A talk with Sanjay Swamy

Sanjay Swamy is well known for cracking deals. Even though he is a managing partner at Prime Ventures, he still considers himself as an entrepreneur. Well, an interview was conducted with Sanjay for knowing the secret behind his success. Here is a brief about the chat Sanjay had.

Was it hard to make the shift from entrepreneur to venture capitalist?

I think I’m still an entrepreneur, a serial entrepreneur at that. We see Prime Ventures as a startup. Even in the VC world, there are different stages. As an investor, you will have one big success and nine failures and still be considered a successful VC. So we wanted to do something different. One of our metrics of success is to look at how many of our companies are successful. Our internal goal is 90% success. This approach changed my perspective. We have not approached venture funding from a traditional perspective of taking as many shots as possible, hoping for a higher opportunity for success.

 

How much time do you spend with each portfolio company?

We spend a lot of time with the entrepreneurs and in this industry, time is the biggest challenge. The bandwidth for partners is limited and hence we invest in only four or five companies a year. We look at the right entrepreneurs to work with. We work very closely but are not hands-on and don’t make decisions. We give them pointed advice but the entrepreneurs run the companies.

 

How regularly do you meet entrepreneurs you fund?

In the early stages, we meet once a week. We don’t need to go to every board meeting asking entrepreneurs what happened. You need regular communication in the early stage. All of us (partners) are involved in all deals. We have a common marketing office if the startups want to use our resources.

 

Why is your area of focus the Fintech industry?

We have a background in finance, and almost half of our portfolio is in Fintech. We have worked on IndiaStack and Aadhaar. The move to Digital India is big and it starts with the financial system by spreading the credit to lot more beneficiaries. It is a difficult space with lots of problems. Banks will still form the backbone and startups will be a layer on top of banks and bring solutions to the market.

What if this peaking of interest in finance is temporary, like the food-tech peak, just a bubble?

I think in any sector there is a little bit of trophy-ism. We have been in this space before the term Fintech was coined in India. We have seen that we can make lives better whether you are a consumer or BPL individual. If you can transform somebody’s life or business, you are adding value. The financial sector is a long-term play. There are more problems to solve than have been solved. So there is no lack of opportunity here. Obviously, there are others realizing the same thing -because there are large profit pools here, it’s worth going after these opportunities. Is it overcrowded?

I don’t think so. There is a little bit of copy-catism but that will happen. Some will succeed, some marginally, some will pivot.

 

Are companies rushing in and investing too much too soon?

I don’t think so. In financial services, the rush to create a company within a definite period of time is not there. You can’t throw money at a problem and solve it. There is an opportunity to create a solid business. Ultimately, what is going to make this market tick is credit. As transactions go digital, and people realize they can get access to credit, that’s when you’ll see second-order effects.

 

Does your experience as an entrepreneur help with decision making as an investor?

That’s the most important reason why an entrepreneur meets us, even those we don’t invest in. We are direct in our feedback because we don’t want an entrepreneur to get nothing out of it. We enjoy brainstorming with them, understanding their business. Over the course of a few interactions, deals might happen.

Do you meet entrepreneurs who are not willing to learn?

We saw a bit of it in the last two years, but it is less now. I think the system has separated the serious entrepreneurs from the irrational ones. It was fashionable to say I am an entrepreneur. That has gone now. If you are passionate and work hard, it might take seven years or you may get lucky but you broadly expect the business to be differentiated. You can’t be a copycat.

Well, we guess this interview will be a lot helpful for others.

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