Maneesh Bhandari, founder and CEO of GrowthPal.com
Maneesh Bhandari, founder and CEO of GrowthPal.com

Anti-Portfolio | Don’t worry about high valuations, if the product is unique and in a large, growing market

If you understand and have experience in a certain sector, then you should be willing to do more rather than forcefully diversifying

Kolkata-based quick service restaurant (QSR) chain WoW! Momo raised funds in November 2015 at a pre-money valuation of more than 100 crore. I started investing in startups in 2010, after I got an exit from my security venture, that I had founded in the US. I had invested in about 10 early-stage startups by 2015, including Box8 in 2013, but none at a valuation as high as what was being asked for WoW! Momo, so I had a bit of a cold feet. I also had the misconception that, primarily, technology ventures can scale fast and, therefore, justified passing this one despite being intrigued by their team’s good execution.

My expertize was in business-to-business (B2B) technology sectors but I was fascinated by the India consumption story and started actively analysing business-to-consumer (B2C) startups. Food QSR was still an open market and several global players had started setting up their respective chains in India. I watched Box8 focus on operational efficiencies and grow well with great execution. In fact, I recently got one of the best exits from it in my entire portfolio of startups so far. The lesson learnt was that if the team is really good, in this case, they had shown commitment for a long time and great execution lately, and the product is very unique in a large growing market, then don’t be worried too much about the higher valuation as long as it’s reasonable from the revenue and growth metrics. If you understand and have experience in a certain sector, then you should be willing to do more rather than forcefully diversifying.

Wow! Momo executed exceptionally well and to continue their expansion with high growth, they went on to raise funds from Lighthouse and IAN Fund in 2017. Last quarter, Wow! Momo raised $23 million from Tiger Global with very meaningful returns to the investors in the first round. It was certainly a big opportunity missed for me and an opportunity to learn from a very good team executing and adding to the India consumption story.

Anti-Portfolio is a section where investors talk about missed opportunities in start-up investments

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