Rashmi Guptey
1st February 2022
Harish Talreja
25th January 2022
Sid Talwar
31st December 2021
Ankit Moorjani
30th June 2021
20th January 2024
Sandeep Murthy
17th March 2022
1st January 2020
20th November 2017
7th June 2022
15th May 2022
17th February 2022
28th November 2023
Prashant Mehta
2nd February 2022
22nd September 2021
30th August 2021
15th March 2022
21st January 2022
14th January 2022
4th October 2024
5th August 2024
25th June 2024
20th December 2023
20th October 2021
25th April 2021
Akshat Jain
12th February 2021
31st May 2020
Tanya Rohatgi
19th August 2024
20th June 2024
Siddhant Ahuja
25th April 2022
14th February 2022
2nd June 2018
5th June 2024
15th February 2024
9th February 2024
26th May 2022
1st February 2024
20th November 2020
Shivani Daiya
20th February 2020
17th August 2014
18th July 2019
17th September 2021
15th September 2021
Maansi Vohra
28th January 2021
Atharva Purandare
10th January 2021
Tanvi Ghate
23rd January 2024
Ahan Rajgor
12th May 2022
8th March 2022
22nd February 2022
22nd August 2024
29th July 2024
5th June 2022
5th May 2022
16th April 2021
15th November 2014
25th October 2021
8th March 2020
7th August 2018
27th December 2016
17th February 2021
29th September 2020
24th September 2020
26th July 2020
20th January 2020
15th October 2018
26th June 2018
13th June 2017
21st May 2024
13th February 2024
15th July 2024
10th April 2024
20th February 2024
Gradual change doesn't disrupt life. It wears a giant stealth cloak of business as usual, while being pregnant with disruption. And then, sudden change makes everyone sit up!
“The twelve most dangerous words in investing are - The four most dangerous words in investing are, it’s different this time.” This paradoxical saying by Michael Batnick of RitholtzWealth Management in response to John Templeton’s old adage set the tone for our thinking in 2020. Markets are different, consumers are different, times are different, but some themes always play out similarly. At Lightbox, our role is to identify and leverage these themes to create accelerated impact.
The opportunity is massive. India is the last large consumer market being disrupted by technology, with a population of 1.3 billion, 67% of which are working age and contributing 60% to our GDP. India presents several long-standing challenges that serve as low-hanging fruit for tech-enabled businesses to capture. India has recovered spectacularly from the days of the License Raj, when there were few brands with no competition and no compelling reason to invest in product innovation. Smaller brands tended to be fragmented with no capital for expansion and the idea of 'Jugaad' kicked in. Thankfully, that's changing too.
In 2020, we saw several elements that had come together, gradually, then suddenly, leaving India poised for massive growth. There were many changes that occurred in parallel in the last decade, -- consumption per capita grew over 4x, urbanization increased and organized retail boomed. E-commerce grew at an unprecedented rate just in the first half of 2020., growing from 3% in 2019 to 4.5%. All this was on the backdrop of evolving new business models, driven by tech adoption, which grew from 2% in 2000 to nearly 50% in 2019!
Consumer Behavior
Consumer behavior is rapidly changing and we need to understand and forecast changes in preferences to identify great upcoming businesses.
Consumer behavior is being driven by four broad trends
convenience, trust, affordability and aspiration.
Take a look at the used car market, a great example of a disorganized legacy system with multiple pain-points for buyers and sellers. Enter Droom. An end-to-end transaction-based marketplace that streamlines the entire process of buying and selling used cars. Another example of solving an inefficient market is Furlenco (now House of Kieraya). They seized the opportunity to organize the historically fragmented furniture market and introduced a subscription model to Indian consumers for the first time - with accessible rates, rapid delivery and service, top quality standards and a commitment to circularity and sustainability.
Yet another example of the sharing economy being used to increase efficiency and reduce waste is Cityflo. Buses at a 2-minute walk, departing every 10 minutes, offering premium intracity travel as a service. They tackled the burgeoning traffic problem in Mumbai by removing 3,650 cars from the road in 2019.
Innovation in times of crisis
In times of crisis, like the COVID-19 pandemic, consumer habits change and industries accelerate or decelerate. Education is a prime example of this. EdTech users in India doubled YoY to 90 million in 2020. Flinto Class, a “pre-school in a box” which onboarded 320 preschools on its program pre-COVID, had to entirely pivot its business post-pandemic. Launched in May 2020, the new Flinto Class@Home D2C model delivered ready-to-use materials to students every month, delivering top quality education at scale with high engagement and user satisfaction. Demand for some services skyrocketed during the pandemic. Healthcare has been another challenging area during COVID amid the 2020 norm of social distancing. In that backdrop, telemedicine was another advancement. With a baseline of 100, it grew about 1.5x in the first half of 2020, with specialties like mental health and dermatology finding greater adoption during that period. With that in mind, we looked deeper into mental health. India has 200 million people with some form of a mental disorder, over 85% of whom fail to receive any professional help. InnerHour attempts to solve this problem with an omnichannel approach to self-assessment, treatment and monitoring, starting with wellness programs for corporate employees.
The rise of quick direct-to-home commerce was one of the greatest consumer shifts we witnessed. The national lockdown made it difficult for people to buy groceries and other essentials. Large e-commerce platforms like Flipkart and Amazon were not equipped for low-value, high-frequency doorstep deliveries of consumables. Dunzo had already pioneered quick doorstep grocery delivery and gained huge traction as millions of consumers were forced to shift online. Mini-warehouses were launched in May 2021, and already began contributing to 70% of neighborhood GMV.
When adoption involves Switchover Disruption (Product innovation and disruption)
Traditional sectors have sorely missed product innovation as legacy companies generally hold monopolies and categories are fairly commoditized. Menstrual care is such a category. Monopolies do not innovate much and continue to sell the same products without much improvement. Nua is a disruptive new brand that adopts a holistic approach to women’s wellness that transcends products and solves challenges around women's wellness not just once a month, but everyday of the year. The brand engages with customers online and offline with a growing community and the mission of “solving women’s problems that matter.”
India is a unique market where simple replication of outside models does not work. At Lightbox, we invest in brands that leverage technology and emerging business models to sustainably shape the future of consumption in India.
Technology, Brand, Models and Sustainability are the four themes that form the foundation of our investment ideas.
Mixing models (subscription, made on the internet, access over ownership) and markets (used cars, restaurants, furniture) can help design the best consumer experience.
As we looked forward, we thought about fundamental parameters that would influence consumer choices -
and the levers that businesses have to address these are - tech and brand.
Fashion and apparel is a great example of an industry that needs change, with inventory-heavy balance sheets and constant production that leads to environmental damage. Bombay Shirt Company addresses this problem by building a platform for custom clothing that spans sourcing to last-mile delivery with minimal wastage. This infrastructure has easily absorbed other brands such as Korra, _cityof and Pause that cater to different customer needs. Food and agriculture is also an industry filled with fragmentation and wastage. India is one of the largest food producing markets in the world but is known for poor quality and wastage. Waycool addresses this problem by operating an end-to-end platform connecting farmers with consumers. Control over the back-end allows the company to launch multiple high quality brands. The tech-enabled supply chain reduces wastage from the industry average of 32% to just 1% using demand mapping, traceability and quality grading. The healthcare system in India is broken, with monthly medicine expenses being a burden for consumers. Zeno Health serves over a million customers, with a direct-to-consumer gamified approach and affordably priced generics that they manufacture in-house.
To sum up, the opportunity is massive. Using the levers of tech and brand, there is opportunity everywhere - agriculture, finance, healthcare, education, apparel etc. Since the pandemic, India has witnessed the arrival and doubling down of a new set of global investors. Google is set to invest $10 billion in India. Against the backdrop of geopolitical tensions between the US and China, India has emerged as the most exciting venture ecosystem in Asia. The commitment from investors and big tech players like Amazon, Google and Walmart, not to mention homegrown Reliance Jio, has made it a terrific time to be a consumer in India today. Investors have put in $37 billion into early stage tech businesses in India in the last six years.
" Gradual change doesn't disrupt life. It wears a giant stealth cloak of business as usual, while being pregnant with disruption. And then, sudden change makes everyone sit up! "
As we can see, a series of gradual changes over the years have led to a sudden boom. It took 41 years to grow GDP per capita by $221 but only 27 years to increase by $1797. Jewelry marketplace Melorra witnessed 7x ARR growth from October 2018 to February 2020 to $28.7 million, but then spectacular recovery after the initial COVID lull to record $54 million ARR in July 2021. It took 29 years for non-cash transactions to reach $472 million, and then 11 years to reach $4.5 billion. It took five years for India’s internet base to grow to 71 million in 2014, and then 7 years to grow by 634 million. Mobile data usage in India grew 44x in the last four years and users have doubled their usage every year.
We're excited about this change and can't wait to see where the next year takes us..one filled with infinite possibilities.
We’re Calling it Operating Venture (till we think of something better)
Across boardrooms and TT tables, discussions still focus on valuations, fundraising and unicorns. Stop it. It’s time to focus on building real businesses and stop worrying about valuation.
Entrepreneurs and investors are jointly trying to imagine and create a new world. There is no straight line to this process… it is a series of assumptions and iterations – a process of Experiment, Fail, Learn, Repeat.
AI in Indian education technology is probably the most advanced in the world. It is challenging traditional western models as well as integrating effectively with public and private systems in India.
Tech companies are nothing without growth. The real value creation will take place in companies that are able to demonstrate differentiated growth by taking advantage of the imminent technology boom (a result of the explosion in data & apps).
We are seeing a changing of the guard from old world businesses to new technology companies. This shift has been taking place steadily around the world at all stages across industries for the past 20 years and has accelerated in the recent decade.
Buying jewelry is as much about the experience of browsing as it is about the actual purchase. After the last year I’ve spent working with Melorra (coupled with 11 years of marriage) I’m slowly starting to understand this phenomena.
Everybody pivots. If you ask anyone who’s run a business in the past, they’ll tell you they pivot a lot. They pivot based on everything from customer feedback, to external advice, to market conditions. And its a good thing….
Melorra is the jewellery brand that's making designer-ware affordable. This is the new thinking in affordable luxury globally.
Someone once said, “customer service isn’t about telling people how amazing you are, it’s about creating stories that do the talking for you.” Very few brands understand the value of these stories or even have the internal service culture to cultivate experiences worthy of being retold.
According to Morgan Stanley, Global Recession in 2020 is a base case scenario. A recession is often defined as a period of decline in economic activity like trade, industrial output and consumer spending. As a recession is inevitable, we looked at the economic and financial downturns and recoveries in the past century to look for similarities with today’s COVID19 crisis.
"Whatever ramp time you are budgeting for in terms of demand coming back - double it. However long you think you need cash for - double it." When this is over, companies that have been household names will disappear and a new crop will emerge. How you prepare and use resources today will determine which group you are in.
All eyes are now on economic activity to recover and catch up to the markets in terms of earnings. But until that day comes, we can continue to expect the unexpected and hopefully see the companies in our venture ecosystem finally achieve their holy grail of being publicly traded.
Why would Jio, a company that has rarely parted with ownership, agree to (or dare we say, actively seek out) partnerships and investments, and why now? What does this $20 BN mean for Jio, and how will these deals affect the broader technology market in India?
At Lightbox, we’re committed to solving problems with differentiated solutions that leverage technology. Its our indifference to conformity and vision to partner with the ambitious who want to embrace the unknown and find a new and better way to do things. Companies that will create a cultural impact and defining moments in the lives of the generations that come after us.
At Lightbox we’ve always tried to use tech to build interesting businesses. Companies that understand what Indian consumers want as well as they understand their household budgets. We ran our annual day at a modern art gallery in Colaba, with our CEOs as well as a few founders from our network to lead the discussion.
Indian consumers have repeatedly demonstrated their comfort with new technology. And that's starting to show at scale in the 120 emerging metros where demand for new and better products and services outpaces supply. Even at the foothills of the Himalayas, people are ready for life online – and open to a new way of doing things.
Profitability isn’t a switch you can turn on and off. No business can suddenly decide that it’s time to get profitable and implement a strategy. If businesses aren’t structured to be profitable, the only real strategy an entrepreneur can implement is to cut costs, almost always at the expense of growth. Profitability at the expense of growth doesn’t last.
You will receive the next newsletter in your inbox.
The monthly Gazette is your source of happenings within Lightbox - updates, blogs, deep dives, opinion pieces and all things consumer tech
Join the thousands who hear from us