Back in 2014-15, online groceries was a hotbed for start-ups. We evaluated several players with great business models, supply chain, tech-enablement and those that were already well-funded. BigBasket was on top of our list. Its business model and market hypothesis looked robust and the team was quite impressive with founders bringing in exceptional execution capabilities—necessary for this sector. Our deep conviction in BigBasket’s robust supply chain versus other players reinstated our confidence in long-term business feasibility. Our investment in Helion Venture Capital, who had backed the company, made us an indirect investor in BigBasket, and our partners’ conviction helped us get more confidence as well.
However, grocery being a highly capital-intensive category made us uncomfortable and we began deep-diving into the magnitude of capital required by players such as BigBasket post their series C funding. As we did our due diligence, we realized our fund’s balance sheet strength was not enough to support the company’s journey on our own and we needed potential large ticket co-investors for the next funding rounds. While we considered all strong domestic funds, we did not anticipate foreign investors entering this relatively volatile sector. Considering all this, BigBasket seemed like a binary risk for us at that time and we decided to pass the deal.
Shortly after that, the company announced a series of foreign investments from US-based Sand Hills Capital, which made its first and only investment in India, Dubai-based Abraaj Group, which also made their first investment in India through BigBasket, and US-based VC Bessemer Venture Partners. BigBasket went on to become an online market leader in this sector with over 20,000 products, 1,000 brands and a host of private labels. With Alibaba coming in as a recent investor, it now aims to reach ₹500 crore worth of sales a month by March 2019.
The one key learning that we took away from this was that if we have a strong conviction in a company’s business model and team, we should back them up without worrying about who exactly will cut the next big cheque. This approach has worked out well with our subsequent deals such as Lending Kart, which is again a highly capital-intensive business and hope that as an indirect investor in BigBasket through Helion, we will participate in the success of the company and support the company from the outside as friends in the ecosystem.