Interview of Ankit Sharma – Director at Trifecta Capital Advisors

Ankit Sharma has 10+ years of experience in investing and lending. He is Director – Investments at Trifecta Capital and has been with the fund since inception in 2015. Trifecta is one of the largest venture debt institution in the country with an investible corpus of Rs.1500 crores across 2 funds. Trifecta has a portfolio of 58 Companies.

What is your investing philosophy?

We look to partner with the business in the emerging economy who are creating new categories or are clear leaders in existing categories. We evaluate the size and characteristics of the market which the company is addressing, the product/ solution which has been developed as well as the quality of the team and its ability to execute the business plan. Further, we typically support businesses which have already raised institutional capital, and we also evaluate the equity sponsors and their capacity to continue support to the business as it executes.

What has been the most important investing lesson you have learned so far?

I feel the biggest learning for me is the importance of sheer grit and perseverance. I have observed that the best founders maintain the ability to stay cautiously optimistic in all situations – their knack for sticking it out while course-correcting as necessary has allowed them to survive multiple market cycles. It is this skill that allows them to derive the true benefits of compounding over the long term, creating and sharing value for all their stakeholders.

Which has been your best investment to date?

Our investments have 2 components – Debt and Equity. Debt investments have a natural exit as it is repaid over time. Our Equity holdings have done well, and we have successfully exited from a few Companies. Some of the Companies where our equity has done exceedingly well are: Urban Clap, Nephroplus, Big Basket, Rivigo, Ninjacart, CureFit, Box8, Vedantu, Shuttl, Livspace, etc

Can you share any investing mistakes that you made and the lessons we can learn from it?

As we look back to our mistakes, we believe that there were a few situations where we have been conservative in our risk assessment, and hence lost out on a few opportunities which went on to become sizable large businesses. As lenders, it is inevitable that we pass on some such opportunities, and we regularly review our anti-portfolio to remind ourselves of the right balance in assessing risk and some early indicators that we should use to evaluate a business’s true potential.

Is there any particular investor or author who has had a significant influence on your investment thinking? 

I feel the 2 most important parameters which define an investor is CAGR and Time. Most of the investors are able to generate a high return but are able to do it for a limited number of years. VC investing in India does not have a long track record as compared to public markets. So I seek inspiration from public market investors such as Warren Buffett and Rakesh Jhunjhunwala, who have generated CAGR of around 20% for many decades.

What would be your advice to Entrepreneurs seeking funds?

Early in your journey be mindful as to whom you are raising funds. A good investor base will help you strategically and also help raise future rounds. It’s important to partner with funds that have a good track record of backing their portfolio Companies. Raise funds when you have cash in hand and don’t wait till the end. Adequate cash will give you leverage in discussions. Lastly, don’t be too tied to valuation. If the business does well, the valuation will eventually increase.

Do you invest in specific sectors? If yes, then which are the sectors?

Trifecta is sector agnostic and is focused on the emerging economies and startups. We have a diversified portfolio across consumer services and products, B2B services, Health care, Education, Agri, and Fintech.

What is your outlook for the present startup ecosystem in India?

Outlook in general is positive. Over the years the Indian startup ecosystem has matured and late-stage exits for investors have given confidence. This has led to the launch of larger follow on funds which will translate to a higher number of startups getting funded. However, with the debacle of WeWorks IPO, we may see short term slowdown in funding as investors reconsider their investment parameters from growth any cost to growth with the path to profitability.

According to you what is more important (Team, Idea, Traction, etc.)?

All 3 are important but if I were to choose one it will be Team. I believe that the entrepreneur, as a practitioner, has the best insights into what will really work in the Company. So even if the business plan/traction goes sideways, a smart entrepreneur with due support from his team can pivot the business model at the right time.

According to you what is the perfect time for a startup to raise funds?

Venture Debt is available to startups that have raised Series A and above from institutional equity investors. Our ticket size varies from Rs.5 crores to about Rs.100 crores. Startups that are looking for extending cash runway, fund working capital, Capex or acquisitions should look for venture debt as equity dilution is marginal. Best time to raise venture debt is along with the equity round or a few months after raising an equity round. Adequate cash in hand will allow the Company to raise a higher amount of debt.

What is the value add that a founder gets, along with your investment?

Over the last 5 years, we have been able to partner with more than 58 category-leading new businesses by providing them the right structured finance solutions in the form of venture debt i.e. non-dilutive capital. As a debt investor, we do not participate in the board of a company, but instead, we assist the company in business development, financial advice and treasury management. Additionally, we also have a very strong set of institutional LPs and we connect our portfolio companies with them.

Would you like to share any of your recent investments and why did you select them?

Confidential. I would not like to comment on any specific investment.

Answer in one line:

Share your original quote: Real wealth is created when all stakeholders make returns – Investors, Founders and Employees

The First 3 slides that you look in a Pitch Deck (in serial order): Team, Business Idea/Plan, Existing Investors

How would you define Startup: Business which disrupts an established business practice or creates a new market altogether 

What are the attributes of an Entrepreneur: Passion, People Skills, Confidence

What are your views about StartupLanes?

Platforms such as StartupLanes are the need of the hour. As a startup ecosystem in the country matures, we need platforms that provide the right kind of network and guidance to an entrepreneur at an early stage. I wish all the best to the StartupLanes team.