MoneyBall: Lightspeed India’s Hemant Mohapatra Is Not Shy Of Chasing Down ‘Compelling’ Deals

After spending 15 years in high-profile roles at Google’s venture capital arm and VC firms such as Andreessen Horowitz, Hemant Mohapatra decided to move back to India. He has now joined VC firm Lightspeed India Partners as a partner and will be scouting for startups for investments in India.

The decision to move back wasn’t easy, says Mohapatra, but he got his answer when he questioned himself where he wanted to be at the time of his death. A slightly morbid question, but it gave him the answer he was looking for — India. In a Medium post, Hemant shared how he arrived at his decision to move back to his family and country and join another company.

Global VC firm Lightspeed Venture Partners via Lightspeed India has been investing in India since 2004, with a focus on direct and cross-border businesses. The Silicon-Valley-based firm generally invests $1 to $25 Mn in growth or early-stage startups seeking to disrupt or transform large markets in the domestic economy. It raised a $115 Mn India-specific fund in 2015 to invest heavily in India’s burgeoning landscape.

With its continued emphasis on investing in Indian startups, the company has now onboarded Mohapatra as a new partner. Mohapatra is the sixth investing partner at Lightspeed India, all of whom focus on investing in the enterprise and consumer categories.

Before Hemant officially moves back to India for his new role at Lightspeed India, he has already started his work from San Francisco.

Mohapatra has a technological background — he was an engineer for more than six years, did his MBA, and then joined Google Cloud in a strategic business development role. A few years into the role, he started doing due diligence for deals at GV and CapitalG (VC arm of Google) and also participated in and led a few investments for Google. After this, he joined well-known VC firm Andreessen Horowitz as a partner.

In conversation with Inc42, Hemant talked about his experiences in Silicon Valley, Google, and Andreessen Horowitz, his plans for Lightspeed India, and more.

Inc42: After being in the US for such a long a time, what made you head to India? What excites you about the Indian startup ecosystem?

Hemant Mohapatra: For me, India was never a question of why, it was a question of when. My whole family still lives in India; I studied at IIT Bombay and still have a huge circle of friends back home. Many others I know well from my life in Silicon Valley and my career at Google have moved back to India as well, so I was working towards the perfect opportunity, which I found with Lightspeed India.

Moreover, I felt that someone like me, who has experience building and launching products, has an empirical understanding of tech, empathises with the founder’s arduous journey, and has strong ties both with the US and India, is a profile that can add strong, differentiated value in India.

One of the key reasons Silicon Valley is so successful in starting up is not access to capital, but access to capital together with access to mid- and senior-level talent who know how to scale businesses. Where would Google be without Eric Schmidt? Or Facebook without Sheryl Sandberg? This talent pool takes multiple hype-cycles to surface and it brings with it a rare camaraderie of optimism in the face of failure and objectivism in the face of hyperboles. India has gone through this cycle of reflection and rebuilding a few times now, and that to me is the most exciting thing about returning: Mature, passionate and self-aware founders looking for smart capital.

Inc42: What will be your exact role and duties at Lightspeed India?

Hemant Mohapatra: The structure of the fund is very flat, which is what attracted me to Lightspeed India. There is a lot of autonomy and ownership available to everyone, every deal is looked at thoroughly, and we are not afraid to ask the difficult questions — both to founders and internally to each other.

Venture is a long term business, so, I will, in the beginning especially but also beyond that, spend a lot of time listening and learning, connecting to smart, passionate founders, and helping out wherever I am needed by the broader startup ecosystem. Meanwhile, if there is an opportunity I come across that looks really compelling, I will not be shy of chasing it down and investing.

Inc42: What are your thoughts on the growth and the late-stage startup funding scenario in India?

Hemant Mohapatra: I don’t think there is lack of funding in India at any stage for the right startup. The bigger question is how to create the right conditions to ensure that startups can grow into healthy, profitable, and sustainable businesses, ready for late-stage funding and eventually for public markets. That should be the goal, regardless of the outcome.

From a regulatory perspective, India should make it easier for both founders and investors to take risks through better tax policies and company registration processes. Investors and founders also waste a lot of time negotiating unenforceable term-sheets, so we need to simplify that so founders can focus on what really matters: building companies, not spending months negotiating term-sheets.

Investors should think of themselves as partners in the entrepreneur’s journey and there I am a strong believer in a “venture services” model to support portfolio companies. We, at Lightspeed India, have focused a lot of energy in this direction with the hiring of Sunil Rao from Google in 2016. All of this should set the ecosystem on a path where we will see more and more startups surviving the product/market chasm and moving into growth stages with growing repeatable revenues, stable organic growth, and top-notch hiring at all levels.

Inc42: India is witnessing a lot of consolidations and exits. For instance, Flipkart was acquired by Walmart, eBay acquired a stake in Flipkart last year and then ended its ‘strategic partnership’ after the Walmart-Flipkart deal, itzcash was acquired by Ebix etc. Do you think it’s good for the ecosystem?

Hemant Mohapatra: Absolutely! We need to celebrate any and all flavours of success for the entrepreneur. I read somewhere that the Flipkart “mafia” has founded over 250 other startups! Can you imagine how many more now have the economic freedom to leave and follow their own startup ambitions? How many will become savvy angel investors and advisors? Or join growing startups as “adult supervision” like Erik Schmidt did for Google?

These events are like the whistle from the pressure cooker. They relieve the tension in the ecosystem for all players, everyone can enjoy a good meal for a while, and then many will go cook for the consumers something great somewhere else.

Inc42: A lot of startups in India are now looking at SME Emerge to list themselves. What do you think is its future in India?

Hemant Mohapatra: It feels like this is a potential exit mechanism for companies in the $10-30 Mn (INR 50-200 Cr) enterprise value range. While there are a number of companies that could benefit from getting liquidity at these enterprise values, this is not a viable path for large exits that institutional venture funds look for where enterprise values will range from $100 million to $1 billion and above. The BSE/NSE and international stock markets like the NASDAQ and the NYSE support companies with these larger enterprise values.

Inc42: You were associated with Andreessen Horowitz, which is among the top VC firms. How was the overall experience and what are the things Indian VC firms can learn from it?

Hemant Mohapatra: I learned a lot from Andreessen Horowitz. As a firm, they have redefined what it means to be an investor by going beyond providing what had so far been the usual for VCs: cash and counsel. Andreessen Horowitz is a well-oiled machine of talent scouts, deal operations, outreach and events, go-to-market teams, PR, and even an engineering team! All these work for the benefit of portcos in critical areas such as helping them hire, or setting up product demos between portcos and potential buyers.

The venture industry is pretty crowded — every week a new fund is raised — and VC funds like Lightspeed and Andreessen Horowitz that value the company-building experience in their investors, treat founders fairly and with respect, and always try to add value to an entrepreneur’s journey even if they cannot be part of it directly, are the ones that will differentiate and dominate over time. The phenomenal exits that Lightspeed has had recently (Mulesoft, Snap, AppDynamics, Nutanix, India Energy Exchange, etc) is a testament to this approach.

Inc42: You have written that you believe more in AR and not VR. Can you explain why?

Hemant Mohapatra: For the most part, the VR wave has come and gone. It is extremely hard to time the market for new technologies, so it’s anyone guess if VR is going to make a return. In my opinion, VR technology was socially isolationary — you wear a headset which isolates you from the environment — so the use cases narrowed down to gaming and a few others. The devices were expensive and it was an additional device the user needed to buy, which added friction.

Finally, developers had a tough time developing apps for them because of different platform architectures. Compare that to AR: your devices are essentially cell phones so the distribution problem is solved. Next, you only have two platforms to develop for: iOS and Android, both with a huge pre-trained developer base. And finally, AR still keeps you integrated to the environment, so the use cases really open up: from learning more about an artifact while traveling, to gaming apps like Pokemon Go, to just using AR to record fun videos from your cell phones with animated characters exploring around your physical space.

Inc42: What are your thoughts on emerging technologies like blockchain?

Hemant Mohapatra: As with most emerging tech, a lot depends on what is the application that will help prove, scale and socialize the technology. Bitcoin and other cryptocurrencies have done a great job proving the underlying blockchain technology to a degree but there is a long road ahead with many difficult engineering challenges around scalability, security, and speed that need to be solved before mass adoption, not to mention regulatory clarity on many aspects of the blockchain stack. As most people who have been tracking this space, I am excited about the possibilities and am keeping a close eye on how it is developing and where the biggest opportunities are.

Inc42: Globally, the AI sector is poised to grow to $16.06 Bn by 2022. You previously said that AI would be gaining a foothold but people are confusing it with machine learning etc. What do you think is the problem?

Hemant Mohapatra: AI is an overarching concept of creating intelligence that possesses the characteristics of a human. Machine learning and deep learning are the tools to achieve AI.

While AI is not a new tech — it’s been around since the 50s — it has suddenly become part of the tech zeitgeist because we now have the perfect storm of limitless compute power available to analyse limitless data stored on infinitely scalable and cheap storage.

Like with anything that gains popularity so quickly, there are bound to be buzzwords and terminologies that conflate and obfuscate. Rest assured, the smart crowd knows exactly how to separate the wheat from the chaff and that is where the smart money is going.

Inc42: What’s next in store for AI?

Hemant Mohapatra: That question could take an entire book to answer, so let me focus on some of the interesting problems that the next-gen AI-prenreneur will have to solve.

First, biased data leads to biased results — for example, an AI programme used by judges to determine if a convicted criminal was going to commit more crimes was found to be biased against minorities. Unbiasing data that is going to drive the AI decision-engine is going to be an area of intense scrutiny and opportunity.

Second, the authenticity of content. The University of Washington recently published research that shows Barack Obama giving a speech and the incredible thing about the video is that it is entirely made up. An AI listened to and watched a lot of Obama’s publicly available videos, de-constructed his facial features and speech patterns, and then created a video of him saying something entirely different. As this technology becomes mature, it’d be difficult to believe almost any content online and new ways to certify what’s real would need to be designed.

Finally, until we reach what is called “generalized AI” — AI that is indistinguishable from a human in doing any task just as a human would, much like C-3PO or Terminator — we will have to depend on a lot of humans to make our AI models effective for the specialised tasks they are designed for. Things like correctly labeling raw data that is fed into the AI model or ensuring an AI model behaves as expected still need a lot of human input. There is a new generation of startups coming up to build what is being called “AI Ops” that are tackling these tough challenges.

Mohapatra has a deep understanding of technology along with many years of experience in investing for some of the top VC firms like Andreessen Horowitz in the US. This, combined with his empathy for startup founders and understanding of the Indian and US ecosystems, will sure help him sniff out some of the best deals in this new market and play an active part in making entrepreneurial dreams come true.

This article is part of Inc42’s latest series, MoneyBall – Get up close and personal with the pioneers of the investment world. Dive in to find out about what excites them, their views on the latest technology & investment trends and what the future looks like from their viewpoint!