N Shridhar, Pegasus FinInvest- Avoiding Hyped Valuations

N Shridhar

With more than 25 years of experience, N Shridhar is an expert in the execution of complex transformational initiatives for top companies with a clear focus on driving profitability for organizations by spearheading their evolution from conservative business models to a more process driven and customer-centric models that streamline and align business functions.

With a keen understanding and deep knowledge of key industries, market changes, and market needs, Shridhar has held crucial leadership roles and directed the strategy and business model of companies towards profitable growth that successfully facilitate this transition to realize maximum business value.

N Shridhar is the Director, Chief Investment and Strategy Officer, CEO – Infrastructure (Industrial & Logistics) at Hiranandani Group of Companies and Managing Director and CEO at Pegasus FinInvest Advisory Services Ltd.

Mr. Shridhar is active and well networked with HNI’s in Mumbai, Delhi, and Bangalore and is an accredited member of the Director’s club, a program certification from KPMG, Board Evaluation committee, UK and SP Jain essentially as an Independent Director. Has vast experience as Group Director & CFO, raising capital, taking companies public, setting up investment companies, and enhancing operational effectiveness and efficiencies.

Given his Business as well as Finance Leadership roles across different industry verticals like FMCG, consumer space, financial services, real estate, and hospitality and in organizations like State Bank of India, Bharat Heavy Electrical Ltd, Asian Paints, and Unilever Group at Ponds India Ltd, Coca-Cola, and Britannia, his experience spans across various facets of finance and business strategy including M & A.

N Shridhar

He has excellent networking and relationships with merchant bankers, local and international lawyers, regulatory agencies, accounting, and auditing firms and banks and institutions cultivated over his senior leadership stint of over 25 years.

N Shridhar is also a Mentor for start-up entrepreneurs as part of the National Entrepreneurs Network (NEN) out of Bangalore. He is currently mentoring 3 company promoters in the IT/ITES space. He also co-invests and helps start-up technology companies.

He is associated with education and academics and has also been part of the Interview panel for students seeking MBA admissions post CAT with various Institutes. He has been mentoring and guiding students and doing career counseling in his spare time. He is also associated with various NGO’s as part of his contribution to CSR initiatives/social responsibility.

Read on to know more about Mr. N Shridhar and his rich experience.

What background and domain expertise do you have? What makes you turn into an investor?

N Shridhar: My operating and investing experience spans over 2 decades in senior leadership roles across big corporates and also during their startup stage in India as well as doing some turnaround stories. This has given me the impetus and confidence to become an investor and set up an ecosystem for entrepreneurs. I have been a mentor for many years and thus decided to invest this “mentor capital” across sectors with a focus on “setting up the entrepreneurs to succeed”.

Having seen operational businesses and helping them to navigate or pivot through their different cycles and contribute towards their growth into success stories has made me turn into an investor. I believe my team and I can add a lot of value to startups to help them grow and become big.

Right after being an investor like in early days, there must be some tough times in building up the first fund along with building up a second fund or giving back the good returns to those LPs, If there is any similar tough time like this, please tell me more about it and how you (or your team) overcome the difficult times.

N Shridhar: While having done investments and exits as a working professional, this is the first time for us to embark with our own fund. Thus building the first fund and its ethos and investment philosophy takes time and effort. We are an impact fund focusing on Fintech, Education, and Healthcare, with a philosophy of investing in “responsible businesses”. We spend a lot of time and effort to identify, whet, and monitor these businesses while contributing to their growth and preparing for an exit with good returns.

As an investor, what kind of startups have you invested in? and how did you find those startups to invest in?

N Shridhar: We have invested in 4 companies so far across financial services, technology, healthcare, and education. One deep-tech startup we have invested in uses machine learning and IOT for predictive analytics for maintenance on large vessels. Over a year, since we invested, it has raised even more capital and is valued at over 3 times.  We like to invest in early-stage entrepreneurs who have a clear focus and vision.  We look at operationally sustainable business models against a pure cash burn strategy for growth.  We pride ourselves on being operational investors and create an “alpha” with our operational mentorship

What would be the core factors that you decide “Not” to invest in certain companies?

N Shridhar: We like to evaluate the entrepreneurial spirit and passion of the founder, also whether his core values are in place. We do not like cash burn models which chase valuations. There are enough investors out there playing the valuation game. And that is a big “no” for us

What would be the KPI that you usually check about the startups’ growth? It may diverse in each industry like LTV, CAC, MoM, etc. but would be helpful to understand more about your additional investment factors.

N Shridhar: For the stages we invest, while it is important to measure the LTV/CAC ratio, MoM growth, which we certainly do, we place a greater emphasis on cash flow, sustainability, and profitability. Unit economics and cash cycles are key to the
long term success of a business and that is what we measure.

What is the investment range and In a typical year, how many startups do you invest in? And overseas headquartered startups have a chance to get investment from you or should be headquartered in certain countries?

N Shridhar: Our investment range is between USD 500K to 2 million. We plan on investing in about 7 – 8 startups in a typical year. They can be headquartered anywhere, however, we want to see services and products being extended to India.

What are the main factors that startups fail as per your experience “after” getting investment and how can they prevent mistakes in advance from your personal perspective?

N Shridhar: Chasing valuations. Most startups fall in the trap of unsustainably burning cash to show a growing top line. There is an extremely high churn rate among funded startups, which is where we come in as “operational investors. Lack of operational experience, strategic guidance, and cash sustainability are the reasons why startups fail, and these are the 3 factors we focus on at Pegasus.

What’s your advice to entrepreneurs who have a chance to meet investors like you? and What are the top 3 questions that you always ask the founders?

N Shridhar: Right off the bat, hit us hard with the problem you are solving and be bold. We like to see the conviction in the entrepreneur about the problem he or she has recognized and how passionately they want to solve it.

  • What problem are you solving and why?
  • What is your vision?
  • What do you need beyond capital?

What’s your general thought about the term “Global” and What are the important factors (criteria) for local startups to consider for international expansion?

N Shridhar: The word global needs to be put in context. A company should not look to expand to new markets without perfecting its model in the existing market. They should always exercise a bit of restraint when expanding internationally. Go to your low hanging fruit first – markets which require the least modifications and investment. 

As you know, our company name is “beSUCCESS”, what’s your definition of the term “success” as an investor or as an individual human being?

N Shridhar: Success is a very subjective term. As an investor success is contributing to and seeing your portfolio companies doing ‘well’ and doing ‘good’. As an individual it is more about creating a balance in society between the haves and have- nots.

What are the one or two things that you would do differently if you could go back to 10 years ago?

N Shridhar: I would have started my fund earlier and spent more time doing successful “impact investments”

Another thing I would have done would have to do more with work-life balance and ensure every minute of my time spent was productive and efficient.

When you travel internationally, what kind of entrepreneurs and startups (or industries) you want to meet?

N Shridhar: All kinds. I like meeting entrepreneurs from different industries who are diverse, innovative and creative. I am a big believer in exposing yourself to as diverse a group of individuals as possible. Diversity of thought makes us stronger, not weaker. Without diversity, we die off as a species. We can no longer adapt to changes in the environment. Innovation and creativity are part of diversity as differential thoughts pool to create new and better solutions!

You can follow N Shridhar here.

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