Good Time To Invest In Startups: Sanjeev Bikhchandani

Despite the ongoing funding winter in the Indian startup ecosystem and markdowns in valuation of various unicorns, veteran investor and Info Edge executive vice-chairman Sanjeev Bikhchandani believes that the current environment is ‘actually a good time to invest’ in startups

“Look, it’s hard to predict (when the funding pipeline will normalise) but, in general,… we are noting that there is still enough activity on the startups and the funds side. It’s actually a good time to invest,” said Bikhchandani during the company’s earnings call for the quarter and the year ended March 2023. 

However, he also cautioned that it is a good time to invest only for investors with a 7-10 years time frame. 

Bikhchandani said that Info Edge is well-placed to leverage this opportunity and added that some of the best investments for the company came around the time of the 2008 global financial crisis.

Responding to a question about whether startups in the ONDC space are a focus area for the company, Bikhchandani said that the state-backed initiative is not central to Info Edge’s mandate. Describing his rationale, he said that the company steers clear of D2C startups and as such ONDC ‘may or may not’ work for the company. 

Curiously, Info Edge’s prized portfolio startup Zomato could see major headwinds emerging from the ONDC as the platform further scales up. 

On the performance of Info Edge’s portfolio amid the raging market volatility, Bikhchandani said that the companies in its kitty are doing ‘fair’. On its prospective investments, he said that the company wants to be ‘particular’ about valuations, founders and cost-efficiency.

“Look, every portfolio will have some situation of stress and we are no exception. Having said that, I think we’re doing very fair. But, tomorrow is another day. We don’t know, we are waiting and watching,” Bikhchandani said. 

Meanwhile, Info Edge’s portfolio continued to reel under macroeconomic pressures. The company said it saw an impairment of INR 12.3 Cr of investment in 4B Networks, a proptech venture of former Housing.com founder Rahul Yadav, in March quarter of 2023. This number stood at INR 519.9 Cr in the preceding December quarter. 

In total, Info Edge impaired an amount of INR 532.2 Cr during the course of the fiscal year 2022-23. 

“In line with accounting policies consistently followed by the company, investment in 4B Networks Pvt Ltd, a partly owned subsidiary of its 100% subsidiary Allcheckdeals India Pvt Ltd, amounting to INR 5,322.53 Mn (consisting of INR 7,194.35 Mn of goodwill, INR 807.73 Mn for net assets, INR 123.22 Mn for ICD given and reduced by non-controlling interest payable of INR 2,802.77 Mn, as per IND AS) has been fully impaired, considering current state of affairs and other relevant factors including excessive cash burn, prevailing liquidity issues and significant uncertainty towards funding options…,” the company said. 

Besides, the company also wrote off its entire investment worth INR 76.6 Cr in B2B marketplace Bijnis. Citing its rationale, the company later said that this was a technical write off owing to “unspecified liabilities on Bizcrum which may materialise owing to the buyback obligations in the existing shareholders’ agreement signed between the company and the investors”.

Meanwhile, the classifieds giant slipped into the red in the fourth quarter (Q4) of the financial year 2022-23 (FY23) with a consolidated net loss of INR 503.2 Cr. This was largely the result of mark-to-market losses in investments held by controlled trusts and the slowdown in billing revenues in its IT recruitment service. 

Shares of the company closed 7.6% higher at INR 4198.70 on the BSE on Friday (May 26). 

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