Info Edge (India) Ltd, which runs a string of consumer internet portals including Naukri.com and 99acres.com, has been investing its surplus cash into other tech startups. In the last week or so it has stepped up its exposure in existing portfolio firms taking majority stake in online restraurant guide Zomato and e-learning firm Meritnation. Techcircle caught up with Info Edge founder and executive vice chairman Sanjeev Bikhchandani to get a lowdown on the company's investment strategy.
You recently picked a majority stake in Zomato and now in Meritnation. Is that your strategy going forward, primarily for your existing investees? Or are these just one-off investments?
We have always maintained that we will infuse more money into our existing portfolio companies, which are performing well, and also where we see the entrepreneurs need more money from us. Both these investments (Zomato and Meritnation) are along these lines.
Our calculations suggest both these firms could be valued around Rs 300 crore with the latest deals. Are they on similar growth and revenue traction path or is that just a coincidence?
See, each business is unique and has an independent plan. They get valued according to its track record and potential. The valuation figure of Rs 300 crore that you have reckoned for each of these companies is inaccurate. However, we are not announcing the valuations. Neither are we disclosing the revenue figures. We will do it when we release our annual results.
Zomato had been looking at a larger funding round. What prompted you to put more money rather than get a VC on board? Can it be attributed to mismatch between valuation expectations?
Zomato has raised as much money as it needed; no more or no less. There were lots of interests from different investors in Zomato. We feel privileged that its founders chose to go with us for this round.
Would these two firms add or make a small dent in consolidated bottom-line of Info Edge, since they are now part of the consolidated financials?
Both the companies would make the same losses that they would have made, if they had not raised money from us but from another investor. What matters is that the operations are healthy and the revenue and traffic scale-up is exponential. Both these firms have a clear vision. Consolidation is an accounting rule and it will be done. We are completely aware on the health of these businesses.
We also see Info Edge signing larger cheques in these follow-on investments of about $5-10 million in Zomato, Meritnation and early this fiscal in Canvera. As a strategy have you increased the ticket size?
We invest as much as our portfolio companies require. Having said that, as a company scales up, it begins to derisk, and we feel more confident about investing larger amounts.
Which are the other sectors within the technology vertical that you are currently looking at to put in money?
Our investing strategy remains what it always was: Indian consumer-based internet startups and we will continue to focus on that.
(Edited by Prem Udayabhanu)