General Catalyst, a US-based venture-capital firm, has acquired Venture Highway for its early-stage investments to strengthen its presence in India’s startup ecosystem.
In a blog, GC stated that “this acquisition allows GC lead initiatives in India and to create one of India’s most powerful venture platforms for the next generation of Indian entrepreneurs.”
General Catalyst is a global investor in some of the most exciting technology startups, including Airbnb Canva Deliveroo Snap and Stripe. GC is a major player on Silicon Valley with over 20 years of experience and $30 billion invested into over a thousand startup companies. Its involvement in India, however, is relatively new. It made its first investment there in 2019. GC’s Indian portfolio contains unicorns such as CRED and Spinny and more than a dozen startups. The firm plans to invest between $500 million and $1 billion in India within the next few years.
Venture Highway, founded in 2014, has provided early funding to startups like Meesho, Moglix Applied Intuition BetterPlace and Chalo. Neeraj Arora is a co-founder and former Chief Business Officer at WhatsApp. He has been an angel investor in Indian startups. Priya Mohan, co-founder of VH, joined the company after she had exited her own startup.
CNBC TV18‘s Shruti malhotra spoke to Hemant Taneja Managing Director and CEO General Catalyst and Priya Mohan from Venture Highway.
CNBC TV18: Hemant. Why did General Catalyst acquire Venture Highway? How does this deal improve GC’s position in the seed market? What excites you about Venture Highway’s portfolio?
Hemant Taneja General Catalyst began investing in India in 2019. As we learned more about the market and the geopolitics changed, we became more confident in India’s promise for the 21st Century. I’ve known Neeraj since years, and we’ve always wanted more partnership. Venture Highway’s ambition was to go beyond the typical VC playbook, and help transform India. We realised that we were stronger as a team. This means that GC has a global seed program. We are One GC – our Indian founders are as important to us than our European and American founding members.
CNBC TV18: Priya what does this partnership mean to Venture Highway and your startups?
Priya mohan: Over the past 10 years, we have invested in India and seen the changes in the entrepreneurial ecosystem. We believe that with India’s growing strategic, economic and political agency, now is the right time to leverage our brand and network. General Catalyst shares our values and culture, and we share a common vision for India. The merger will combine VH’s local intelligence and networks along the India/India-US Corridor with GC’s platform globally. This will create a powerful leverage for not only our existing startups, but also all of our future investments.
CNBC TV18: Hemant could you tell us more about the deal?
Hemant Taneja : Venture Highway is now part of General Catalyst. We are thrilled to welcome Priya and Neeraj and the entire VH Team and tap into their global expertise. Venture Highway will continue supporting their existing investments, and any new investment we make will be done out of our GC Funds.
CNBC TV18: Priya – What are your future plans?
Priya Mhan: With this partnership, we can reimagine “venture” beyond our current form and in a way that is contextual to India!
CNBC TV18: Hemant. What challenges have global venture firms faced with India? How do the exit levels and return rates compare to other regions of the world?
Hemant Taneja : In order to be successful in India, you need a strong local presence who knows the market well and is familiar with Indian nuance and variety. India has many unique competitive advantages, and we must take full advantage of them. We also need to be integrated and bring all the resources of a large firm.
This is the right time. Over the last decade, India’s venture ecosystem has grown and matured. India is a large country, but its economy is smaller than California. We are particularly excited about the chance for Indian entrepreneurs to build companies that will not only be focused on the domestic market, but also the global stage. With these strategies, we’re confident that India can be as attractive as any other venture-market.
CNBC TV18: Hemant Hemant, What excites you about Indian startup stories?
Hemant Taneja : There are so many exciting things about the Indian startup tale. The engineering talent in India is world-class. India’s demographic dividend is one of the strongest in the entire world, and it has the largest pool tech and entrepreneurial talent. India’s vast landscape is also a plus. India has a lot to build and can leapfrog over the best capabilities of the most developed markets. India’s ambition should not be to catch up with the West, but to leapfrog them.
CNBC-TV18:
What’s your opinion on pursuing profitability and future IPOs in light of the recent IPO challenges that India has faced?
Hemant Taneja : Our culture was largely focused on growth, at all costs. We put scale and profitability before discipline. I’m glad that we have collectively returned back to the basics and realised that the law of gravitation within businesses is the same, even if they are a startup. I look forward to companies such as Meesho, a Venture Highway portfolio firm, that have achieved profitability and are maturing in their leadership and capabilities. IPOs and exits play a vital role in the health of the VC eco-system. We need these companies to reinvest into the Indian startup ecosystem and encourage the entrepreneurial flywheel.
CNBC TV18: Hemant. The last time we spoke you said that themes like healthcare, inclusive finance and climate change, as well as supply chain investing, could make India a resilient force within the new global order. Do you plan to invest in these areas or are there new ones?
Hemant Taneja : I’m still very excited about these areas. But, India has an excellent opportunity to advance manufacturing. We’ve been discussing with the La Famiglia Europe team how to combine European manufacturing excellence with Indian capabilities. As we’ve seen with the rapid shift in geopolitics, such as relations with China, the world needs diversification. The other areas remain very relevant – the climate crisis can only be solved by India, and we need to improve the quality of living for India’s billion plus citizens.
CNBC TV18: Hemant has always insisted that profit must have a purpose. How will that translate to your early-stage investments in India?
Hemant Taneja : In India, we will continue to practice responsible innovation – something that Indian founders excel at. We want founders who are aware of the impact they can make to take on responsibility from the very beginning for building a company the right way. We have these conversations at the start of our processes. Even if two IIT engineers are in a dorm, we want them to consider the consequences of their actions.
CNBC TV18: Hemant. What are your thoughts on the future of AI? Its implementation and the regulatory framework — are there enough guardrails?
Hemant Taneja : AI has a fundamentally transformative nature. AI’s value is tied directly to the data underneath. That’s why we are so focused on startups working with existing businesses to help them get the most out of new technology and data. We are looking for entrepreneurs who can go from industry to industry and see the opportunities and build trust with enterprises.
Guardrails will always be a topic of conversation in AI. Imagine if we put guardrails in two years ago. We wouldn’t have understood what we were doing. We believe that having a human in the loop will always be important. Our belief is that users should decide when an AI system can be deployed, based on their understanding. I hope that we’re still discussing guardrails a decade from now because it means that AI has advanced and we have new capabilities to improve lives.
CNBC TV18: Priya what is the current fund size of Venture Highway and its portfolio status?
Priya mohan: Our three funds have over 90 companies in their portfolio. Meesho Moglix Sharechat Applied Intuition Chalo BetterPlace are some of our marquee businesses. They have grown beyond Series C. Most of our Fund 2 & Fund3 companies, including Grip Drivetrain and Ripik are still very young. We are fortunate to be able to offer a portfolio of many category-creating businesses.
CNBC TV18: Priya you sold a part of your stake to Westbridge in Meesho earlier this year. How much of your stake do you own and is Meesho IPO the next exit for you?
Priya Mhan: Although we have sold a portion of our stake, we remain very bullish about the prospects for Meesho. We were fortunate to have led their seed round, and we’ve invested in many subsequent rounds since then.
CNBC TV18: Priya what is your biggest learning from being an early-stage fund?
Priya mohan: When investing in a founder/space the regulatory and structural challenges and opportunities are different and not uniform. That is what you would underwrite, as an investor.
Investors live in an information-overload world with a multitude of signals, including fundraises, investor sentiments, competitive sentiments, etc. To avoid being distracted by the noise, it is important to be able to consume data with a critical eye and apply first principles. This takes patience, and it is only when few people are able to see what others cannot that large companies can be built.
CNBC TV18: Hemant as a global investor, what is the role of a VC today?
Hemant Taneja Venture capitalists are here for the most ambitious founders who go beyond quick wins to build lasting companies that change the World.
CNBC TV18: Priya? Are we in a funding summer or a scorching spring? Just over $4 billion was invested in startups this year. If early-stage funds keep writing checks, will $4-6 billion be the “new normal”?
Priya mohan: India is at its strongest macro-status today, and this means the opportunity for large companies to build in India for India or in India for the rest of the world will grow significantly. We believe that “Venture”, in this context, will evolve to fit the India opportunity. We want to be the pioneers of that effort. The right metric, therefore, is not the capital, as it will grow, but rather the ability to contextualise, and curate, the right opportunities that are nuanced for India.