CHOOSING STARTUPS AND SMALL CAPS THAT CAN BE UNICORNS OF TOMORROW

Date: 25 Sep, 2021

With a total of 22 startups entering the unicorn club in 2021 alone, the Indian startup ecosystem is on an all-time high in terms of growth. Zomato and several other startups have recently launched their IPOs and some are just in line for the same. Everyone is trying to find a way to invest in these companies in order to make some good profits, but they seem to be missing the big point and there’s a much bigger lesson to be learned.

Does a startup become a billion-dollar business in the blink of an eye? No. Every startup grows from scratch, takes risks while having a clear vision in mind and slowly and steadily captures the market, or fail. Only a handful of them makes it to the unicorn club. Mr. Abhishek Agarwal, founder of Rockstud Capital talks about how to pick the right small businesses and small caps in their early stages so that they can help create great wealth over the next decade. In this webinar, Mr. Abhishek Agarwal shares his insights of what a fund manager looks for in a startup before investing, for example, if the idea is bankable or not or if it’s just a valuation fuss.

India currently has 50+ startups in the unicorn club. This may not seem like a huge number when compared to USA and China but the exponential growth in the number of unicorns is a great sign for the startup space, entrepreneurs and investors who are willing to take a risk for a possible future of unmatched returns.

Rockstud Capital is an investment fund that follows a unique hybrid equity strategy by investing in both Early-Stage Startups and Listed Equities on NSE. They make their investments in a ratio of 51:49 to tackle risks and liquidity issues with a potential for incredible returns.

Every fund wants to have trust attached to its name in the market. So Rockstud Capital from the very start has worked with the best of Industry as its service partners like Khaitan & Co, IBDO and Axis Bank etc. With service partners like these, Rockstud stands as a fully regulated fund in the VC space.

Finding the perfect stage to invest in a startup can be quite tricky and the risk to reward ratio may vary by a large margin. After gaining a lot of experience by investing in different startups at different stages, Mr. Abhishek Agarwal realized that to minimize risk Rockstud Capital should participate in the Pre-series A stage i.e. post validation of a startup idea.

Abhishek believes in the philosophy that if you have a product that can give the value people are looking for then you will always find people who are willing to pay for it. It was around 2011–2012 when countries were still recovering from the 2008 crisis. The equity segment in the Indian market was also not doing well but there were few silver linings. India’s first chapter in the startup world began with the Flipkart story. After starting his investment journey in 2014, to date, Mr. Abhishek Agarwal’s Rockstud Capital fund has more than 30 companies of which there are 24 startups.

Mr. Abhishek Agarwal talks about one of the portfolio companies of Rockstud Capital, Lilac Insights that offers reproductive (prenatal) and cancer genetics testing for the past 10 years. As people have started becoming health conscious, the demand for enhanced testing centres has increased a lot. Covid has only accelerated its demand even more. The genetic testing industry is worth $23 billion and in India, the industry has a market worth of just 400–500 Cr. Due to rising awareness and a growing need in the market, it is expected to grow at a 3YCAGR of 30%. Lilac Insights has raised 46 crores in the last round and aims to generate a revenue of Rs 200 crores within 3–5 years.

Another company in Rockstud Capital’s portfolio is Big Haat Agro Pvt. Ltd., which is using the latest technological advancements to transform the entire pre-harvest journey of the farmers. India is a country where 58% of the population is still dependent on agriculture as the major source of income. Thus the agriculture sector has great potential when it comes to market availability. Big Haat Agro provides farmers with advisory and farm inputs such as seeds, fertilizers and chemicals etc. It has raised over 19 crores over three rounds of funding and has a post-money valuation of Rs 61.8 crores.

Rockstud Capital has also invested in companies like TATA ELXI LTD and AMBR ENTERPRISES INDIA LTD. TATA ELXI is a niche IT player in the automation side of the car manufacturing business while AMBER is the largest OEM manufacturer in the country. Both the companies are the major players in their respective segments.

With different investments in small caps and startup space that follows a similar pattern of decision making, Rockstud Capital has stayed constant with their investment philosophy. Rockstud Capital believes that looking for companies that are backed by simple facts and has a good room for expansion in the coming future are bound to generate great returns in the long run, rather than chasing the next big unicorn.

Watch the video here https://www.youtube.com/watch?v=S2uX5V1oXbE&t=256s

To know more about Rockstud Capital, visit www.rockstudcap.com



Disclaimer — The article is made for informational purposes only and should not be regarded as an official opinion of any kind or a recommendation. It does not constitute an offer, solicitation or any invitation to public in general to invest in the stocks discussed. This article is confidential and privileged and is directed to and for the use of the addressee only. The recipient, if not the addressee, should not use this material if erroneously received, and access and use of this material in any manner by anyone other than the addressee is unauthorized. It shall not be photocopied, reproduced or distributed to others at any time. While reasonable endeavors have been made to present reliable data in the article, Rockstud Capital LLP does not guarantee the accuracy or completeness of the data in the article. Prospective readers are cautioned that any forward-looking statements are not predictions and may be subject to change without notice. No part of this material may be duplicated in any form and/or redistributed without Rockstud Capital LLP’s prior written consent.

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