from you know, raw. Presseri the founder also sort of learned the challenges there were with basically logistics costs associated with moving water, especially its beverages, just water with you know um, temperature controlled with water based and stuff like that.

Speaker B: It's like 90%, 95% is water. Yeah, water.

Speaker A: So you're, you're transporting volumes of water across and the costs are too much and makes it very difficult for you to get your margins. So you know moved out of that because we realized that it's not Very easy to build on that. And we created other form factors like effervescent tablets and other things. Right. So, uh, to answer your question, yes. I don't think premium, uh, drinks can be scaled in a mass way. There will always be niches and you will stick to those niches. And where large niche is concerned, raw principities done fantastically well. Now you, you mentioned Hector Beverages. I'm told Hector Beverages has actually moved away from the large, uh, pricing, uh, you know, the paperboat brand to others. Right.

Speaker B: The swing brand, which is more mass market.

Speaker A: It's mass market, right? Like a 10 rupees kind of a packet because. And not just that, you know, you have to also look at what India likes to consume. And, uh, the largest, uh, drink, beverage consumed is mango juice. Right. Uh, you can try orange juice, you can try pineapple juice, you can try apple juice. Everything but mango works very well with India, which is why that model has worked very well for Hector Beverages. You know, they sense that. They realize that, you know, that's where scale would come. Uh, and to go through distributors rather than to create your own distribution network. There are existing distributors who buy large quantities, quantums out of you and sell in tier 2, tier 3 towns also. So you don't have to worry about that distribution bid. You create the product, price it well, and the distributors take it off you and sell it. So that model works well. So to answer your question in a line, yes, premium beverages scaling is definitely a challenge.

Speaker B: M. What do you think of Lahori Zira?

Speaker A: So I don't know much about the brand, frankly, uh, because that is an area that we, you know, I had decided to avoid.

Speaker B: Right.

Speaker A: Uh, I believe they've done fantastically.

Speaker B: Why did you decide to avoid. You're saying mass market beverages is an area. Correct. Okay.

Speaker A: So we felt that there was a lot more opportunity in other spaces, uh, which are growing rapidly, I'm sure. You know, see, uh, in every market, uh, there are people, founders who will be able to identify something that works. And maybe Lahore Jira will be one of those. Right. Uh, but having said that, I would still think that it tends to be reasonably regional. To make it pan India is very difficult because see, uh, like I said, there are three, four Indias economically. But you are aware that, you know, every 150 kilometers, the language changes, the taste preferences change, you know, cultures change everything. Right. So like Jeera as a product, uh, like Jeera water, which is acceptable and, uh, liked a lot in the north, is not enjoyed in the south. And in South India, they would like coconut water, which does not get consumed as much in the north. So taste preferences vary and it's so diverse, uh, across regions that it becomes very difficult to take certain product categories and make them a pan India, uh, scalable product.

Speaker B: So in consumer space, what is your thesis?

Speaker A: So like I said, our thesis is, uh, focusing on any business, uh, that is targeting the top 10% of the population. And that's where the premiumization comes in. You will see that in most business models today, um, like I said, the top 10% of the population has the ability and the intent to pay. And if you want to make a profitable business, that's where you've got to target. If you try middle India, bottom India, you might be able to get some scale, but you will not be able to get profits. It's very difficult to make money there.

Speaker B: Uh, what's an example of a success story of, uh, a company catering to the top 10% which has really broken out?

Speaker A: There are, there are several. So for example, you look at the foods businesses, right? A lot of the foods businesses are now focusing on the top 10% because. So look at Biba. Viba has done fantastically well, right? There are more mass. They're more mass. Of course, wouldn't be that. Uh, yeah, but, but, but if you see, most of the consumption would get, uh, will be done by the top 10% of the population. So for example, uh, one of the strategies is, you know, the small sachets, right, of ketchup. Now where does that go? It goes to people who purchase their food through Zomato, Swiggy and you know, uh, stuff like that, right? So It's a top 10%. So it does not have to be a direct TG. It could be an indirect TG. So which is why we are also looking at enablers, what we call enablers. So it could be, you know, uh, say, um, travel companies. We looked at one travel company which was targeting the Gen Z, because the Gen Z today want to do four holidays a year, or maybe even five if they can fit that in, uh, they'll go for a week each, they'll take one, one week, four, five days each and do four, five holidays in the year, right? So there's so much more that you can get out of that. Uh, then there are business models which are saying, okay, we are going to refurbish phones because, you know, smartphone is something that not just the 10%, but you know, everyone else wants now gradually. And so you're targeting business models like that. Uh, so there are several such uh, that we look at anything that is an enabler. So one investment that we've done at Cactus Partners is a company which is in the manufacturing side, okay? But they are uh, manufacturers of apparel to the fast fashion industry which is in the mass premium segment. So the likes of Vmart, Vishal, Megamart Zoodio, etc. The fast fashion side that fast fashion is growing so quickly at about some 20, 25% per annum and uh, the supply is not being able to keep up. So this company has created a business model which enables matching of supply to demand.

Speaker B: It's asset light or does it have its own factories?

Speaker A: They have their own factories. So they have their own factory. They lease out full factories and they aggregate unused capacity in the industry.

Speaker B: Most VCs tend to avoid like asset heavy businesses like say a manufacturer. Why did you decide to back them? And in general, uh, are you like bullish on asset heavy businesses?

Speaker A: So what we are bullish on are businesses that show secular growth, uh, opportunities whether they're asset light or whether they're asset heavy or asset M medium. Right. Uh, so for us we were early investors in manufacturing in 2021 when investors were giving crazy valuations and uh, there were all kinds of business models getting funded and all we were looking at businesses that were in the manufacturing space, uh, which tend to be reasonably capex heavy. But what we look at are, ah, a couple of things. One, what are the tailwinds for the industry? Right. So we see that the manufacturing industry today has massive tailwinds. There is a, uh, you know, a China plus one benefit, uh, that is coming our way. And two, the government is also very positive on that and is supporting the industry and saying look, let's build our own capacities. And we have seen that our capex, uh, gross, uh, uh, private, uh, investment in um, um, manufacturing and all has been stuck at something like between the 14 to 16% of GDP range and that is now gradually growing. Um, so what we want to do is to ensure that we participate in that secular growth opportunity. Uh, and uh, we have in fact in our portfolio at Cactus Partners, our best performers are manufacturing companies, right? Similarly, uh, for this company in the apparel manufacturing space. Now one might say apparel manufacturing is a fuddy duddy old world business. Right? But what we are looking at is a differentiated business model, right? It is not that chaloic, you know, uh, factory and we will just put some uh, sewing machines and you'll just give it to someone. No, what they have done is they have mapped the supply Chains across the country. They identify where the best, uh, you know, yarn is made at the lowest cost. They source it. From there they send to the next place where it gets dyed, the third place where it gets woven into material. Then what they're doing is building to scale. So for example, they'll make one factory which will make say, for example, only denim. There'll be one factory which will make only shirts. Designs will be different, but you're making one product, so you have economies of scale. They know how to sort of, uh, stitch it also to make sure, you know, your processes are standardized, uh, to a large extent. Uh, then, for example, they are sort of not, uh, very asset heavy either because like I said, they go and they aggregate unused capacity. So there are lots of uh, plants out there, we call it plants, but it's actually a fragmented industry where someone sets up a small factory and has say, 50 sewing machines. Out of that they're being able to use only 50% capacity. The remaining 50% is unused. So what they do is they go and they say, okay, you let us use this 50% capacity, we'll pay you uh, a fixed amount for that. And uh, they then uh, meet the supply, uh, requirements of the uh, large retailers. So it's a differentiated model where they don't need to spend on capex. They go and tie up with unused capacities and they have a system created, a training process for their people where they have someone who goes and monitors daily manufacturing processes at each of those separate locations. So that is what we look at. We look at something that is differentiated but should work in our minds. We do a lot of analysis, we do a lot of deep dives, we uh, do a lot of reference checks before we finally decide to invest. So, you know, our conviction levels when we go into an investment should be very high.

Speaker B: How did you find this business? It doesn't sound like the kind of business which would be actively going out to raise funds.

Speaker A: So the founders, right, are uh, highly dynamic. Um, you know, they had built a business in the furniture industry which is another quote unquote, fuddy duddy business. But they built it, uh, took IT to about 100 crore top line, uh, finally sold it off to some other buyer, right? And this is an area that they had found, uh, an opportunity and they wanted to build that. They had raised money from previous, uh, funds. So there was another fund called Jungle Ventures who they had raised money from. Um, so this company that we've invested in is called Showroom B2B. So they had Jungle Ventures and others so they reached out to us because they saw our uh, value proposition. Right. So just to tell you a little bit about what uh, we do at Cactus Partners. So we um, we do per fund anything between 13 to 14 companies. Investments in 13 to 14 companies. Why is that? Because we believe in walking the path with our founders and hand holding them in that growth journey. So there's a lot of value add that we like to contribute or build alongside the founders and uh, we've done that with most of our investments. That's one. And my partner Anurag, uh, he is a highly successful entrepreneur. So he's been there and done that. You know, he's created $100 million plus top line company. He's got six offices globally in his previous business which he stepped down and now we are doing uh, Cactus Partners together. But you know, he has those Networks. He's done B2B, D2C, he's done M&A. Strategic uh, investments. Uh, currently the business is working on AI aspects of a lot of their offerings. So you know, uh, he brings in a lot of wealth of information, knowledge and operating chops to the table and he spends a lot of time with the founders in the business scaling side of things. So value add is something that we bring to the table. So I, you know, I, I believe you know they found out about us from the market, reached out to us and uh, that's when the conversation started. Uh, then you know, I knew the partner at uh, Jungle Ventures. So we caught up. I told him, look, we are talking to one of your portfolio companies. We got his perspective on it, we did our own research, we delved into the business model. I have done lending to uh, this industry as a banker earlier, so had enough knowledge on that. Plus my partner Amit, who, who leads investments for us, uh, he did a fair bit of deep dive into the industry along with my principal. And then finally we took a call saying that look, this is something that is promising, that's very differentiated. So what we would want to do is to uh, try and do things which are not uh, where there's no herd instinct, there's no herding behavior. There are lots of businesses today. If you hear AI, everybody is going towards AI, but we are a little circumspect. We would want to study uh, it a lot more, take a more concerted thought through view before we invest in AI. Uh, we already have two companies which are adopting and implementing AI in our uh, portfolio. But it doesn't mean that you just jump into it because that's the wave. Um, we have been through cycles since we started in 2021. Uh, 2021 was the year of euphoria. Uh, people paid crazy valuations for various types of businesses. But by 2023 the markets had tanked significantly.

Speaker B: Right?

Speaker A: And uh, a lot of the businesses in that year which had invested in that year, uh, the investors were sitting on 50% drawdowns, 70% drawdowns on the valuation and debt paid. But for us, because we had gone in with our eyes open, open into the businesses we invested in, Those were actually 2x up. So there was a sort of a divergence. We were 2x up while other valuations are falling by 2023. Right. So we've invested in 2021, which was the euphoria year. We've invested in 2023 when the markets were down. We continued through 2425 when things have now come to a certain level of stability. And now of course there's another divergence where there's a, there's a sort of euphoria on AI and uh, the rest of the businesses now people are saying, okay, what are you doing about AI Irrespective of what their current business models are. We've seen three cycles within a short span of five years. Uh, and uh, um, we would like to think that we're a little disciplined in the way we go about, uh, evaluating businesses. We look at not just the story behind the prospects. We sort uh, of test it. The hypothesis is tested before we invest. We do a lot of our own diligence. So people say things like, okay, the TAM for the industry is this much. Uh, we don't just go by an external, uh, you know, um, publication which says we've done some, conducted some research, even though if, you know, they bring a lot of credibility to the table. But they say, okay, we think this is the tam. We do our own bottom up exercise to see, okay, realistically what could be the dam and is there a divergence? Is it very high, very large, uh, between the external publication and what numbers we have got or whether it is close by and the external one can be considered to be relevant. So we do all that, uh, sort of analysis before we take a decision to invest in a company.

Speaker B: M. Okay, I'm guessing compared to a, uh, pure early stage fund, um, the problems for you would be of a different flavor, like early stage funds. The problems are you get thousands of uh, pitches every month from those thousands. How do you find those 10 which I were talking to, and out of those 10, maybe you invest in one. Uh, you are uh, early growth stage, which uh, means that post PMF and I believe like series A is when you would typically enter a business. So this itself is a uh, smaller pool like compared to companies at early stage or angel stage. Uh, by the time you come to Series A, 90% of them would anyway have not managed to make the cut to reach series A. Um, so what is the flavor of problems, uh, for ah, this stage of investing? Um, is it about building credibility with founders, uh, building a personal brand so that m, you get more deep flow? Is it about uh, being good at evaluation? Is it about being good at supporting, uh, you know, help me understand the flavor of problems that you face.

Speaker A: Okay, so you know, before I come to the flavor of problems, maybe what I can do is give you a little bit of background to you know, very early stage, like, like you've covered a little bit and how we are trying to do things a little differently and what happens at our stage. Right? So very early stage clearly is the 0 to 1 space, right, where you're um, experimenting, you're hustling, you're trying to create a POC and trying to get to product market fit, right? So for that the challenges there are very different, uh, in the sense that over there you're trying to stay above water, right? You're trying to survive, you're trying to get a product out to a customer, you're trying to get customers to give you uh, revenues, right? Uh, and you have to also as a founder you have to convince an investor that what you are building is something that makes uh, sense for the customer to put money into. So a fund that invests at a very early stage is actually taking a call on the founder, the founder's ability to build, uh, and it's effectively a bet, right? So that's why the term bets is used in the industry. Why and your perforce, uh, because uh, of the nature of the uh, exorbitant risk that you're taking at that stage, you have no option but to, to do what is called the power law. Right? The power law is basically, you know, that 50% of your portfolio will uh, die, right? Companies will not be able to survive, will die. Uh, and 30% might give you some return, there might be some loss, there might not be full write offs, but you're then depending on 20% of your portfolio to become Sunycons unicorns and to give you your overall fund return, right? There is no option but for you to uh, play that uh, you know, game. If I m may use the term, uh, at the early stage. We come in post product market fit, right? So for us, uh, we are ah, coming into companies that have some minimum revenue scale, right? They have paying customers, they have uh, maybe uh. And what we would like to see in that business is whether they have recurring customers, right? And we want to see that they are, have maybe industry beating gross margins. Because only if you have high gross margins will you be able to become profitable along the way. So when we invest, while we are, when we say early growth, we use the term early growth. Many of our investments are in companies that might uh, be EBITDA negative. So it's not, I mean private equity would invest only in which is later stage would invest in EBITDA positive companies. So we are okay with coming into companies which are EBITDA negative, but that will execute and grow the business. And by virtue of the high gross margins, we know that they'll become EBITDA positive as they continue scaling. So it's profitable growth, right? So we're investing in businesses that can grow profitably. So the challenge we face. So we are basically underwriting growth risk. We are not taking mortality risk. Right? So ideally if you have revenues and some recurrence in your revenues, recurring revenues and stuff, chances are that you might not close down. Uh, your biggest uh, concern is will you not be able to scale. So uh, the considerations there are more around your go to market. How do you scale your business? Uh, it's more about how do you ensure that you maintain your profitability while you're growing. Uh, it's about also putting uh, systems, processes and policies in place to enable the scaling. Because quite often we see that you rush to get customers and clients. But if you don't have your back end sorted, customer, uh, experience gets uh, hate, you know, it's. And uh, maybe the system cannot deliver to the promises that the sales is making to the customer and so on.

Speaker B: Right?

Speaker A: So there are disconnects. You want to make sure that there's a concept of fit in the organization, that the departments are all aligned and are working with each other seamlessly to ensure that the final product that goes to a customer meets uh, with uh, ensures, you know, customer satisfaction. Not uh, just satisfaction, but you know, excellence. They should be very, very happy with the product because only then will they buy your product again and will pay you a price when they see the value that gives you a gross margin. Right. So it's mostly around um, strategy. So a lot of the work that uh, Anurag, my partner uh, does with our portfolio. Uh, companies on scaling is around strategy, it's around uh, your organization design, how do you structure your organization, how do you find the right people for the right jobs, uh, how do you think through their skill sets and how applicable or relevant it is for the role, all of that. And third is uh, international expansion, if that is a requirement of the business. Uh, and fourth is putting governance in place, systems, processes, policies, etc. So you know, a lot of our effort goes into those elements whereas uh, at a very early stage the considerations would be very different.

Speaker B: Right.

Speaker A: A lot of the time would typically go into helping a uh, founder because most founders know their product. Right. They know what they're looking to sell. Now one hopes that that is aligned to customer needs because quite often we say, you know, what is the problem that you have been solving? And all we've seen in several cases, a lot of these problems are uh, uh, made in your own mind. They're really not a problem with the customer. The customer quite often doesn't consider it to be a problem, which is why products then uh, are not purchased and the business fails. So one hopes that the product customer fit is there and all you require then is access. A lot of the early stage investors, uh, work with their uh, portfolio founders to uh, open doors for them, to give them access, to get them the initial breakthroughs. So the nature of the challenges is very different across both.

Speaker B: Uh, how does this affect your selection behavior versus early stage selection behavior in terms of selecting which deals you want to back or which founders you want to back.

Speaker A: So some things will not be different in the sense that the founders have to be stellar. Right. Exceptional. Um, we like to see that um, the founders who are building have relevant experience in that space. Right. Um, so it's important that you've done something in that space which you had learnings from which you're bringing to this business. Right? That's one. And there are a lot of softer aspects that we see. Uh, you know, whether the founders have displayed their execution abilities. That's one to do they have the ability to build a team, a second layer and a wider team. Um, do they have what it takes to attract manpower and talent? Uh, so some softer aspects of that. The third of course is, um, as they grow, do they have what it takes to engage with investors?

Speaker B: Right.

Speaker A: And the future investors who are likely to come into the business. Right. And do they know how to speak the language that also, of course they also develop along the way? But do they not know how to speak the language that investors want to hear. And do you also know the language that a customer needs to hear? Right. So you have to have that ability to, uh, you know, switch from one to the other. Right. And create that, um, you know, the background or let uh, an investor know exactly what you're doing, which makes your business valuable. Right. Uh, and that also has to show up in numbers. So you've got to execute, right? So the execution ability is something. So when we come in, they've already got some minimum revenue scale, right? So we can always look at what they've achieved, how fast that has grown, how they have delivered that, and that plays into one of the various elements of our evaluation of the founders. So the founders have to be stellar. So internally we typically when we look at a deal, we look at what we call internally the five T's framework, right? So one is a team. So it's not just the founder, but the rest of the team. So team. The second thing we look at is that, uh, the tam, right? So how large is the opportunity? And we do our own groundwork, like I shared earlier, that, you know, do our ground up TAM evaluation. Um, we also like to see if the founder is great, okay? But is trying to build something in, uh, an industry or a sector which has significant headwinds, Right. Or is the founder above, good, Maybe not exceptional, but is good and the sector has uh, significant tailwinds. Right? So that evaluation also is something that we take into account to take a call on whether that combination is a good one or not. Right? So the team, the tam, the tech. So how important is technology in uh, what the business requires? And how is the founder thinking, uh, about technology, application of technology, utilization of technology, or actually building the technology? Uh, and, uh, does that make sense? Right? Does, uh, it make sense to build it internally or to use it from external sources? Right. We see that. We've seen a lot of businesses where initially they used to outsource it, but then I've decided, no, no, we are going to do it internally ourselves. So the question then is, do you really have the core competence to build it yourself? Is it a distraction should you get done from outside? Is it readily available? Or is it something that is so differentiated that only you need to build it? So those factors we take into account in the technology, right? So team tam, tech traction. Traction is the, you know, your track record, how much have you built in terms of your revenue, profitability, you know, all of that stuff. So check traction is the uh, fourth thing. And the fifth is transaction. When we Say, transaction. We believe that every business is good at a certain price, right? So if the business is looking really good, but the valuation expectation is out of whack, we'd be happy to, uh, not participate. Because, see, it's critical that if you really want to make a return on your, A good return on your investment, your entry valuation has to be a reasonable number. Our portfolio today is doing very well because even during the euphoria of 2021, we, uh, paid very reasonable valuations. We did not pay through crazy numbers like a lot of peers did in the industry and are struggling with many portfolio companies there. So that has worked well for us and we believe that, uh, the entry valuation is critical. Uh, and, uh, we also sort of have that conversation. And see, uh, founders will always want a very high value. You have to build that rapport with them, um, and explain to them what is a reasonable valuation by showing them peer comps and, uh, comparables. And, uh, not just that, to say that, okay, are you looking at only getting in money or are you also looking at bringing in value, value add? Because what we are bringing in is we're going to give you a reasonable, fair price for your, uh, you know, business. But at the same time, there's a lot of value that we can, you know, add to the business along the way. So, you know, that negotiation then sort of has, uh, to settle at a, uh, valuation for the business, which works for us. If it does, yes, it's great. You know, we go in. If not, we are happy to say, okay, shake hands and say, you know, we, you all the best. Uh, because this doesn't make sense for us at this price. So these five things is what we typically look at before we go into a business.

Speaker B: So I, uh, think part of the reason why you are able to enter at the right valuation, I, uh, feel like the thesis you have is not a very crowded market. Uh, for example, you are not chasing AI businesses where you would have a lot of competition for deals. You're coming in at series A. I don't think India has too many, like, focused Series A investors. They are either early stage or they're like series B in between. There is that gap there, definitely. Um, do you not, um, worry that this, uh, this space has less competition for a reason? I mean, you know, like they say, if you're operating in a space where you have no competition, then you need to think twice that maybe there's a reason why there is no competition here. Does, uh, that cross your mind?

Speaker A: So, yes. So when we started uh, Cactus Partners and we wanted to see how we could be different. Right. You don't want to be one of many. Right. You want to find some differentiation. And that is when we did a fair bit of data crunching. Because a lot of our decisions are data backed, right? Not a lot. Almost all decisions as far as possible are data backed either with hard data or with some softer aspects which sort of add to the hard data that's available. And we. Exactly like you pointed out, we saw that, you know, there's a very, very large focus, uh, on the bottom of the pyramid which is your pre. Seed, seed up to pre series A. There are several funds. There will of course be uh, several uh, companies that would get uh, you know, started. But as you're aware, 90% of them will not.

Speaker B: High mortality rate.

Speaker A: Yeah, high mortality rates. But the number of funds which are looking at deals in that space are also several. The bigger challenge we saw is that funds which are getting, and that there are, you know, funds which are at the series, beyond series B, say C, D, E, there are very large funds who are waiting for some of these companies to come close to 500 million is nothing nowadays, but one would say 800 million to a billion, uh, plus in terms of valuation for them to then come in with a reasonably large check which gives them a decent stake in the company. But how many companies actually get uh, to that stage? If you're looking at a pyramid, the pyramid could be a sharp one. But the one we are talking about is actually a very broad one like this with a low. Uh, so there are lots at the bottom and there are very few at the top. So the middle layer is where we felt we could add a lot of value and play because. Exactly. Like you pointed out, we feel that the numbers also showed that there are not too many Series A deals coming in where it's the first check. Right. So we come in as a first check investor at series A. There will be others who invest at the seed level and then they will back their winners. So when the winners are doing a seed A, they might either lead the round or get someone else to lead the round, but they will double down.

Speaker B: Yeah, Most of the well known funds are backing the winners. Like they come in early stage and back the winners.

Speaker A: Yeah, yeah. So but we are the uh, we come in at the series A stage. Right. And what we also felt, and it's sort of playing out is that there are several businesses in India which have not raised money earlier, where the founders have built, bootstrapped the business and taken it up to a reasonably decent level. After which they are now looking to raise their uh, first round of uh, institutional capital. So in many of our uh, portfolio companies we are the first institutional check in that company. Uh, there are also deals that we're looking at which have matured from the early stage, have come up to a series A stage where we can now consider investing in it. But there again what happens is that we tend to be highly selective because we're going to only about 14, 15 companies. So it's important for us to uh, make sure that all the companies that are maturing and getting to a series A meet with our financial metrics that work for us. And uh, so that makes it a little selective for the uh, companies which are growing. They need to bring in the profitability angle, which I think is happening today. It wasn't happening in 2021, 2223, but now gradually. I think most funds have learned from the challenges they faced in 21, 22 23. And you will see the term um, uh, product market fit being used a lot. Uh, people are saying no, we want some profitable growth. All of that is now path to profitability. All of that is now gradually that uh, pragmatism is coming into play right now.

Speaker B: But uh, do you not worry that you'll miss AI deals for example, uh, because you would be a little more hung up about valuation.

Speaker A: So think about what our goal is, right? Our goal is to give our investors a certain return, right? Our goal is not to chase uh, multi baggers. So when we construct our portfolio, we would like to create a portfolio which you know, in a worst case scenario, let's say, you know, out of four, let's say simplicity, 15 uh, companies, right? Let's say three to four of them will not go to plan. But there again we want to ensure that there's no mortality. So we should be able to get at least a 1 and a half 2x on that investment. Let's say a 15 to 18% IRR over there, right? That's the, let's say 3 to 4 companies, right? Then there is this hard middle of 7, 8 companies, right? Which ideally should give us between a 4 to 6x and then we've got you know, the uh, outstanding performers, outliers and maybe say another three or four of them who will give us you know, uh, any number it could be on an average anything between say an 8x to 10, 12, 15x.

Speaker B: Right?

Speaker A: So on the whole if you're looking at the kind of returns we're giving. If we achieve this, we are meeting our numbers. Right? Uh, we need what we need to give our uh, investors. We don't need to take inordinate amount of risk, uh, to try and chase multi baggers which might or might not become multibaggers. So we are not in that uh, 01 kind of uh.

Speaker B: You're not playing the Paolo game, basically anti Paola, uh, investment.

Speaker A: We want more consistency in the returns uh, from uh, our uh, uh investments. So that's one. And so think of us as like a bridge between the power law and the private equity M. This is a stage where we feel that there's a fair bit of strong uh, scaling with profits. Uh, that happens. And if I may add one more element there see uh, we have to do 14, 15 companies at best. We believe that we are likely to miss out on several great opportunities. Opportunities. Right. Uh, for various reasons. It could be the risk appetite, it could be the valuation. It could be that maybe because we were not looking at that sector we missed out opportunities. It could be various reasons for it. But the point remains that um, we will miss 50, 100 of them, but we have to do 15. We need to make sure that these 15 give us the returns that we need to give to our investors.

Speaker B: You mentioned uh, previously about the question for companies on whether they should build the tech in house versus they should use tech which is like available through an API or things like that. Uh, which I think essentially is the challenge in front of most AI businesses. I'm wondering if you have a take on that. I know AI is not like your primary focus area, but do you have a take on. There are some businesses which are called AI wrappers. Uh, but AI wrappers also have seen a pretty good growth of valuation, etc. What's your take on the AI space? Opportunities to invest there, especially within India.

Speaker A: So we believe AI is here to stay. Uh, there is of course Genai, Um, there's a fair bit of uh, work happening across various aspects of creating and deploying AI. We uh, like to keep our eyes and ears open. We uh, are not very married to a specific thesis and we would like to see how the space evolves. Right. So for us, when we are looking at any business, we would like to see if AI, uh could potentially disrupt it and if it can, is the founder conscious of it, um, you know, acknowledges that potential risk and is doing something about it.

Speaker B: Right.

Speaker A: And is uh, adapting uh, to it, to the changing times and adopting it into uh, their operations. Right. So that is something that we Very closely. Take a look at when we are evaluating businesses.

Speaker B: What's an example here of where a problem statement can only be solved with AI and therefore you would back an AI business there.

Speaker A: So for example, we had an investment in a company called Capture cx. Now Capture focuses on the customer experience management side of the CRM business, right? So what they would do is um, for the back office where you have agents, agents used to have dashboards. So whenever a call came in from a customer saying that, look, I'm having a certain problem, the information would get thrown up on the dashboard for the agent to troubleshoot and provide us resolution to the problem. Now that actually was doing fantastically well. But then AI came in, right? And with AI came in voice bots, chatbots, agentic processes and stuff like that. So the team at Capture was very conscious about it. They were tracking the developments over there and they kept abreast of the developments, right? And adopted it immediately and started offering those services or the products to the customers. So customers who earlier used to have maybe just an email solution coming in or a call coming in gradually started adding your chat bot, uh, if someone calls in the voice bots, stuff like that. So that integration immediately into the processes of your customers, uh, has helped the company. And today I think what, 35 to 40% of the revenues uh, is from AI. This is one example. We have another company, uh, called Entangles, which is in the telematics space, which, which is used for preventive maintenance of fleets, so logistics fleets, right? But essentially the product is such that it can be used for any engine, right? So what they have is a device which is put into the, which is plugged into the, the ICE engine of you know, trucks and buses and lorries and stuff like that. And there is a command center where they use AI to map the performance of some 200 plus parts of an ICE engine, right? And they know that a certain part needs to function within a certain range of its parameters, right? So they know that if it starts, if the parameters start showing something going beyond the range on the upper higher end, what could, uh, you know, what could be the cascading effect on the rest of the engine which could potentially lead to a certain negative outcome or if it's below, then there could be a completely different uh, sort of cascading, uh, effect and that leads to a uh, engine shutdown or a breakdown and that leads to losses. So the preventive maintenance side of things sends a message to the driver of the vehicle to say that look, this is likely to Happen. So at the next stop, please, you know, resolve it, see to it, you know, see what you need to do. And the solution is also presented to them saying, okay, do this, uh, if it is something that they anticipate is likely to happen in the next four days, seven days, whatever, the fleet manager is informed and told that this vehicle, you know, you need to uh, do the preemptive maintenance of this part, either replace it or repair it or whatever so that you know, the functioning does not get impacted. So that preemptive maintenance saves a lot of money for the customer. And there's a clear value add over there, right. Using AI. So what they're doing is they're using AI and applying to physics. Right. So the clear use case for that.

Speaker B: Right.

Speaker A: So we try to look at businesses which try and bring in, you know, application oriented use cases using AI in day to day lives.

Speaker B: Yeah, essentially what I understand is that uh, you would be bullish on companies using AI, uh, at the orchestration layer. Not exactly. A company which is like an AI lab attempting to build a language model or whatever from the ground up is not what you're looking at, but you want to be closer to the customers, which means orchestration layer companies which are applying AI over there.

Speaker A: So one way to think of how we look at businesses is uh, the picks and shovel strategy.

Speaker B: Right.

Speaker A: So we prefer the picks and shovel strategy to the gold prospecting one. Because a gold prospecting one is binary.

Speaker B: Right.

Speaker A: So if you're creating an AI product, you might be successful, you might not be successful. Right. And the one thing that we've seen is that uh, you know, the large names, the big ones, uh, they become stronger and stronger. Right. So it becomes very difficult for an insurgent to come and create uh, a slightly differentiated positioning for itself and which helps them to then, you know, be the David to the Goliaths. Right. Uh, here what we are looking at is, okay, let's the others do what they have to do. We are going to see the application of that technology, technology to the real world and see how companies uh, can use it. Stay abreast of developments happening, uh, which is being developed by the big tech guys and create business models that uh, generate revenues for you and profits.

Speaker B: I want to get your take on a very India specific kind of a business model. A lot of startups have. Um, see like in more organized markets, uh, the B2B supply chain, there are large players operating in those spaces. Like say, uh, if it was about say delivering meat, uh, you would have a company in the US which would have their own avatar and directly do the processing, et cetera. Whereas in India, the large players are aggregators like say Captain Fresh or Fresh to Home. These would be aggregating, working with multiple people who have assets and they would have an asset light approach or same thing in say showroom B2B. Uh, you have competitors like say Groyo Fashionza, uh, Zillingo was also like though now there are problems there. But essentially these companies are saying that India has a lot of SME manufacturers who are inefficient. I will build a tech layer on top and make them, uh, give them more efficiency thanks to my tech layer. And I will aggregate demand on the one side and I will match it up with these millions of manufacturers. And this is across multiple spaces. Fashion is just one example. But I think even an off business would be something like this. Or there are lots of such examples of people who. Yeah, yeah, zetwork, exactly, yeah. Asset, uh, light manufacturing, building a tech layer. What's your take on that? Because you've invested, you've slightly gone counter to that thesis with the showroom B2B investment which has its own factory. Uh, so I'm just wondering that, do you feel that is the way to go or are you also equally bullish on the other approach of asset light aggregator kind of an approach?

Speaker A: That's not an easy one. So the way we look at it is that how key are you in the supply chain? How critical is your presence in the supply chain?

Speaker B: Right.

Speaker A: So it's important. That is an element that we sort of try to evaluate. There is definitely, uh, a role for the likes of off business networks and all these, because very clearly, I mean India has a very large MSME market, like 6 lakh plus MSMEs in the country. And many of them know manufacturing. They don't know how to go and get business. They don't know how to market themselves. Right. Uh, they might know how to build a product, but they might not know how to build it and maintain quality along the way.

Speaker B: Right.

Speaker A: So these intermediaries play a big role in mapping and matching demand and supply. Right. And making sure that they get these MSMEs to start meeting certain quality norms that are required to improve the overall final product quality. Right. Uh, and putting the supply chain in place. So there's definitely a role for them to play. The question is how do you value them? So the biggest challenge has been that, you know, for us it's the business are good valuation is. So you have to distinguish between the business and the valuation Right. So we believe that a lot of these, if you look at, there are two models here, right? So, uh, in this, uh, aggregation play, uh, you can either say the company custom, the, uh, vendor will manufacture and bill it directly to the, uh, client and you get a cut, your percentage cut, right? The take rate, what they call a take rate. Right now your take rate tends to be 5%, 6%. Right. So that's effectively your revenue. Right? You are providing a service, you're creating value, and you are getting a certain, um, um, revenues for it and you have your costs associated with it. So we would like to look at your take rate and your unit economics and give you a valuation on that. But I think historically the uh, valuation has been given to the revenues generated by the throughput rather than the take rate that these guys. So that I think there has been a little bit of a disconnect there where we sense and see that there's a lot of maybe valuation that is offered, which we might not agree with that methodology of valuing a company. Then there are others where what they will do is they'll say that, okay, uh, we will pass it through our balance sheet to show a higher, uh, revenue. I will go to some 20, 30, 50, 100 vendors. I will get them to, I will purchase a product from them and then I will sell it to the client.

Speaker B: I think this is what zetwork can all do.

Speaker A: Uh, ostensibly, you know, they have control over the quality, um, through that process. And maybe that's great. But at the end of the day, again, it'll still reflect in your P and L, right? Because you will, you'll buy it from them at a certain cost and you will sell it to the customer at a certain cost. The question is, okay, what is your margin that you're making over there? So we will evaluate that. Right? So there are no, uh, you know, good or bads here or what is right or wrong here. It's about the business model, to see what is the business model and are you able to get something better than what the industry typically gets. And that indicates your value add.

Speaker B: Right.

Speaker A: Like I said, your margins are an indication of what the customer is willing to pay you for for the services you are providing. Right. So that is critical for us when we are evaluating a business.

Speaker B: I've heard, uh, early stage investors, uh, say that great founders find their own tam. Uh, you know, they believe in betting on the team, not the tam. Uh, what is your take on that?

Speaker A: Um, so, okay, I think that belief system also ties in a little bit with the stage at which they invest. And it typically happens at the early stage. Uh, we would prefer a combination of the two.

Speaker B: Right.

Speaker A: So, for example, I touched upon this a little while earlier. Would you like to back a great founder who's trying to build something in, um, a really difficult industry? Let's say it's. It's a commoditized industry. Let's say there's a lot of regulatory overhang and he finds a niche. He or she finds a niche in it and says, look, I'm going to build it because I've identified a niche and, you know, I will create the, uh, TAM in it. Now, do you want to invest in a company like that or are you okay with investing in. Let's say, you know, AI. AI is doing. There's crazy tailwinds over there, right? And we find, uh, a founder who understands AI, who's done it before and is, you know, is great at it. But maybe if I had to look at him compared to that other founder, I'd say, okay, he's good. He's not as great as that other founder who has already done two different businesses and exited it and made money. So, you know, which one would you invest in? Right now our preference would be to invest in the latter, where we say, okay, he's good, but he gets the tailwind or the support of an industry which is growing organically and growing its tam. Whereas here the odds are stacked against maybe, uh, they're stacked against you. They might be surmountable, not insurmountable, but the. There's a lot of headwind and you're trying to change the, you, uh, know, the structure of an industry, which, uh, is probably, uh, you know, a challenge you're taking on, which will require you to put in significantly more effort to get the kind of returns that you're expecting compared to the good founder who will get automatic, you know, support and tailwinds, which will help him grow a lot faster. Him or her grow a lot faster. So, you know, that's how we would look at it.

Speaker B: What do you think of the recruiting tech space? Uh, I've not seen a breakout business there. Like APNA would be the only one. But APNA also now seems to be voice agents. Like more of that kind of a business rather. Ah. Than a pure recruiting tech. Is that a business that you think there are opportunities for breakout companies? Or is it like the Nokris and linkedins of the world have. Have it covered.

Speaker A: And yeah, I mean, I would like to think that, um, I mean, we've looked at several. When we started in 20, 21, 21, 22, two years, we looked at several such companies, but we just felt that there was no real differentiation. It's effectively the same thing everyone is doing. In fact, quite often what one would do is they would create the technology stack, get, uh, a couple of clients, start uh, doing their payrolls, start doing certain aspects of HR management. But invariably they would go back towards the NBFC side of things and say, okay, let me give you a loan because I know uh, your salary, uh, situation and I know your uh, ability to repay and whatever. So let me give you small ticket loans and grow on that. Right? So we saw that model happen a lot, um, and there are several players out there, um, some of them who have scaled reasonably well, but um, they necessarily need to move out of India also. So they need to grow internationally and that's what they are doing. Uh, but for us, we felt that there was no real clear differentiation. Uh, so for us to take a chance with some of these, what is the struggle that we face? Um, it could turn out to be a lifestyle business, right? It might not be, it might not scale the way we anticipated. It'll reach a certain level and tend to stagnate, right? So when we look at businesses we try to see, okay, is it somewhat differentiated? Will they be able to create scale?

Speaker B: Right?

Speaker A: And what does it take to create scale? And uh, could uh, it just sort of reach a lifestyle, uh, business, uh, level, you know, so we felt that a lot of these businesses, um, so you, while you might see a couple of breakouts, like, you know, great HR has done quite well and a couple of others have done well. But you just have to be lucky, right? We could have done an investment in some space and you know, nothing could have come of it, you know, so we, so when we are looking at it, we look at the industry structure also and see, you know, what are the opportunities over there and what are the tailwinds over there, all of that.

Speaker B: Okay, uh, my last question to you. What's the best way for people to reach out to you, get your attention.

Speaker A: So we are early growth, right? So it doesn't make sense to sort of reach out to us if you're at a zero, uh, to one stage, right? Um, reach out to us are, you know, we, we have a section on the website where you can come in and you know, uh, put in a little bit about yourself and your business. And you know, there uh, is a investment team colleague who looks at it every day.

Speaker B: Do Those, uh, website leads ever lead to an actual investment?

Speaker A: Um, I don't think we've had any so far.

Speaker B: Right. Which is what most VCs have told me.

Speaker A: Yes. But the one example I gave you is that the founders, um, uh, reached out to us on LinkedIn. Not through the website, but through LinkedIn. Uh, and then they gave us a little bit of a brief and then said, yeah, okay, this looks good. So we said, okay. So we also have our own, uh, uh, cactus page, uh, Cactus partners page on LinkedIn. So we occasionally receive, uh, some, uh, hits over there, but so far we've not seen any others other than this one example.

Speaker B: Okay. Okay. And other than that, I guess introductions, that's what would work.

Speaker A: Warm leads. Introductions is what works best.

Speaker B: M. Okay, awesome. Thank you so much for your time, Rajiv. It was a real pleasure.

Speaker A: Thank you. Thank you so much for having me. This is, uh, very interesting, and I hope, uh, a lot of what I've shared has been helpful to your, uh, um, viewers. And, uh, I'm sure you. You reach out to a lot of founders, and I hope some of what I've shared has been insightful for them.